Case Study

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1. Go back in time to 1986. Do a SWOT analysis for Telefonica de Espana. Does your analysis lead to the same conclusions as Telefonica's managers?
The textbook explains SWOT as an acronym for “Strengths, Weaknesses, Opportunities, and Threats”.
Strengths; Telefonica is a monopoly at this time because it is state owned and this is a major strength for them. The fact that Spain’s culture and language is similar to the market in South America is a major advantage as well.

Weaknesses; According to the textbook the prices associated with Telefonica’s service was high. Competitors were looking to exploit this by offering cheaper service with better technology. Companies who could lower their profit margin are a major concern for Telefonica.

Opportunities; The deregulation of telecommunications in South America (with the cultural similarities as I mentioned before) seemed to be the perfect opportunity to enter this market and be successful.

Threats; Due to the many complaints from their customers Telefonica faces many threats from competitors in this “new market”. There is a chance that they may not survive in this market if they do not provide better service and technology.

2. How would you characterize the corporate strategy adopted by Telefonica?

3. Minority investors in Telefonica's South American subsidiaries are unhappy with the parent corporation. Suppose you are a senior manager at the parent corporation. How would you handle the problem with the minority investors? What would you recommend to the CEO should be done about the minority investors? 4. The Latin American telecommunications market is growing much faster (12.6 percent in 2007) than that of Spain or Europe, both of which grew at a 4.9 percent rate in 2007. Should Telefonica have continued to focus on the Latin American market, rather than acquire O2 and Cseky? What about its purchase of a minority position in China Netcom?
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