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Consultancy Case Study Telefonica
1. A Critical Insight Into How
Telefonica OperatesWithin
Its Business Environments
Millie Ridgway, Ryan Isaacson, HarryWalsh and Becki Colson
N0557192, N0556408, N0561320, and N0565928
2. Our Role
Global consultants forTelefonica, primarily providing
insight into its telecommunications markets; and how it
can sustain & grow within their markets.
4. AboutTelefonica
Spain’s telecoms market leader, specialising in private network packages
€2.8 billion gross profit in 2015 (Telefonica, 2015, pp.1)
Control 91% of Spain’s fiber optic network (Hetz &Toyer, 2014, pp.1)
Multi-national company, operating in Spanish / Portuguese speaking countries across Europe and South
America
8. PESTLE Analysis
Spain UK
Political • Speed of mobile networks
• Brexit –Telefonica passionate to continue
innovating and delivering value
(European Commission, 2016)
• Speed of mobile networks
• Brexit – Political Uncertainty within the UK (poor
opposition).
Economical • Specific push for exports
• Spanish economy – predicted to grow by
0.2% in 2016/17 fiscal year (CNBC, 2015)
• Threats to customers buying data
• Low value of £ due to Brexit (reduces value of
O2), increased roaming charges
Social • Influence of the media
• Necessity of WiFi
• Popularity of subscription video for on-
demand services – bought rights.
• Ageing population
• Trends
• High standard of living
• Increased mobile phone usage
• Data over text / calls
Technological • Rapidly advancing
• Broadband speed boasts
• Europe's most productive technological base (UK
Dept. Of Science and Innovation, 2014).
• Emergence of 5G
Comparison between howTelefonica operates within the Spanish & UK Market
9. Latin America, Spain &The UK
Necessity for constant connectivity
Growing digital demographic
Reduction in conventional digital platforms used
Increased popularity of ‘Quad Play Package’
Similarities ofTelefonica’s Markets
Quad Play:The
Provision of Fixed
Phone Line, Mobile
Phones,TV &
Broadband in one
package.
10. Telefonica’s– Industry Analysis
Supplier
Power
• Medium –Telefonica’s large market share equates to increased power.
Buyer Power
• Low – Cost and inconvenience of change for consumers
Threat of
Substitutes
• Low – No close / viable alternatives to mobile service provision.
Threat of New
Entrants
• Low –Telefonica maintains large market share, strong brand equity
Competitive
Rivalry
• High – Large competition across all of the market segments it competes within.
12. Telefonica’s Global Strategy –The Decision
to Re Brand
“Internationalisation is a form of
diversification, but into new
geographical markets”
(Johnson et al, pp.13).
“ If organisations put in place a
localisation strategy that identifies the
cultural differences of target markets,
they can boost brand value…”
(Venes, 2016,pp.1)
14. How O2 Can Sustain a Competitive
Advantage
• O2 Priority Moments
• ExclusiveO2 customer only deals
• “By the end of 2012, just 18 months from launch,
Priority Moments had acquired millions of customers,
up 100% in 2012” (Marketing Society, 2016, pp.1)
Brand
Equity
• Deals to Exclusively market phones in UK; first generation
iPhone (Wray, 2007).
Influence
Over
Suppliers
"Brand equity is the difference in the effects realised in the marketplace due to the
investment and the work put into the brand" (Campbell, 2002, pp.211).
15. How O2 Can Sustain a Competitive
Advantage
Blue Ocean Opportunity
Customer Service Quadplay Offering Mobile Phone Only Serivce
O2 SKY BT EE VODAFONE VIRGIN
Perceived
Performance
High
Low
Critical Success Factors
Blue Ocean
“…Global-Local Dilemma…’
(Johnson et al, 2014, pp.270)
“Blue oceans are new market
spaces where competition is
minimized”
(Johnson et al, 2014, pp.59).
16. How Movistar can sustain a competitive
advantage
“The combination of brand name and brand significance has become a core
competitive asset in an ever-growing number of contexts” (Kotler and Gertner
2002, pp.249)
• Significant Market PositionMarket Leader
in Spain
• High demand for broadband and Pay -TVGrowth in
Latin America
• 4G+ offered across Movistar’s Network
Worldwide.
Leading
Technology
• Consistent branding across 14
countries despite cultural differences.Brand Equity
17. HowVIVO can sustain a competitive
advantage
• Market Leader in BrazilDominant
Market Presence
• Contract customer base
and higher data usage.
Increase in
Mobile Business
• Utilises country’s
resources effectively.Localised
18. Telefonica: Sustaining & GrowingTheir
Competitive Advantage Globally
"Your competitive
advantage is the essence
of your strategy”
(Collis & Ruskard 2008,
pp.85)
Building upon it’s strong brand equity.
Strong dominance within their markets
Ability to negotiate with suppliers
Experienced at acquiring competitors
19. Telefonica: Global Challenges
What? How? Why?
Limitations • Poor Customer
Service
• Brexit is seen as a
"dead-end".
• Call centres are
based in South
America.
• No plans to expand
O2 in the UK.
• Customers see
service as a
differentiating factor.
• Not capitalising on
growth opportunity.
Vulnerabilities • Brexit
• Strong presence of
competition, e.g.
Orange /Vodafone
• Could threaten O2
operations in the UK.
• Political uncertainty.
• Falling value of the £.
• Strong threat of
substitutes.
• Economics of scale =
not a competitive
advantage.
• Hard to create long-
term strategy for the
UK = instability.
20. Suggested Global Strategy Adjustments
Innovation
through new
technologies
Use / Sell
consumer
data
Exploit B2B
opportunities
Tailor
customer
services
A good strategy is about “… creating the conditions of innovative adaptation
and entrepreneurial insight at market level” (Chia & Holt 2009, pp.56)
22. Impacts on: Culture
New strategic
suggestions are inline
with company culture,
employees underlying
expectations from the
business.
“Culture does not trump
strategy, rather they
work together, to
enhance the success of
one another” (Wyatt,
2014, pp.1).
23. Impacts on :Value Chain
Changes to HR Function
– adjusting the way
’salesmen’ interact with
‘customers’
Initial strain in R&D
department as large
emphasis on innovation.
Greater link between
marketing / customer
needs and R&D.
Customers still at the
forefront of their
strategy, re located
customer services
teams with increased
product knowledge
Source:
Porter (1985: p11-15)
25. Impacts onTheir Stakeholders:
Enlighted Self
InterestApproach
• “…Recognition of the potential long term
financial benefit to the shareholder of well-
managed relationships with other
stakeholders” (Johnson et al, 2014, pp.128)
Lassiez-Fair
Approach
• “…Companies do the minimum required, it is
up to the government to protect the people
through legislation…” (Johnson et al, 2014,
pp.128).
“…The decisions about the asset pool should focus solely on
the common interests of their owners…”
(Waldkirch, 2008, pp.5)
26. Recommendations ForTelefonica
Continue to focus business around innovation, grounded
within the company’s strategy
Take advantage of ‘Big Data’ available, giving more
attention to B2B opportunities.
Continue to base business strategy around ‘delivering
for customers’, tailoring services offered, to their needs.
27. References
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Chia, R.C.H. & Holt, R. (2009) Strategy Without Design – The Silent Efficacy of Indirect Action. Cambridge University Press. P56
CNBC (2015) 'Telecoms in Spain and the UK' [Online news video]. Available at: www.video.cnbc.com/gallery/?video=300046410
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28. References
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Porter, M. (1985) Competitive Advantage. New York: The Free Press. P11-15
Porter, M. (1980) Competitive Strategy. New York: The Free Press.
Schein, E.H. (2007) Organizational culture and leadership. Jossey-Bass publishers.
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29. References
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