A comparative case study analysis between full acquisitions vs. joint ventures as seen through the development of Telefónica's international growth strategies

Abstract

This paper investigates the various acquisition and expansion strategies of Spain's telecommunications company Telefónica within the Argentinean, Brazilian and Czech markets. Its main focus is to identify the determinants of what prompted Telefónica to either pursue a merger/acquisition or a joint venture approach to expand its operations.<br />The results show that joint ventures are preferred to acquisitions where the target assets are linked to asymmetrical cultural, regulatory and economic/market place conditions to those of Telefónica's and Spain's.<br />Moreover where acquisitions were preferred Telefónica excelled vis-a-vis its competitors within the Latin American markets due to its cultural affinity and successful experience in privatizing its operations within Spain and replicating the same within Argentina in particular. As such the analysis demonstrates that there is a strong correlation between Telefónica's recognition of its cultural and market identity and its decision to acquire offshore telecommunication firms via either an outright acquisition or a joint venture. This is reflected by the manner it conducted its due diligence, dealt with local regulators and ultimately deciding on the manner in which to expand its operations.