IN-COMPANY PROJECT: CORPORATE INNOVATION WITHIN A NATIONAL POSTAL COMPANY WITH ALMOST 500 YEARSRicardo Filipe Samora TavaresProject submitted as partial requirement for the conferral ofMaster in MarketingSupervisor:Prof. Mónica Mendes Ferreira, invited lecturer of ISCTE Business School, in the Marketing, Operations and General Management Department.October 2018CHAPTERS SUGGEST NO OF PAGESAcknowledgements (optional 1 11 Table of Contents 1 22 Summary (in Portugues and English) – limit of 250 word per language 1 13 Exposition of the context of the issue 1 14 Literature review of the issue (suggested: 10 to 20 references to scientific articles, books and possibly, though in lesser number, other sources).
5 105 Inclusion of a conceptual reference framework giving a schematized presentation of the issues from the literature review to be analyzed; a summary figure may be presented at the end 2 36 Methodology. Research paradigm. Research questions. Specific issues and / or hypotheses and / or research propositions. Methods.
Data collection and analysis techniques and identification of the ways information was gathered and processed 2 37 Analysis of the information and conclusions – Processed data (support calculations may be included as appendices) 30 408 Forms of implementation3 69 Conclusions (includes Limitations) 2 310 Bibliography11 AppendicesTOTAL 50 75ACKNOWLEDGEMENTSABSTRACTTABLE OF CONTENTS TOC o “1-3” h z u 1.SECTORAL FRAMEWORK PAGEREF _Toc525572334 h 52.LITERATURE REVIEW PAGEREF _Toc525572335 h 73.CTT – CORREIOS DE PORTUGAL PAGEREF _Toc525572336 h 83.
1.Mail PAGEREF _Toc525572337 h 93.2.Orders & Logistics PAGEREF _Toc525572338 h 93.3.Payment Services PAGEREF _Toc525572339 h 103.4.
Bank PAGEREF _Toc525572340 h 104.CHALLENGE: CREATE AN ADD VALUE PROPOSITION FOR MICRO, SMALL AND MEDIUM ENTERPISES SEGMENT PAGEREF _Toc525572341 h 115.METHODOLOGY PAGEREF _Toc525572342 h 126.Analysis of the information and conclusions – processed data (support calculations may be included as appendices) PAGEREF _Toc525572343 h 137.CONCLUSION PAGEREF _Toc525572344 h 158.BIBLIOGRAPHY PAGEREF _Toc525572345 h 16I.APPENDICES PAGEREF _Toc525572346 h 17SECTORAL FRAMEWORK The paradigm of transformation of the postal sector continues to be evident in parallel with the previous years.
Thus, the focus on efficiency and business diversification remain the strategic focus of postal operators. The weight of the postal business is steadily declining, accounting for less than 40% of the industry’s revenues, with Orders ; Logistics and Financial Services emerging as the industry’s main levers of growth.The phenomenon of digitalization has resulted in the structural fall in physical mail, which has been increasing in Portugal especially in 2017. This trend of acceleration is widespread, however, in the Portuguese case in the period between 2014 and 2016 the fall (-3.
7%) was still less aggressive than in some European realities, especially in countries where the digitization of government services is at an advanced stage. However, in 2017, the decrease in mail addressed to CTT was 5.6%, higher than the guidance range of 4% to 5%.On the other hand, the growth of e-commerce has fueled the parcel delivery business.
Postal operators have been developing their offerings in this area, making this business a pillar in their growth strategy. The volume of orders delivered by European postal operators increased by an average of 8% per year between 2012 and 2016. In 2017 the volume delivered by CTT in Portugal and Spain increased by more than 20%. In these markets, significant growth potential is also identified, since the number of e-commerce orders per capita is significantly lower than other realities. The globalization trend presents opportunities and challenges to operators as there is greater accessibility to non-domestic markets and flows, but at the same time competitive pressure increases. Specifically in Portugal and Spain there is a phenomenon of “Iberization” of the business of several companies that increasingly see the Iberian market as one and that as such they seek to provide services in an Iberian perspective and not only local, extending order delivery services.Finally, postal operators globally have been able to reinvent themselves by leveraging their assets to exploit new sources of value.
Diversification has required investment in levers of growth and a new focus of the teams, materializing in the less dependence that the operators have of the traditional business. The weight of non-mail business income has been increasing significantly in the sector (62% in 2016 versus 51% in 2011), particularly through the growth of areas such as Orders & Logistics and Financial Services. CTT adopted a similar diversification strategy, however, the limited penetration of e-commerce in Portugal and Spain and the launch of the CTT Bank only in 2016 mean that we are still behind our international peers. Thus, the Company’s results are still very dependent on the performance of the mail business, which still represents more than 70% of our business.LITERATURE REVIEWDefinir conceitos: inovação, inovação corporation, design thinking, co-creation.CTT – CORREIOS DE PORTUGALinclusion of a conceptual reference framework giving a schematized presentation of the issues from the literature review to be analyzed; a summary figure may be presented at the endCTT is one of the companies in which the Portuguese trust the most – they recognize CTT as the most popular and with a better public image.
From its origins, dating back to 1520, the year in which King D. Manuel I created the first public postal service in Portugal, CTT took an evolutionary leap that presupposes profound changes.The appearance of the first institution organized to send written messages facilitated the exchange of messages between people, from different social strata. In this way, the couriers approached the citizens, contributing to their wider sociability, not needing a physical presence to communicate.
Between the establishment of the public postal service in 1520 and the present time, through the establishment of regular mail transport by Mala-Posta carriages (1798) and by postal railway ambulances (1866), by the introduction of the stamp (1853) and the code postal service in the distribution (1978), the Portuguese Post Office ceased to be a postal company to become a communications group, whose service goes much beyond the delivery of correspondence.Over the years, CTT has been able to adapt to the progress of society in order to respond effectively to the demands of a constantly evolving world and to approach customer needs, combining the values ??of trust and closeness that are the hallmark of Portuguese Post Offices.All these changes are the reflection of an experience accumulated during almost five centuries of activity. As we enter the 21st century and faced with the challenges of the total liberalization of the postal sector, the CTT Company can rightly take pride in this past, which has earned it the respect of international organizations and Portuguese civil society.Today, CTT is a large communications network, with reliable business solutions to help the national business community in all areas that are at the core of its business: mail, Orders ; logistsc, payment services and, more recently, Banco CTT.MailDespite the visible drop in mail in recent years, this service continues to be the one that contributes the most to CTT’s operating income (71%) and EBIT (71%).The recurring operating revenues in the Mail business area reached € 527.
5 million in 2017, a decrease of 1.1% compared to 2016. This business area includes the post offices network which, in addition to providing postal services, retail and convenience, also provides services to other business areas as a sales channel.
Also included in this business area are business solutions upstream and downstream of mail, namely printing & finishing, mail manager, video coding, hybrid mail and other complementary solutions to the mail business, namely advertising services like CTTAds.Orders & LogisticsIf in the mail sector, we clearly see a downturn, this setor comes up against this scenario, both in national and international markets, showing greats signs of growth potential.In 2016 the volume of express and parcels grew by around 8%, most of which was boosted by the volume of domestic B2C orders. By 2020, revenue growth in this market is expected to be around 37% (referring to the global express and parcel market in the IPC’s Global Postal Industry Report 2017).At the national level, there has also been a strong evolution in the volume of orders in recent years.
However, it should be noted that the growth in the volume of orders when compared to the international markets has been more moderate, since much of the market is still referring to B2B orders, little influenced by the growth of ecommerce which is in turn the strong lever of growth of this business. In Portugal, the presence of companies on the Internet is still small (40% have an online presence) and only 27% of companies sell on this channel (Source: ACEPI / IDC “Annual Survey of the Economy and Digital Society in Portugal”, October 2017 ). Nevertheless, the weight of B2C orders in the domestic market has been increasing, especially encouraged by online commerce. It is believed that the future is promising in the Iberian market, given that the penetration level of e-commerce is below that of other markets, as can be seen in the following graph.Payment ServicesThis business area included, in 2017, all retail-oriented financial services as well as the payment activity directed to the business segment, rendered either through post offices network or through Payshop’s agents.Operating income in this business area amounted to € 61.
8 million in 2017, -12.7% more than in 2016. The reduction of € 9.0 million is mainly due to the recognition of € 3.
2 million in 2016 relating to the memorandum of understanding concluded with Altice in 2015 and the decrease in income from payment and insurance services and PPR’s of € 2.4 M and € 1.5 M respectively.The last quarter of 2017 was marked at the end of October by the change of the Public Debt products of the responsibility of the Treasury and Public Debt Management Agency (IGCP), EPE, with the Savings Certificates Plus (CTPM) giving rise to the new Certificates Treasury Savings Program (CTPC), reflecting the improved Portuguese Public Debt rating. The placements of the new CTPCs were lower than those of the previous CTPM, although it did not prevent the volume growth of the whole put in the year to increase by 483 million euros compared to the previous year, since the public debt products marketed by CTT maintained the advantage of rates vis-à-vis most bank deposits (whose average income was at historical lows below 0.
3%). Thus, in 2017, revenues from the savings segment were mainly originated in the placement of Public Debt Securities.BankAt the end of 2017, Banco CTT reached a new historical mark, the first full year of activity, totaling more than 20 months since its opening to the public in March 2016. It is present all over the country in 208 stores and counts on the confidence of around 285 thousand customers, through the opening of more than 226 thousand demand deposits accounts.
The focus on simplifying the day-to-day lives of the Portuguese and the diversification of the offer in 2017, notably with the launch of Crédito à Habitação, have allowed Banco CTT to strengthen the relationship of trust and proximity to its clients. This is evidenced by the continuous growth of banking activity, with deposit withdrawals of more than 619 million euros, of which approximately 409 million euros on the order, the success of the Credit Card offer Banco CTT, with more than 49 one thousand cards placed, and the intermediation of Personal and Automobile Credit in partnership with Cetelem, available both in the stores and on the Bank’s website, whose credit volume made available in 2017 exceeded 36 million euros.Banco CTT proposes to provide its customers with affordable, comfortable, reliable and innovative services. In 2018, the goal was the same: to continue the strategy of simplicity, transparency and competitiveness of all its offer, in order to grow in clients, resources and credit granted, solidifying its presence and boosting its growth in the Portuguese banking sector.
CHALLENGE: CREATE AN ADD VALUE PROPOSITION FOR MICRO, SMALL AND MEDIUM ENTERPISES SEGMENTNowadays, the Portuguese business fabric consists in ? 1.2 M of companies, of which 99.9% are MSMEs and represent 56% of the national turnover. However, due to the high number of companies without activity, it is estimated that the number of active companies in Portugal is around 500-600K. Between 2010 and 2016, according with Por Data, MSME sector had a growth of 4% in number of new companies, meaning a growth of 3% in revenue.Analyzing CTT, it was found that SME’s account for, approximately, 24% of mail and 61% for orders ; logistics revenue.Questions:Which new products or services should CTT add to their offer to MSME?Which new ways of communication should CTT explore?Which customer experience evolutions should CTT do in order to reach SME’s needs?METHODOLOGYresearch paradigm.
research questions. specific issues and / or hypotheses and / or research propositions. methods. data collection and analysis techniques and identification of the ways information was gathered and processedWas follow a service design think methodology in order to reach to an optical solution and answer the proposal challenge.
Methodology:External Market AnalysisPostal SectorBenchmarkMarket TendenciesMSMEs AnalysisInternal AnalysisBusiness unitsAs-Is Innovation model;Innovation ProgramsBenchmarkInternational Post Office OperatorsPortuguese CompaniesBusiness ModelsExample of Case StudiesCTT PositioningDecision matrixUp to Innovation ProgrammeDefinition of the solutionDefinition of the processBusiness Case (Business Canva model to estimate the future costs???)Schedule of activitiesMarketing PlanInvestment costsReturn on investmentAnalysis of the information and conclusions – processed data (support calculations may be included as appendices)Por todo o projeto em ingles aqui excepto benchmark que está no ponto 5.Para este projeto, foi criado uma persona denominada de “Jonas”. O Jonas uma pessoa empreendedora, fez o curso de gestão à noite enquanto trabalhava – durante 7 anos – como promotor imobiliário. Após finalizar o seu curso, deixou o seu emprego para criar a sua empresa de Gestão de Condomínios de Habitação. A sua empresa é relativamente pequena com cerca de 10 empregados e para além do negócio core de gerir condomínios, tem-se expandido para a gestão de outro tipo de estabelecimentos (e.
g. Centros de Escritórios, Complexos Industriais e de Armazéns). Atualmente, o Jonas ou alguém da sua equipa vai pelo menos uma vez por semana à loja dos CTT, uma vez que a sua atividade envolve o envio de cartas para os condóminos. Por vez são aproveitas as idas aos CTT para efetuar o levantamento de encomendas da empresa ou até mesmo encomendas pessoais.External Market AnalysisPostal SectorBenchmarkMarket TendenciesMSMEs AnalysisInternal AnalysisSWOT AnalysisAs-Is Innovation model;”Today there are many Portuguese and foreigners who think that Lisbon is the best location for their startups, which brings innovation, qualified people, but also capital to finance these projects, which creates a positive snowball effect.
” (CTT’s CEO, Francisco Lacerda)Innovation ProgramsBenchmarkInternational Post Office OperatorsPortuguese CompaniesBusiness ModelsExample of Case StudiesCTT PositioningDecision matrixUp to Innovation Programme (definition of the solution and the process)Business Case (Business Canva model to estimate the future costs???)Schedule of activitiesMarketing PlanInvestment costsReturn on investmentCONCLUSION(conclusões finais)BIBLIOGRAPHYAPPENDICESMailWith regard to mail, there is a strong pressure on traffic, a trend that is observed in most postal operators and, consequently, is reflected in the decrease in the fees associated with the mail business. The following graph shows the relationship between traffic growth and revenue growth for a number of European postal operators in a sectoral trend analysis analysis between 2014-2016 (the 2017 data for all operators is not yet available).The reality of the domestic market is similar to that of the international markets, and there is a historical trend of volume decrease in all mail segments, resulting from the digitalization and consequent substitution of mail by other means of communication. As can be seen in the chart below, which represents the evolution of the mail traffic in Portugal, the fall was more pronounced in the editorial mail.
In addition, in recent quarters there has been an acceleration of the drop in mail addressed.