SUMMARY

LOGOS INOV STRATEGIC ANALYSIS

EXECUTIVE SUMMARY

Author: Ana Carolina Barbosa Silva – São Paulo, Brazil – October 2013

SUMMARY

Summary

Introduction _____________________________________________________________________________________________ 1

Competitor Analysis ____________________________________________________________________________________ 1

Environmental Analysis ________________________________________________________________________________ 1

Competitive Positions __________________________________________________________________________________ 2

Five Forces Analysis ____________________________________________________________________________________ 2

Capability Analysis and Competitive Life-Cycle ______________________________________________________ 2

Conclusion & Recommendations ______________________________________________________________________ 3

Appendix ________________________________________________________________________________________________ 4

LOGOS INOV – STRATEGIC ANALYSIS

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Introduction

Logos Inov Comunicação Visual Ltda. was founded in 1994 in Diadema and operates

in the industry of commercial and industrial signaling, producing plates, bands,

banners, and other products.

Most of the owners’ time is devoted to tactical and operational activities.

Nevertheless, there are not well-defined and managed processes, leading not only

to a lack of strategic vision, as well as to the loss of efficiency in operation.

In this context, Logos Inov needs to review its processes, product catalog and target

customer segments in order to achieve a sustainable competitive position and profit

in the coming years.

Competitor Analysis

Logos Inov is a micro sized company and most of its customers is located in the

same city (Diadema) and nearby regions, but it aims to expand its sales coverage in

the future. In addition, the company has not a well-defined product portfolio and

competes with companies that have diversified portfolio and also with companies that

have specific portfolios, but not always they all produce exactly the same products.

Therefore, we define strategic groups and the main characteristics of competitor

analysis as Exhibit 1. To better visualize the geographic matching, see Exhibit 2.

Nowadays, Logos Inov competes primarily with small-sized companies located in

ABC, mainly due to its characteristics of low power of scale, high customization of

products and distribution limitations, because most have no website and have

predominantly reactive posture regarding the customer approach that most often is

who first comes in contact with the store in search of their services.

Environmental Analysis

Analyzing factors related to the industry, exposed in Exhibit 3, if we consider the fact

that services related to industries are the most profitable items in the firm revenue,

we can conclude that the growth of the population of the state of São Paulo, and the

high in the Brazilian economy are the factors that most influence the industry in

LOGOS INOV – STRATEGIC ANALYSIS

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question, since this leads to large population concentrations, with the construction of

residential buildings and also the concentration of businesses and industries which

have great need for signaling services.

Competitive Positions

If we consider the four generic competitive positions, it is easy to notice that Logos

Inov can be labeled as a company of Niche only by their geographical feature, since

it caters to a narrow market scope but do not focuses on cost reduction nor

uniqueness of products, as well as their main competitors (Exhibit 4).

Firm’s others competitors show differentiation, specializing in products in accordance

with the standards of Safety at Work norms (three of them) and another focusing on

cost leadership, through its B2B sales strategy and wide distribution.

Five Forces Analysis

Through the five forces analysis, you can see that despite being a relatively attractive

industry due to the possibilities of differentiation and growth potential, entry depends

on equipment investment that has significant costs and relatively high learning curve.

Being an industry that had several innovation disruptions along its development,

today most well positioned companies has many years of existence, and they have

been adapting to new technologies and market demands, as shown in Exhibit 6.

Capability Analysis and Competitive Life-Cycle

Even if simple compared to other production processes, the value chain of Logos

Inov presents some critical features for the end product to be delivered according to

the market requirements as shown in Exhibit 7.

For most small businesses, the main competitors of Logos Inov, professionals with

artistic talents (handmade painting plates and banners) initially carried out this type

of work. Therefore, the acquisition of knowledge took place over a considerable time,

as these industries have undergone several innovations over the past 40-50 years,

as shown in Exhibit 6. In contrast, these are the same innovations that allow players

LOGOS INOV – STRATEGIC ANALYSIS

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of other industries to be able to adapt more easily and enter this market through

technological power and technical knowledge, and not just subjective artistic gifts.

Over the past decade, there has been no major innovation in this market , occurring

only efforts regarding optimizing the efficiency of processes and machines , the

emergence of different raw materials and consequent increase in the quality of final

products .

It is a mature industry that despite dealing with the diffusion of the Internet and

smartphones as marketing medias, do not face potential substitutes threatening in

most of its target markets.

Conclusion & Recommendations

From the strategic analysis performed, we conclude that Logos Inov needs to make

efforts in order to achieve a more comfortable strategic position in its industry.

According to its skills and market opportunities, it is recommended that the company

consider adopting a position at a niche market, with the possibility of specialization

in signaling market for industries and buildings (which today have high profitability in

its revenue).

It is also recommended that the company make efforts in order to improve its skills

(processes, people and systems), to occupy a sustainable position in the market.

Online sales is an initiative that fits market trends and can provide greater visibility to

the firm, solving the problem regarding absent marketing strategy, low sales reach

and reactivity of sales approach.

LOGOS INOV – STRATEGIC ANALYSIS

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Appendix

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 1: Strategic Groups

Company Website Years of Existence Strenghts Weaknesses Portfolio focus

Logos Inov - 20

• Personalized treatment

• Quality x Price benefits

• High customization

• Location

• Bad on time delivery

• Hight error rate

• No marketing strategy

• No catalogue for reference

• No special materials

• No website/online sales

•Plates

•Bands

•Banners

Sinalize http://www.sinalize.com.br/ 16

• Distribution

• Price

• Special materials

• Catalogue for reference

• Product quality

• Low customization

• No online sales

• Just B2B

• Display of plates

Seton http://www.seton.com.br/ 15

• Marketing strategy

• Diversified portfolio

• Quality of products

• Reputation

• Specific plates in

compliance with Work

Security Norms

• Special materials

• Catalogue for reference

• Online Sales

• High priceMarketing strategy

• Low customization

•Signaling for safety at

work

Inova sinalização http://www.inovasinalizacao.com.br 2

• Digital marketing

• Diversified portfolio

•Quality of products

• Special materials

• Specific plates in

compliance wiht Work

Security Norms

•Hight customization

•Catalogue for reference

•No online sales •Plates

Grupo Franmetal http://www.franmetal.com.br/ 18

• Modern technology

• Diversified portfolio

•Quality of products

• Special materials

• Specific plates in

compliance wiht Work

Security Norms

•Catalogue for reference

• Low customization

• No online sales•Plates

Small companies at ABC Most doesn't have website -• Hight customization

• Personalized treatment

• No online sales

• Informality

• No catalogue for reference

•Plates

•Bands

•Banners

Rei das placas http://www.reidasplacas.com.br/site/ 2 •Online sales •Visual identity•Plates

•Varieties

Focal

Size: Big - Location: ABC

Size: Big - Location: Big São Paulo

Size: Small - Location: ABC

Size: Small - Location: Big São Paulo

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 2: Strategic Groups – Geography

Country: BrazilState: São Paulo

Region: Big São PauloSub-region: ABC

City: Diadema

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 3: Environmental Analysis

Demographic Trends Consequences

• Growth of population of São Paulo2: increase of

demographic density and verticalization3

• Interiorization of industries4

• Increased presence of residential buildings (which need

signalization)

• Possibility of detachment of potential buyers (industries)

Macroeconomic Impacts Consequences

• Increase in the Brazilian economy5 • Increase of industry and commerce economy (industries are the

buyers that provide most profitability to Logos Inov)

Technological Developments Consequences

• Emergence of digital printing plotters with direct

printing onto substrate

• Emergence of special materials

• Need for investment on technology

Political-legal pressures Consequences

• Industrial Signalization Norms

• Eventual laws (Ex.: Antismoking law)

• Need for compliance

• Increase of demand

Industry Analysis

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 4: Competitive Positions

Sinalize Seton FranMetal Inova

Logos Inov Small ABC Small Big SP

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 5: Five Forces Analysis

Industry Rivalry• Medium number of competitors (+)

• Opportunities to differentiate (+)

• Substantial exit costs (-)

• Similar competitors (+)

Bargaining Power of Suppliers• Most of products are provided for many

suppliers (+)

• There are some products provided by an

only supplier (-)

• High switching cost because difference

on payment conditions and service

quality (-)

• Raw products with few substitutes on

the market (-)

Bargaining Power of Buyers• Large number of potential buyers.:

industries and buildings. (+)

• Low switching cost to another firm (-)

• There’s no too much differentiation (-)

• Difficult for buyers to backward integrate

(+)

• Price discrimination possible (+)

Threat of Entry• Medium investment on machines (+)

• Medium learning curve (+)

• Substantial exit costs (+)

Threat of Substitutes• Cross-price elasticity is low (+)

• Low Swithching costs (-)

• Difficult to forward integrate (+)

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 6: Industry Development

References: 6 to 10

Commercial and Industrial Signaling - Timeline

~1970

Pen plotter

~1980

Vinyl plotter

~1990

Digital Printing Plotter

~2000

Digital Printing Plotter –Rigid Substrate

~2013

Optimization: efficiency, quality and materials

Industry Event

Logos Inov Event

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 7: Capability Analysis

LOGOS INOV – STRATEGIC ANALYSIS

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EXHIBIT 8: References

1. https://www.jucesponline.sp.gov.br/Pre_Visualiza.aspx?nire=35212102736&idproduto=

2. http://www.ibge.gov.br/estadosat/temas.php?sigla=sp&tema=projecao2013

3. http://www.bbc.co.uk/portuguese/noticias/2013/02/130213_casas_cercadas_sp_fn.shtml

4. http://www1.folha.uol.com.br/mercado/1178060-fuga-das-industrias-eleva-peso-do-interior-

de-sp-na-arrecadacao.shtml

5. http://economia.uol.com.br/noticias/redacao/2013/09/25/economia-brasileira-vai-crescer-

mais-em-2013-diz-ministro-mantega.htm

6. http://www.summa.be/html_en/aboutus/history.php

7. http://www.hpplotter.co.uk/what-is-a-plotter.htm

8. http://www.gspinc.com/default.asp?contentID=79

9. http://www.wide-format-

printers.org/2FLAAR_reports/free/uv/705756_History_UV_Cured_inkjet_Printing.pdf

10. http://digitaloutput.net/content/ContentCT.asp?P=2474