Telefonica: SWOT Analysis

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Table of Contents

SWOT
Minority Investors
Latin American Market
Work Cited

SWOT

Strengths	Weaknesses
Strong position in Spain Strong domestic demand Equipment and technology investments. Technology, capital, and managerial talent competitive advantage over local entrepreneurs of South America. Linguistic and cultural ties with South America (Griffin and Pustay 327).	Poor Services in Local Market Lack of competitive advantage over European rivals.
Opportunities	Threats
The end of state telephone monopolies Underserved local market The privatization of state-owned telephone monopolies in South America.	Entry of European rivals Low prices and smaller profit margins in Europe.

Looking at the results of SWOT analysis, it can be stated that the strategy chosen by the managers of Telefonica was the most suitable at the time. The later can be seen in terms of the way the company leveraged its strengths to utilize opportunities, overcome weaknesses, and avoid threats. In that regard, the company had two options, one of which was associated with threats and weakness, i.e. the position in the European market, while the other was associated with strengths and opportunities, i.e. the privatization of state-owned telephone monopolies. Thus, it can be stated that the conclusion that be seen from the SWOT analysis is the same reached by the managers of Telefonica. Such conclusion accordingly, should be taken in the order of their occurrence, where the privatization in South America was yet to come; they first built their strengths through investments, and increasing customer base. Then, when the time cam came for internationalization, they utilized their opportunity.

Minority Investors

The issue with minority holders can be seen twofold. On the one hand, the profits of the minority investors are affected by the management fees imposed. On the other hand, such practice, governed by the overall aggressive strategy, is the one that provided the company its profitability and rapid growth. Accordingly, the CEO o the company might have several options to address the issue, which might taken as a complex approach for addressing the way the company transfers its product lines. In that regard, the complaint of the minority investors should be taken more seriously in terms of the stagnation of the value of shares in South American subsidiaries. Thus, the company might consider addressing the concerns of investors, through reconsidering the way it differentiates its various subsidiaries and their pricing strategy.

Latin American Market

It can be seen that the environment has changed since the time it contributed to the decision to enter the South American market. In that regard, having built a strong base in South America, the company no longer has the same weaknesses it had previously. At the same time, developing customer loyalty in South America the company created barriers for entries there, and thus, it cannot be stated that it will leave the market there unprotected. Expanding in Europe and China, which market can be seen as one of the fastest growing, can be seen as strategic decision, which will enable the company to continue its expansion globally beyond Spain and South America. Thus, it can be stated that the decision of the company to target European and Chinese market appropriate, according to the current position of the company and the changes in the external environment.

Work Cited

Griffin, Ricky W., and Michael W. Pustay. International Business. 6th ed. Upper Saddle River, NJ: Prentice Hall, 2010. Print.

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Telefonica: SWOT Analysis

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