Pestle analysis for development of micro, small, and medium entreprises in Merauke City

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in national economic growth. This study aims to analyze external factors influencing the development of MSMEs in Merauke City. The research employs a qualitative descriptive approach combined with PESTLE analysis. The findings indicate that the external factors affecting MSME development in Merauke City encompass political, economic, social, technological, legal, and environmental dimensions. Political stability, regulatory support, and decentralization policies contribute to the creation of a conducive business climate. Post-pandemic economic recovery, access to financing, and government incentives provide significant growth opportunities, although challenges such as inflation and shifts in consumer lifestyles must be addressed. Social factors, including education levels, local culture, and environmental awareness, encourage sustainable product innovation. Technological challenges related to limited internet infrastructure and low adoption of e-commerce remain key constraints; however, these can be mitigated through targeted training programs and research-based support to enhance competitiveness. Compliance with prevailing laws and regulations, along with the protection of intellectual property rights, is essential to maintaining the legality and reputation of MSMEs. Furthermore, environmental factors offer opportunities for the development of eco-friendly products while simultaneously requiring MSMEs to manage risks associated with climate change and natural resource exploitation. The contribution of this study lies in providing a comprehensive and context-specific PESTLE-based mapping of external factors affecting MSMEs in a border-region setting such as Merauke City, which can serve as a strategic foundation for local government policy formulation and for MSMEs in developing adaptive strategies to enhance competitiveness and long-term sustainability.