The Effect of Corporate Strategy to Company Performance

--PT. Telekomunikasi Indonesia, Tbk (Telkom) is a state-owned enterprise that serves telecommunication services and network across Indonesia. Telecommunication business is a “legacy” platform of this company; whereas another portfolio business that called “new wave” has, motivate the company to keep making innovation related to digital based product. This confirms Telkom's commitment to increase revenue amid competitive business environment. In 2015, Telkom’s management has targeted a growth of 8%, which is slightly above the market growth. It has “first thing first strategy” to make a sustainable competitive growth in all business units in Telkom. Based on above description, it is thought that it would be beneficial to analyze how the company’s cooperates strategy affects the performance of Telkom’s business unit. Unit analysis used in this research is 30 business units of Telkom that spread across Indonesia. From the hypothesis test using Partial Least Square (PLS) approach, it was revealed that corporate strategy has a significant effect to improve company performance. The most dominant aspect that reflects corporate strategy is portfolio strategy followed by directional strategy and parenting strategy. As for the company performance variable, profitability dimension is the most reflecting the company performance, followed by sales and market share dimension. Keywords---Corporate Strategy, Company Performance _________________________________________________________________________________________________

Below is a table of previous research about the relationship between corporate strategy and company's performance. Some of the research above has shown that there is relation or interconnection between corporate strategy and company's performance.

Objective
To reveal the effect of corporate strategy to business unit's performance in PT. Telkom Indonesia

The Methods Used
The nature of this research is descriptive and verifiable. Verificative means the writer want to examine the truth of a hypothesis, which gained through data collection. Where in this research, writer will examine whether a corporate strategy could affect to the company's performance of business units in PT. Telkom Indonesia. Research method used is descriptive survey and explanatory survey.
Analysis unit here is PT. Telkom Indonesia that has a plans and corporate strategy. Examination units for this research are PT. Telkom's business units across Indonesia. Meanwhile the time horizon used here is a cross sectional, where the research conduct in a one time period on 2014.

Hypothesis Test
Refer to the research's objective and also sample limitation, writer using PLS (Partial least Square) analysis to show that corporate strategy can increase company's performance in PT. Telkom Indonesia's business units.

DISCUSSION
In this part we will discuss the result of this research in verifiable way through hypothesis test using Partial Least Square (PLS). Before the discussion begin, hypothesis will be analyzed with model comparison test result. In PLS, model prediction evaluation is done using two analyses, which are inner model and outer model.

Structure Model Evaluation (Inner Model)
Structure Model can be evaluated by seeing the R 2 value on endogen variable and path coefficient parameter.  The test show that the effect of corporate strategy to company performance is significant with t-statistic s higher than 2,07 (t table at =0,05); it has affect 16,2% and the other factors effect rate is 83,8% From the measurement result show that the portfolio strategy dimension (X2) is the higher contributor dimension to reflect corporate strategy in PT. Telkom Indonesia, followed by directional strategy dimension (X1), and parenting strategy (X3). While for the company's performance variable; company's profitability dimension (Y2) is the most reflecting company performance, followed by sales 9Y1) and market share (Y3). The result described above revealed that corporate strategy has significant effect to increase business units' performance of PT. Telkom Indonesia. Portfolio strategy that includes the development of competitive strategy implemented by PT. Telkom Indonesia to its business units; and the implementation of business unit development strategy has given higher contribution in reflecting that corporate strategy could support company performance in business units of PT Telkom Indonesia.
Considering the research result, PT. Telkom Indonesia needs to improve portfolio strategy. To make it happens, they will need an operational strategy that involves the improvement of capability to create competitive strategy at its business units; and capability to improve the strategy implementation of its business units. The development of portfolio strategy could that improved company performance is need to be supported through the directional strategy implementation, through the implementation of growth strategy, alliance strategy, stability strategy; effectiveness strategy and efficiency strategy. In other side, to optimum the performance they also must to improve the implementation of value creation strategy; relationship strategy; strategic planning; financial control; and strategic control

CONCLUSION AND RECOMMENDATION
Corporate strategy has a significant effect to increase company performance at business units of PT. Telkom Indonesia. The most dominant aspect in reflecting the corporate strategy is portfolio strategy, followed by directional strategy and parenting strategy. Meanwhile, for company performance variable, company's profitability dimension is the most reflecting company performance followed by sales dimension and market share.

a. Practical Recommendation
Based on the result, recommended that corporate strategy could be used as a basic to improve company performance at business unit of PT. Telkom Indonesia in a sustainable way. Thus, the management of PT. Telkom must consider important aspects below: a. The improvement of competitive strategy development at its business units b. The improvement of development strategy at its business units c. The improvement of growth strategy implementation d. The improvement of alliance strategy implementation e. The improvement of stability strategy implementation f. The improvement of effectiveness strategy implementation g. The improvement of efficiency strategy implementation h. The improvement of value creation strategy implementation i. The improvement of relationship strategy implementation j. The improvement of strategic planning implementation k. The improvement of financial control implementation l. The improvement of strategic control implementation