Telefonica: Business Analysis Report with Strategic Tools

This report offers a comprehensive analysis of Telefonica, a Brazilian telecommunication company, utilizing various strategic assessment tools. It begins with an abstract highlighting the importance of PESTLE, SWOT, Balanced Scorecard, and the 7-S model in company analysis. The introduction provides background information on Telefonica and its services. The core of the report focuses on applying the 7-S framework to analyze Telefonica's organizational structure, discussing how the company can transition from a flat to a hierarchical structure by adjusting its strategy, structure, systems, staff, style, skills, and shared values. It also explores the use of the Balance Scorecard to evaluate performance from financial, customer, internal business processes, and learning and growth perspectives. Furthermore, the report incorporates SWOT and PESTLE analyses to examine the company's internal strengths and weaknesses, and external opportunities and threats. The report concludes by emphasizing the significance of these tools in aiding Telefonica's strategic decision-making and business development.

ESSAY

Table of Contents
Abstract: ..........................................................................................................................................1
INTRODUCTION...........................................................................................................................2
Analysis using 7-S Framework....................................................................................................2
Balance score card.......................................................................................................................5
SWOT analysis..........................................................................................................................10
PESTLE ANALYSIS................................................................................................................12
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17

Abstract:
This present study has covered and shown increasing importance of using different
assessment tools for company analysis. It has shown importance of PESTLE analysis tool,
SWOT analysis tool, Balance score card and 7 S model. It has made an effective use of PESTLE
analysis tool which help this company to analyse all external factors like economic factors like
changes in inflation and tax rates, political that shows impacts of political stability and instability
of a particular country, social factors shows changes in society trends and buying behaviours of
customers. The main purpose of using this tool is to decrease all negative impacts of all these
factors and increase brand awareness among people for increasing sales.
It shows and uses SWOT analysis tool that helps the company to identify its strengths,
weaknesses, opportunities and threats. By identifying all these internal factors,
telecommunication industry develops and focuses business strategies for decreasing threats and
weaknesses and increasing internal capacity. This report also shows an effective use of balance
score card tool with the main aim to keep track of execution of all organizational activities by
staff and monitor consequences arise from their actions. The main aim of telecommunication
industry is to make changes in its organisational structure and make use of hierarchical structure
for managing all works of the company with efficiently. 7 S model includes company's strategy,
staff, structure that is being used to access & monitor changes in the internal situation of the
company.
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INTRODUCTION
Organisational behaviour refers an important tool that help organisations to analyse group
as well as individuals performance and activities (Wilson, 2017). This Organizational Behaviour
also helps an organisation to study and identify complex and changing nature of human beings in
organisation.
Telefonica is a Brazilian telecommunication group and known as subsidiary of Spanish
Telefonica. This company was founded in the year of 1998. Headquarter of this
telecommunication company is in Sao Paulo, Brazil. In the year of 2010, it acquired some shares
of Vivo that belonged to Portugal Telecom (Bourque and et.al., 2018). In the context of products
and services it offers cable and satellite television, internet access, fixed line etc. It employed
around 35,000 people of several countries.
This present study is going to show importance of using different analysis tool for
Telefonica company. SWOT and PESTLE analysis plays an important role for analysing all
internal and external factors of the company. With the help of this analysis, this company focuses
on increasing its skills and decreasing it's all weaknesses for accomplishing its goals and
objectives. It will also show importance of performance measurement tools such as 7 S model
and balance score card. By using these tools, Telefonica makes itself able to increase and
develop capacity and effectiveness of its internal functions. Lastly it will discuss about
increasing importance of using hierarchical organizational structure for this company. It will
make an effective change in structure from flat to hierarchical because with the help of
hierarchical structure, it maintains managerial entity with efficiently.
Analysis using 7-S Framework
McKinsey Framework refers to the management model which was propound by Robert
H. Waterman Jr. and Tom Peters who were the former employees of McKinsey Company. This
model is being used by the companies for the purpose of analysing the organizational structure.
This model helps companies to understand their structure according to the internal situation of
the business and accordingly do changes in the organizational structure (McKinsey 7S
Framework, 2019). It is done in order to improve the performance and efficiency of the
organization. For the improvement, there are seven (7) “S” elements which is the part of the
model.
In the context of the Telefonica Company, This model will help company to change their
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organizational structure from flat to hierarchical structure. Thus, for the change in organizational
structure, Company will also change in their 7S elements. These 7S are as follows -
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(Illustration 1: Seven Elements of McKinsey Model
Source: McKinsey 7S Framework, 2019)

1S – Strategy – Strategy refers to the action plan which is prepared by the top management team
of the organization for the purpose of achieving organizational goals and objectives. There are
various types of strategies which is being used by the companies in order to gain competitive
advantages (Perveen and Habib, 2017).
In the context of Telefonica, for the transformation of organizational structure, company
is required to change in its strategies such as employee management strategy, marketing strategy,
distribution strategy, organizational and employment policies.
2S – Structure – Structure means arrangement of organizational aspects such as task allocation,
supervision and co-ordination in order to achieve the organizational objectives. It is considered
to be the base for organizational performance. For the structure change, companies are required
to change in their elements of organization structure (Ravanfar, 2015).
For the change in organizational structure of Telefonica, Company is required to increase
in their management layers, wider their chain of command & span of control, make departments
according to the business activities, focus on the specialization and make roles & responsibilities
more formalize.
3S – System – System is related to the set up of various organizational aspects in order to fit into
the organizational structure. System basically builds with various sub-systems (Szeto, 2017).
In order to ease in conversion of organizational structure from flat to hierarchical,
Telefonica has to do change in their sub-systems so that organizational system can be change.
For that firm has to divide their whole organization(which is considered to be a system) into
various divisions (which are considered to be as sub-systems). This will also lead to change in
communication system, reporting system and working system of the organization.
4S – Staff – Staff can be define as the people who are working for the company in order to
achieve the organizational objectives. It includes CEO, executives of all the levels and
employees of the organization. In this model, staff involves employees, their job roles and
competences (Bismark and et.al., 2018).
For the implementation of Hierarchical organizational structure in the context of
Telefonica, there will be change in the staffs of the company. There will be change in human
resource strategies such as recruitment & selection, training & development, performance
management & reward system etc. Along with that, Organization is required to specialized
employees which can be only hired by the specific job description and person specification
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which will be change accordingly to the requirements of the firm.
5S – Style – Style is the manner and approach which is being used by the managers and leaders
of the company to provide a particular direction and guidance to their employees. Organizational
style involves management and leadership style (Channon and Caldart, 2015).
Change in organizational structure will lead to change in employees' behaviour and
working pattern. Thus, Managers and leaders of Telefonica need to change their management
and leadership style so that they can motivate their employees to face work load, to do new roles
& responsibilities and to retain them in the organization.
6S – Skills – Meaning of skills is the abilities, capacities and knowledge to do something. There
are various skills, an employee must possess in order to achieve their own targets and
organizational goals (McKinsey 7S Framework, 2019).
Change in organizational structure means change in organizational activities due to
change in working environment and working policies. This will lead to change in working style
of employees of the Telefonica. Change in working style will demand for new skills. Thus,
company is required to provide training and development programs to their staffs for the gaining
of new skills in order to do activities easily.
7S – Shared Values – Share values is all about the core values of the organization. Core values
are the fundamental principles and beliefs of the organization which help to define the basic
behaviours of employees and organization. Overall it helps company as well as employees to get
to know about what is right and what is wrong (Perveen and Habib, 2017).
Due to change in organizational structure, roles and responsibilities of the employees of
Company has increased as well as changed. This lead to change in the behaviours of employees
as well as Telefonica. Thus, in order to manage and guide the change in behaviour required to
change in shared values.
Balance score card
It is strategic performance management tool. This is the tool which is used by the management
for the purpose of measuring the performance and analysing the different activities in order to
managing the implementation of a strategy or operational activities (Fauziyyah, Chumaidiyah
and Wulandari, 2019). Thus, individual used this tool for the purpose of identify the personal
performance. Therefore, it provides the ideas to organization that which types of strategy firm
can used to achieve the organizational goal. Henceforth, organization evaluate their strategy like
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Reporting production activity, manage operations and service delivery activities that helps
Telefonica that they evaluate their strategy in order to pay more attention, based on the
company's vision and mission. The main purpose of evaluation balance score card which is
described below -
 This tool mainly focus on strategic plan in relate to the organization goals.
 It mainly focuses on monitor the operational activities by selecting the small number of
data items.
 It manages the financial and non financial item.
The first stage of balance score card is achieve the vision and mission strategy of Telefonica
that are demonstrated by the four perspective which is financial perspective, the customer
perspective, the internal business processes and learning & growth.
Financial perspective
Financial perspective is essential for all stakeholders of the organization which means high
revenue satisfy the stakeholder it refers to profit margin and financial position of the
organization. Thus, this stage is described that firm need to re-evaluate their strategy in order to
increase profits margin, return on investment as result firm set the targets that they generate 30 %
revenue in a year (Hendry and Fernandes, 2019). Thus, to achieve the targets Telefonica can take
initiatives to provides the wireless or wired internet connection to the customer. Henceforth,
these initiatives directly impact on the sales, when sales is incurs so profits margin, revenue and
return on investment will be achieved.
Customer perspective
Customer perspective is most important because customer is the one who are the success key of
organization. Thus, to satisfy the customer each organization deliver the best product and
services. Generally, customer want quality product with best prices so, Telefonica always make
the best products in order to satisfy the customer. Therefore, Telefonica focus on providing the
cost free wire less access also the best internet service to their customer that helps to provide the
connectivity at a wide range of data transfer rates via various networking technologies.
Therefore, improving the customer services firm target the customer according to the needs and
then measure the number of customer who attracts towards the product. This process is helps to
generate the huge number of customers by satisfy the customer In order to provide the best
product and services.
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Internal business processes
Internal business process is refers to evaluate the internal strategies of organization. It described
that which strategies Telefonica actually added in the internal process to enhance the production
activities. Thus, Telefonica identify that which activity needed to achieve out internal business
process. Thus, Telefonica need to be improve and review their internal process method that helps
to achieve the actual vision and mission of the organization. Hence, Telefonica defining their
internal processes to their employees in order to maximize the profit and minimise the expenses.
Telefonica engage their employees in a valuable way as they provide the best training and
learning opportunity to their employee in order to maintain the internal business process. Thus,
the manager of Telefonica distributing responsibility among the employees so, that they easily
understand their work and give their hundred percent in achieving the organizational mission and
vision.
learning & growth
Learning and growth is the perspective which determiner the employees' behaviour towards the
working environment. Thus, employee ability and skills is indicated that how much they capable
for achieving the organizational goal. Thus, an employees learning ability help to organization in
continuous improvement and growth (Raval, Kant and Shankar, 2019). Therefore, Telefonica
improves the ability among the employee so they can conduct the learning and development
programme in order to enhance the motivation and confidence among the employees. On the
other side, Telefonica also provide the different medical, retirement, housing, health and safety
related benefits to satisfying the employees. Telefonica can provide the rewards and opportunity
to employees for their future expansion. This all facilities and benefits helps to organization that
employee are satisfies with their job and it can help to reduce the employee turnover.
A balance scorecard of Telefonica Company would appear as illustrated in the table below. This
table describes the four perspectives that organization need to focus on the specific area that
helps to achieve the vision and mission of the organization. Therefore, this balance scorecard is
described some specific area Telefonica might focus on this to achieve the specific goal and
objective.
Departments of Telefonica company Areas of focus
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Financial perspective  Positive financial result
 Profit margin
 Return on investment
 Increase revenue
 Cash flow
Customer perspective  Meet customer needs
 Customer satisfaction
 provide the best customer services
 number of customer in market
Internal business processes  Process problems that are experienced
Process automation
learning & growth  Employee satisfaction related to job.
 Reduce employee turnover rate.
 Training programme to provide
learning opportunities.
How to implement the balance score card in organizations
Balance score card is a type of template this is the easiest model Telefonica can develop
in the organization in order to achieve the mission and vision. Thus, this strategy is linked to
number of objective firm can take the initiatives and make plan and strategies in order to overall
goals and objectives. This score card is used for the management purpose as managers share their
ideas and express their opinions in order to generate results. Thus, the managers of the
Telefonica describe the different perspective related to the critical success factors and they can
point out or set up indicators themselves so that these can be monitored in the future.
Determine the vision
In this section, Telefonica set their organizational mission and vision. Thus, according to the
vision company decided their strategy that helps to accomplish the goal. This strategy describes
the purpose statements that means which types of decisions organization take to achieve the
future objective.
Add perspective
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In this stage, Telefonica set their objectives according to the different perspectives. This
perspective helps to organization for future expansion. Thus, financial perspective helps to
determine the historical, current and future data that helps to analysis the actual financial
performance of the firm. On the other side, customer perspective aids to determine the customer
satisfaction, customer acquisition and customer profitability level that helps to identify that
which types of customer attracts towards the product and service. Thus, this all term explained
that Telefonica retains or maintains ongoing relationship with its customer (Nandonde, 2019).
The third perspective is internal business processes, it determined that which types of process
Telefonica used in internal business that helps to deliver the value proposition that will aids to
attract and retain the customer in target market.
Add objective and measure
In this stage, Telefonica add the different types of objective according to the perspective and then
to achieve the objective, organization measures the strategy to implement in the business
process. Thus, Telefonica used the approaches that how to motivate the people and employees
related to the work so, top managers defines the responsibility and priorities to the employers and
employees that how to do work so, they follow the order to achieve the objectives.
Connect each piece
In this stage, organization connect their objective with company future expansion. In financial
perspective for example, organization objective is increase sales and reduce cost so firm can take
initiatives to achieve objective as they negotiate with their suppliers. These initiatives help
organization future expansion. On the other side, in customer perspective Telefonica objective is
provided the variety of product and services to the customer so firm can take initiatives as they
make the new and innovative product to attracts the customer. Thus, this all strategy helps to
achieve the company objective.
Share and communicate
In the last stage, Telefonica share their ideas and information to the employees that they can use
this strategy in the business to achieve the overall organizational goals. On the other side, the top
managers of Telefonica understand the new ideas of employees that will helps to achieve
organizational goals also there are some question that employees will ask to managers for a new
idea that will be discussed. Thus, share and communicate is most important while taking any de
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scions related to company growth so. All the employees and managers Pay attention to how
team is going to discuss option, how they are going to make some conclusions.
Swot analysis
SWOT analysis
Telefonica is called one of the leading organization in telecommunication industry and its
has several strengths which makes it able to compete with its rivals and take competitive
advantages (Sammut‐Bonnici and Galea, 2015). Rather than, strengths it has some weaknesses
and threats which it needs to remove. SWOT analysis is an effective strategic planning tool that
is being used by this company. With the help of this tool it can understand and analyse its present
strengths, weaknesses, opportunities and threats. Some strengths, weaknesses, opportunities and
threats are described as follows:
Strengths: Strength can be defined as an ability and capacity to complete work in an
effective manner and accomplish goals (Bondarenko and et.al., 2017). Some strengths of
Telefonica company includes:
 The main strength of this company is it has high level of customer satisfaction. Customer
service department of this company is so experienced which focuses on increasing good
brand equity among all its potential customers.
 Other main strength which makes it able to increase sales is product innovation capacity.
It has successful track record of developing new products.
 It has strong presence in approximate 25 countries with extensive operations which can
give it opportunity to increase its sales and revenue.
 It has around 36,000 skilled workforce by which this company focus on research and
development. It helps Telefonica company to attract wider range of customers towards its
services and products.
 In addition, it has an excellent advertising and branding that makes it one of the top
strong brands in the telecommunication industry.
Weakness: Weaknesses can be defined as a disadvantages and demerits of the business. Thus,
weakness is the area which determined that company can improve their weakness and change
this weakness into opportunities and strength that helps to achieve the competitive advantages.
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