The goal of this research is to develop economics, especially in strategetical management science aiming the development of fit model for high degree competitiveness in Micro and Middle Enterprise SMEs (Usaha Mikro Kecil dan Menengah and abbreviated as UMKM in bahasa) in Batik (Indonesian traditional hand-made clothing design by applying wax (malam in bahasa)). The practical aim of this research is to apply this model serving as an alternative input for Batik Micro Enterprise in order to develop their high degree competiveness. The result of this study is tended to give input for Indonesian government in terms of maintenance policy effectiveness and in up scaling Batik Micro Enterprise. This study analyzed the governmental role, resources and entrepreneurship in affecting the leadership cost and differential strategy in building the high degree competitiveness of Batik Micro Enterprise by applying the descriptive analysis and Structural Equation Modelling (SEM). The data were processed with AMOS software. The Respondents were taken from batik's small enterprise in jogja and solo as many as 144 enterprise, registered in the Department of Cooperatives and SMEs jogja and solo. The researcher found that most of strategy batik’s small enterprise are differentiation strategies. Government and resources variable have a positive influence and significant to competitive advantage by batik Micro Enteprise.