| Alan ServiánCorporate StrategyPhd, Luis Vives de PradaLic&MDE IV |
Analysis of Telefonica’s corporate strategy. Its geographical diversification and its business diversification strategy. A brief overview of the company is also given. | |
Analysis of the company’s corporate strategy and its diversification
I have chosenTelefónica to write this chapter on its corporate strategy because from my point of view, Telefónica is an incredible company, one of the most important companies in the world, and, generally, common people and everybody does not know how big and important is this company until they investigate it.
That happened to me, I knew that Telefónica was one of the most important Spanish companies in theworld, but I did not know all the countries that they have presence, all the business lines that they have, and which is more important, how a national company has became in a few year as a world leader telecommunications company. Nowadays, the revenues of Telefónica represents 2% of the Spanish GDP.
Another fact that makes interesting doing an analysis of this company is to investigate and getconclusions of how a national company change its shareholders into private ones and continued its grew until being a world telecommunications leader.
Telefónica is the main telecommunications company in Spain and one of the biggest companies in the world. The company was founded in ----- and it has suffered an incredible growth since its foundation. Some figures thatshow the size of the company are the following ones:
* 228 million customer accesses
* 169 million wireless telephony accesses
* 42 million fixed telephony accesses
* 1.7 million pay-TV accesses
* Presence in 24 countries
* 56.4 bill € in revenues in 2007
* More than 63% of revenues from outside Spain.
* Net profit over 8.9 bill € in 2007
* Market capitalizationof 106.1 bill €
* 248.000 professionals
Financial and Economic results
2007 was an historic year for the company, in which its net profit climbed by 43% to a record 8.906 million €.
Similarly, earnings per share grew by 43.5% in 2.007 to 1.872€, for an impressive track record of fourteen consecutive quarters of uninterrupted growth.
Revenues, Operating Cash Flow and operating income allrose significantly in 2.007 by 6.7%, 19.3% and 42.1%, respectively. In 2.007 operating revenues amounted to 56.441 million Euros, 35% of which was earned by Telefónica España, 36% by Teléfonica LatAm and 25% by Telefónica O2 Europe. At the same time, all the lines of business made a positive contribution to the company’s organic revenue growth, which, excluding the effects of exchange rates andchanges in the consolidation perimeter, came to 7.4%. Year-on-year organic revenue growth in Telefónica LatAm was 13, in Telefónica España 4.6% and in Telefónica O2 Europe 4.5%.
Every year dedicated telecommunications analysts say that the industry is at an historic and fundamental crossroads. 2007 undoubtedly highlighted the accuracy of the crossroads metaphor, market byexpanding customer bases, revolution in handsets and devices, penetration of Broadband and global deal-making.
Customer trends, technological developments and the competitive environment are the vantage points from which to analyse the sector. Increasingly these three factors need to be assessed in relation to each other.
* Customers: The number of global telecommunications customers is set tocontinue to grow. Customers will increasingly adopt emerging technologies and related applications.
* Technology: Ever increasing bandwidth and the emergence of convergent and more powerful devices are handling the sector opportunities for new waves of growth. These waves in turn require still greater innovation.
* Competition: The ongoing transformation of the telecommunications sector...