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Acknowledgement

We the students of BUS203 (Business Environment) course Sec-3 would like to take the
opportunity to thank them who helped us at the time of preparing this report. We are very
grateful to our course instructor Kohinur Akter for her continuous guidance henceforth. Her
guidance has been of extreme help to us. We are also gratified for all the times we seek advice
from her and she answered with the paramount patience and perseverance. In addition to this, her
requirements for the assignment made it mandatory for us to seek contacts external to the
classroom, which proved to be very rewarding.
We would like to thank BRAC University for the working environment of the lab; where
we spent hours together to prepare this report. We are really indebt to all the people who helped
us in preparing this report.
Finally, all the group members related to this report worked a lot and worked very hard to
make this report successful. Without everyones active participation it would be very difficult for
us to complete this task in time. A special thanks to all the group members who worked very
hard to make this report.




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Executive summary

This report deals with the analysis of the Ceramic Industry of Bangladesh with respect to
Michael Porters Five Forces Model. The Ceramic Industry of Bangladesh is quite mature and it
dates back to 1962. Bangladesh being a gas rich and low-labor cost economy and having
advanced in bone china technology in the last decade has perfectly positioned itself to be a
strategic partner in both the production and supply of ceramic goods. Hence, this industry needs
to be analyzed in terms of its competitiveness with the aid of Porters Five Forces Model to view
its prospects of gaining and maintaining a large share in both the local and foreign markets.
The analysis carried out in this report shows that the industry environment of the ceramic sector
is weak to moderate competitive and offers ample growth opportunities for both existing
businesses and new entrants. As the collective impact of the five competitive forces is moderate
to weak, the ceramic industry of Bangladesh is considered to be competitively attractive in the
sense that industry members can reasonably expect to earn decent profits and a wholesome return
on investment.








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Chapter 1
1.1 Origin of the topic:
This report has been made as part of our Business Environment course to analyze the ceramic industry of
Bangladesh using Porters Five Forces.
1.2 Objective of the report:

To learn about the ceramic industry as a whole and the present condition of this industry.

1.3 Methodology:
Secondary forms of information have been used to prepare this report. The details of the sources
are highlighted below
Different books and periodicals related to the particular sector.
Newspapers
Website information
1.4 Limitations:

Briefly, we face the following limitation during preparing the term paper: :

Since Ceramic industry is a big industry, it was something difficult to us to prepare the report
within this time.
One of the main barriers was time shortage.
Due to time shortage, details of many aspects of the managerial issues of Ceramic industry have
been skipped.
It was very difficult to collect adequate data from such a big corporation because of some
divisional and confidential problems.
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Chapter 2
2.1 Industry Overview:

FU-WANG Ceramics Company Profile
Fu-Wang Ceramic Industry Limited, the pioneer ceramic manufacturer in Bangladesh was
established in May 1995 as a joint venture company. Subsequently, in 1998, it was listed in the
Dhaka and Chittagong capital markets. Since then, it has been operating as a public limited
company. The company is engaged in production of various types of wall and floor tiles. Within
a short period, the business expanded its market share by its unique quality, competitive price,
exclusive designs, and wide variety of sizes and models. Its effective and creative marketing
campaign enabled the company to establish its brand value in the tiles market in Bangladesh. Fu-
Wang Ceramic Industry Limited is capable of meeting the increasing demand of customers
countrywide. By using high quality raw materials, Italian/Chinese machinery and highly
experienced foreign and local engineers, the company has created good reputation in the
Bangladesh ceramic market. The business is engaged in selling luxurious glazed floor and wall
tiles, that are produced by utilizing the latest printing and laser cut technology. Fu-Wang
Ceramic Industry Limited meets European standards in production. With an affordable pricing
structure, the company aims to reach a vast residential and commercial property development
market that is presently experiencing rapid growth in Bangladesh. The company not only sells its
products in our country but also exporting in the North Eastern region of India.

Management:
1.Chairman-Mr.Alexander Lee
2.Managing Director-Mr. Khaled N. Kabir

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Shinepukur Ceramics LTD
Shinepukur Ceramics Limited is a member of BEXIMCO Group and it is the largest private
sector business in Bangladesh. Shinepukur Ceramics has been registered in Bangladesh in
1997and thieir production of tableware started in April 1999. They produced different kinds of
table wears like Bone-China, Ivory China, dinner set, soup set, tea and coffee set and so on. In
addition, SCL is equipped with the top-of-the-testing and Quality Control Laboratory facilities,
Decal Plant, Carton-Packaging Plant, Modeling Unit, and has at its disposal its captive gas-based
Power Generation capability, and the best effluent discharge mechanisms in place. The Company
is also an ISO 9001/2000 certified Company. Since commencement of the commercial
production at the end of 1999, Shinepukur has successfully developed a substantial export
market for the top-of-the-line Bone China and Porcelain Tableware and the customer portfolio
now includes world renowned Tableware companies in the UK, USA, Spain, Italy, Australia,
New Zealand, Norway Sweden, Russia, UAE, Denmark, Germany, Turkey, and India.wom

MONNO Ceramics Limited
Monno Ceramic Industries began producing porcelain tableware for the Bangladesh home
market in 1985, and secured its first export order the following year. Monno soon earned an
enviable reputation for both quality and value. The subsequent introduction of bone china to its
range of quality dinnerware has only served to strengthen that reputation. As the original
exporter of porcelain dinnerware Made in Bangladesh Monno is proud to contribute to the
growth of the Bangladesh economy. In a developing country the kudos accorded to exports and
the valuable foreign exchange derived is significant. Today in Bangladesh Monno is a household
name and regarded as one of the countrys premier companies.Bangladesh is still a relatively
young country. When after independence British India was partitioned in 1947, West Pakistan
and East Pakistan were created. Subsequently East Pakistan proclaimed independence in 1971
and Bangladesh (meaning Bengali homeland) came into being. As a developing country
Bangladesh is accorded preferential tariffs by the European Union which means zero import duty
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on Monno tableware. Monno offers products in Porcelain, New Bone China, Ivory China, and
real Bone China. In fact they source the materials in their bone china body and glaze from Stoke
on Trent, to which is added pure water filtered from their own wells. So Monno likes to think of
it as English Bone China. Customers include many well known prestigious department stores,
speciality and chain stores around the world for whom they manufacture own label products.
Some customers have been with Monno for as long as 20 consecutive years and Monno is proud
to enjoy a close relationship with them. They work with customers to develop their own shapes
or decorations, or can offer designs from their extensive stable. Their talented teams of artists
and designers work closely with the experienced technicians of an own in-house decal print unit.
That combination of man and machine helps achieve striking results.

RAK Ceramics Profile
RAK Ceramics (Bangladesh) Ltd. BDT 4009 million global conglomerate in the ceramic
industry. We have always strived to create the right ambience in your life with a perfect blend of
technical finesse and aesthetics while creating thousands of designs in Ceramic Tiles & Gres
Porcellanato and several models in Sanitary ware.
Ceramics:
RAK Ceramics Bangladesh produces a very wide range of products in the Ceramic Range with
products such as Ceramic Wall and Floor Tiles, Dcors and Borders, Cladding etc.
Sanitary ware:
In Sanitary ware various models are produced in wash basins (mounted as well as pedestal
types), bathroom sets (water closet & water tank), Counter and many associated accessories.
Marble shades products, Single set (OASIS) are exclusive collection of product range. Moreover,
Double flushing system, Jet flushing system, Soft closing Hinges, Spreader are the available


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Chapter 3: Industry Analysis based on Porters Five Forces

Michael Porters Five Forces Model is one of the most famous tools for analyzing an industrys
environment. According to this model, a company in an industry can achieve its existence and
success if it can overcome and sustain the competitive forces of the market within which it
operates respectively.
The Ceramic Industry of Bangladesh is a booming sector and the growth of both its domestic and
local markets indicate that it may become one of the biggest foreign exchange earners for the
country in the coming years. Therefore, analyzing the industry environment of our ceramic
sector is of great concern. This paper investigates the industry environment of the ceramic sector
of Bangladesh by using Porters Five Forces. The analysis shows that the collective impact of the
competitive forces is from moderate to weak and hence, the Ceramic Industry of Bangladesh can
be considered to be competitively attractive in the sense that industry members can reasonably
expect to earn suitable profits and a good return on investment.

3.1 Rivalry among existing companies:

The ceramic industry of Bangladesh faces stiff competition from foreign sources like Sri Lanka,
China and Thailand but the domestic marketplace is yet weakly competitive. Ceramic
manufacturers like Monno Ceramic, Shienpukur Ceramic, Standard Ceramic, FARR Ceramic
and Bengal Fine ceramic are still leading, especially in the export market, and have been recently
expanding their plant to further improve their share of export market. All other ceramic
manufacturers are also increasing their production capacity following robust growth in demand
for ceramic wares. Due to the global recessionary impact and rising labor cost, the developed
countries are placing more orders to low-cost countries for quality ceramic wares; hence, the
export demand for Bangladeshi ceramic ware is growing rapidly. Addressing this strong growth,
the numbers of competitors, roughly of equal size and competitive capability, are increasing in
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this industry day by day (Khandaker and Alamgir 2006, Khan). The competing local
manufacturers are also active in making fresh moves to improve their market standing and
business performance. For instance, X Ceramics produces ceramic tiles for both interior and
exterior usage. According to the management of this company, they are the first to manufacture
tiles made of ceramics intended for external use that would be manufactured within the country.
Besides, X ceramics is also increasing its production capacity to manufacture 20% more output
than their nearest competitors to gain 25% of the market share. This company is also coming up
with powerful strategies like teaming up with overseas entity to share its technological know-
how and to turn its concern into the first ever European Standard multinational joint venture
ceramics manufacturing facility. The strongest competitive pressures come not from outsiders,
but also from current industry participants. Great Wall Ceramic Industries Ltd., has announced to
produce a high-end product, fine-cut tiles with decorated borders to meet local demand since
demand for costly tiles is high. FARR Ceramics Ltd., which went into commercial production in
February 2007, already bagged 10% market share in Bangladeshi ceramics exports and is among
the few now showing resilience against global recession. Moreover, the management of FARR
Ceramic claims, it is the first Bangladeshi company to enter the export market of Argentina after
shoring up its foothold in Europe (Rahman 2009c, 2009f, Bhuiyan 2009, Star Business Report
2009). However, increment in the number of new plants, capacity development, product
development and market expansion by ceramic ware manufacturers of Bangladesh are still low
compared to the robust growth in demand both in export and local market. As there still exit
ample growth opportunities in this industry, the Journal of Business and Technology (Dhaka),
rivalry among the existing companies are still weak, thus making this sector more attractive for
the potential entrants.

3.2 Threat of new entrants-
Bangladesh has certain competitive advantages in the international market in terms of
availability of gas, cheap labor and the generalized system of preferences (GSP) that allows
Bangladesh to have duty-free exports to Europe. Along with that, there is also no quota
restriction on the export. Thus, seeing this sectors potentiality for investment, the ceramic
industry has always attracted both local and foreign investors. Apart from that, the domestic and
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export demand for ceramic products are also rising rapidly, widening the gap between demand
and supply. Thus, new entrants can expect to earn beneficial profits by capturing the untapped
demand (Rahman,2009). Presently, the construction industry including residences, shopping
malls and offices are growing so fast that the ceramic tiles business is becoming one of the
booming and prospective sectors with a staggering annual growth rate of 20 percent, as shown in
Fig. 5.1(appendix). The demand for ceramic table wares has also significantly increased in our
country. This can be attributed to a continuous rise in use among the middle income groups in
the past decade. Another reason might be the sky-rocketing price of gold for which many people
have switched to giving ceramic tableware at weddings in contrast to the traditional practice of
presenting gold jewellery at wedding ceremonies. The export of ceramic products registered an
average growth of 20percent in the last decade and the domestic sales of ceramic products
account for approximately Taka 1000 crore annually. Hence, more players are joining the market
like Dulal Brothers Ltd., X Ceramics and Peragon Ceramic Industries Ltd., etc. Several other
ceramic ware manufacturing companies are also about to enter this sector quickly. According to
Bangladesh Ceramic Wares Manufactures Association (BCWMA), a medium scale ceramic
plant needs around Taka 10 crore in initial investment (Journal of Business and Technology,
Dhaka). In addition to the existing factories, five or six new ceramic factories would be set up
with an investment of around Taka 3000 crore, which will generate employment for around 0.5
million workers. Besides, the importers who used to import low-cost Chinese goods are now
coming to set up manufacturing units of their own. According to BCWMA, this transformation
could occur as the government increased the supplementary duty on imports of tiles and sanitary
ware to 45 percent (Islam 2010, Rahman 2009).
This pool of new entry into the ceramic industry of Bangladesh indicates that this sector has low
entry barriers as the government regulations are supportive for new entrants. However, the
number of new entrants and their capacity development is low compared to the growth in
domestic export and demand. Hence, the competitive threat of potential entry is not strong
enough to place significant competitive pressure on the existing manufacturers.



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3.3 Threat of substitute products-

The ceramic industry is already in fierce competition with low-priced sanitary ware, tiles and
table wares that are mostly imported from China. Along with that, this sector is also facing
strong competition from firms in other industries that are offering substitute products. The
demand for low-priced, attractive and durable substitutes of ceramic tableware like melamine
wares, aluminum wares, steel kitchen wares, glass wares and plastic wares are increasing and the
local manufacturers of these products are drawing significant profits from the thriving domestic
market for these crockery items. In recent years, large scale manufacturers have entered the
crockery market, with their brands competing strongly with both local and foreign ceramics
products of the same kind. Some local manufacturers are also producing world-class plastic
goods, spending a large amount on TV commercials and selling thousands of pieces every
month. These companies include, Bangladesh Melamine, Sharif Melamine, RFL, BRB and
GAZI, who are contributing largely to this thriving crockery market and creating demand for
new products. As the import of crockery has increased fourfold in the past decade, these local
large manufacturers of substitute products are also expanding their existing capacities with focus
on new product lines to attract more customers in the respective markets (Islam 2010).
Moreover, the history of tiles business is not very old in Bangladesh. Mosaic is still popularly
used in many urban and sub-urban households. Other substitutes of tiles also include wooden
flooring or bamboo flooring, ply board, marble stones and other artificial stones for both interior
and exterior usage. Hence, the availability of these low cost, attractive and durable forms of
substitute products are exerting a comparatively competitive pressure on the existing companies
of the Ceramic Industry in Bangladesh.

3.4 Bargaining Power of Suppliers
Bangladesh needs to import 100% raw materials for producing ceramic wares. The raw materials
account for 35-40 percent of the total production cost of the ceramic products. The raw materials
of ceramic wares include China clay, ball clay, fire clay, feldspar, quarters plaster of Paris,
aluminum oxide, aluminum hydro oxide, zinc oxide, coloring items and liquid gold. These raw
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materials and Jahan: Ceramic Industry of Bangladesh 111 machineries are imported from
mainly India, China, Rumania, Indonesia, Italy and Germany. The Mymensingh clay could be
used for producing tiles, but in 2007 the government put an embargo on cutting hills which
stopped the ceramic manufacturers from procuring raw materials from the Mymensingh hills.
Since in Bangladesh, there is a shortage of raw materials, equipment and machineries for ceramic
industry, it gives the supplier more leverage in bargaining the price. But the supplier base of
ceramic sector is moderately large enough to weaken the supplier power. However, some of the
suppliers like India are also showing interest to integrate into the ceramic industry of Bangladesh
and perhaps could become a powerful rival (Chowdhury 2004, Islam 2010, Khan 2009).

3.5 Bargaining Power of Buyers
Individual consumers of ceramic products in this industry have much bargaining power in
negotiating price concession or other favorable terms with seller, hence, the individual buyers
mostly pay the sellers posted price. However, it is relatively easy for buyers to switch to
comparatively low-priced imported ceramic goods; keeping this in mind, the local manufacturers
are aiming for competitive pricing to attract and retain customers. Ceramic ware manufacturers
of Bangladesh have managed to create a solid stand in the international market. So, most ceramic
manufacturers, keeping this foreign market success in mind, have turned more towards exports.
Bangladesh has got a huge opportunity in ceramic tableware market because of increasing
demand from the developed countries where the production cost of ceramic tableware has
increased significantly due to an enormous rise in labor cost. Bangladeshs export markets
include the UK, the USA, Canada, Spain, Italy, Australia, New Zealand, Norway, Germany,
Sweden, Russia, the UAE, Denmark, France, Mexico, Argentina, Turkey, India, Nepal, Bhutan
and many other European and Middle East countries (Rahman 2009a). The bargaining power of
these international buyers is reasonably strong enough to negotiate for price concession and
favorable terms since they can always switch to low-priced suppliers of ceramic wares from
China, Sri Lanka, Thailand and Malaysia. But due to increased production cost, these countries
are also failing to offer competitive prices and losing their share in the international market.
Thus, more international buyers are moving towards Bangladesh as it has cost competitiveness in
terms of gas supply, cheap labor cost, skilled labor and also has competitive advantage of
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possessing bone china technology (Khan 2009). As the number of buyers, both in local and
international market, is growing, the bargaining power of buyers is weakening.


Chapter 4

4.1 Recommendation

1. Need to bring some innovative change on the product styling also in product
diversification to attract more customers also to have a firm grip on local and
international market.
2. Barriers need to be removed for a certain period; time limit would be till the industry is
fully settled down to become a leading earning sector of the country.
3. Collaborate with other industries in terms of getting full grasp on hi-technological
factors.
4. Capturing international market by providing product which is perfect in terms of quality
also price is negotiable and flexible for the international buyers.
5. Make interesting deals with the suppliers which they cannot refuse, neither they become
dissatisfied- for less rivalry and for long run business purpose.
6. Segments of the domestic and export market would be beneficial too.
7. Supply of ceramic goods needs to be increased in the domestic market to match up with
demand. Demand for ceramic products is high even at home as the local companies
export much of the products to the international market. Most of the ceramic factories
import ceramics mainly from China.
8. International standard laboratory needs to be opened to maintain the quality.
9. Needs government support through lower interest rates.
10. To increase company image, brand image and for social responsibility, they can do some
social works liketree plantation, blood donation programs etc.
11. They can increase the advertising efforts. Billboard may be the best way in advertising of
their products.
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Conclusion
With the increasing demand of ceramic products both at the domestic and international markets,
all major Bangladeshi ceramic companies have been expanding their plants and operations. This
industry has a bright future if it can maintain the quality and fix up all the problems.














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Reference List

Aliakbari, F. and H. S. Tousi. n.d. Using Porters Five Forces Model for Analyzing the
Environment of Environmental Media-owner Companies. (Case Study: An Ad promotion
company). Retrieved from http://icbm.bangkok.googlepages.com/78. Fatemeh. Aliakbari.
AR. Pdf
Daily Ittefaq .2009 November 7. Ceramic Wares Export Potential.
Bangladesh News Online.2008, September 17. Ceramic Sector Eyes $100m Export.
Retrieved from http://www.independent-bangladesh.com/ 200809169876/business/
ceramics-sector-eyes-$100m-export.html.
Islam, M. S.2010, April 16. Ceramic Importers Turn Manufacturers. The Independent.
Khandaker, N. and R.Alamgir. 2006, August 1. Not Just Your Average Cup of Tea.
The Daily Star.
Khan, A. A. n.d. Ceramic Industry in Bangladesh. Retrieved from
http://www.bangladeshinfo.com/business/others01.php.






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Appendix


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