SWOT Analysis of Telefonica - Resolving Strategy Paradoxes to Create Competitive Advantage - Case Study Example

The paper “SWOT Analysis of Telefonica - Resolving Strategy Paradoxes to Create Competitive Advantage" is a delightful example of a case study on management. Business firms rely on strategies to attain their business objects, especially where there is increased competition. In 1986, Telefonica, one of the telecommunication providers in Spain, saw the need to reassess its competitiveness because of the significant changes in the telecom industry. Through an evaluation of the firm, it becomes possible to draw immense insight from the SWOT analysis of the firm, back in 1986.

In 1986, Telefonica had a number of strengths that gave it greater advantage over other players in the market. First, Telefonica had immense access to the communication market in Spain because it was a national corporation operating in the communications industry. In addition, Telefonica had better access to equipment, managerial skills, capital for expansion into other regions like South America. Notably, these characteristics were notable for Telefonica to compete with other local firms, as well as new entrants from the European Union.

Apart from the strengths above, Telefonica encountered several weaknesses that affected its ability to compete in the telecommunication arena contrary to its expectation. These weaknesses included consumers in Spain who were aware of Telefonica’s poor ability as it delivered poor services to its clients across Spain. Because of this poor ability, the firms never managed to solve all complaints from its customers. Over again, the firm did not have sufficient capacity to handle the increasing demand for services. The lack of such capacity is a weakness and a bottleneck that must be a firm must overcome using a strategic plan (De Wit & Meyer, 2010).

Opportunities are also crucial aspects that a firm uses to develop a strategic plan in business. Telefonica, in 1986, had a handful of opportunities available at its disposal. In Spain, there was a demand for more services as the market required more communication services. This opportunity prompted Telefonica to acquire new equipment in order to expand their services to new areas in Spain with little coverage. Most important, acquisition of new technology made Telefonica envision more customers going after is services as compared to those of other local providers. Equally important, the pending regulation in South American was an opportunity for Telefonica.

In 1986, Telefonica had several threats such as new regulations that would take effect when Spain joins the European Union. This threat would force, Telefonica to compete with other players in the market and possibly lower its prices to appeal to customers.

Telefonica’s focus in Europe and Spain
With the need to capitalize on its opportunities, Telefonica opened the business in Latin America as a strategy of expanding its business and cushioning itself against increased competition in Europe. Nonetheless, the firm’s investment and focus on the European market became more, despite the significant growth in the telecommunication market in Latin America than in Europe or Spain. This move is justified because the firm's strong base in Spain that could allow it to edge out other local competitors. Moreover, Telefonica understood the importance of establishing itself in other countries that were members of the European Union. These reasons are some of the push factors that made Telefonica acquire new equipment in search of new customers in the expansive European market (Griffin & Pustay, 2000).