Telefnica Brasil S.

A
Analysis of the organisations structure and process of
management

Daniela Corraini

Content:

Business Context........................................................................................................... 2
Organisation Structure.................................................................................................... 3
Process of management................................................................................................. 7
Summary...................................................................................................................... 9
References................................................................................................................. 10

Business Context
Telefnica Brasil S.A is a public limited company, whose corporate purpose is to
provide telecommunications services and the development of activities necessary or
useful for the performance of such services, pursuant to concessions, authorizations
and permissions granted to it. The company is headquartered in the capital of So

Paulo, Brazil and belongs to the Telefnica Group, a leader in the telecommunications
sector in Spain and present in several countries in Europe and Latin America. [1]
In addition to fixed-line services in the state of So Paulo and mobile telephones
throughout the national territory, the company also has a varied product portfolio:
broadband fixed and mobile, ultra broadband (over fiber), TV, data and information
technology. [2]
The Brazilian market of telecommunications is competitive. The company faces
competition in all areas in which it operates, mainly from other providers of mobile
services as well as fixed-line operators. Many of these competitors are part of a large
national or multinational group and therefore have access to financing, new
technologies and other benefits. Nevertheless, Telefnica Brazil took the lead in the 4G
market, with coverage in more than 73 cities and continued leadership in 4G coverage
on the basis of population, with 30% of the population in the coverage area. It is also a
leader in the mobile market in 11 Brazilian states. [1]
There are some issues that the company has to face. The huge competition may
adversely affect the company, it can limit the ability to retain or increase the existing
customer base and expand operations. The devaluation of the real currency can
increase the company's cost of debt and certain commitments in foreign currency.
Equity investments in foreign currency also suffer effects with changes in the exchange
rate. In addition, the Brazilian government has exercised and continues to exercise
significant influence over the Brazilian economy. This influence, as well as Brazilian
political and economic conditions, have detrimental impact on the business and the
market price of the preferred shares. Inflation and government efforts to curb inflation
may contribute to economic uncertainty in Brazil, adversely affecting the business and
operating results. As the telecommunications industry has extensive government
regulation, this may limit the flexibility to respond to market conditions, competition and
changes in the cost structure or impact on prices. Also this is a sector that is subject to
rapid technological change. [1]
Following three key points: Discover, Disrupt and Deliver, the company is always
willing to focus on the client, anticipate changes, meet challenges and deliver what is
promised, making the technology accessible to all. This way, the main goal is to bring a
technology that connects and contribute to solutions that offers benefits to the daily lives
of people and become increasingly close to the customer. [2]

Organisation Structure

CHAIRMAN &
CEO
OMBUDSMAN
DIVISION
* This area was developed
after the junction of Vivo
and Telefnica, to identify
the best practices of both
companies and achieve a
better unification.

GENERAL AND
EXECUTIVE
OFFICER
Paulo Csar Teixeira
INSTITUTIONAL
RELATIONS AND
REGULATORY
AFFAIRS

GENERAL
SECRETARY AND
GENERAL
COUNSEL

Leila Loria

Breno Pacheco

INTERVENTION,
INSPECTION AND
INTERNAL AUDIT

CORPORATE
COMMUNICATION
Lylian Brando

Juan Diaz Carmona

INTEGRATION*
Estanislau Bassols

PRIVATE
INDIVIDUAL
BUSINESS
Christian Gebara

BUSINESS,
COMPANIES AND
WHOLESALE
SERVICES

MEDIA
Roberto Piazza

CUSTOMER,
STRATEGY AND
QUALITY
Cristiane Barretto

Silvio Antunes

TELEFNICA
FOUNDATION
Maria Gabriella
Bighetti

SECRETARY OF
THE COMPANYS
BOARD OF
DIRECTORS
Fabiane Reschke

NETWORK AND
CUSTOMER
SERVICE
Andrea Folgueiras

INFORMATION
TECHNOLOGY
Christiane Edington

FINANCE,
EXTERNAL
RELATIONS AND
CORPORATE
RESOURCES
Alberto Horcajo

HUMAN
RESOURCES
Sandra Lima

Figure 1: Organisational Chart of Telefnica Brasil S.A. [3]

The company has a Board of Directors, comprised of shareholders, which is the

highest organ of administration, representation, supervision and control of the company,
and has the duty to order the ordinary management of the Company to the executive
bodies and the management team. It also has an Executive Board, responsible for
managing the day-to-day and for representing the company to third parties. [1]
In all, the company has 18,532 employees (December 31, 2013). All the staff are
full-time and are divided into the following categories: 26% in network operation,
maintenance, expansion and modernization; 62% in sales and marketing; and 12% in
administration, finance and investor relations, human resources, inventory, technology,
legal and strategic planning and administrative control. [1]
This organisation structure was chosen for the company due to the unification of
structures of two companies that previously existed, Telefnica, which operated in fixed
telephone services in the state of So Paulo and Vivo, which operated in the mobile
services. There was an integration of the two companies and thus a new organisation
structure was designed to consolidate and support common activities. [4]
The main change was the replacement of the chief executive officer. This
strategy privileged, according to the company, the integration of fixed and mobile
businesses. Another aspect of this organisation structure change process was the
segmentation of business operations divided into two units: the individual market,
managed by an executive who was formerly part of Vivo, which includes the individual
and residential segments and the unit companies market, managed by an executive of
Telefnica, which brings together corporate clients. [4] Thus, due to restructuring of
executive officers and directors, 23 executive positions were cut, it reflected the
continuous integration process. With all this reorganization of the structure, executives
of both companies were privileged and the convergence strategy adopted by the
company has been strengthened. [5]
To make the division of areas more propitious for a better organization, it would
be important to divide the areas, creating more departments and each department
should be responsible for one or two tasks. This way, directors would accumulate fewer
responsibilities and would be able to work better in an area that has more knowledge,
improving their tasks and getting better results for the company. A company in the
telecommunications sector that has a divided organisation structure is Telecom Italia.
The areas are more divided and it has the deputy chairman, the chairman and the
managing director domestic, representing the company.

Figure 2: Organisational Chart of Telecom Italia. [6]

For a telecommunications company, an efficient organisation structure would be

a decentralized structure, but with centralized control mode. The structure should be
decentralized, making the leader of each area or department fully responsible for its
operation. And the centralized control mode because the headquarters should control all
key elements for the development of services, planning the development of the entire
company and mediate conflicts. Thus, the headquarters should centralize the finance,
procurement, operation and maintenance of the network, among other activities, but
should fully decentralize customer related activities such as marketing, sales, etc. This
way, risks of communication, control and management would be reduced. [7]
This model is applied to the AT&T company, the headquarters that assume many
responsibilities, centralize finance, purchasing, technology, legal business, service
development, public relations and many types of network operation and maintenance,
while the regional subsidiaries that have limited responsibilities, take account of the sale
of products and services, operation and maintenance of local telephone network and
sales of its own customers, and they are bound to act under the policy made by the
headquarters in many perspectives. [7]
There are three types of departments in a telecommunications company. The
service departments are primarily responsible for marketing, sales and customer
service. The departments that consist of a technology research, development,
deployment and management of network and other departments, are primarily
responsible for providing technical assistance to service departments. Departments
such as finance, legal business, human resources, public relations, among others,
provide a development guide and routine support services and technology research
departments. [7]
It is important to have a department that connects the service departments with
technology research departments, to strengthen its management and facilitate
coordination and cooperation among them, such as "Technology, Innovation and
Product", with workers who in addition to having knowledge of network engineers, have
knowledge about business. This department exists in a company called Australian
Telstra. [7]
Besides that is really important that the top executive of the company pay high
attention to the management of finance, HR and corporate policy. [7]

Process of management
The company has a grading system for payments, where each position has a
stipulated salary range. There is no individual payment by results, only profit sharing,
which depends on the company's performance (profit, employee and customer
satisfaction, etc.). Existing benefits for employees are: profit sharing, transportation
vouchers, meal vouchers, food vouchers, discount on company cell phone products
(device + telephone line + unlimited data package), health insurance, dental insurance,
life insurance. [8]
When it comes to promotion, managers first consider people within the area, then
consider people from other areas and last option is to hire people from outside the
organisation. In addition, through internship and trainee programs, graduates are hired.
In the trainee program, graduates are hired and after three years working in several
areas, if they perform well, are promoted to manager. They use online recruitment for
hiring new employees and vacancies are advertised on the site vagas.com.br. [8, 9]
The company's management style gives enough autonomy to employees, since
most layers of employees is composed of consultants, which is an intermediate position
between management and analysts. Regarding the X and Y McGregor's theory,
depends largely on the area within the company. For more operational work what
prevails is the X. But for the most strategic areas, what predominates is Y. In general
people like to work there and usually who leaves the company, comes back a few years
later. There are no formal consultative committees, but team works are formed
according to the company projects, usually led by a manager, composed of employees
from all areas involved and from several positions, to define specific action plans. [8]
The structure of the areas is as follows: Executive Director - Director - Division
Managers - Section Managers - Employees. On average, for each division manager,
there are two section managers. In the management control area, for example, there
are six division managers and 12 section managers. In most areas every manager has
an average of 6 employees. [8]
The company has the union of telecommunications workers. It is not that
stronger such as the metalworkers union or the bankers union. It is useful to defend
what already exist for the employees, but they do not get a lot of new things. It
represents the opinion of the majority, but few are part of the union. [8]
Although there is an efficient process of management, some improvements could
be made. Employees could have bonus for good results and a performance evaluation

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system could exist. With this system of evaluation, it would be possible to understand
the reasons why certain people are promoted.
Besides that, they could have an internal evaluation within each area, to know
the opinion of the rest of the team in relation to each person. In addition, the company
could pay courses for employees with good performance, encouraging everyone to
work better and improving the company's results, with more skilled and committed
employees.
Ita Unibanco Holding S.A., a Brazilian bank, although it is not in the
telecommunications industry, is an example to be followed. There is a very strong focus
on development and constant feedback, which helps the employees to understand and
adapt to the corporate culture. In addition, all employees go through a formal
performance evaluation, which measures the "what" and "how" they deliver the service based on the goals and values stipulated by the company. Who is well rated grows in
the career. The area of human resources, in order to encourage others to strive more
reveals who performed best. There is also a program called "Todos pelo Cliente" (All in
favour of the customer) in which employees who suggest improvements to the account
holders can earn a scholarship of 5,000 reais for courses in Brazil or 10,000 dollars to
other countries. The bank also offers scholarships for college and a lot of online
courses, ranging from financial mathematics to label - that must be made during office
hours. [10]

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Summary
The recommendations made to improve organisations structure and process of
management are the following:
- Divide the departments, having more areas and more supervisors for each
segment.
- Have a decentralized structure with a centralized control mode.
- Have a department that connects the service departments with technology
departments.
- Bonus for good results.
- Performance evaluation system.
- Internal evaluation in each area.
- Extra courses and incentives for employees.

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References
[1] Telefnica Brasil S.A. (2014). [online] Annual Report.
http://siteempresas.bovespa.com.br/DWL/FormDetalheDownload.asp?
site=C&prot=421661. [Acessed 24 Nov. 2014]

Available

at:

[2] Telefnica Brasil S.A. (2013) Annual Sustainability Report. [online] Available at:
http://www.sustentabilidadetelefonica.com.br/relatorio2013/port/01.htm [Accessed
13 Nov. 2014].
[3] Telefnica Brasil S.A. (2014). Organisation Structure. Internal Telefnica Brasil
Report. Unpublished.
[4] Pereira da Silva, M. and Guimares Monteiro de Freitas Alves, C. (2013).
Organisation Change - The case of a company of telecommunications in Brazil. IV
Encontro de Gesto de Pessoas e Relao de Trabalho. [online] Available at:
http://www.anpad.org.br/diversos/trabalhos/EnGPR/engpr_2013/2013_EnGPR187.
pdf [Accessed 12 Dec. 2014].
[5] TeleSntese, (2012). Telefnica/Vivo consolida integrao e enxuga estrutura
executiva. [online] Available at: http://www.telesintese.com.br/telefonicavivoconsolida-integracao-e-enxuga-estrutura-executiva/ [Accessed 15 Dec. 2014].
[6] Telecom Italia, (2011). Macro-Organization Chart of the Telecom Italia Group at
March
31,
2011.
[online]
Available
at:
http://1q2011report.telecomitalia.com/2011Q1en/TelecomItaliaGroup/MacroOrganiz
ationChartoftheTelecomItaliaGroupatMarch312011.html [Accessed 3 Jan. 2015].
[7] Si, X. (2011). Research on the organisational structure of Telcos. 2nd International
Conference on Artificial Intelligence, Management Science and Electronic
Commerce
(AIMSEC).
[online]
Available
at:
http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=6011319&tag=1
[Accessed 12 Dec. 2014].
[8] Internal Source. Tatiana Corraini, Economic and Financial consultant.
[9] Barros, I. (2013). Telefnica Vivo investe em benefcios para funcionrios |
EXAME.com. [online] Exame. Available at: http://exame.abril.com.br/revista-vocesa/edicoes/180/noticias/telefonica-vivo-investe-em-beneficios-para-funcionarios
[Accessed 3 Jan. 2015].

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[10] Sendin, T. (2013). Ita Unibanco destaque em carreira e reconhecimento |

EXAME.com. [online] Exame. Available at: http://exame.abril.com.br/revista-vocesa/edicoes/180/noticias/itau-unibanco-e-destaque-em-carreira-e-reconhecimento
[Accessed 4 Jan. 2015].

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