Strategy for improving and empowering MSMEs through grouping using the AHC method
Authors: Zahrotun Lisna , Amanatullah Yosyadi Rizkika , Linarti Utaminingsih , Soleliza Jones Anna Hendry 
Published: February 2024

The high number of migrants in the city of Yogyakarta has resulted in increased opportunities for Micro, Small and Medium Enterprises (MSMEs) in Culinary and Handicrafts. The large amount of data collected by the Cooperative Office, which reached thousands, caused inas to have difficulties in determining what training was needed by MSMEs and also difficulties in choosing which MSMEs would receive training held by the Cooperative Office. In addition, the Yogyakarta Cooperatives and UMKM Office had difficulties in selecting which UMKM needed to receive these trainings. Grouping can be used as a strategy in selecting MSMEs and determining training according to their individual needs. The purpose of this study was to group SMEs using the Agglomerative Hierarchical Clustering Single Linkage method and its application to provide recommendations for MSME groups to the Yogyakarta Cooperative and MSME Office. The results of the recommendations for the number of groups can be used in providing implementation, design, and evaluation of the development and empowerment of MSME data in the City of Yogyakarta. This study uses the Agglomerative Hierarchical Clustering Single Linkage method. The stages in this research are Load Data, Cleaning Data, Data Selection, Transformation Data, Clustering Process with AHC single linkage, Silhouette Coefficient, and Knowledge Representation. This research resulted in 2 group recommendations from a total of 1336 Culinary MSME data and 3 group recommendations from a total of 145 Handicraft MSME data. The results of the silhouette score test in the Culinary Sector are included in the strong structure category with a value of 0.79 and the Crafts Sector is included in the Medium Structure category with a value of 0.615. From the number of these groups, recommendations were obtained for improving a service in increasing MSMEs, especially those with a turnover of less than 10 million, marketing purposes within the Yogyakarta area, and not having financial assistance from the government. The high number of immigrants in the city of Yogyakarta has resulted in increased opportunities for Micro, Small and Medium Enterprises (MSMEs) in the Culinary and Crafts sector. The large number of MSMEs creates increasingly higher competitiveness. Apart from that, the large amount of data collected by the Department of Cooperatives and MSMEs, which reaches thousands, causes the Department to have difficulties in efforts to improve and empower these MSMEs. Grouping is one method that can be used as a strategy in mapping MSMEs, especially in efforts to improve and empower MSMEs through training conducted by the Department. The aim of this research is to group MSMEs using the Agglomerative Hierarchical Clustering (AHC) method in an effort to achieve strategies for improving and empowering MSMEs. The focus of this research is[a1]  MSMEs in the craft sector and MSMEs in the culinary sector. The results of this research provide 2 group recommendations from a total of 1336 Culinary MSME data and 3 group recommendations from a total of 145 Craft MSME data. The silhouette score test results in the Culinary Sector are in the strong structure category with a value of 0.79 and in the Crafts Sector are in the Medium Structure category with a value of 0.615. From the number of groups in the two MSMEs, strategies were obtained to improve and empower MSMEs, especially those with a turnover of less than 10 million, marketing objectives within the Yogyakarta area, and not having capital assistance from the government.  [a1]the result of the revision of the Abstract