Strategy

Strategy

Sustainable
Growth

We made great strides in our three strategic pillars–growing both organically and through mergers & acquisitions, expanding internationally and increasing our operational efficiency, defined in 2013, throughout 2014.



4G
We expanded our business by obtaining a 4G license

OPTICAL FIBER
We signed an agreement to lay a submarine cable connecting Brazil and the United States

ALGAR FARMING
We invested in the professionalization of agribusiness

In the ICT segment, we increased Algar Tech’s presence in Latin America after acquiring Asyst. In addition, we expanded Algar Telecom’s business by obtaining the 4G license and signing an agreement to install a submarine fiber-optic cable between the United States and Brazil. We have identified opportunities to expand telecom services provided for MSME (Micro, Small and Medium Enterprises) clients by tapping into our existing operation and started offering customized products and services to these clients.

In the Agribusiness segment, we are considering opportunities within our industry. We believe in the potential of crop/livestock farming in Brazil; therefore, we decided to specialize in this business and turned ABC Agricultura e Pecuária – A&P into Algar Farming.

Overall, we increased our ability to work together with customers, suppliers, communities and institutions to develop new businesses, as well as innovative services and products. Moreover, we raised more funds and obtained incentives to promote innovation. The newly-introduced InnovationLab and Espaço Inovação [Innovation Space] at Algar Telecom will reinforce this possibility even further.

We created CSC (Centro de Soluções Corporativas, or Corporate Solutions Center), which started to centralize the Algar companies’ backoffice activities–related to Human Talents, Procurement, Finances, Controllership and IT – to support sustainable growth and improve efficiency by standardizing processes. CSC will allow each company to focus on its core business and add new business with more quickly.

Also in terms of efficiency, Algar Telecom analyzes its structure and processes with the help of a specialized consulting firm to increase productivity. The results achieved in 2014 exceeded our initial expectations and accounted for 13% of the Company's EBITDA in the year. We will continue these initiatives throughout 2015 to build a leaner Company prepared to adapt to market changes swiftly.


Business Culture

Our close relationships and the Algar way of serving customers are key distinguishing features of our businesses, regardless of market performance. The “People serving People” vision goes both ways. We fulfill our purpose by strengthening relations of trust and commonality of purpose among internal teams; in addition, we gain the trust of, and become closer to, our customers, whose perception of value in business relations is enhanced. Accordingly, our Procurement Club, a cross-selling and up-selling facilitator, became a reference in Brazil by capitalizing on the relationships among our consultants and customers, thus allowing the different Algar companies to do business among one another. For example, this synergy made it possible for Algar Aviation to boost sales of the TBM 900 aircraft in 2014.

The Procurement Club led to R$30 million gains by capturing commercial synergies in 2014.

The Algar brand

The Group conducts a study about the Algar brand image every two years to assess and classify the results of our relationships and communication initiatives among our key stakeholders. Innovation, commitment to serve, Human Talents and sustainability are the Algar companies’ strategic drivers, and the 2014 survey, conducted by Instituto Expertise, indicates that respondents already mention these attributes spontaneously, which shows that Algar’s positioning is being perceived by our main stakeholders. The survey also reveals respondents perceive the companies with which they have ties as having are the same attributes as the Group. This led us to see the importance of corporate alignment for our customers, associates, partners and others to perceive the Algar brand as it really seeks to be. The Algar Group’s image, whether it is seen as a group or as a specific company, is closely associated with reliability, one of the Algar values. The greatest strength identified in the study is that this attribute is also the most appreciated by all stakeholders in their relationship with any Algar company. This result explains the high recommendation rates and probability of continuing to be a client, leading to high customer loyalty. Finally, most respondents believe companies gain value by belonging to the Group. This is because Algar projects an image of confidence and credibility and is a prominent, respected group.

Intangible assets

Intangible assets are key distinguishing features that strengthen the businesses and significantly help the Company create value. Among our assets that cannot be monetized, but have value and can bring competitive advantages, we highlight:


People serving People
Algar is a company that was created to serve. It is an integral part of our DNA and is a commitment to our customers. We seek to build lasting relationships with all our stakeholders, thus creating value for society as a whole.

Brand strength
Since we adopted a single logo for all Algar businesses in 2009, we have been disseminating our culture and values more intensely, both internally and externally. By using the same name, Algar, we strengthen corporate unit, share experiences and optimize the brand communication effort.

Technological excellence
Our culture of innovation has brought sustainable and assertive results for the Group. Our history of growth is based on our ability to innovate and on the way we do it–jointly with customers, the community and institutions, thus developing not only the Group internally, but also the value chain.

Human and intellectual capital
Valuing human talents is an Algar premise. We believe in people and in the ability their commitment gives them to change the world. We recognize that they are our main asset. Therefore, we further each associate’s human and intellectual development.

Work climate
Algar’s Organizational Climate survey, with 83% of positive responses, shows that associates are happy to work for the group. When we say that Algar values sustainable relationships, we have in mind mainly those who are in the Company – our associates.

Sustainability
The success of Algar’s environmental, social and cultural initiatives in recent years has made the Group into a major promoter of sustainability in Brazil. Our awards in 2014 – Guia Exame de Sustentabilidade [Exame Magazine Sustainability Guide] for Algar Telecom and Rio Quente, Best Managed Company from Época Negócios [Época Magazine Business Edition]–, as well as energy efficiency projects and Instituto Algar’s activities reaffirm our commitment to a balance among, and integration of, social, environmental and economic aspects.