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 - – technology disruption, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, increasing energy prices,
geopolitical disruptions, talent flight as more people leaving formal jobs, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Pt Takeover are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
Organizational Resilience of Pt Takeover
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pt Takeover does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Pt Takeover digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pt Takeover has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
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.
Diverse revenue streams
– Pt Takeover is present in almost all the verticals within the industry. This has provided firm in SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Pt Takeover has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pt Takeover has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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 -
Interest costs
– Compare to the competition, Pt Takeover has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Pt Takeover has relatively successful track record of launching new products.
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.
Products dominated business model
– Even though Pt Takeover has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) should strive to include more intangible value offerings along with its core products and services.
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.
Skills based hiring
– The stress on hiring functional specialists at Pt Takeover has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
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.
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 -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pt Takeover can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pt Takeover can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Manufacturing automation
– Pt Takeover can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
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.
Creating value in data economy
– The success of analytics program of Pt Takeover has opened avenues for new revenue streams for the organization in the industry. This can help Pt Takeover to build a more holistic ecosystem as suggested in the SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) case study. Pt Takeover can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Pt Takeover can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. SONAECOM TAKEOVER OF PORTUGAL TELECOM (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
Leveraging digital technologies
– Pt Takeover can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
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.
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 -
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pt Takeover can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Regulatory challenges
– Pt Takeover needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Pt Takeover.
Shortening product life cycle
– it is one of the major threat that Pt Takeover is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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 .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pt Takeover with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.