LOST ON PURPOSE
A JOURNEY OF DISCOVERIES
Canggu's supply side
Destination III - The established Canggu in South Bali
With a group with members from Germany, the Netherlands and Indonesia we were researching on Micro & Small size Enterprises (MSE).
The research goal was to collect and evaluate relevant information for strategic decision making in order to:
1. Advice on the match between the present destination area Features (supply) and the attending markets (demand).
2. Advice about effective interventions required to achieve the destination area’s preferable future.
This part of the report introduces Canggu's features and potential to you.
Destination characteristics and developments
Figure 2: Map of the Canggu area
Finally, Canggu is an area that is known for its social media activities. Social media is an aspect that is taken into consideration and often is crucial in a marketing strategy.
Development of the area
Initial stakeholder mapping
Figure 3: Initial stakeholder mapping
Stakeholder categorization
After and during the interview process, it became clear to the researchers, that mapping stakeholders per sector alone does not represent the variety of businesses entirely. The interviews showed that similarities between enterprises operating in different sectors can – at times – be larger than similarities within the same sector. The research outcome shows that the most impactful difference between MSEs in the Canggu area lies in the level of strategy refinement. It is important to note that no judgment should be passed on the importance of the stakeholder groups on basis of their strategy. All acting groups are vital for the creation of the tourism product and, together, provide the supply for the tourism needs in the Canggu area. Nevertheless, the researchers decide to categorize MSEs as follows:
The Innovators
MSEs who fall into the category of innovators are characterized by a well-thought through strategy, economical knowledge, and - in large parts - financial literacy. Furthermore, entrepreneurs who operate innovative businesses have a deep understanding for the market and tourism needs, which allows them to react on changes in the environment and current trends in a fast pace: to a large extent they are owned or operated by foreigners. Interviewees who have been characterized as innovative often mentioned that they do intensive market research and try to get a feel of what works and what doesn't. A simple example for this is that one interviewee 8 mentioned that before she started her business, she watched the environment and the tourist close by establishment she wanted to open up and created a strategy based on this. Another interviewee mentioned, that for him it is crucial to collect feedback about the food he offers in order to adjust his menu weekly. Innovators did not see the high number of competitors as a threat for their own business. Interviewee 3 told the researchers, that in his opinion, competition can only help to redefine and reinvent yourself. Even businesses who overtook ideas from innovators are not seen as a threat. In many cases, Innovators function as an inspiration for those businesses who belong to the bracket of adapters. Although six interviewees have been characterized as innovative entrepreneurs, they represent the smallest number of businesses.
The Adapters
The researcher grouped those businesses as adapters, who have a very basic strategy. Often, this strategy is characterized by copying trends innovators implemented or set already. When market changes happen, they, unlike innovators, need more time to react to changing tourism needs. Operators of these businesses consist of foreign owners and local owners. Enterprises who have been characterized as adapters are aware of certain trends but the process of implementation of a new strategy takes long and is mainly led by innovators or obvious market changes. For example, one interviewee described, that he was aware of the need for social media to promote your business in the Canggu area. He has not worked with it much yet, but is planning to use it in the future.
The Survivors
Survivors are the type of businesses who are and have been operating without a defined strategy. Often, these businesses are local-owned. Some have been the first business to operate in their field in the area of Canggu and therefore have extensive knowledge about the local culture, traditions, and the area in general Many of the businesses have been operating for a long period of time. This indicates that owners and managers of these businesses must have had a right approach in some way or profited from the fact that up till a few years ago, there was not much competition in the area and the development has been slow and stable. When asked for future strategies, all interviewees had in common, that there was no, very little or unfeasible planning. One interviewee mentioned, that she does not know how to create a strategy and finds it difficult to find one. Another interviewee told the researches that there is no strategy she will apply at all. Rapid growth and market changes might pose a threat to these businesses. Similarly to the adapters, survivors see competition as a possible danger to their own businesses.
The Canggu area is a village area in the Badung regency, located in the southwest of Bali. The main road in the Canggu area is Jalan Raya Canggu, which connects the inland area with the beach through smaller roads. Since the Canggu area has only been in growth since 2016, it still has some accessibility and transportation issues. Also, from observations in comparison with Kuta and Seminyak, the Canggu can still be seen as uncrowded. Physically, the Canggu area is still dominated by rice fields and nature. However, the growth in the past two years has been rapid and big, which brought along many new buildings and constructions sites. As mentioned in the external forces and based on interviews 7, 8 and 15, the taxation of rice fields will cause a decrease of rice fields in the future. Furthermore, the Canggu area is known as one of the major surfing spots in Bali. Echo Beach and Batu Bolong beach are the most common locations for surfing. Also, through observations it is seen that a high number of yoga schools and organic cafés can be found in the Canggu area.
Besides the physical development related to tourism, the Canggu area is well represented by the banjar. In total, there is a number of 20 banjar found in the research area. A banjar is a social and cultural community with the aim to preserve the Balinese culture. Also, the banjar collect plans for the tourism development in their area, as an input for the village and governmental master plans. Overcrowdedness and the loss of culture are aspects that are high on the agenda of the banjar, where rules and regulations are also connected to, in order to limit it and to control developments in the future. Finally, banjars are responsible for collecting waste and providing safety around the Canggu area and therefore play a big role in the society.
Within this situation, enterprises are required to engage with the community and the banjar and to follow certain governmental and traditional rules.
According to observations and the results of interviewees 18 and 20, residents who have lived in the Canggu area for a long period of time, the developments of the Canggu area can be described. In the past, between 1983 and 2006, the first tourists came to the Canggu area to surf. They stayed in Kuta or Seminyak and just spend the day in the area. There were just a few accommodations and other tourism facilities. Some years later, after 2006, locals started to set up small individual enterprises to offer tourism facilities, such as food and beverage. The first changes happened in 2006, when some residents sold and rented out their lands to foreigner and Indonesians outside Bali. Even though the real development did not start yet, this was the start of it in the Canggu area. Tourism kept growing in Bali, but mainly in the Kuta and Seminyak area.
From 2013, the first real developments started to come into the Canggu area. Locals and foreigner started to compete in the tourism market, which was at that time still slowly increasing. The biggest increase started from 2015. In the past 3 years, the Canggu area developed into a developing destination with lots of tourism facilities. It became very popular for surfing, yoga and its café culture. The first major developments took place in Berawa, but currently, Batu Bolong can be described as the most developed area, which became clear within the observations. In Batu Bolong, there are many tourism related businesses and the first chain hotels have entered the area. The second developed area is Echo Beach, which is dominated by restaurants, hotels and co-working spaces. Thirdly, Berawa is in the list, which shows some tourism facilities, but is not dominated with it yet. Also, local businesses and restaurants still can be found. The other areas in the Canggu area can be considered as underdeveloped and residential. It is dominated by rice fields and nature. Finally, Raya Canggu is the main road, which offers many enterprises which are not related to tourism.
In order to determine who is interacting with one another in the tourism sphere in the initial stage, the researchers grouped MSEs on basis of the sector and part of the supply side they are operating in. This was a technique to prepare an interview guide for enterprises and to assess the current match between supply and demand. All stakeholders take part in creating the tourism product and are of the tourism supply. From the research perspective, which is focusing on MSEs as the suppliers, the sectors of interest are as following: