Telefonica Spain Case Study Example | Topics and Well Written Essays - 750 words

Telefonica Spain - Case Study Example The privatization of state-owned enterprises was among the changes within the political environment, which motivated the global expansion of Telefonica Spain. Additionally, the rise of globalization caused the company to seek new markets in foreign countries. In addition, there was government deregulation and hence liberalization of the market which allowed the company to expand to foreign markets. The changes in the economic environment which stirred Telefonica’s global expansion include the competitiveness in the market especially in labor, returns on revenue, market share and shareholder values. It is argued that companies expand into foreign markets as a measure of adapting to the changes in the political, economic and social-cultural environment (Hill, 2011). Telefonica Spain’s initial focus in Latin America as opposed to its expansion into the European market was as a result of the deep social cultural and language ties that Spain had with Latin America. The social-cultural factor is the most significant consideration by a company which seeks to expand internationally. This is because culture defines the preferences and values of the consumers and hence determines their decisions to purchase and use a company’s products (Hill, 2011). Additionally, the rapid growth of the telecommunication industry within Latin America in terms of both mobile communications and internet connections inspired Telefonica Spain to expand into this market to meet the expanding needs of consumers for telecommunication services and products. Question 3: Telefonica has used acquisitions, rather than Greenfield ventures, as its entry strategy. Why do you think this has been the case? What are the potential risks associated with this entry strategy?