Developing the Materiality Matrix at Telefonica SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Developing the Materiality Matrix at Telefonica
Telefonica, one of the largest telecommunication companies in the world and headquartered in Spain, has been issuing a corporate sustainability report since 2002. In its 2011 Sustainability report, the company included a "materiality matrix," and was one of only five of the 97 companies in Spain that produced a sustainability report that year. The case describes the purpose of the materiality matrix, how it was developed, and the opportunities the company sees for improving it.
Authors :: Robert G. Eccles, George Serafeim, Asun Cano Escoriaza
Swot Analysis of "Developing the Materiality Matrix at Telefonica" written by Robert G. Eccles, George Serafeim, Asun Cano Escoriaza includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Materiality Matrix facing as an external strategic factors. Some of the topics covered in Developing the Materiality Matrix at Telefonica case study are - Strategic Management Strategies, Communication, Organizational culture, Social responsibility, Strategy, Sustainability, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Developing the Materiality Matrix at Telefonica casestudy better are - – increasing government debt because of Covid-19 spendings, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Developing the Materiality Matrix at Telefonica
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Developing the Materiality Matrix at Telefonica case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Materiality Matrix, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Materiality Matrix 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 Developing the Materiality Matrix at Telefonica can be done for the following purposes –
1. Strategic planning using facts provided in Developing the Materiality Matrix at Telefonica case study
2. Improving business portfolio management of Materiality Matrix
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Materiality Matrix
Strengths Developing the Materiality Matrix at Telefonica | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Materiality Matrix in Developing the Materiality Matrix at Telefonica Harvard Business Review case study are -
Ability to recruit top talent
– Materiality Matrix is one of the leading recruiters in the industry. Managers in the Developing the Materiality Matrix at Telefonica are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Developing the Materiality Matrix at Telefonica 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.
Low bargaining power of suppliers
– Suppliers of Materiality Matrix in the sector have low bargaining power. Developing the Materiality Matrix at Telefonica has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Materiality Matrix to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Materiality Matrix 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.
Successful track record of launching new products
– Materiality Matrix has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Materiality Matrix 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
– Materiality Matrix has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Materiality Matrix to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Materiality Matrix is one of the most innovative firm in sector. Manager in Developing the Materiality Matrix at Telefonica Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Materiality Matrix digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Materiality Matrix 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.
Strong track record of project management
– Materiality Matrix is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Materiality Matrix 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 Robert G. Eccles, George Serafeim, Asun Cano Escoriaza 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
- Materiality Matrix 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 Materiality Matrix is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Developing the Materiality Matrix at Telefonica Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Materiality Matrix in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Developing the Materiality Matrix at Telefonica | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Developing the Materiality Matrix at Telefonica are -
Need for greater diversity
– Materiality Matrix has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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 Materiality Matrix supply chain. Even after few cautionary changes mentioned in the HBR case study - Developing the Materiality Matrix at Telefonica, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Materiality Matrix vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Materiality Matrix products
– To increase the profitability and margins on the products, Materiality Matrix needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Materiality Matrix 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.
Slow to strategic competitive environment developments
– As Developing the Materiality Matrix at Telefonica HBR case study mentions - Materiality Matrix 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.
Products dominated business model
– Even though Materiality Matrix 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 - Developing the Materiality Matrix at Telefonica should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Developing the Materiality Matrix at Telefonica 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 Developing the Materiality Matrix at Telefonica can leverage the sales team experience to cultivate customer relationships as Materiality Matrix is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert G. Eccles, George Serafeim, Asun Cano Escoriaza suggests that, Materiality Matrix 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Developing the Materiality Matrix at Telefonica 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 Materiality Matrix has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Materiality Matrix 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.
Increasing silos among functional specialists
– The organizational structure of Materiality Matrix is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Materiality Matrix needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Materiality Matrix to focus more on services rather than just following the product oriented approach.
Opportunities Developing the Materiality Matrix at Telefonica | 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 Developing the Materiality Matrix at Telefonica 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 Materiality Matrix 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 Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Materiality Matrix 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. Materiality Matrix 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.
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. Materiality Matrix can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Materiality Matrix 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Materiality Matrix 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.
Developing new processes and practices
– Materiality Matrix can develop new processes and procedures in Leadership & Managing People 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.
Creating value in data economy
– The success of analytics program of Materiality Matrix has opened avenues for new revenue streams for the organization in the industry. This can help Materiality Matrix to build a more holistic ecosystem as suggested in the Developing the Materiality Matrix at Telefonica case study. Materiality Matrix can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Materiality Matrix 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, Developing the Materiality Matrix at Telefonica, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Materiality Matrix 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 Developing the Materiality Matrix at Telefonica - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Materiality Matrix to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Materiality Matrix can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Developing the Materiality Matrix at Telefonica 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.
Leveraging digital technologies
– Materiality Matrix 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Materiality Matrix in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Materiality Matrix can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Developing the Materiality Matrix at Telefonica External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Developing the Materiality Matrix at Telefonica are -
Increasing wage structure of Materiality Matrix
– 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 Materiality Matrix.
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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Materiality Matrix can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Materiality Matrix.
Shortening product life cycle
– it is one of the major threat that Materiality Matrix is facing in Leadership & Managing People 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 Materiality Matrix in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Developing the Materiality Matrix at Telefonica, Materiality Matrix may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Materiality Matrix 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 Materiality Matrix 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.
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. Materiality Matrix 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Materiality Matrix in the Leadership & Managing People industry. The Leadership & Managing People 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.
High dependence on third party suppliers
– Materiality Matrix 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Materiality Matrix 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 Developing the Materiality Matrix at Telefonica .
Weighted SWOT Analysis of Developing the Materiality Matrix at Telefonica 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 Developing the Materiality Matrix at Telefonica 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 Developing the Materiality Matrix at Telefonica 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 Developing the Materiality Matrix at Telefonica 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 Developing the Materiality Matrix at Telefonica 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 Materiality Matrix needs to make to build a sustainable competitive advantage.
