**3.1** *Telefónica* **group profile**

This chapter explains the strategy that *Telefónica* designed and implemented concerning CSR and the tools it uses. It was chosen for this work, from among Spanish companies, because of the impact of its CSR actions and the strength and

### *Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

coherence of its approaches. *Telefónica* is not just a "plant" of strategies, policies, and CSR actions but also actively participates in the development of tools to support these issues [49]. With the analysis of a company that applies CSR, the vision is complete, and we can draw a systemic picture of the ongoing process. *Telefónica* focuses its social responsibility as a relationship strategy with its stakeholders, and the value of the company [50] largely depends on how to make these contacts. The corporate strategy analysis highlights that the clear goal it wishes to achieve is to increase the trust of its stakeholders and the social responsibility of the companies with which it operates, which is essentially explained by the relationship it has with these external interlocutors. *Telefónica* S.A. is the largest Spanish telecommunications company and operates mainly in Spain and Latin America. It is one of the largest fixed and mobile telecommunications companies and is ranked third in the world after China Mobile and Vodafone. It was created in 1924, and until the liberalization of the market in 1997, *Telefónica* was the only telephone operator present in Spain and held a dominant position, with over 75%, in 2004. The Spanish government privatized the telephone market in 1997 and currently, *Telefónica* is a public company, without a controlling shareholder. Among the largest shareholdings are those of *Banco Bilbao*<sup>2</sup> and *Caixa*, whose shares of 5.17 and 5.013%, respectively, do not, however, allow control of the company [51]. The year before Movistar was born, the mobile telephony division of the company, the group operates mainly in Spain, the Czech Republic (with Český Telecom), the United Kingdom, Germany, the Isle of Man (acquiring O2), Argentina (with *Telefónica* de Argentina), Brazil, Chile (with *Telefónica* Móviles), Peru (with *Telefónica* Móviles), Colombia (with the Movistar brand), Puerto Rico (with *Telefónica* Empresas and *Telefónica* Larga Distancia), China (with a 5% stake in China Netcom)- and Morocco (with Méditel), while in Portugal and Italy, it is a shareholder of the former monopolists Portugal Telecom and Telecom Italia. The internationalization strategy of the *Telefónica* group provides 40% of revenues from abroad and it operates in many countries that are developing. Today, it has fixed ADSL telephone lines and mobile telephone customers in 16 countries; it has a significant presence in Latin America and does business with nearly 50 different countries. The countries in which it operates are 1) Europe: Spain and Germany; 2) America: Colombia, Mexico, Peru, Guatemala, El Salvador, Nicaragua, Ecuador, Chile, Argentina, Uruguay, Brazil, Panama, and Venezuela; 3) Africa: Morocco. Establishing a precise and unambiguous strategy for managing relations between the interested parties of the *Telefónica* group is a difficult undertaking, and in fact, many actors participate in this process, as the following table shows (**Table 1**).

The methodology used to conduct this study was an empirical analysis of *Telefónica* and the direct observation and study of the documentation on CSR plans and verification of the annual corporate responsibility reports [52]. The development

<sup>2</sup> Banco Bilbao Vizcaya Argentaria (BBVA) is a Spanish multinational banking group with a strong regional origin (Basque Country). Its origin dates to the merger of Banco Bilbao Vizcaya and Argentaria in 1999, which led to the creation of the second-largest Spanish bank, behind Banco Santander Central Hispano. It is the 10th European bank by capitalization with 64.6 billion capitalizations and is highly sensitive to issues of social responsibility and environmental sustainability, and in fact, according to the President of the BBVA Foundation Francisco Gonzàles Rodrìguez, as well as the Guggenheim and Fine Arts Museum of Bilbao: "There can be no sustainable development without a sustainable financial system."


#### **Table 1.**

*Number and type of interlocutors of the Telefónica group.*

of the guides on AENOR's3 CSR standards starts from *Telefónica*, differentiated into three levels of work where it is possible to study its strategy on social responsibility and the leadership position held by the group in the telecommunications industry.

#### **3.2 Organization of CSR in** *Telefónica*

*Telefónica* has a centralized unit within its organizational structure whose function is to coordinate the CSR strategy. Social responsibility is an integral part of its global strategy for this company. It is relevant that the organizational structure created to design and manage the CSR is integrated within the general management of reputation and brand. This form of organization is also highlighted by the functions of the general manager of corporate communication (**Figure 2**). Furthermore, the profile of the heads of the general management and the communication professionals is relevant in light of the emphasis currently placed on the "brand," so the choice of these people is made very carefully. In this structure, at the first level of *Telefónica*, there are the presidents of the companies of the group and the managing directors, and the president has significant importance in the four "staff" functions. The Directorate-General for Corporate Communication (with its CSR functions) is one of the components of this staff, and from this position, it supports the whole group, including the branches of *Telefónica* Peru, *Telefónica* Moviles, and *Telefónica* Latin America (Graph 7).

In the representation of the organizational structure of the *Telefónica* group, there are several business divisions and, in addition to those included for personnel, there is the Directorate General on "development, planning and regulation" and one on "finance and resource sharing." Furthermore, these two directorates-general members are members of the management committee and the presidents of the most important companies. In this matrix structure, the strategies, management systems, and management tools used are common and derived from the top business centers. The work assigned to the general management of reputation, brand, and CSR is to reproduce an idea of leadership, the champion of a specific objective. An important coordinating role is therefore required, due to the multinational nature of

<sup>3</sup> AENOR is a private, independent, and non-profit Spanish organization recognized nationally, in Europe, and internationally that contributes to the improvement of quality in companies, their products and services and to the protection of the environment, and, consequently, to the well-being of the company, through the development of standardization and certification of company activities.

*Corporate Social Responsibility and Social Report: A Case Study in the Basque Country DOI: http://dx.doi.org/10.5772/intechopen.105511*

#### **Figure 2.**

*Organization chart of the Telefónica group. \* Also responsible for the Secretariat of the Executive and Steering Committee. \*\*Logistics, systems and T-Gestiona. Source: Telefónica S.A.*

the company and the diversity of the *Telefónica* Group. The management principles include a focus on CSR, as well as on quality, which must permeate all the processes and activities of the company because its implementation must be transversal, and to be effective the commitment of each unit should be encouraged. In groups of companies such as *Telefónica*, the approach to CSR must be promoted at the central level, even when responsibility is assumed by each of the peripheral units; therefore, the only efficient solution is to have a good organization capable of managing CSR in the companies of the group. However, it must be clarified that in a company of *Telefónica*'s size and history and given the territorial vastness in which it operates and the different nations in which it is present, there may be various CSR policies and actions within it. In this sense, the first reference to consider is the activity carried out by the Fundación *Telefónica*. As indicated in the graph, there is a directorate-general (DG) of institutional relations and the social action by the group largely corresponds

to the work of its foundation. Another important organizational unit whose function has been included in the broader field of social responsibility is that of environmental responsibility. In the case of *Telefónica*, environmental developments have been promoted by *Telefónica* I + D4 , which is one of the group's support subsidiaries and acts as a catalyst for innovation activities.
