CHAPTER II LITERATURE REVIEW 2.1 Company Overview 2.1.1 Company Profile TELKOM Management Consulting Center (TELKOM MCC) as one supporting business u...
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2.1 Company Overview 2.1.1 Company Profile TELKOM Management Consulting Center (TELKOM MCC) as one supporting business unit was formed to provide consultancy services in management areas such as operational and strategic thinking to all business units within TELKOM in order to anticipate future challenges. The uses of TELKOM MCC services as an internal consultant of TELKOM is an effort to optimize the HR competency in TELKOM, also offer benefits of cost efficiency for the user unit, so that will improve the performance of the unit concerned. The establishment of TELKOM MCC is necessary since TELKOM need an independent unit in form of Center Organization that function to available a formal structure for business consultancy management activities in TELKOM. TELKOM's Management Consulting Center (TELKOM MCC) was established according to Keputusan Direksi Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia, Tbk No: KD.50/PS150/PRORES-01/2002 September 19, 2002 concerning the establishment of organization/unit Management Consultancy Service Center, located on Jalan Cisanggarung 2, Bandung. This agreement was made in order to allow the apprehended of business consultancy management activities in systematic, effective, and efficient throughout the optimization in distributing the duties, deciding the business unit measurement and delegating the authorities. Primarily, TELKOM MCC has to support in giving the consulting service to the internal environment of TELKOM including TELKOM business unit, foundation, and subsidiary company and TELKOM group. More over, if there is an excess in service capacity, that is available and not influence the main performance, so TELKOM MCC is allowed to offer its services externally to public or other organization outside TELKOM and TELKOM group as well.


2.1.2 Vision, Mission, and Objective Vision “To become the most recognized & reliable Consultant for client's value enhancement” TELKOM MCC strives to be the credible and trusted consultant in creating the client’s added value and improvement the client’s business performances. Mission Give the high quality of consulting services, particularly in Operational Management, Performance Management and Human Capital Management, in improving client’s performances, competencies, and growths through experience and knowledge sharing. Objective Offer an added value for clients to reach up the high competitive and sustainable growth through professional consulting services in form of recommendation or solution that could be implemented properly.

2.1.3 Philosophy According to the believed value and

refer to the Corporate Culture, in the

transformation period, TELKOM shaping its new positioning of “Life Confident” , which include five values of Expertise, Empowering, Assured, Progressive & Heart. Refer to the TELKOM’s Life Confident, TELKOM MCC also absorb there positioning into its philosophy that will form the character as consultant also as a guidance in executing actions, decision making, and servicing clients, there are:

Figure 2.1 Believed Philosophy of TELKOM MCC


1. Inspiring Be inspired and inspiring the surround environment in each step that will stimulate the improvement in quality, productivity, and strengthen individual integrity. 2. Integrating Give the same opportunity to all people, without considering its religion, race, ethnic, and social status and unite all units in a strong and unique group as one body. 3. Innovating Be the change agent and involve in the transformation following the dynamic development and always be ready in giving the best effort we can do. 4. Implementing Become the tools and giving the appropriate added value in each creation we made.

2.1.4 Business Scope and Role TELKOM MCC business scope includes all activities in consulting and research management in the area of TELKOM and TELKOM group. Research activity is managed together and incorporated with TELKOM RisTi (TELKOM Research and Development) to maintain a maximum synergy in offering its research services. TELKOM MCC business scope only could be seized through implementing these several roles, for instance as the: a. General management b. Secretariat c. Planning and control d. Center services provider e. Consulting and research in Corporate Management officer f. Consulting and research in Business Management officer g. Consulting and research in Operational and Maintenance Management officer h. Consulting and research in Marketing Management officer i. Consulting and research in Finance Management officer j. Consulting and research in Human Capital Management officer 9

2.1.5 TELKOM MCC Logo

Figure 2.2 TELKOM MCC Logo TELKOM MCC logo is representing the philosophy and objectives that planted in each performance and actions. With the tag line of “Your Business Solution”, TELKOM MCC as the credible consulting services offer the help in assist and recommend the proper solution for clients also proven that “Consultant has all the answers”.

2.1.6 Organization Structure TELKOM MCC organization is oriented to the professional bureaucracy configuration that consists of five fundamental levels, as follow: 1. Strategic Apex, is the KAPUS TELKOM MCC as the CEO of TELKOM MCC 2. Middle Line, is the Coordinator of each Consulting Group (in the consolidated phase) 3. Operating Core, is the consultant itself including the Senior Consultant 4. Technostructure is the planning and control division or mostly called as Perencanaan dan Pengendalian (PRANDAL). This division including the subdivision of Cooperation and Control, Planning and Development, and Marketing. 5. Support Staff, is the Shared Services and Corporate Secretary. Shared Services including the Logistic and Administration and Web Base Management. Furthermore, the organizational structure can be generated through this diagram above that also will be explain the relation of each division and subdivision one another, as follow:


Figure 2.3 Organization Structure 2.1.7 Business Pillars

Figure 2.4 TELKOM MCC Business Pillar Business Pillar illustrate overall business model that TELKOM MCC developed where shown in Figure 2.4 above. TELKOM MCC Objective is offering an added value for clients to reach up the high competitive and sustainable growth through professional consulting services in form of recommendation or solution that could be implemented properly. According to the Figure 2.4, the statement of “Client’s Performance 11

Enhancement, Competitiveness, and Growth” is actually the representative of TELKOM MCC Objective in apprehended their business. Formerly, the main business that TELKOM MCC takes over is only the consulting business one. Consulting services that is offered by TELKOM MCC is in terms of Performance Management, Operation Management, and Human Capital Management, which represented by the three circles shape with yellow, blue, and red color. Along with the challenge and dynamic trends in business tends TELKOM MCC to have other business to support the existence of current business portfolio. Hence, TELKOM MCC nowadays is not only maintain the consulting business but also supported by Publishing and Research activities also System & Resources Management infrastructure to fulfill several level and complexity of clients needed. Depth explanation will be describes as follow: 1. Consulting Services Besides allocate the consulting service for all area of management, in order to enter the external market, TELKOM MCC also developing its specialization in the area of Operation Management, Performance Management and Human Capital Management. •

Operation Management relates to the activity of the policies implementation and activity in business performances as needed as well regarding the effective and efficient in order to satisfy the clients and related stakeholders with the excellent product and services, such as: ♣ Product Positioning ♣ Market Size Estimation ♣ Process Management ♣ IT Risk Assessment ♣ Financial Accounting Information System ♣ Management Accounting Information System

Performance Management includes all activity to ensure that the business objectives is achieved in effective and efficient as well throughout the excellent product and services, such as: ♣ Product/Service Performance ♣ Company Valuation


♣ Financial Due Diligence ♣ Malcolm Baldrige Quality System •

Human Capital Management contains the management process and the development of human capital in the company in order to support the accomplishment of the targeted goals in effective and efficient as well with the excellent product and services, such as: ♣ Strategic Human Capital Management ♣ Business Process Re-engineering ♣ Organization Design and Development ♣ Competency Profiling & Directory ♣ Performance Management System (PMS) ♣ IT Based 360° Competency Assessment ♣ Organization Behavior Assessment ♣ Transformation Management ♣ Corporate Culture Development

2. Publishing TELKOM MCC also maintains the publishing activity as the support business to gain the sustainability in its business. This business development published magazines, journals, research reports, books, etc that relates with the consulting service. Running this publishing activity also functions as the promotion tools that support the development plan in external market.

3. Research TELKOM MCC also do some researches relate to the consulting services that functions as the data resources for other business that TELKOM MCC operate, for publishing and consulting business.


2.1.8 Products and Services Operational Management Good management of operations provides the necessary competitive advantage for organizations facing today's business environment is rapidly changing. Facing pressure from competitors, a superior organization to realize that success must be built on the synergy between well-trained personnel, effective management practices, and futureoriented, and the latest knowledge. Consultancy services of Operational Management: •

Process Management

Product Positioning

Management Accounting Information System Performance Management It includes activities to ensure that corporate goals are achieved effectively and efficiently. Target of operations management is to ensure that the organization and its entire sub-systems (processes, departments, teams, employees, etc.) work together optimally to achieve the desired results the company. Consultancy services of Performance Management: •

Malcolm Baldrige Quality System

Product/Service Performance

Company Valuation Human Capital Management In recent years, the businessman is more and more aware that the tangible asset is no longer the dominant factor in affecting the value of the company. Instead intangible assets, including human capital is increasingly greater effect in increasing the value of a company even double it. Human capital, with its uniqueness, can be said as the competitive advantage of company if it managed in a systematic and linked to the mission and strategic goals.


Consultancy services of Human Capital Management: •

Transformation Management

Performance Management System (PMS)

Strategic Human Capital Management Publishing TELKOM MCC publishes magazines, journals, studies, books, consultancy related to that could be used as references and solutions in business. MCC currently has issued Telkom business and management magazine named INSPIRED to business development in the field of publishing. Business Forum Services include the provision and implementation (event organizer) "Business Gathering" as Workshop, Seminar, and Symposium.

2.2 Business Competition Landscape Striving in tight competition is hardly maintained for several businesses. Awareness of having consulting services still limited by several big companies; even more, the middle companies rarely feel that consulting services is necessary enough to expend. However, the need of consulting services in Indonesia is increasing significantly after monetary crisis in 1998. There are many business try to arrange their new strategies to reborn as the new company. Moreover, the need of employee is reduced regarding the uncertainty and unstable economic situation and it is driven the consulting services to play. Indonesian market is open for new player particularly in consulting business. The dynamic trend in business drives the value of consulting business is increasing with the growth estimation for about 20%-30%. Actually the demand of consulting services, especially in management area is excess the recent capacity of supply. Often, local consultant is seemed not capable as the foreign consultant because local consultant cannot compete in accordance to its brand.


2.2.1 Competitor There is several consulting services company that could be addressed as TELKOM MCC competitor, as follow: 1. The Jakarta Consulting Group –consultant in the area of: • organizational development and human capital management (including training and recruiting) • marketing and business strategies (including communication and legal affair), IT business, event organizer, and business club society 2. Red Piramid –consultant in the area of change management. 3. Hay Group –consultant in the area of: • organization management • human capital management 4. Watson Wyatt –consultant in the area of: • human capital • retirement (actuarial) consulting 5. Daya Dimensi Indonesia –consultant in the area of competency based human capital. 6. Accenture –consultant in the area of: • business strategy • customer relationship management (CRM) • financial and performance management • talent and performance management •

supply chain management

7. Axon Indonesia –consultant in the area of business transformation, including the strategies, business process, technology solution, jobs, and culture. 8. Arrbey –consultant in the area of business strategy. 9. A.T. Kearney –consultant in the area of: • business strategy • operational management • business transformation 10. Ernst & Young –consultant in the area of: • audit, • accounting advice, 16

• tax compliance and planning, • transaction advisory services, • in protecting IT assets protection assistance, • capital market advice, • tax-effective supply chain planning, • compensation design, • M&A planning and post-merger integration service, • assurance and advisory business services, • strategic growth markets 11. Booz Allen Hamilton –consultant in the area of: • corporate management • strategic planning • product and service innovation • marketing and selling • human capital management • change management • information system and strategy 12. MarkPlus & Co –consultant in the area of marketing and strategy management 13. Frontier –consultant in the area of research and marketing 14. Enterprise IG –consultant in the area of brand equity 15. Dunamis –consultant in the area of: • knowledge management • leadership development • organization alignment 16. Lembaga Management FEUI –consultant in the area of management specialization 17. SUCOFINDO –consultant in the area of: • examination in agriculture, engineering, trade and facilities • management of collateral • certification in product, quality system, and environment management • consultancy in investment activity and laboratorial services 18. TUV –consultant in the area of maintaining the product, quality, and environment 17

19. Lloyd –consultant in the area of maintaining the product, quality, and environment 20. PT SAP Indonesia –consultant in the area of development in IT system 21. Astra Graphia –consultant in the area of development in IT system 22. Mitra Mandiri Informatika –consultant in the area of development in IT system 23. Prosys Solution –consultant in the area of development in IT system 24. PT. Sarana Mitra Global –consultant in the area of development in IT system

2.2.2 Product and Service Position among Competitor There are many consulting companies which operate within a country (local) and several of them giving consulting service globally. TELKOM MCC was a local company that serves consulting services in a global range area. To provide its international client, TELKOM MCC already has a branch office located in Singapore joined with PT Telekomunikasi Internasional Indonesia (TII) offices. TII is a subsidiary company of PT Telkom Tbk that hold an international telecommunication services also as a representative of PT Telkom Tbk in international community. Hence, TELKOM MCC also joined partnership with TII to promote its services internationally. TELKOM MCC can be called as a newbie in consulting business. According to the Introduction to Management Consulting by Dr. Joe O’Mahoney, historically, consulting services has been started from the past a century ago. According to the O’Mahoney, during 1890-1940, consulting activity focused on the area of technical analysis. In this era, academics people are mostly hired by consulting firm to provide some advising activity. Typical firm that are mostly chosen are AD Little, Booz, Allen Hamilton, AT Kearney (O’Mahoney, 2007). Next trend in consulting field are talking about strategic management (1940-1970). Many consulting firm, such McKinsey, Bain&Co, and Boston Consulting Group are hiring MBA candidates and academics people. Subsequently, in 1970-1990, consulting firm such Arthur Andersen, IBM, Deloitte, and E&Y are hired as technical and financial specialist. Afterward, the trends of consulting firm that are mostly chosen are change. Since the consulting market is focusing to solve some niece and specific problem, like outsourcing, e-business, etc the experts are mostly hires. As a consequences, many newbie are suddenly appears. TELKOM MCC 18

is established in this era. Following the current trend, where many experts are preferable to give advice in order to solve company’s problem, PT Telkom Tbk used the experts they have to work as a consultant for segmented market. In several previous years, still, big consulting company, such McKinsey, Mercer, AT Kearney, Monitor, BCG, AD Little, Bain&Co that has been operated over the past decades ago is preferable to choose in giving consulting services for many clients. Generally, consulting services are segmented according to the industry, function, and sector. According to O’Mahoney, TELKOM MCC position among competitor portrays in this figure below.


Figure 2.5 A Consulting Typology (O’Mahoney, 2007) According to the Figure 2.6, we can see that TELKOM MCC is segmented as the strategy consultant and service provider. Direct competitor, that has the same segmentation as TELKOM MCC are Oliver Wyman, AT Kearney, and McKinsey, where all of them are bigger that TELKOM MCC based on product and service that is offered and experience in managing client.

2.2.3 Target Market and Segmentation Generally, market for consulting business is the big corporations both domestic and international. Other potential target is the government organization and local society in the level of domestic market. According to the target, TELKOM MCC is segmented its market into: 19

Domestic market: 1. Internal: TELKOM Offering consulting services for internal TELKOM is the main obligation of TELKOM MCC to help TELKOM management in improving the company performance and cutting the cost of external consultant. 2. External • TELKOM Group • BUMN and BUMD • Government company or public company • Private company

International market (in synergy with PT. TII): 1.

Several countries of TELKOM international business target market, such as: • Singapore • Malaysia • Brunei Darussalam • Philippine • Vietnam • PNG • Thailand • Taiwan • Cambodia • Laos • Myanmar • Australia • Middle East area


Industry and companies that relates with telecommunication business.


2.2.4 Competency Analysis (Porter’s Five Forces)

Figure 2.6 Porter's Five Forces Model of TELKOM MCC (TELKOM MCC Business Plan 3rd revision, 2010) According to the Figure 2.7, TELKOM MCC competencies analysis is not good enough since it has a high threat of new entrant, medium score for bargaining power for supplier and threat for substitute, also a high score for bargaining power of buyer and a high competitive rivalry among players. This analysis illustrate that TELKOM MCC will face several obstacle if TELKOM MCC has no good action or often called as strategies to anticipate the problem that might occur. Depth explanation will b described as follow: •

Threat of New Entrant Threat of New Entrant is categorized as high based on these several symptoms. In 2006, INKINDO, a consultation firm association in Indonesia, listed about 6,000 consultation firm and this number is increased up to 7,385 firms in 2009. This big numbers of consultation firms is not followed by the market availability. Indonesian market awareness to have consultation service is limited by big companies only (market growth is stagnant). This condition becomes worse because most of the market often hire the foreign consultation firm. 21

However, TELKOM MCC could be surviving since the necessity of consultation service is increased after monetary crisis. During this period, many companies collapse and even more of them are suffered lot of loss. Consultation service holds a big role during this period, especially in helping companies to maintain its company becomes better as before. However, the availability of local consultant in Indonesia is not sufficient. This low resource of local consultant appeared since the consulting service industry in Indonesia is not fully regulated. There is only one formal regulation that the government already issued, but it is not specifically related to the consultation firm matter, yet only covered the accessible process of product and services. The ambiguity of regulation matter is highly influence business people in running its business. •

Threat of Substitute Having consultation service seemed not become the primary needs for many companies. This condition makes consulting firm sometimes cannot provide many specific products for many markets because the target market itself is only big companies where have the same problems. Thus, many consulting firm actually offer the same product for the same target market. It means that the substitute product owned by TELKOM MCC also own by the other firms. Product and service differentiation of TELKOM MCC is more pointed to the client’s needs and wants. As the broaden utilization of technology and IT facilities emerge, TELKOM MCC accommodate its research and analysis management process through on-line or web-based consulting which is rarely used by other competitor. However, this is program is not good enough to make the score of Threat of Substitute become low. Score for Threat of Substitute is positioned in the range of medium.

Bargaining Power of Buyer There several factors that influence the Bargaining Power of Buyer as follow: – Consultation fee. This factor has the significant influence among others. Consultation fee today become much more competitive following the growth of new entrants. Consultation fee also depend on how well the consultant’s skill, experience, and reputation to be marketed. – Relationship between buyer and consultation service provider. Create good relationship with buyer might become the seller’s benefit. Through


this action, seller probably got its loyal buyer that makes the seller’s business sustained. Moreover, many customers tend to select provider that already known. Therefore, intimacy between seller and customer should be maintained well. – Switching cost. Open competition in the market offers the customers some alternatives to choose the best provider they need. This situation makes some companies has low switching cost unless they have specific and rare product and services to be offered. Based on explanation above, TELKOM MCC is categorized as high bargaining power of buyer. •

Bargaining Power of Supplier TELKOM MCC Bargaining Power of Supplier is positioned as medium since: – Having many expert consultants from internal PT Telkom Tbk with various skill and experience – TELKOM MCC do strategic partnership to create transfer of know-how (knowledge, experience, and system) – There is dependency on the TELKOM MCC business partner since many variances of demands and gap competencies exists.


2.3 Theoretical Foundation 2.3.1 Conceptual Framework Conceptual framework illustrates the frame of thinking about the linkage between theories and actual condition. The objective of this framework is to keep the writer on the right research flow from the beginning until the research is answered. This following figure will explain the conceptual framework of this research.

Figure 2.7 Conceptual Framework As stated in the previous chapter, TELKOM MCC has difficulty in maintaining its market performance. Figure 2.8 shows that by keeping corporate entrepreneurship alive within the company, TELKOM MCC performance (market) will be increased. According to Kuratko et al. (1990) the need to pursue corporate entrepreneurship has arisen from a variety of pressing problems including: (1) required changes, innovations, and improvements in the marketplace to avoid stagnation and decline (Miller and Friesen, 1982); (2) perceived weakness in the traditional methods of corporate management; and (3) the turnover of innovative-minded employees who are disenchanted with bureaucratic organizations (Ferreira, 2002). This statement proves that corporate entrepreneurship could be used as an approach to answer the difficulty in maintaining market performance occurred in TELKOM MCC; according to Figure 2.8 it 24

shown from the blue arrow where come from Corporate Entrepreneurship side to the side of TELKOM MCC Performance. In his book entitle Lead Like an Entrepreneur Keeping The Entrepreneurial Spirit Alive within Corporation, Thornberry (2006) stated that to make company as entrepreneurial as possible, we ought to recognize where the company’s strengths and weaknesses in terms of entrepreneurial orientation at first. Based on this statement, the assessment to understand the entrepreneurial orientation in TELKOM MCC is conducted using Entrepreneurial Orientation Survey (EOS). From the assessment, company will know the condition of entrepreneurial orientation exists. Thus, it will be seen which dimensions already maintained well or others which need improvement. Moreover, entrepreneurial orientation also ought to be implemented within each people force and organization itself. People as the day-to-day performer are the main resources that will determine the company performance. Thus, organization with entrepreneurial orientation also should be created to provide proper working environment, so that people feel comfortable and motivated in doing their responsibilities. Keeping entrepreneurial orientation within people and organization is a way to create corporate entrepreneur. From many resources, we know that corporate entrepreneur is actually built good environment for company to process the idea creation and pursuit of opportunities. Through idea creation and pursuit opportunities, company will ease in doing innovation as an approach to win the tight competition today. For better condition, TELKOM MCC should find ways to make all dimensions of entrepreneurial orientation having good score. As high as the entrepreneurial orientation illustrate that the company is easier in becoming corporate entrepreneur. By doing so, company should consider maintaining each dimension of entrepreneurial orientation well and then tries to implement this entrepreneurial orientation through people and organization as one unity to support the company becoming corporate entrepreneur.


2.3.2 Corporate Entrepreneurship Sharma and Chrisman (1999) in “Corporate Entrepreneurship: How?”, defines corporate entrepreneurship as the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization (Ramachandran, Devarajan, & Ray). To simplify, the writer define corporate entrepreneurship is entering the entrepreneurial mindset within a company or in other world by implementing corporate entrepreneurship. Corporate entrepreneurship represents a framework for facilitating ongoing change and innovation in established organization (Morris, Kuratko, & Covin, 2008). Through corporate entrepreneurship, a company will run in entrepreneurial way, employees becoming entrepreneurs, and the rigid company paradigm will be shifted and replaced by the flexible, creative, speed, agile, and innovative character. Implementing entrepreneurship within corporation seemed somehow contradictory. We often associate corporate with words like large, organized, bureaucratic, formal, stiff, and hierarchical. Entrepreneurial, in contrast, conjures up associates like creative, inventive, small, quick, driven, winning (Thornberry, 2006). Even though those two words look like opposed, making corporate become more entrepreneurial was the perceived solution that requested by business people for many corporate problems. According to Kuratko et al. (1990) the need to pursue corporate entrepreneurship has arisen from a variety of pressing problems including: (1) required changes, innovations, and improvements in the marketplace to avoid stagnation and decline (Miller and Friesen, 1982); (2) perceived weakness in the traditional methods of corporate management; and (3) the turnover of innovative-minded employees who are disenchanted with bureaucratic organizations (Ferreira, 2002). The critical thinking to enter the entrepreneurial thinking inside the company has actually begun over the past 20 years ago when Peter F. Drucker launched the book entitled “Innovation and Entrepreneurship”. In his book, Drucker states: Entrepreneurship is based upon the same principles, whether the entrepreneur is an existing large institution or individual starting his or her new venture single-handed. It makes little or no difference whether the entrepreneur is a business or a non-business public-service organization, not even whether the entrepreneur is a governmental or non-governmental institution. The rules are pretty much the same, the things that work and those that don’t are pretty much the same, and so are the kinds of innovation and where to look for them. In every case, there is a discipline we might call Entrepreneurial Management. (1985)


2.3.3 Entrepreneurial Mindset Entrepreneurial mindset is one of belief in change and innovation while recognizing and developing the capabilities to achieve such changes (Morris, Kuratko, &Covin, 2008). In a book entitled The Entrepreneurial Mindset (2000), Rita Gunther McGrath and Ian MacMillan stated that there are five characteristics of Entrepreneurial Mindset: 1. they passionately seek opportunity 2. they pursue opportunities with enormous discipline 3. they pursue only the very best opportunities and avoid exhausting themselves and their organizations by chasing after every option 4. they focus on execution, specifically adaptive execution 5. they engage the energies of everyone in their domain

2.3.4 Entrepreneurial Orientation In a journal titled Exploring Entrepreneurial Orientation (EO) in 3 Dimensions: A New Prospective for Analyzing The Value of A Company, Professor Dr Dirk Deschoolmeester and Zhan Jun state that: “ ’The term entrepreneurial orientation is used to refer to the set of personal psychological traits, values, attributes, and attitudes strongly associated with a motivation to engage in entrepreneurial activities’ (McClelland, 1962; Dunkelberg & Cooper, 1982; Hornaday & Aboud, 1971; Timmons, 1978)” (n.d.: 3). Every company wants to be as entrepreneurial as well. However, the most important is not make our company as entrepreneur as possible. Thus, understanding where your company is strong and where it is week in its entrepreneurial orientation is a good way to start (Thornberry, 2006: 223). In chapter 12 of Lead Like an Entrepreneur, Neal Thornberry state that there are seven factors that ought to be have by company in accordance to the entrepreneurial orientation, there are Fast, Flexible, Focused, Friendly, Frugal, Far-reaching, and Futuristic (2006: 223). Those 7s represent the ideal characteristic that can be measured using Entrepreneurial Orientation Survey to assess how entrepreneurial your company is, what your company’s strengths and weaknesses are. These 7s formed the basis for the Entrepreneurial Orientation Survey (Thornberry, 2006: 223).


The 7s is defined to “… describe the opportunity-focused organization – one that is ready and able to pounce on new business opportunities. Friendliness, future orientation, and global reach (far-reaching) allow enterprises to identify opportunities; speed (fast) and flexibility allow them to aggressively pursue these opportunities. Frugality ensures that resources are available to help capture the opportunity. And finally, focus keeps a company from going off the deep end and becoming so entrepreneurial and ranging so far a field that is goes out of business” (Thornberry, 2006: 234).

2.3.5 Entrepreneurial Orientation Survey Entrepreneurial Orientation Survey or EOS is used “… to help companies better prepare their strategies for creating and sustaining entrepreneurial spirit” (Thornberry, 2006: 222). In EOS, the dimensions that will be measured are: 1. General, it illustrate the opinion of employee about their company. 2. Strategic Planning, it illustrates the readiness of company to see the changes and how company makes decision about their strategy in the future. 3. Cross Functionality, it illustrates the relationship between employees in the department. 4. Support for New Ideas, it illustrates the respond of company to the ideas from the employees. 5. Market Intelligence, it illustrates the ability of company to see the market and to make some prediction, so they can make strategic planning based on their prediction. 6. Risk Aversion, it illustrates the brave of employees in company to take a risk. 7. Speed dimension illustrates how fast company responds the problems, in the organization or in a working process. It will help company to find solution and solve the problem as soon as possible, so the employees will work effectively and efficiently. 8. Flexibility, this dimension illustrates how flexible the company in responding the problems and find the solution for it.


9. Focus, it illustrates the strength of commitment of company about the vision and mission, and also their target. 10. Future illustrates the readiness of company to run the business at the next time. 11. Personal Orientation, illustrates the personality of employees related with the entrepreneurial behavior in the company. EOS not offers the ways of make the company become more entrepreneurial; hence, EOS only provides a measurement of entrepreneurial orientation through some dimensions. EOS will illustrate where the strengths and weaknesses are of the measured dimensions, so company can focus and prioritize on the dimension that has high score and improve the dimension with lower score.

2.3.6 Corporate Entrepreneurship, Innovation, and Opportunity As an answer to deal with unpredictable change and highly threatened business turbulence, company in modern era ought to prepare themselves with a strategy to compete and sustain their market performance. Every company is obviously wanted to be the best in its business, thus, they have to create the proper environment that support for innovation. Through innovation, company can differentiate themselves among competitor that will increase the chance to get potential customer that guide to increase their market share. In addition, participation from all people inside the company will ease the process of idea creation. This process, if maintained well, will gain the motive for employee to think and act as creative as possible to do innovation. This framework is actually the characteristic of entrepreneurship. Seeking and capitalizing on opportunity, taking risks beyond what is secure, and having the tenacity to push an innovative idea through to reality represent the essence of what entrepreneurs do. (Morris, Kuratko, & Covin, 2008). Entrepreneurship can be manifested in organization of all sizes and types. Entering the entrepreneurship way or often called as entrepreneurial mindset within company named corporate entrepreneurship. Without opportunity, idea creation and innovation is worthless. In fact, opportunity should be pursue by the company and it hard to maintain since seeking for opportunity is limited by time and speed. However, if innovation runs together with opportunity, it will become the marvelous thing to be used as strategy to beat the competitors. 29

Opportunity can be defined as a favorable set of circumstances creating a need or an opening for a new business concept or approach. In a book entitled Corporate Entrepreneurship & Innovation, Morris, Kuratko and Covin stated how entrepreneurship is actually work (2000: 30). Generally, entrepreneurship is recognized through the process involved. The process itself can occur in many different settings, including the larger and established company. This process actually consists of six stages, where at the earlier stages, innovation and opportunity holds a big role to control the process. The first step in entrepreneurship process is identifying the opportunity, including the source of opportunity, size of opportunity and the sustainability of opportunity. Opportunities also represent the word of potential. After opportunity is clearly identified, the process then will lead to define the business concept, where a business concept is defined as an innovative approach for capitalizing on an opportunity (Morris, Kuratko, & Covin, 2008).