PORCELANOSA Organizational Plan

In this document we will analyze the strategy of one of the most important

Spanish companies with a presence throughout the world, dedicated to designing,

manufacturing and selling a wide range of household products, Porcelanosa.

For the analysis of the strategy our team will use several methods and tools, from

classic strategic methods to modern.

“One source for all your needs”

iMBA 2013-14

Benedetti, Francesca Cano, Jorge

Catalá, Erica

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INDEX

ELEVATOR PITCH! 4!

BUSINESS CANVAS MODEL! 5!

ENVIROMENT ANALISYS! 11!MCKINSEY 7S! 12!PESTEL ANALYSIS! 13!PORTER’S 5 FORCES! 14!

ANSOFF MATRIX! 15!

SWOT MATRIX! 18!

BIBLIOGRAPHY! 19!

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ELEVATOR PITCH

Porcelanosa Group is a family company that has expanded its business

worldwide in recent years. It has 8 different companies and each one is

specialized in a concrete area; floor and wall tiles, kitchens, dressing rooms,

bathrooms and building systems. For this purpose, the group relies on its key

partners, suppliers and prescribers, who collaborate in its key areas, R&D

activity, procurement and marketing.

The company is targeting both profitable businesses and affluent final

customers, both looking for quality and design products, which want to

differentiate themselves acquiring exclusive goods that are not consumed by the

mass market. These consumers meet the company from the most traditional way,

through their stores, magazines or publicity, but also from showrooms and social

events, where the company makes a great effort to surround itself with media and

public personalities such as Isabel Presley or George Clooney among others.

Finally, Porcelanosa differs from its direct competitors by the quality of its

products, its diversification, its global presence and its strong commitment to

innovation and technology, like Noken with Krion. This has allowed the

company to be a world famous company, leader in the areas where operates and

sustainable over the time.

!5!

BUSINESS CANVAS MODEL

The Business Canvas Model is a strategic management template, which

will allow us to develop the Porcelanosa’s business model through nine elements,

which our team will study in depth below.

1. Customer segments. Customers can be divided into two very distinct

segments, final customers (B2C), and business customers (B2B). Within the

first classification customers are looking for products both traditional and

avant-garde design, but always looking for quality, high technology,

careful design and exclusivity for the first or second home. Is also

important to mention the segment of the

population with purchasing power that the

company focuses, we could classify this

customer segment as upper-middle class and

upper class. Within the second classification

Porcelanosa aims to reach businesses where

the company can provide its quality products

and exclusiveness brand. In general these

businesses are also identified with the quality

and exclusiveness such as Bentley, BMW or

MGM Mirage among others. Sometimes there

are global and profitable companies who can afford the cost of

Porcelanosa’s exclusiveness, such as McDonald’s, Subway or Holiday Inn

among others. Other businesses that are clients of Porcelanosa are those

who belong to the building industry, such as decorators, architects or

designers. This prescribers link Porcelanosa’s product to other customers.

We can see this issue as an opportunity in the SWOT matrix, which is

explained later on.!!

B2C:

B2B:

Customer Segments

Quality and design oriented

Middle-upper and upper class

Final customer-oriented business Hotels

Restaurants Car industry Real State Airports

Fashion retailers and many others

Prescribers Architects Designers Decorators

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2. Value proposition. As the company distinguishes two types of customers,

we also have to distinguish the value

proposition to each customer. On one side

are the B2C customers, to whom the

company offers high quality products,

manufactured with the latest technology in

the market and both traditional and avant-

garde design. But the perception of value is

not limited to this; when the customer

purchases a product socially acquire a

higher-level status, further than this,

exclusivity. There are much evidence you

can see in customer relationship and key

activities. On the other side are the B2B

customers, who also receive added value in

their businesses and a quick response to a mass demand from de market.! 3. Customer relationship. Porcelanosa creates five types of relationships with

its customers. The first would be a relationship of personal assistance,

where the customer is informed about the world of possibilities offered by

the company. It is personal and advised according to the prospect

customer’s needs. The second type of relationship would be once the

prospect customer becomes a final customer, the relationship is stronger,

would be a dedicated relationship. At this point a Porcelanosa’s specialist

personally ensures that the customers receives the full experience of

quality, professionalism, detail-oriented and

luxury. This dedicated personal assistance

supports the customer through the entire

process until the final product is installed at

home. The third type of relationship is

through trade fairs held annually each

February in Villa-Real. In this event, customers around the world are

focused for four days to discover the latest developments made by the eight

B2C:

B2B:

Value Proposition

High quality product

Traditional and avant-garde design

High technology design

High social status

Exclusive customer relation

High quality product

Design

High technology design

Added value to the business's product or service

Efficient distribution system

Efficient distribution system

Quick respons to a mass demand

Customer Relationship

Trade fairs

Personal assistance

Dedicated personal assistance

After-sales service

Customization

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companies of Porcelanosa Group. This kind of event maintain, even

strengthen, the relationship between both prospect and final customers

with the brand. The fourth type of relationship is within the after-sales

service, and finally, the fifth type is customization. The company offers to

its clients, through its manufacturing processes, the ability to adapt the

product to a wide range of individual customer needs, which lead us to

the first type of customer relationship, personal assistance.! 4. Channels. Channels must divided into two blocks, direct and indirect

channel, in order to reach the customer segments. Talking about the direct

channel, which is directly related with the company, Porcelanosa tries to

obtain new clients and build loyalty through its stores, department stores

and showrooms where are displayed many examples or interior design.

The company has its own magazine Lifestyle & Porcelanosa, a free

magazine addressed to the customers whom

are interested on design, interior design,

cutting-edge architecture and new trends.

Porcelanosa, through the public relation

group, plans and holds events in order to get

the word out about the company in the

country area they are establishing, using

recognized people as brand image. Also,

Porcelanosa is promoted by the media

publicity on TV and press with the aim to

show its events and new openings. Aware of the role of social media and

its current relevance in communication of any organization, Porcelanosa

has launched its own blog and its corporate profile on major social

platforms that are currently in the network such as Facebook or Twitter,

and website partners whit whom has an alliance or partnership.!On the

other hand, through indirect channels, Porcelanosa approaches its target

market through prescribers, such as architects, designers or decorators

whom have home’s projects for its customers.!

DIRECT

INDIRECT

Channels

Stores

Department stores

Showrooms

Events by public relations

Catalogue and magazine

Social network

Media advertising

Prescribers Architects

Designers

Decorators

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5. Key activities. According to the value proposition offered by Porcelanosa,

the company has to have a basic pillar on many departments. The

company’s strategy is focused on the internationalization, looking for a

sales and growth increasing as the

Spanish industrial sector is stagnated,

then this strategy is based in a huge

investment on marketing and research-

development-innovation (R&D&I) in

order to pay attention to the new

technologies. Thus, the quick adaptation

to any innovation is the Porcelanosa’s concept and rules. As a

considerable part of the budget has been allocated to investment on

R&D&I, the procurement and logistics department has became a relevant

feature of Porcelanosa, purchasing quality raw materials, being efficient on

its lead times -using high technology-, on its warehouses and giving a

quick response to mass demands.! 6. Key resources. Many of the key resources of Porcelanosa are directly

related with the key activities of the company. On the first hand, we can

find some aspects of logistics attending to the high quality raw material

that Porcelanosa procurement and purchasing acquire for the wide range

of factories has in each part of the world, and the warehouses distribution

system. In this case Porcelanosa has many

partnerships, which will be explain later

on, with information technologies (IT)

companies in order to continuously adapt

the machines to the latest technologies

and ease the information among the

employees related with the production

process. Taking into account all the key resources and activities,

Porcelanosa has created a well known brand image of high quality giving

a high value proposition to the target market, being at the same time a key

resource for the company.!

Key Activities

Research and Development and Innovation (R&D)

Procurement

Marketing

Logistic

Key Resources

High quality raw material

Warehouses distribution system

Brand

Factories

IT

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7. Key partners. Porcelanosa works with many different types of suppliers and

partners. First of all raw material suppliers located all over the world. The

main products delivered to Porcelanosa are marble, ceramic, clay and

other stone material. Other products of the wide range of raw material are

wood, chemical stuffs, and stainless steel

for taps and other accessories. Other

suppliers of the company are marketing

companies, in order to carry out the

promotion of Porcelanosa product

portfolio, international insurance

companies such as Mapfre Global Risk

and IT companies who provide tools that

allow accurate, on time and multi-

platform information. In the last decades

Porcelanosa developed an intense

collaboration with countries like Italy,

German and Japan in service and

equipment issues, in order to cover the lack of possibilities in the national

area. It should be named prescribe companies, architects, designers and

decorators whereby Porcelanosa closely works to realize furniture

installation.! 8. Cost structure. Porcelanosa is a company with a value-driven philosophy.

Less concerned with cost, Porcelanosa business model focuses on creating

value for their product. “Even if we wanted, Porcelanosa doesn’t know

how to manufacture cheap” Silvestre Segarra, Vice-president. In fact the

main areas where the company invests a big part of cost structure are the

logistic one, in order to realize an excellent distribution system. The

procurement department, looking for the best-quality materials and

services from suppliers and partners. High investments also in R&D&I to

improve technologically products quality and the production process in

general. And finally advertising and publicity with the latest modern

marketing techniques to promote Porcelanosa products.!

Key Partners

Raw material suppliers

Marketing companies

Suppliers spread around the world

Mapfre Global Risk

Prescribers Architects

Designers

Decorators

Service & equipments: Italy, Germany, Japan

IT companies

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9. Revenue streams. Talking about Porcelanosa, the main cash flow revolves

around four different items. Innovation and Quality, which are key factors

in Porcelanosa values system; exclusivity, another value created by the

company thanks to the uniqueness involved buying Porcelanosa products.

Other groups, fundamental in Porcelanosa revenue streams, are the

Prescribers whereby the company cooperates in order to offer an excellent

service of planning and installation to its customers. Lastly the Stores

themselves, whence Porcelanosa get out the majority of its income.!

Cost Structure

Research and Development (R&D)

Procurement Advertising and publicity

Factories

Logistic

Revenues Streams

Innovation and quality

Exclusivity

Prescribers

Stores

!11!

On:

B2C: B2C:

B2B:B2B: DIRECT

INDIRECT

Customer Segments

Key Resources Channels

Revenues Streams

27/01/14Designed for:

The Business Canvas Model PorcelanosaDesigned by: Benedetti, Francesca

Cano, JorgeCatalá, Erica

Cost Structure

Key Partners Key Activities Value Proposition Customer Relationship

High quality product

Traditional and avant-garde design

High technology design

High social status

Exclusive customer relation

High quality product

Design

High technology design

Added value to the business's product or service

Stores

Department stores

Showrooms

Trade fairs

Personal assistance

Dedicated personal assistance

Research and Development and Innovation (R&D)

Procurement

Marketing

High quality raw material

Warehouses distribution system

Brand

Raw material suppliers

Marketing companies

Research and Development (R&D)

Procurement Advertising and publicity

Factories Innovation and quality

Exclusivity

Prescribers

Stores

Suppliers spread around the world

Logistic

Efficient distribution system

Efficient distribution system Mapfre Global Risk

Factories

IT

Quality and design oriented

Middle-upper and upper class

Final customer-oriented business Hotels

Restaurants Car industry

Quick respons to a mass demand

Events by public relations

Catalogue and magazine

Social network

Real State Airports

Fashion retailers and many others

Prescribers Architects Designers Decorators

Logistic

Prescribers Architects Designers Decorators

Service & equipments: Italy, Germany, Japan

IT companies

After-sales service

Customization

Media advertising

Prescribers Architects Designers Decorators

!12!

ENVIROMENT ANALISYS

McKinsey 7S

This analysis develops both hard (strategy, structure and system) and soft

elements (skills, staff, style and shared values), of Porcelanosa’s business model.

Shared Values The whole Porcelanosa, from bottom to top, is commited to

learning, harmony, collaboration, communication, cooperation,

creativity, growth, development, flexibility, passion and precision values. But quality, innovation

and efficiency are pilars.

Strategy “Porcelanosa has its strategy both quality

and design of its products, focusing the

corporate image in excellence, luxury and

exclusiveness” Jose Pascual Pesudo,

Marketing Manager Structure It is a global company, market structured, but familiar. Its expansion

is formulated by its own stores and

alliances

System “Porcelanosa bet heavily on IT to

automate the most production processes,

distribution and aperture of new

stores” D. Manuel Gil Cantavella IT Manager

Skills Customer oriended,

retailer and exquisite, communicative,

creative, effectiveness and efficiency,

analytics, motivated or analytics among others

Staff Oriented to achieve quality and designed products focusing the

corporate image in excellence, luxury and

exclusiveness

Style As a family business, all

decision are taken centralized. It is a global

company, so the information channels

need to be really effective and efficient

!13!

Pestel analysis

In this section you will find a list of factors related to the environment that

surrounds Porcelanosa in aspects such as politics, economic, social situation,

technological, environmental development and legal system. They can affect

positively or negatively to the general activity of the company.

Porcelanosa

Political Government policy

Political instability in overseas markets

Foreign trade policy

Tax policy Labour law

Trade restrictionTrade restriction

Economic Labour economic situation

Interests and inflation

Market cycles Credit funding/facilities

Country development level Exchange rates inflation

GPD per capita

Social Demography

Consumer attitude

Consumer profile Ethnic and religious factors

Technological Competitors technological

development

Technological maturity Financing research

Innovation potentiality

Environmental Limited natural resources

Waste disposal and recycling procedures

Legal Taxation

International legislation

Commercial policy Regulative entities

Norms Commercial policy

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Porter’s 5 Forces

With the Porter’s five forces we will identify and analyze the five

competitive forces that shape every industry, in Porcelanosa’s case the tile and

ceramic sector, in order to determine the weaknesses and strengths of it.

1. Competition within Porcelanosa industry

Porcelanosa Group being leader in each sector in which has

presence has been approached by many companies giving similar value proposition at

similar price as Fiandre Architectural Surfaces, Grupo

Concorde, New Pearl Ceramics Groupp, Alfagres and Daltile.

2. Potential of new entrants In order to approach Porcelanosa, companies can find barriers

to entry in the industry. First, the company has a depth knowledge about all its products, then the companies who

would reach its position would need so many time on learning and carrying high costs of entry. And secondly, they also may need to adapt the machinery to the latest techonology systems

as Porcelanosa has a high level on innovation technology.

3. Bargaining power of suppliers

The company has a wide range of suppliers all of them spread

worldwide focused on reducing lead times to accomplish with

the quick response feature of the company and its effectively distribution system. Then,

looking backward on the supply chain we can consider that there is a neutral supplier power on its

environment.

4. Bargaining power of customers Paying attention to the other side we find the target market segmented

into B2C and B2B. On the first hand, the final customers (B2C) are who are looking for something exclusive. This exclusity brings a top quality

and edge fashion and innovative products or services, which satisfy their need for their home. On the other hand, Porcelanosa has a wide

range of business customers (B2B) as hotels, car industry, real state and many others, or prescribers like architects or designers focused on professional drafts or customers’ homes. Both segments have no bargaining power obtaining in this way a neutral buyer power.

5. Threat of substitute products

Porcelanosa has clearly distanced itself from the first

competitors when the company began its diversification transforming them into

substitutes. Those ones can be substitutes of the Porcelanosa’s ones, but not replacing them at

all. Companies like Leroy Merlin, the german The Singular Kitchen, Roca, the wide range of tile companies from Castellón or

even IKEA.

!15!

ANSOFF MATRIX

PRODUCTS

Current New

MA

RK

ET

Cur

rent

MARKET PENETRATION PRODUCT DEVELOPMENT

New

MARKET DEVELOPMENT DIVERSIFICATION

Ceramic and tile industry

Europe

USA

Health &

wellness

Ecologic product

Natural product

Kitchen and

bathrooms

Krion

Building systems Spa

home

!16!

Since Porcelanosa was founded in 1973, the company has been featured

by its large diversification within the ceramic and tile world, establishing this

factor as its growth strategy as you can see in this chronology.

Taking the entire chronology and ANSOFF matrix into account, we can see

that in the Porcelanosa’s business model predominates the diversification as

growth strategy focused always on the customer. Although despite this strategy,

the group has also commercialized new products within the market where it is

present laying on its own supply chain, carrying out a product development

strategy. At the same time, since its beginning Porcelanosa the company has

gradually build a market development strategy going overseas based on a sales

analysis following the best sales rate in order to know how worthy is doing

business in the country selected. With the last enterprise, Urbatek, the group has

wanted to consolidate its position in the main market from where it was born

commercializing more in depth the porcelanato among the traditional products.

All of this represents a market penetration in the ceramic and tile industry sector,

which plus its internationalization the group has been establishing in different

parts of its supply chain but not depending on them, in other words, if one

company of the group falls, it doesn’t drag the entire group.

Following all those strategies, especially the diversification, Porcelanosa

has positioned itself as leader in many services about bathroom, kitchen, floor,

1973 •  Porcelanosa: passion for detail and quality

1986 •  Venis: exclusive and surprising design

1987 •  Gamadecor: state-of-the-art kitchen and bathrooms

1993 •  Systempool: the benefits of water

1999 •  L'antic Colonial: the very essence of nature's own materials

2001 •  Butech: high-tech building solutions

2001 •  Noken: efficiency and sophistication in bathroom equipment

2004 •  Urbatek: products for large-scale projects

!17!

walls and even furniture, in order to have One source for all your needs, knowing

to create a innovative, international and branched group and converting an

industrial product into a consumer product.

!18!

SWOT MATRIX

The term SWOT is an acronym that indicates the first letters of the words

strength, weaknesses, opportunities and threats. Two of them, strengths and

weaknesses are related to internal and controllable variables of the company,

object of this study. On the other side, opportunities and threats are external and

non-controllable factors connected to the general environment of the market to

which belongs Porcelanosa.!

Inte

rnal

and

co

ntro

llabl

e

STRENGHTS! WEAKNESSES!! Diversified product

portfolio

! Strong brand portfolio

(quality and design)

! Efficient distribution service

(logistic)

! Productivity independence

! Limited scale of operations

! Difference in pricing

according to the companies

(of the same sector)

! Deeply dependent on Italian

and German technology (lack

of in the national area)

Exte

rnal

and

no

n-co

ntro

llabl

e

OPPORTUNITIES THREATS

! Growth in demand for

global wood products

! Positive outlook for global

construction industry

! Strategic growth initiatives

!

! Stringent legislative and social

regulations

! Decreasing of the national

products demand

! Increasing of substitutes

products.

!19!

BIBLIOGRAPHY

Documents:

• Audit of Porcelanosa’s financial statements. [Castellón]: Colegio de

Registradores de Castelló/Castellón, 2012. 83p.

• AZNAR, Álvaro. Advanced strategic management systems. [Valencia]:

Estema Business School, 2013. 37p.

• AZNAR, Álvaro. Strategic planning applied to international companies.

[Valencia]: Estema Business School, 2014. 71p.

• CARRILERO CASTILLO, Agustín. Strategic decisions on Operation

Management. [Valencia]: Estema Business School, 2014. 31p.

• PERALT RILLO, Agustín. H3S. [Valencia]: Estema Business School, 2013.

29p.

Tools:

• SABI [Consultation: Sunday, 26 January 2014]

Web pages:

• http://www.businessmodelgeneration.com [Consultation: Tuesday, 14

January 2014]

• http://www.cincodias.com [Consultation: Thursday, 23 January 2014]

• http://www.expansion.com [Consultation: Thursday, 23 January 2014]

• http://www.iti.es [Consultation: Monday, 27 January 2014]

• http://www.porcelanosa.com [Consultation: Monday, 13 January 2014]

• http://www.prezi.com [Consultation: Monday, 20 January 2014]

• http://www.registradores.org [Consultation: Monday, 27 January 2014]