TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C)
Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's TelefA³nica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, TelefA³nica made a a‚¬5.7 billion cash bid for PT's share of the JV. According to TelefA³nica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.
Swot Analysis of "TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C)" written by Nuno Fernandes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Telefa Nica facing as an external strategic factors. Some of the topics covered in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) case study are - Strategic Management Strategies, Financial management, Joint ventures, Mergers & acquisitions and Finance & Accounting.
Some of the macro environment factors that can be used to understand the TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) casestudy better are - – increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, technology disruption,
increasing energy prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Telefa Nica, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Telefa Nica 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) can be done for the following purposes –
1. Strategic planning using facts provided in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) case study
2. Improving business portfolio management of Telefa Nica
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 Telefa Nica
Strengths TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Telefa Nica in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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.
Organizational Resilience of Telefa Nica
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Telefa Nica 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 Telefa Nica digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Telefa Nica 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.
Low bargaining power of suppliers
– Suppliers of Telefa Nica in the sector have low bargaining power. TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Telefa Nica to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Telefa Nica has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Telefa Nica 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.
High brand equity
– Telefa Nica has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Telefa Nica to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Telefa Nica is present in almost all the verticals within the industry. This has provided firm in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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.
Analytics focus
– Telefa Nica 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.
Learning organization
- Telefa Nica is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Telefa Nica is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Telefa Nica 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.
Training and development
– Telefa Nica has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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.
Innovation driven organization
– Telefa Nica is one of the most innovative firm in sector. Manager in TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) are -
Slow decision making process
– As mentioned earlier in the report, Telefa Nica 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. Telefa Nica 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.
Slow to strategic competitive environment developments
– As TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) HBR case study mentions - Telefa Nica 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C), in the dynamic environment Telefa Nica has struggled to respond to the nimble upstart competition. Telefa Nica has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 Telefa Nica has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Nuno Fernandes suggests that, Telefa Nica is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Telefa Nica, firm in the HBR case study TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Telefa Nica 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.
Aligning sales with marketing
– It come across in the case study TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) can leverage the sales team experience to cultivate customer relationships as Telefa Nica is planning to shift buying processes online.
Lack of clear differentiation of Telefa Nica products
– To increase the profitability and margins on the products, Telefa Nica needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C), is just above the industry average. Telefa Nica needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Telefa Nica 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.
Opportunities TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) | 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Telefa Nica can use these opportunities to build new business models that can help the communities that Telefa Nica operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Building a culture of innovation
– managers at Telefa Nica 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.
Using analytics as competitive advantage
– Telefa Nica 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Telefa Nica to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Telefa Nica 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.
Developing new processes and practices
– Telefa Nica 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.
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. Telefa Nica can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Telefa Nica to increase its market reach. Telefa Nica 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.
Learning at scale
– Online learning technologies has now opened space for Telefa Nica to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Telefa Nica has opened avenues for new revenue streams for the organization in the industry. This can help Telefa Nica to build a more holistic ecosystem as suggested in the TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) case study. Telefa Nica can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Telefa Nica can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Telefa Nica 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, TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Telefa Nica is facing challenges because of the dominance of functional experts in the organization. TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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.
Loyalty marketing
– Telefa Nica 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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. Telefa Nica can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Telefa Nica with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Telefa Nica 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.
Stagnating economy with rate increase
– Telefa Nica can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
Regulatory challenges
– Telefa Nica 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.
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.
Environmental challenges
– Telefa Nica 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. Telefa Nica 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 Telefa Nica 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. Telefa Nica 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C), Telefa Nica 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 Telefa Nica business can come under increasing regulations regarding data privacy, data security, etc.
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 Telefa Nica.
Weighted SWOT Analysis of TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 TELEFA“NICA'S BID FOR THE MOBILE MARKET IN BRAZIL (C) 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 Telefa Nica needs to make to build a sustainable competitive advantage.
