Date post: | 24-May-2015 |
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Evangeline Caedo
José Gálvez Carazo
Sven Johannsen
Tamara Franco
Pedro Gonçalves
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Structure of Business
Mission, Vision
Licensing / Niagara
Objectives, Values
Background
Product
PEST Analysis
Porter’s 5 Forces
Comparative Advantage
Competitor Landscape
Sales Projection
Pricing Strategy
Source of Business
Value Chain
Brazilian added value
Production Process
Objectives, Values
Capital Investment
Break-even Analysis
Financial Statements
Financial ratios
WACC & ROI
CSR
19871978 2005 2012 2014 - ?2004
• Tecnilab was founded • Certification – ISO 9001 quality management system
• New branch facilities Tecnilab North / 2L
• Opening branch in Porto • Starting to export • Further Internationalisation
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
NIAGARA VALVESManufacturing Valves
Since 1942
MANPOWER CAPABILITY
FACILITIES & MACHINERYVALUES SYNERGY
MARKET SYNERGY
STRENGTH OF COMMERCIAL CHAIN
0
1
2
3
5
4
Eduardo Carvalho NiagaraOrion
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
“We aim to anticipate our customers’ needs and maximize the stockholders’ return through enhancing the quality of our products and expanding to new promising markets.”
VISION
“To produce high quality water control valves that foster the reduction of water wastage globally.”
MISSION
Qualitative
• Help reduce water wastage from leaks
and cracks in pipes that existing old-
fashioned valves cannot address.
• Bring new technology and innovation
to the Brazilian valve industry.
Quantitative
Gain 15% of volume share in Brazil by
start of 2020
Achieve a minimum 35% overall
profitability
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Click to view video
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
PARALLEL ENTRY CONNECTORS
STAINLESS STEEL (ST) PILOT BODY
FILTER MANUAL DRAIN
TRANSPARENT FILTER BOWL
EASY PRESSURE CONNECTIONS
(ST) FILTER BODY
(ST) RESTRICTION ORIFICE
(ST) PIPEOPENING, CLOSING
SPEED CONTROL
(ST) FASTENERS
FUSION BONDED EPOXY COATING
PEST ANALYSIS OF BRAZILHow could the country itself affect our Business?
PESTAnalysis
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
• First level bullet
- Second level dash
Third level arrow
PESTAnalysis
ECONOMICAL FACTORS
High inflation rate
TECHNOLOGICAL FACTORS
Low availability of engineers and scientists
POLITICAL FACTORS
Corruption
SOCIAL FACTORS
Declining labourparticipation rate
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
POLITICAL FACTORS
Threat to the freedom of speech
Corruption
Strong presence of violent crime
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
ECONOMICAL FACTORS
Improvement and further development of infrastructure
Rising household debt
High inflation rate
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
SOCIAL FACTORS
Declining labour participation rate
Enhancement of sanitation and housing
Actions to reduce poverty and hunger
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
TECHNOLOGICAL FACTORS
Low availability of high skilled engineers and scientists
Currently low R&D expenditure
Expansion of higher and vocational education
OPPORTUNITIES THREATS
WEAKNESSESSTRENGTHS
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
STRENGTHS
• Most advanced technology quality and performance of valve
• High capacity of valve full lift and full port single chamber (required for firefighting flow rates)
• Pilot system automatism and control of water flow
• Protection filter can be cleaned without stopping the valve (unique) saves money and time in maintenance
STRENGTHS WEAKNESSES
THREATSOPPORTUNITIES
Fac
tors
Factors
Extern
alIn
ternal
HarmfulHelpful
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
• First level bullet
- Second level dash
Third level arrow
WEAKNESSES
• Strong focus on the German market 60% of productionexported to Germany
• non-existence of a purchasing department lack of bargaining power
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
STRENGTHS WEAKNESSES
THREATSOPPORTUNITIES
Fac
tors
Factors
Extern
alIn
ternal
HarmfulHelpful
SEESAW
• First level bullet
- Second level dash
Third level arrow
OPPORTUNITIES
• Valves are in need, where loss of water (liquid) through leaks, is relevant. (38% water loss in Brazil)
• Market segmentation demand for valves in the oil industry
• Start exporting to surrounding countries special focus to “Alianza del Pacífico” members
• Promising demand for valves inBrazilian “Favelas” locking valves remotely
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
STRENGTHS WEAKNESSES
THREATSOPPORTUNITIES
Fac
tors
Factors
Extern
alIn
ternal
HarmfulHelpful
SEESAW
THREATS
• Brazilian market for valves could already be mature denial of importance of leaks reduction
• Strong probability of Brazilian’s housing bubble to burst credit crunch decrease of demand
STRENGTHS WEAKNESSES
THREATSOPPORTUNITIES
Fac
tors
Factors
Extern
alIn
ternal
HarmfulHelpful
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
WEAK STRONG
BUYER POWER
DEGREE OF RIVALRYSUPPLIER POWER
NEW ENTRANTS
SUBSTITUTES
0
1
2
3
4
5
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
NICHER
FOLLOWER CHALLENGER
LEADER
Competitors’ Profile
Valloy:o 100% local companyo First mover & market
leadero Old-fashioned, standard
product offering
Bermad:o A multinational company
from Israelo Offers comprehensive
water works solutions
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Bermad Tecnilab BrasilValloy
INNOVATIVENESS
STRATEGIC ALLIANCE
BRAND EQUITY ORGANISATIONAL CAPABILITY
TECHNOLOGY
PHYSICAL FACILITIES
FINANCIAL STANDING
0
1
2
3
5
4
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Previous public bids by COMPESA
Investment aligned with UN Millennium Goals
Population growth
1
2
3
4
(~7,400 valves purchased)(24 contractors)
~6,200 valves purchased(21 contractors)
~560 valves(10 contractors)
70% REACH
82% PI
6% SHARE
584 valvesFor year 1
9% of total reach
Case Study by Portugal
5 Market research (PI)
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Year 1 Year 2 Year 3 Year 4 Year 5
Conservative 584 1,091 1,746 2,444 3,142
Optimistic 1,000 1,211 2,038 2,792 3,770
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
EX
PE
CT
ED
UN
ITS
SO
LD
6%
7%10%
9%
14%
12%
16%
18%
14%
15%
MARKET GROWTH: +20% YOY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Year 1 Year 2 Year 3 Year 4 Year 5
Valloy 4,365 4,850 5,238 5,587 5,657
Bermad 2,425 3,274 4,074 5,063 6,286
Dorot 1,358 1,698 2,037 2,444 2,933
Technilab 584 1,091 1,746 2,444 3,142
Others 970 1,213 1,455 1,921 2,933
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
EX
PE
CT
ED
UN
ITS
SO
LD SOURCE OF VOLUME: VALLOY
MARKET GROWTH: +20% YOY
6% 9% 12% 14% 15%MARKET SHARE:
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
DN50 13% DN65 14% DN80 16% DN100 15% DN125 12% DN150 10%
DN200 7% DN250 5% DN300 2% DN350 2% DN400 1% DN500 2%
+88%
+60%
+40%
+29%
+79%
+68%
+37%
+35%MARKET GROWTH: +20% YOY
Yr1 Yr2 Yr3 Yr4 Yr5 Yr1 Yr2 Yr3 Yr4 Yr5
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
85%
15%
Contractors & Distributors
Direct Buyers
Sales Managers handling key Brazilian regions
(contractors)
Water State company
1.8 billion R$ investment in past 5 years
Distribution networks in Latin America
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
STARS UNKNOWN
CASH COWS DOGS
Relative Share
HIGH LOW
HIG
HL
OW
Gro
wth
Rat
e
DN50, DN65DN80, DN100
DN125, DN150
Approach:1 – Price competitiveness (<100% in price benchmarking)2 – Margin play depending on the role of SKU in the portfolio
SKU % Margin Benchmarking
DN50 35% 97%
DN65 50% 67%
DN80 30% 94%
DN100 35% 90%
DN125 35% NA
DN150 50% 86%
DN200 60% 81%
DN250 60% 79%
DN300 60% 80%
DN350 60% 61%
DN400 60% 59%
DN500 40% NA
PRE-SET VALVE
DIAMETERS
PRODUCTION OF PARTS &
PILOTSSHIPPING
PRODUCTION & ASSEMBLY
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
OUTSOURCED
60% OUTSOURCED
OUTSOURCED
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
MACHININGCASTING PAINTING MOUNTING TESTING
PRODUCTION & ASSEMBLY
DELIVERY COLLECTIONAFTERSALES
SERVICES
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
SEESAW
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
76%
24%
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
Liabilities O. EquityCurrent Assets LT Assets
€ 203
€453
€ 174
€1,231
€ 145
€3,143
€ 661
€ 286
€ 373
€ 283
€1,030
€ 374
€ 160
€2,152
€ 189
€ 758
€1,675
€ 637
€2,665
€ 622
Assets Assets Assets Assets AssetsL&OE L&OE L&OE L&OE L&OE
YEAR 5YEAR 2 YEAR 3 YEAR 4YEAR 1
5-year cum. NI: 4.3Mn €Initial Investment: 631,250€
Payback period
COMPANY NATURE OF BUSINESS RIVALRY MARKETING OPERATIONS FINANCIALSINDUSTRY
CONSERVATIVE SCENARIO YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Cost of Debt 10.40% 10.40% 10.40% 0.00% 0.00%
Corporate Tax Rate 15% 25% 25% 25% 25%
Total Debt 283,294.63 € 285,339.26 € 374,241.01 € 636,857.03 € 1,317,214.05 €
Total Equity 372,818.63 € 661,225.66 € 1,030,350.19 € 1,674,930.75 € 2,665,390.62 €
Total Firm Value 656,113.26 € 946,564.92 € 1,404,591.20 € 2,311,787.77 € 3,982,604.67 €
Cost of Equity 13.56% 13.56% 13.56% 13.56% 13.56%
WACC 11.52% 11.82% 12.30% 11.97% 11.65%
THANK YOU !