Business Transformation at Telefónica De España
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Case Details:
Case Code : BSTR256
Case Length : 20 Pages
Period : 1998-2006
Pub Date : 2007
Teaching Note : Not Available
Organization : Telefónica de España
Industry : Telecom
Countries : Spain
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Introduction Contd...
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The late 1990s saw Telefonica de España going through a bad financial phase. In
1999-2000, the company's revenues grew by 2.1% but the EBITDA declined by 10.7%
to €4,491 million and the operating expenses increased by 11.6% to €5,878
million. The company faced several problems due to difficult market conditions.
The liberalization of the Spanish telecom industry saw the entry of several
private players, leading to severe competition for the company.
With growing competition, the call prices fell from c.€ 7.45 per minute in 1999
to c.€ 5.74 per minute in 2000.
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At the same time, the new players entering the market were
providing bundled voice and Internet services.
The company was slow to react to the changes mainly due to access deficit and
delays in developing and approving the new products. The transformation program,
however, helped Telefónica de España to develop customer focus and new, better
quality products.
Its market share in fixed telephone, broadband, and Internet connections also
showed a marked improvement.
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According to Julio Linares (Linares), Executive
Chairman, Telefónica de España, "I believe we have changed a lot.
Nowadays, the organization is more oriented to results.
Also, we all have understood the need to balance the focus on short-term
results with efforts to gradually change our capabilities and attitudes.
Finally, I would highlight the fact that the organization has advanced
significantly in its customer orientation and has also become really
conscious of efficiency - critical requirements for our current and
future success."5... |
Excerpts
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