CHAPTER I INTRODUCTION

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1 CHAPTER I INTRODUCTION 1.1 Background The nature of business has been transformed over the past few decades. Today s companies must survive in a fast-paced, highly threatening, and challenging global environment. Dramatic and ongoing change forces business people to regularly reassess the basic purpose of their organization in become much more flexible in their approach to serving multiple stakeholders. These changes have highlighted the need for companies to become more entrepreneurial (Dess, Lumpkin and McGee, 1999; Brazel and Herbert, 1999 in Ramachandran, Devarajan, & Ray, 2007) and companies around the globe are indeed attempting to foster entrepreneurship so that business opportunities are perceived and exploited (Sathe, 1988; Russell, 1999 in Ramachandran, Devarajan, & Ray, 2007). This condition gets along to a new trend that the basic requirement for winning companies in modern era is by entering the entrepreneurial mindset within their company, which more popular be represented by the gimmick word of Corporate Entrepreneurship. In this modern era, dramatic competitiveness and business turbulence can easily drives to the chaos and uncertainty situation that might be the obstacle for business people to perform their company. However, uncertainty can yield to the tremendous opportunity when looked at in the right way (McGrath & Mac Millan, 2000). Through entrepreneurial mindset, entrepreneurs can easily retain the uncertainty by capturing the benefit of uncertainty to become high potential business opportunity and utilize these opportunities with speed, aggressive, and focus oriented. Thus, opportunity orientation as an image of entrepreneurial mindset will ensure to the increased process efficiency, increased market share, and increased to the bottom line of the business or in other word, it can result in wide-ranging benefits to the company. Entering entrepreneurial mindset can be manifested through several ways in an established company. It could be come from above, from below or might be from 1

2 separate unit. TELKOM Management Consulting Centre (TELKOM MCC) as one of supporting unit under the Division of Human Resource and General Affair of PT Telekomunikasi Indonesia Tbk (PT Telkom Tbk) is on-going to tries in initiating the corporate entrepreneurship in its business unit. This action is necessary with consideration that TELKOM MCC presently needs to grow significantly to maintain its market share that will drive in having a better position in internal and external market. TELKOM MCC is a consulting service provider that serve its internal customer (PT Telkom Tbk business unit, foundation, and subsidiary company) also external customer (Telkom Group and non-telkom company both domestic and foreign) as well. 1.2 Problem Identification Formerly, TELKOM MCC is established to assist and consult PT Telkom Tbk in ensuring its business performance through providing advice, create and deploy project design, controlling the project implementation, or as functional management for PT Telkom Tbk project. 14,000 12,000 10,000 8,000 6,000 4,000 2, Internal 1,027 7,539 4,469 10,331 11,435 10,854 6,279 Eksternal ,696 Total SLA 1,316 7,886 5,333 10,955 11,755 11,250 9,975 Figure 1.1 Annual Sales Data (TELKOM MCC Business Plan 3 rd Revision, 2010) As a newbie in consulting industry, TELKOM MCC obviously has many competitors that are more powerful in image also more experienced in conducting consultation 2

3 business. Yet, since TELKOM MCC is a PT Telkom Tbk business unit, they can use the image of PT Telkom Tbk that has a good perception in Indonesian point of view. Thus, from 2002 until now, TELKOM MCC can sustain in its business even though the sales is not grow as expected as well. According to the Figure 1.1, it illustrate that the sales performance is not maintain well and the trend tends to decrease. TELKOM MCC uses Service Level Agreement (SLA) to measure the sales. SLA is an agreement in the level of service between user (unit) and supplier that explain all about the objectives, responsibility, rightful authority, and the payment for the existing service. In general, there are two parties that TELKOM MCC serves: internal client and external client (further explanation about TELKOM MCC client will be detailed in Literature Review chapter). Thus, there are also two sales from internal market and external market. From , TELKOM MCC sales are highly influenced by internal market, in other word, internal market until now is more dominant than external market. However, the trend of internal market funding in TELKOM MCC sales seemed decreasing for the last two year. This statement is supported according to the movement of orange line in Figure 1.1. Moreover, this condition is supported by evidence that TELKOM MCC can not penetrate its internal market according to the graph of wallet share year by year (see Figure 1.2). Wallet share is the total cost for spending in consulting services in PT Telkom Tbk. According to the Figure 1.2, PT Telkom Tbk only funds less than 50% in TELKOM MCC to provide the consulting service. For the period of , PT Telkom Tbk is prefer to hire external consultant than using their internal consultant. External consultants that are mostly hired are AT Kearney, MC Kinsey, and Hay Group. Cost of PT Telkom Tbk spending to provide consulting service is dominated by the external consultant. However, looking forward to the chart in Figure 1.1, even though the external market contribution is fewer than internal, but, that the trend of sales of external market is increasing year by year (the trend line is shown by the yellow line). For that reason, there is evidence that a big opportunity is existed. This benefit ought to manage as good as possible by create and deploy the potential market to result an increasing TELKOM MCC market share. 3

4 300, % 40.00% 250, % 200, % 25.00% 150, % 100, % 10.00% 50, % TELKOM 93, , ,577 93, , ,243 72,078 MCC 1,316 7,885 15,632 36,394 43,666 48,440 7,829 % WS-MCC 1.40% 3.08% 10.96% 38.98% 41.60% 36.35% 10.86% 0.00% 4 Figure 1.2 Annual Wallet Share Data (TELKOM MCC Business Plan 3 rd Revision, 2010) According to these conditions, TELKOM MCC should prepare them with the best weapon before they re entering the battle field. Weapon in this term is innovation. Innovation is the creation of idea and opportunity (Arifahanum, 2009). Those two factors are related and influencing one another. Creation of idea is necessary, but it will be a junk if there is no opportunity to bring it into reality. However, if opportunity is not used to deliver idea, it will be worthless. Idea will be more precious if it runs together with opportunity in a good timing. Innovation also needs participation from all company s stakeholder, especially the employee. Therefore, employee s motivation to create idea in term of innovation is need to be maintained. In order to maintain the employee in creating innovation, company needs to penetrate them with entrepreneurial mindset. As stated before, executing the entrepreneurial mindset within company will ease company to see the opportunity. If it maintained well, opportunity along together with the idea creation can make an innovation. However, weapon will not work properly if there is no bullet inside. As a bullet in this case, is the entrepreneurial orientation of company s stakeholder. According to the assessment, if the entrepreneurial orientation is high, it means that company is ready to execute the

5 corporate entrepreneurship strategy as an approach to maintain its position in internal and external market through innovation. 1.3 Research Question This research is conducted to answer several questions: 1. How was entrepreneurial orientation of TELKOM MCC? 2. In which dimension of entrepreneurial that TELKOM MCC should be improved and/or sustained? 1.4 Research Objective The objectives of this research are: 1. measure the entrepreneurial orientation of TELKOM MCC through assess the dimensions that support corporate entrepreneurship using Entrepreneurial Orientation Survey 2. give recommendation to increase the entrepreneurial orientation (for each dimension that has low scale) also to uphold it for the aim to become TELKOM MCC as the entrepreneurial based corporation The assessment result will be used to analyze and state the further action that the writer recommends to TELKOM MCC as the propose solution to enlarge the chance in pursuing opportunity in order to increase its market share then lead to the improvement of position among competitors. 1.5 Scope and Limitation In this research, the writer tries to state deeper information about Entrepreneurial Orientation Survey in TELKOM MCC. Other information related to corporate entrepreneurship and strategy in increasing market share through pursuing opportunity, etc will be presented as a supporting data, thus, it will not explain in detail. 5

6 1.6 Discussion Systematic Discussion Systematic is intended to provide general descriptions of which will be presented to facilitate readers in understanding the basic problems and the content of this final project. The discussion systematic chapter each project is as follows: 1. First chapter is the first introduction that includes background issues, problem identification, research questions, research objective, scope and limitation, and discussion systematic. 2. Second chapter is a company profile and theoretical foundation. In this chapter the writer explain about company overview including the company profile, product and services, business competition landscape, and the conceptual framework that includes a number of theories related to the research, corporate entrepreneurship definition, and the research method used. 3. Third chapter presents the research methodology that includes methods of research, population and sample, data collection techniques, as well as processing techniques and data analysis. 4. Fourth chapter decipher the results of research and discussion that includes an overview, profile analysis and discussion of the data. 5. Fifth chapter as the last which contains the conclusions and recommendations. This chapter concludes several chapters that have been discussed previously and propose suggestions for improvement. 6

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