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Telefonica

Telefonica was originally a state-owned phone company in Spain but privatized in 1998 when the EU abolished state telecom monopolies. Seeing increased competition, Telefonica targeted Latin America for expansion due to shared language and history. This allowed it to succeed where competitors faced higher costs adapting to local languages. Today Telefonica has a presence in over 30 countries and 346 million customers due to transforming in response to EU directives and pursuing opportunities in Latin America.

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Vicky Calta
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415 views13 pages

Telefonica

Telefonica was originally a state-owned phone company in Spain but privatized in 1998 when the EU abolished state telecom monopolies. Seeing increased competition, Telefonica targeted Latin America for expansion due to shared language and history. This allowed it to succeed where competitors faced higher costs adapting to local languages. Today Telefonica has a presence in over 30 countries and 346 million customers due to transforming in response to EU directives and pursuing opportunities in Latin America.

Uploaded by

Vicky Calta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The new Conquistador

Telefonica de Espana was a


state-owned phone company in
Spain for most of its existence.
With the EU's abolishment of
state-sponsored telephone
monopolies in 1998, Telefonica
privatized, modernized, and re-
analyzed its strategy.
Telefonica's management
decided to target Latin America
for expansion, feeling its
linguistic and historical ties
gave it a competitive
advantage.
EUROPEAN UNION
In 1998 the EU stated sponsored telephone
monopolies would be abolished

Any European telecommunications firm


would then be able to provide service
anywhere within the EU

Telefonica`s Managers realized they had to


transform the company faced with:
.Increased competition.
.Lower prices
.Smaller profit margins
EVOLUTION

1924 1987 1990 1998 2018


. Founded in Madrid. . List on New York . Entries Latin . Positions as the . Presence in more
. Only telephone Stock Exchange America through largest than 30 Countries
operator in Spain . Obsolete equipped Chile and Argentina telecommunications . 346 million
. Spain joins the company in Latin customers
European Union America
High costs of current obsolete Products do not need to be
Technology adapted to the host language

HOME REPLICATION STRATEGY

Linguistic and Cultural Standarized service as result


Similarities of Privatization
BENEFITS FOR LATAM
OPPORTUNITIES INNOVATION ECONOMY
Managers and CEO’s of Development for a Telefonica has
Telefonica in Europe continent that was contributed to
are Argentinians and completely dominated economy not only by
Brazilians by obsolete state- the investment itself,
owned companies but also improving
telecommunications

https://www.youtube.com/watch?v=n7dCYQ32pbw
BENEFITS FOR LATAM
How important was the EU’s directive eliminating national telecommunications
monopolies by 1998 in shaping Telefónica’s strategy? What would the company
look like today if Spain were not a member of the European Union?

. Telefonica was pushed out of its comfort zone


. Business strategies became more aggressive to retain market share
. Innovation became more relevant in order to survive
. Without the EU’s directive Telefonica could have been taken over by its
competitors
Why did Telefónica initially choose to enter the Czech market,
rather than the larger French or German markets?
. Czech Republic is the best Eastern European nation to do business in due to its
strategic geography
. Czech opened doors for opportunities to markets across Europe
. Eastern European markets are easily accessed while bypassing political
difficulties, economic troubles and unnecessary expenses
. They maintained their Monopoly structure by acquiring majority of Cesky
Telecom
How important were cultural ties in determining Telefónica’s
success in Latin America?

. Both its linguistic and cultural ties to South America gave them a competitive
advantage over their European rivals
. Latin America is a bonus being a back door to North America
Considering Telefónica’s large and persistent share of the Spanish
telecommunications market, how successful has the EU’s directive been in
promoting competition within the European telecommunication industry?
. There is better price to quality ratio for consumers
. Lowered barriers to entry
. Majority was still owned by Telefonica and its subsidiary
. It created competition within the EU territory
Minority investors in Telefonica’s subsidiaries are unhappy with the parent
corporation. Suppose you are senior manager at the parent corporation. How
would you handle the problem of minority investors? What would you
recommend the CEO should be done with minority investors?
. Collect feedbacks and address majority
. Revisit the management fee scheme and come up with a better one
. Emphasize the importance of treating the shareholders well because of the
threat to switch to competitors
CONCLUSION
EU's decision to eliminate telecom monopolies, pushed Telefonica
to get out of its comfort zone. Telefonica could have been taken
over by rivals Lowest
in the international sectors
airfare costs in because of lack of
improvement and would have totally lost their market share.
Canada
Instead of that Telefonica’s
Strong brand presence
imagetoday
in is in more than 30
countries, withCanada
full operations in 14 countries and extended
presence in a further 19 countries.labour
Non-unionized They serve
forcemore than 346
million customers and partnerships across Europe, Africa, Asia and
the Americas.

Telefonica is today one of the world's largest


fully integrated telecommunication providers.

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