Over the past ten years many technology companies have succumb to the economic conditions that have dictated their demise. InVision technologies is a company that has risen to the occasion and silenced many of the pessimists and naysayers. The purpose of this discussion is to identify InVision's strategic strengths and weaknesses based on environmental "scan" analysis. The discussion will also focus on the core competencies of the organization and develop a Porter's "Five Forces" analysis for the organization. Finally we will discuss the strategic thinking of company CEO Sergio Magistri. Let's begin with a brief description of the company's function and the products that it offers.
According to MultexInvestor Invision Technologies produces and sells explosives detection systems which are used in airports throughout the world to monitor checked baggage. The company, founded in 1992, has created products that are based on advanced computed tomography. (Company Profile) The detection systems that the company creates are the only such systems that have been certified by the Federal Aviation Administration.. (Company Profile) Along with the EDS system that the company sells, MultexInvestor explains that,
The Company also designs, develops and manufactures products used for weapons detection and for non-aviation applications, including landmine detection and maximization of timber industry output. Quantum Magnetics, Inc., the Company's wholly owned subsidiary, uses quadrupole resonance (QR) and magnetic sensing technologies for the inspection, detection and analysis of explosives, concealed weapons and other materials. The Company's Wood division consists of Inovec, Inc., which manufactures systems using laser-based technologies to increase sawmill yields, and WoodVision, which is developing the Company's CT technology to increase the value of harvested timber. (Company Profile 2003)
Strengths and Weaknesses based on Scan analysis
The major strength that this company possesses is the fact that the products that it produces are FAA certified. These certifications give InVision an advantage over the competition. The advanced computer tomography that the company utilizes is the most effective technology for the security systems that the company creates.
Another strength that the company has is diversification. Diversification allows the company to spread out there profits over different industries, so that all of the company's eggs are not in one basket. The company operates in the security industry and the timber industry. InVision has found innovative ways to harvest timber and detect weapons and explosives. (Company Profile 2003) This innovation has guided the company to the top of the field and the company has virtually no competition in the field of explosives detections systems.
This company has very few weaknesses because it has carved out a niche market and entry into the market is rather costly. The demand for the product that the company produces has also increased because of the heightened security measures that are present in airports throughout the world.
The technologies that are involved in the manufacturing of the product require workers with high skill levels.
InVision's core competencies include; the use of advanced computed tomography in the manufacturing process, offering an array of security products and creating high quality products. The company's use of advanced computed tomography gives the company a definite edge over the competition. InVision's only real competitor is L-3 Communications Holdings, Inc. which also uses advanced computed tomography. (Company Profile 2003) This technology has been a groundbreaking invention and allows for greater security in our nation's airports.
Another core competence of the company is the fact that it offers an array of security products. These products include the CTX series which offers products ranging from stand alone machines to handheld wands that can detect explosives. (Company Profile 2003) The company also offers a line of Quantum products. These products operate through the use of QR technology, which uses molecular structure to detect explosives or other harmful products. This series of products includes devices that check parcels and screen mail at airports. (Company Profile 2003) This core competence allows InVision to continue to develop a huge customer base for the products that it produces.
The last core competence that the company possesses is the ability to create high quality products. When these products are used properly they can be extremely effective at detecting weapons and explosives. It is obvious that the company goes to great lengths to create products that incorporate the newest technologies while keeping the public safe. The life of the products is also significant when the machines and gadgets are taken care of and provided with the proper maintenance.
Porters 5 Forces
Bargaining Power of suppliers
The bargaining power of suppliers in this particular industry is high. As we alluded to earlier, there are only two companies that have FAA approved products to offer the airline industry. The bargaining power of the suppliers is also high because the demand for the product is great.
Bargaining Power of Customers
The bargaining power of customers in this industry is low because there are a limited amount of suppliers. The bargaining power is also low because substitutes are not readily available. In addition, the product is essential to the customer's ability to conduct business.
Threat of New Entrants
The threat of new entrants is very low. The threat of new entrants is very low because the barriers to entry and exit in this industry are high. The research and development that is required to manufacture these products is high.
Threat of Substitutes
The threat of substitutes is very low. There are no alternative products that sell at a lower price and provide the same quality.
Competitive rivalry amongst existing players
Competitive rivalry amongst existing players is low. There are only two companies that produce these products and InVision has a huge advantage over the competition because it offers more products.
Strategic thinking of Company CEO Sergio Magistri
According to InVision Technologies' website, Sergio Magistri has been an integral part of the success of the firm. (Management 2003) Magistri has been the CEO of the company since December of 1992 and has been an outstanding example of leadership. (Management 2003) Magistri was also a project manager at AGIE Switzerland and Director of Computer Engineering at Imatron. The CEO has degrees in both electrical engineer and a biomedical engineering. (Management 2003) The company strategy for the future will involve the development of products that serve additional agencies. The company's official website explains this strategy in the statement below:
As foretold by recent events, the need for advanced security technology goes well beyond airports. InVision is positioning itself to help other government agencies and concerned organizations expand their security infrastructure to prevent terrorism directed at government buildings, border crossings, public areas, sports arenas, post offices and schools. Through its diverse technology portfolio and proven development track record, InVision is advancing threat detection and CT technology and, in the process, making the world safer." (Company Overview 2003)
The most obvious example of Magistri's strategic thinking lies in the type and quality of the products that InVision creates. As the CEO he has implemented a system of research, development and production that ensures that a high quality product is produced. Technological advances are of the utmost importance and he strives to instill these priorities into all of his employees.
Magistri also aims to offer products that are easy to use and convenient. Products such as hand held wands enable security to check passengers quickly and efficiently. Additionally, the QR products can detect harmful substances in mail and parcel. All of the products that the company produces serve an important purpose and aid the company in establishing a large customer base.
The CEO has also implemented a financial strategy that has allowed the company to profit greatly. According to an article in Business Wire the company has enjoyed a significant increase in profits at a time when many companies are recording significant losses.
In April of 2003 the company reported that sells had reached $165 million compared to $33.2 million in the same quarter of last year. (InVision Technologies Reports Strong 2003) The company also reported that 97% of all revenues were derived from explosive detection systems. (InVision Technologies Reports Strong 2003) The article reports that "net income for the quarter was $34.4 million, or 21% of revenues and $1.87 per diluted share. This compares to $2.8 million or 8% of revenues and $0.17 per diluted share for the comparable quarter last year." (InVision Technologies Reports Strong 2003)
In the article Magistri concedes that he is pleased with the increase in profits and attributes it to new government regulations that require certain security devices to be present at all of the nation's airports. (InVision Technologies Reports Strong 2003)
Magistri also believes that the demand for the company's products will continue to grow domestically and abroad. (InVision Technologies Reports Strong 2003) The CEO believes that the company will continue to create products that are on the cutting edge of technological change.
Magistri has been active in expanding the company overseas. Earlier this year he was instrumental in construct a deal to purchase the German-based YXLON International Holding…