TElefonica Sec B
Transcript of TElefonica Sec B
-
8/8/2019 TElefonica Sec B
1/30
BUSINESS
TRANSFORMATION AT
TELEFONICA DE
ESPANA
-
8/8/2019 TElefonica Sec B
2/30
INTRODUCTION
y Telefonica - one of the leading telecommunicationscompanies in the world with major presence inEurope, Africa and Latin America and a monopolisticpresence in the Spanish telecom industry
y However, the late 1990s saw Telefonica going througha bad financial phase due to liberalization of theSpanish telecom industry and the entry of new playerswho were providing bundled voice and Internetservices
y In the year 1999-2000, Telefonicas EBITDA declinedby 10.7 percent and the operating expenses increasesby 11.6 percent to 5,878 million
-
8/8/2019 TElefonica Sec B
3/30
CONTD...
y
In the year 2000, Telefonica implemented atransformation program to improve its financialperformance and increase its declining marketshare
y
The transformation program helped Telefonica todevelop customer focus, and new, better qualityproducts
y The program enabled the company to reverse its
declining earnings trend, and become one of theleading broadband operators in Europe along withan integrated communications solutions provider
-
8/8/2019 TElefonica Sec B
4/30
CONTD...
yTelefonicas market share in fixed telephone, broadband,and Internet connections also showed a markedimprovement and it became a very customer focused,result oriented organization
y During the first three quarters of 2006, Telefonica deEspana (the Spanish subsidiary of Telephonica SA)generated revenues of 8893.9 million, with a growth of1.7 percent over the same period in the year 2005
y For the nine months ending 2006, the Telefonica group
generated total revenues of 38, 704 million and a netprofit of 5185.7 million. The net profit witnessed anamazing increase of 59.4 percent over that of previousyear
-
8/8/2019 TElefonica Sec B
5/30
CASE BACKGROUND
y 1924- Established as Compania Telefonica NacionalDe Espana(CTNE)
y Monopoly over operating Telephone lines In Spain
y Acquire over 70% of existing 78000 lines.
y 1967- Opened a satellite communications GroundStation.
y 1985- CTNE became first Spanish company to belisted in London stock exchange.
y 1988- Ley de Ordenacion de lasTelecommunicaciones (LOT) regulated CTNEs newbusiness activites.
-
8/8/2019 TElefonica Sec B
6/30
CONTD...
y As a result CTNE adopted a new name Telefonica de
Espania SA.
y 1989- became a global player.
y 1991- Telefonica de Espana SA entered into an agreementwith Spanish Government.
y Early 2000- Created two global business
Telefonica Moviles
Telefonica Data Corporation
-
8/8/2019 TElefonica Sec B
7/30
CONTD...
yLate 2000- Spanish economy slowed down due toworldwide economic slowdown caused by technology
bubble burst
y Same time Spanish market faced crises due to saturated
market conditions.
y Adverse market conditions lead to business
transformation.
-
8/8/2019 TElefonica Sec B
8/30
THE TRANSFORMATION PROGRAM
y
Designed around three modules- Growth,Competitiveness and Commitment
y Transformation was to be achieved through a series ofshort term programs,(each of one-year duration),called waves
y The waves mainly comprised of a few blocks ofwork which were designed by the top management,integrated with the budget cycle, and communicatedto the top 500 people in the company
y The waves were reviewed on an annual basis. Seniorexecutives were made the Head of each of themodules, and were assisted by a manager
-
8/8/2019 TElefonica Sec B
9/30
CONTD...
y
In order to achieve its objectives, Telefonica deEspana launched a program based on four parameters
y The first parameter was Project Verne, which aimed at
installing 1 million Asymmetric Digital Subscriber
Line (ADSL) lines by 2003y The second parameter was Project Eficient.es, which
aimed at reducing the operating costs by 5 percent, by
the year 2004
y The third parameter was Project Excelent.es, which
focused on building customer satisfaction and loyalty
by achieving excellence in quality using Six Sigma
-
8/8/2019 TElefonica Sec B
10/30
CONTD...
y The fourth parameter was Project E-Business which
aimed at using new electronic processes to interactwith the clients
y In order to face the growing competition and limitedmarket growth, Telefonica set three strategic
priorities:y Maintain revenue through traditional business
y Growth in the internet and broadband business
y Progress in business transformation of the company
y In 2002, the operating revenues increased by 0.5percent and the operating income grew by 6.6 percentand Telefonica was able to implement itstransformation process
-
8/8/2019 TElefonica Sec B
11/30
GROWTH
y
Telefonica planned to achieve growth by puttingin efforts to develop broadband capabilities and
revamp the product categories
y It had begun testing the new technology ADSL
way back in 1997, recognizing the need to providehigh-speed Internet access
y By expanding ADSL services, the company could
provide several additional services includingInternet applications, content, and multimedia
value added services
-
8/8/2019 TElefonica Sec B
12/30
CONTD...
y Telefonica had a huge task of building infrastructure toprovide ADSL services. With growing demand for ADSL,the company was installing 500 new lines everyday in theyear 2000. The demand was expected to grow to 3500lines a day for 2001
y Telefonica divided the market into 4 zones and forecastthe demand based in each zone by taking the historicaldata of demand for existing products
y Telefonica revamped its supply chain networks tomaintain optimum inventory levels and was able to reducecapital investment in terms of network inventory andoperating expenses. It was able to carry out 90% of theinstallations within 10 days of the request
-
8/8/2019 TElefonica Sec B
13/30
NEW PRODUCTS & SERVICES
y Voice Mails, Text messages
y 2002, 11 million voice mails and 4,50,000 text
y ADSL Intranet solution, Web, e-Business & net LAN for
corporate users
y Video Conference & Internet gaming for residential users
y Digital TV, Digital audio, Broadband for TV & PC, and
Video on demand
y
New Services like Holiday line, immigrant line andprepay line
y Voice packages, Tariff modules, and value added services
like Caller id, Voice mail and SMS.
-
8/8/2019 TElefonica Sec B
14/30
CONTD...
y Enhanced IPTV service, Imagenio.
y 2004 it offered 40 TV channels & 15 Audio channels.
2006 it was available in 140 cities and 4 million
subscribers.
-
8/8/2019 TElefonica Sec B
15/30
COMPETITIVENESS
y Quality Is Our Differentiator
Improved quality by practicing Six Sigma, and
improved processes and development of online
capabilities
Followed quality system that was in compliance withUNE-EN-ISO 9001: 2000 standards
Improving Work Process
Launched Operative Excellence module to improve
quality of customer service. Used Six Sigma methodology and a 4 phased working
model was structured.
Diagnosis >End result Model>Action Plan>Follow Up
-
8/8/2019 TElefonica Sec B
16/30
SIX SIGMA
y First co. in Spain to adopt six sigma
y Process initiated by Julio Linares at the end of 2000.
y Special unit called Six Sigma Office
y Francisco Alonso was appointed head of Six Sigma Unit
y Top management commitment
y Employees involvement in identifying projects
y 16 members of executive committee were introduced tosix sigma concepts
y 20 senior managers were trained to be six sigma
champions
y 21 black belts were given responsibility of initial pilotproject
-
8/8/2019 TElefonica Sec B
17/30
CONTD...
y Implementation monitored through monthly reports & one-to-one
meeting with black belt
y Employees support
y Complemented customer satisfaction program
y First phase- between March-July 2001- 21 projects were identified
y Second phase- began by end of 2001- 80 projectsy Customer satisfaction peaked after first phase
y 150 people involvement, 10 exclusively for six-sigma
y Employees share in the profit earned
y
Financial aspect too was given due importancey Leaders shared experience through intranet
y Linked part of variable salary to participation
y Six sigma- an ease rather than responsibility
-
8/8/2019 TElefonica Sec B
18/30
IMPROVING ONLINE CAPABILITIES
y June 2000, launched Telefonica online- communicative
channel between company and its customer
y June 2004, co. acquired Telefonica Data Espana
y Provided data services like connectivity services that
allowed clients to share information between different
locations, internet access, internet publishing, whole sale
traffic service & outsourcing
y Also there were hosting and application services like web
hosting, content delivery, security service and applications
y Website www.telefonicaonline.com for customers
y Developed centro de servicios, a voice based portal to
manage a wide variety of its services
-
8/8/2019 TElefonica Sec B
19/30
CONTD...
y Started a project Hermes project in 2003-distribution
process for end customers
y Project in collaboration with logistic department
y
Co. contacted customers on occurrence of any problems indistribution process
y Another initiative called e Attencion, all reports pertaining
to problems, complaints and the way the problems are
solved could be obtained onliney Customers could make general enquiries about services
they used.
-
8/8/2019 TElefonica Sec B
20/30
COMMITMENT
y To increase the commitment, company reorganized themarket and customer segments and came up with the set
of values
y Customer Segments
y Rearranging the market segments
y Values
-
8/8/2019 TElefonica Sec B
21/30
CUSTOMER SEGMENTS
y Householdsy SOHO
y SMEs
y Large Corporations
y Households eg.yBasis households - basic voice services
yAdvanced digital households include voice with
broadband and digital home services
y Aimed at converting basic customers to high valuecustomers
-
8/8/2019 TElefonica Sec B
22/30
CONTD...
y SOHOy Basic and starters
y Proactive and receptive
y Technological and advanced
y Large Corporations Company leveraged on its expertise
in communication to meet the demand for information and
communication technology solutions
-
8/8/2019 TElefonica Sec B
23/30
REARRANGING THE MARKET
SEGMENTS
y Decided to compete in 3 retail markets 1. Voice market
2. Internet
3.Multimedia
1.Voice market Provided discounts and news
services to attract customers
2.Internet High quality internet and navigation andADSL development
3.Multimedia Provided multimedia packages in
association with partners
-
8/8/2019 TElefonica Sec B
24/30
VALUES
yValue based on expectation of all its stakeholders
y Shareholders and investors had access to all theinformation
y Company aimed at providing customers with
quality and fulfillmenty Company built relationship based on trust and
contributed to society
y
Maintained relationship with various communitiesy In Spain company was among the three most
valued Companies for commitment to socialissues
-
8/8/2019 TElefonica Sec B
25/30
THE RESULTS
y Positive Growth @1.9% in EBITDA in 2001
y Contributing Factors Being:
y Price Discountsy New Packages
y Reduction In Operating Expenses
y Tariff Increases
y By 2004 No. of ADSL connections grew to 2.5 millionWith a Coverage of 95%
-
8/8/2019 TElefonica Sec B
26/30
CONTD...
y Quality Process Initiation Led To Improvement In Service
Parameters
y In 2004 The Transformation Process Was Re launched
Through A Program Called Meta Cliente
y Crece (Grow)
y Impulsa (Drive Forward)
y Avanza (Move Forward)
y Motiva (Motivate)
-
8/8/2019 TElefonica Sec B
27/30
CONTD...
y As Of Dec. 2004 Telefonica had over 12.5 Million Clients
y Residential Users: 30-80 ARPU
y Commercial Users: 50-150 ARPU
-
8/8/2019 TElefonica Sec B
28/30
CONCLUSION
y Largest Fixed, ADSL and Mobile Phone Operator in SpainWith Market Share of
y 85% in Fixed Telephone Connections
y 89% in Fixed Broadband Internet Connections
y60% of Imagenio Coverage
y Total Broadband Access stood at 8.8 Million by2008 With a Household Penetration of 60%
yNew Technologies and Service Alternatives With
Multi Functional and Multi Access Handsets wereIntroduced.
-
8/8/2019 TElefonica Sec B
29/30
CONTD...
y Offers Broadband Solutions in Communications,
Entertainment and Information
yRegistered a Rise in Profit of 65.6% (8835 Million Euros)in the quarter ending Sep. 2010.
-
8/8/2019 TElefonica Sec B
30/30
PRESENTED BY
Budhaditya Bhattacharya (09BS0000579)
Ishan Sodhi (09BS0000918)
Shivam Agarwal (09BS0002226)