SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A)
The case is set in February 2006, right after Sonaecom's announcement of its takeover bid for Portugal Telecom (PT) of a‚¬9.50 per share. The reader does not yet know how PT will react and whether its management will accept the offer or not. The case recounts this fascinating and intense M&A transaction, taking us through one of the largest takeover bids ever in the European Telecom sector, with a deal value above a‚¬15 billion. How will PTs board regard this bid? On the one hand, it represents a 20% premium over the prior stock price. On the other hand, it is a terrible blow to the international aspirations of the PT group. Moreover, the sometimes conflicting views of the general public, the competition regulator, employees and the government have the potential to complicate matters further. Lastly, this deal also has important international implications. One thing is sure. Given all the external pressure, for example from regulators, nothing will be the same for PT or the Sonae Group after this offer. The case serves as a rigorous application of valuation methodology with a focus on understanding the difficulties in forecasting future cash flows and the sensitivity of the valuation analysis to underlying assumptions.
Swot Analysis of "SONAECOM TAKEOVER OF PORTUGAL TELECOM (A)" written by Nuno Fernandes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pt Takeover facing as an external strategic factors. Some of the topics covered in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study are - Strategic Management Strategies, Financial management, Mergers & acquisitions, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) casestudy better are - – increasing household debt because of falling income levels, increasing energy prices, wage bills are increasing, technology disruption, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pt Takeover, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pt Takeover operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) can be done for the following purposes –
1. Strategic planning using facts provided in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study
2. Improving business portfolio management of Pt Takeover
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pt Takeover
Strengths SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pt Takeover in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Pt Takeover in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Pt Takeover has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Finance & Accounting field
– Pt Takeover is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pt Takeover in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Pt Takeover has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Pt Takeover is one of the leading recruiters in the industry. Managers in the SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Pt Takeover is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Nuno Fernandes can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Pt Takeover in the sector have low bargaining power. SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pt Takeover to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Pt Takeover has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Pt Takeover has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Pt Takeover is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Finance & Accounting industry
– SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) firm has clearly differentiated products in the market place. This has enabled Pt Takeover to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Pt Takeover to invest into research and development (R&D) and innovation.
Weaknesses SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A), it seems that the employees of Pt Takeover don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Pt Takeover 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pt Takeover is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A), in the dynamic environment Pt Takeover has struggled to respond to the nimble upstart competition. Pt Takeover has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Pt Takeover has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Pt Takeover even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Pt Takeover supply chain. Even after few cautionary changes mentioned in the HBR case study - SONAECOM TAKEOVER OF PORTUGAL TELECOM (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pt Takeover vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Pt Takeover products
– To increase the profitability and margins on the products, Pt Takeover needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) HBR case study mentions - Pt Takeover takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Pt Takeover has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Pt Takeover needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Pt Takeover has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pt Takeover to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pt Takeover can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Pt Takeover can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pt Takeover in the consumer business. Now Pt Takeover can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Pt Takeover can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pt Takeover is facing challenges because of the dominance of functional experts in the organization. SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pt Takeover in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Pt Takeover can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Pt Takeover can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Pt Takeover has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pt Takeover to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pt Takeover can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, SONAECOM TAKEOVER OF PORTUGAL TELECOM (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Pt Takeover to increase its market reach. Pt Takeover will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pt Takeover can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Pt Takeover has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) are -
Consumer confidence and its impact on Pt Takeover demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Pt Takeover needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pt Takeover can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pt Takeover in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing wage structure of Pt Takeover
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pt Takeover.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pt Takeover in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A), Pt Takeover may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
High dependence on third party suppliers
– Pt Takeover high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pt Takeover will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Pt Takeover needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pt Takeover business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pt Takeover can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) .
Weighted SWOT Analysis of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pt Takeover needs to make to build a sustainable competitive advantage.
