Tile industry in Pakistan has 4-5 major participants viz. Shabbir Tiles, Master Tiles, Karam Tiles and National Tiles. The market comprises of urbanised and semi-urbanized population which is immense market for these participants to provide to. The GDP growing rate nevertheless it is non appreciable but it suggest that the market will further increase by the GDP growing rate. With the presence of this immense market every company in the tile industry big figure of clients.
Tile industry is besides quickly capturing the marble floor users because marble-tiled floors require smoothing in the installation where they are topographic points and this is extra cost that marble flooring requires over tile flooring. Although comparing marble tile with regard to quality and functionality it enjoys the benefits that include lastingness, aesthetics, hardness, higher scratch opposition and better H2O opposition than other tiles no affair how hard a tile is.
Tiles as a merchandise would lie in the high engagement consumer purchasing behaviour because purchasers require a batch of information as they are non in a wont to buy it as the demand arises when a new abode or office is built or the old tiles are after a long life are now in a bad order and needs to be replaced. Buyers are good cognizant that they have to do the determination after careful and acute choice and this is why their behaviour is assortment seeking.
Price except for luxury merchandise affairs in every merchandise, but as the purchasing behaviour is non of frequent in nature and the purchasers are non good informed about the monetary value alteration happening in the market therefore the market is non monetary value sensitive
Marketing attempts in the Tile industry are non up to the grade and most of the companies are merely selling their merchandises on corporate branding footing. But their corporate trade name image is strong plenty to clearly distinguish itself with others.
Since the tile market includes urbanised and semi urbanised population of the state it can be assumed that the clients are profitable.
All these factors make dickering power of purchasers highly low. This can be explained with the aid of Template on Bargaining Power of purchasers which follows next.Template on Bargaining Power of BuyerEffect of Macro Environment on Bargaining Power of Buyers – Plague Consequence
No evident affect
Due to dual digit rising prices in the state there has been a immense impact on the demand of the every trade good other consumer packaged goods. Ceramic tiles industry dependant on building industry is besides a victim of the high rising prices in the state and their demand has besides declined to some extent. This fact is apparent from the past tendency from which it can be observed that demand has become relatively slower as compared to old old ages. Since most of the tiles clients are industries, the recession has led the tendency of building downwards. Hence the purchasers are negatively affected by this economic status.
Social Trends favors the industry as the population of the state is chiefly position witting and are concerned with the stuff benefits greatly. Since Tiles as a tendency is in the focal point the purchasers have no pick instead than to travel with the tendency and this benefits the Tiles industry in general.
The client expects the companies in the industry to supply them with the latest designs, colourss and forms for better client satisfaction and this requires the latest engineering to maintain them updated with the tendencies. There are imported tiles in the market which give purchasers a assortment to choose which slightly increases the bargaining power of purchasers.
Menace of New Entrants
The Fixed cost in the Tile Industry accounts for 50 % -80 % of the Entire Cost. Per unit cost diminutions with every extra unit produced. Economies of scale production can significantly profit in cost economy and this clarifies that big houses have a cost advantage.
There is immense potency in the industry for marketing attempts. It has besides mentioned earlier that the companies bing in the industry are simply capitalising on corporate trade name image and there is no attempts done to make trade names for different tile merchandises or its discrepancies. However the bing corporate image besides differentiates companies with each other but with merchandise stigmatization or merchandise discrepancies branding companies can command premium and can increase client lifetime equity.
Every industry has its ain kineticss. Some industries are capital intensive and some are non. Some industries are labour intensive and for some industries to survival are dependent on uninterrupted technological alteration. Tile Industry is non capital intensive nor requires high-fidelity engineering. In Pakistan non much mechanization is done in this industry and the startup cost is for the Tile industry is besides non rather high.
Serviceable Equipment is expensive because due to the political state of affairs in Pakistan Plant and Machinery suppliers are non willing to come to supply after gross revenues services, even they are loath to come for installing of the Plant and machinery.
Since the market is large plenty and there is a possible that new comers can be accommodated there will be no revenge from the bing participants towards the new entrants and there will be no hurdlings to procure distribution channels or beginnings of supply new entrant may non confront any trouble come ining the industry.
No limitations as such are imposed by the authorities on the ceramic makers but the regular review and intervention by the authorities functionaries on the procedures of the companies is an obstruction for the makers. Hence, the new comers to this industry will confront unneeded intervention by the authorities.
There no such merchandise differences in this industry and comparatively, they will non hold many jobs in obtaining skilled people, stuffs or supplies. Hence, there will non be any legal barriers at the clip of entry but authorities review is a challenge for the new comers.
Increasing rising prices and increasing fuel cost in the state greatly impacts the Tiles Industry. Fuel Cost comprises of major proportion in the entire cost of production of Tiles and this is why this has a direct impact on overall cost of production and this factor is non merely vulnerable for the bing participants but besides possible obstructor for new comers. The magnitude factor can non be undistinguished or of low importance.
Turning population and increasing displacement towards urbanisation makes the industry potentially attractive and there are non much competition in the industry so societal factor is drawing Threat of New Entrants towards high nevertheless the magnitude of pull consequence towards high can non be higher because lower competition are non merely factors to bring on New Entry.
There is a slow growing in the engineering required for the production of ceramic merchandises. The innovation of new, improved and higher productive capacities of new machines tend to make unconventional barriers but being a labour intensive industry it is slow paced. They are unskilled and non readily accepting the new processing techniques and programming logics.
The industry in concern is the Ceramic Tiles Industry. Buyer has assortment of replacements available that include marble tiles, granite tiles and mosaic ( out dated ) . Marble flooring and Granite flooring are better surrogates to Tiles ( ceramics ) and they are besides expensive than Ceramics Tiles. Marble flooring is lasting and enjoys aesthetics as good but it requires to be polished with in the installation where they have to be floored, but it is better surrogate in public presentation in functionality than Tiles on the property that include: low or no H2O absorbing and has low scratch rate. Granite Tiles are besides a good surrogate but they is besides expensive than Ceramic Tiles and they more portion other kineticss of marble tiles.
These replacements are existent and purchasers can replace them with ceramic Tiles nevertheless it has besides been observed that tendency is towards ceramic tiles and people are traveling off from marble and granite flooring. This analysis shows that menace of replacement is high. It can besides explicate with the aid of Template.
Template for Threat of Substitutes
No evident affect
Inflation and lower GDP growing rates indicate that monetary values of the surrogates affair. This benefits the cheaper surrogate which is ceramic tiles. Ceramic Tiles cost lesser than marble and granite and another of import point is that Ceramic Tiles do non necessitate shining.
Presents aesthetics have become highly of import for the clients. They demand for designs and convenience in care of their floor. Ceramic Tiles are relatively cheaper and easy to keep than Marble and Granite. Granites and marble both are good liked by purchasers on the footing aesthetics as the aesthetics are natural nevertheless tiles are besides aesthetically designed and are no less than in aesthetics to their comparable surrogates. There is besides a displacement from marble tiles to ceramic tiles every bit good therefore the magnitude of this force is really low on the low side
With the changeless promotion in engineering, new methods and equipments are being introduced in ceramic fabrication. Hence, the company needs to update harmonizing to the tendencies in the industry maintaining in position both local and international markets.
Low Medium High
Overall Picture of Threat of Substitutes
L ( 1 ) M H ( 10 )
Dickering Power of Suppliers
The Inputs required for ceramic tiles fabricating include clay and chemicals. These inputs are of standard quality in nature. National Tiles are besides utilizing standard inputs. There are no complications in procurance of these inputs, a batch of possible providers are available and providers can be switched easy. The Nature input providers is such that they are making their concerns on short to medium graduated table and this clarifies that providers are non in a place to come in into the Tile Industry ‘s concern. For these providers, the companies in the Tile Industry are their of import clients because there are non many companies in the Tile Industry, barely 5-6 major participants, this makes client base scarce for the providers. The providers have to keep good dealingss with these companies in order to stay profitable.
Costss of Purchases of these inputs are comparatively a little part of the overall cost as the major part of the cost is on operating expenses which include ingestion power and gas. This all sums up and the analysis implies that the bargaining power of providers is low.
Template for Dickering Power of Supplier
The jurisprudence and order state of affairs in the state is a job for the providers as companies get the natural stuff from mines in the northern countries of the state. The unstable political conditions become a barrier for the providers to supply the makers with natural stuff on clip and in proper status.
Inflation may do addition in cost of natural stuff, but there are non a batch of companies in the market therefore the providers have a low bargaining power as the cost of purchase does non simply depends on the natural stuff but even other operating expenses which form a constitutional part of the cost of stuff in fabrication tiles and ceramics.
No evident affect
No evident affect
Rivalry among Rivals
Tile industry growing is linked with the building industry. GDP growing rate can give an thought about the growing rate of any industry in an economic system of a state. Since the GDP growing rate in the past oscillated around merely 2.5-3 % , the growing of Tile Industry can non be rapid because the industry itself is in the early phase of adulthood.
It has besides been stated antecedently that fixed costs in industry is around 50-80 % so it covers the major part of the entire cost. Merchandise differences are important in the Tile industry. National Tiles are known for their lasting tiles most suited for the industrial sector of the industry whereas Master Tiles are popular for their aesthetic quality.
National Tiles Limited focuses on one property and specialized in it which is lastingness and hardness whereas other participants of the industry are good diversified.
Surrogates to Tiles ( ceramics ) are expensive and they besides require other cost to be incurred like marble requires smoothing so there is presence of exchanging cost.
The rivals are of much bigger size than National Tiles. National Tiles production is 2000 metres per twenty-four hours whereas all the other rivals are bring forthing within the scope of 15000-2000 metres per twenty-four hours which is many times greater than the production of National Tiles. One ground of National Tiles holding low production end product and still executing good on the industry is that the clients of National Tiles are Industrial and Commercial Users whereas the clients of the rivals are chiefly residential users.
Most of the foreign companies are non willing to do investing in Pakistan due to the jurisprudence and order state of affairs in the state. This reciprocally affected the concerns in the state but at the same clip it is chance for the local makers to boom as they van expect that they are non traveling to hold competition from a Global Company coming to Pakistan,
Peoples are seeking aesthetics in the tiles and the companies that are good at planing the Tile can salvage themselves from the competition from the rivals.
The industry is labour intensive more than capital intensive. With immense and modern engineering, companies in the industry can vie on the footing of modernised engineering in which they have invested but a immense part of fabrication tiles depend on the figure of labour. Therefore more than engineering, the industry is dependent on the labour efficiency.
Overall Picture of RivalryOpportunities and Menaces
Worsening rural population due to improved life conditions, nevertheless 63.8 % of Pakistan ‘s population still lives in rural countries which remains an un-tapped market
Supply of power and gas remain the cardinal cost- related issues that impact the industry
Low competition among rivals in industrial tile sector
No inducements from the authorities to better fight of the industry i.e. , tax-exempt zones, subsidy, and uninterrupted power supply etc.
Abundant handiness of inexpensive labour ( 15.6 % of entire labour force has primary instruction merely )
Due to take down import duties, local manufacturers are happening it hard to vie with Chinese tile imports
Demand turning for different designs and assortment in tiles by people who are in the class of upper middle & A ; upper income group
Thymine he tile industry is extremely dependent on the building industry therefore the kineticss of building industry besides effects Tile Industry
Large excess capacities in the international markets
Competitive Profile Matrix -CPM
a. Value Chain Analysis
Approximately 60 % input stuffs are produced by National Tiles itself which includes ceramic colourss and other stuffs where as 40 % input stuffs for fabrication tiles are purchased from ‘Mian-Waali ‘ and ‘Saree ‘ country of Pakistan which includes minerals ( chemicals ) and clay. The company is non to a great extent trusting on its providers to supply them the whole stuff instead it prefers to hold modest perpendicular integrating which is a competitory border for the company.
The Operational activities of National Tiles Limited are aligned with the quality conformity. German engineering is used in the procedure of fabrication tiles which assures the specification conformity of the Tile. Plant in Nooriabad operates with the capacity of 2000 metre per twenty-four hours, presently company programs to spread out its production capacity from 2000 to 4000 metre per twenty-four hours, for which they are puting up a separate works.
The Process of Manufacturing tiles at NTCL consist of following activities:
Slip Preparing & A ; Glaze Making
For the faux pas readying the natural stuffs are assorted up with H2O as per the demand. Proper composing along with the sufficient sum of H2O so gets loaded to the all Millss for crunching
Cast and Drying
Slip is cast into plaster molds, due to soaking up of H2O the surface becomes thick with clip so the tiles are dried to a low H2O content to increase the strength of organic structure, which is called drying.
Then tile is brought for glazing which involves smoothing the surface of the tile to give it a glassy form.
Then the tile is brought for firing in kiln, as a consequence the organic structures will take topographic point a series of physical and chemical reactions, and will take a fixed form.
Inspection, mending, Re-firing & A ; packing
As a concluding measure, NTCL inspect the finished merchandises to look into its conformity to the quality and so sent for concluding wadding, in instance a large part of tile is out of specifications, the tile is repaired and re-fired.
Approximately 90 % distribution is done by National tiles itself, and they are engaged in forward integrating that does n’t do them rely on others to administer their merchandise, in fact national tiles believes that they are making good than others in distribution country because it is good designed by their expert people which does n’t go forth any major failing that may do hold in handiness of the merchandise to the clients. Since industries are their chief clients whom they straight supply the tiles at the topographic point where the tile is required to be floored. The major part of their gross revenues is in Karachi so distribution is non really broad since most of the industries are located in Karachi where as they besides supply tiles to the industries in Punjab chiefly in Faisalabad.
Selling and Gross saless:
Selling is done chiefly through Personal Relationship ( PR ) and company contacts. This is necessary as 90 % of the gross revenues are done straight through the company showrooms, merely approximately 10 % of the gross revenues are through the engagements of mediators or traders. The company has developed good PR relationship overtime with the clients and possible clients. National Tiles Limited is non involved other selling activities but still the corporate image has earned good name and good will for the company.
With the aid of the gross revenues squad of the company the company has negotiated and signed a contract with Pakistan State Oil for adorning all the gasoline Stationss ‘ shocking with National Tiles. Second the company has been able to successfully put to death the contract with CDGK to adorn Karachi metropolis. For this purpose National Tiles were used at the beach strip pavings and sitting countries at Sea View every bit good to adorn the subway at Clifton.
National Tiles – Head Office, Factory and Showrooms:
NTCL is a public limited company and the exclusive maker of Extruded Vitrified Split Tiles. The company mill is situated 80 kilometer from ace main road near Nooriabad which makes it easier to secure and transport the needed natural stuffs. Besides it provides the chance of enlargement if required in future as this country has many empty secret plans still available.
NTCL has strategically placed its caput office at 8th floor, Al-Sehat Center, Annexe Regent Plaza Hotel, Rafiqui Shaheed Road, Karachi. This helps them to be situated at a topographic point which is easy approachable. Furthermore, being near to a luxury hotel makes it easier to run into proficient experts from abroad.
The company has more than 80 traders who take attention of the gross revenues and distribution of tiles throughout the state. Since the gross revenues attempts are done straight by the company, to provide to this intent they have established salesrooms in all the major metropoliss like Karachi, Faisalabad, Lahore, etc. These offices showcase all the merchandise samples, colour catalogues and designs for the clients to detect, take and order from.
The company has 6 national offices in Lahore, Islamabad, Peshawar, Faisalabad, Multan and Hyderabad to assist gross revenues throughout Pakistan. Their chief gross revenues and show centre for Karachi metropolis is in saddar behind Hotel Metropole while gross revenues mercantile establishment is in Golimar, Ghousia Colony.
Management at National Tiles has programs to name traders in international market like Gulf States, Singapore, Malaysia & A ; Bangladesh and other such parts. At the minute they are exporting split tiles to UAE through direct gross revenues for specific undertakings, nevertheless the measure is really low.
Material Procurement – Local and Imported:
NTCL procures 40 % of natural stuff from the local market while the staying 60 % of natural stuff is manufactured by them at their mill works through suppression of rocks. They buy ‘clay ‘ , which is one of the chief constituents for the tile organic structure, from Mianwaali and Saree.
Previously the company used to purchase chemicals and dyes from imported chemicals ‘ market in sadder. The providers till present remain unfixed as the chemicals are procured from providers in the unfastened market.
Next they would prove them in their research labs before use in their production procedure. This was done in order to look into if the chemicals are of the same consistence and pureness degrees or non as is required by the tile expression they implement.
Soon the company ‘s R & A ; D has made them self sufficient in dye production. This has besides helped in cut downing the procurance cost as the dyes were an expensive stuff due to import responsibilities, etc.
At the clip of company ‘s get downing old ages about 80 % of the entire stuff used to be imported, nevertheless the company has progressed and brought this figure down to approximately 20 % of entire stuff procurance.
Use Of Technology:
National Tiles are the exclusive user of German engineering in their fabrication works in Nooriabad. They started their operation with the proficient coaction of M/s. Agrob Anlagenbau GmbH, Germany. They have best machineries from China and Germany to oppress rocks to do dust and clay. They have programs to set up another works with machine-controlled machineries. For proficient aid they have local applied scientists who have accomplishments to work with heavy machineries operated in NTCL.
Another facet of technological development at National Tiles is the use of Split Technology for the tile fabrication. This enables the production of two tiles in the one rhythm therefore cut downing the cost of separate production.
Furthermore, the company under consideration is the lone 1 in Pakistan to do glassy tiles which sustain rough conditions conditions and many other trials of scratch and lastingness. This is made possible through firing them at really high temperature ( about 1180oC ) in a ‘kiln ‘ which is operated 24 hours.
Management and Employees – constructing a strategic plus:
National Tiles maintains rigorous policy to enroll new employees. The enlisting and choice procedure is practiced internally. New choice for vacant place is done after interviews and review of past experience every bit good as academic records.
The entire work force appointed by the company is about 300 people. Out of this entire, about 200 workers are assigned to the mill and the production procedure while 80 employees fall under the caput of selling and gross revenues. All the employees are professionally trained as per the company demands.
Executive Management of NTCL comprises of:
Agha Tajammul Hussain ( Chairman & A ; Managing Director )
Agha Tahir Hussain ( Deputy Manageing Director )
Agha Babar Hussain ( Director Production )
Agha Afsar Hussaib ( Director )
Agha Athar Hussain ( Director )
Mrs. Niaz Fatima ( Director )
Mrs. Shafiq Fatima ( Director )
Agha Mustafa Hussain ( Director Gross saless & A ; Managing )
Agha Murtaza Hussain ( Director )
c. Trend of Key Financial Ratios
Financial Ratio Measures the fiscal wellness of a company and gives a speedy image of house ‘s strengths and failings lied in operating, puting and funding activities. These fiscal indexs are rather helpful while explicating the scheme.
NTCL ‘s fiscal place and public presentation is really surprising as indicated by each ratio in each twelvemonth because the tendency of about all ratios is non consistent in all 3 old ages.
Indexs TO LIQUIDITY:
Company ‘s ability to run into the short term duties is worsening over the last 3 old ages, which is negative mark for the company ‘s short term creditors ; company is systematically falling short of liquid plus to pay the sum due from the creditors which may do company to lose its short term recognition adoption for its operating activities.
In twelvemonth 2008, company is holding merely 30 % of the easy hard currency exchangeable assets to pay the liabilities which are about 3 times of the most liquid assets this ability farther goes down in twelvemonth 2009 and retrieving somewhat in 2010. The difference between speedy and current ratios shows that in twelvemonth 2009 and 2010 the company is maintaining equal stock list which is non supposed to be easy hard currency convertible this may do uneasy feeling to short term creditors/supplier to impart stuff to the company on recognition.
Indexs TO PROFITABILITY
Gross Net income:
Gross net income border shows that on mean 82 % is the cost of goods sold over the period of 3 old ages, gross borders of the company are really inconsistence due to little diminution in the gross revenues and little addition in cost of goods sold that reflects worsening efficiency in the operational cost direction.
Operating Net income:
For first two old ages the operating border is holding increasing tendency that shows the company is able to cut down its operating activities disbursals but borders goes for really down in the 2010 that shows incompatibility in pull offing operating activities disbursals.
Net Net income Margin:
As compared to last two old ages 2008 and 2009, borders have declined in 2010 due lessening in the gross revenues of the company that declined the net net income borders which were increased in last twelvemonth.
Tax return on Asset:
Assetss invested in the company are non acquiring up to the grade return except a small return in 2009 and once more diminution in 2010.
Overall profitableness ratios are marginally affected by worsening in 2010 after some addition in 2009 as compared to 2008.
Indexs TO SOLVENCY:
Due to heavy losingss in past old ages company has significant accumulated losingss in 2008, that could do company to lose its equity which made them to travel for more long term debt in twelvemonth 2009 and 2010, and harmonizing to company ‘s policy managers can put in giving involvement free unbarred loan to company in instance of any crises so that company should non be fall short of financess for any enlargement.
Timess Interest Earned:
The company ‘s ability to pay involvement from its EBIT has increased in twelvemonth 2009 the ratio increases because of addition in the gross revenues that increased EBIT but this ratio goes down once more in 2010 due to worsen in gross revenues therefore this incompatibility would give ruddy signal to external debt holders ( other than managers of company ) to avoid imparting money to the company.
Indexs TO ASSET MANAGEMENT:
Inventory Employee turnover:
On mean company is able to change over stock list into gross revenues 1.94 times in a twelvemonth in 2008 and this tendency is more or less maintained in following two old ages 2009 and 2010 this public presentation really slow but consistent over 3 old ages.
Entire Asset Turn Over:
On norm in all 3 old ages the assets generate about a half unit gross revenues per unit and this tendency is worsening over last 3 old ages which indicated the inefficiency of assets to bring forth sensible per unit gross revenues.
Index TO SHARE HOLDERS:
Due to little sum of income in 2008 EPS is below norm but it has improved in 2009 due to increased gross revenues and increase profitableness but EPS goes down once more in 2010 which is unattractive for an equity investor to put in NTCL.
Tax return on Equity:
Though company had some net incomes in all three old ages but their equity turned into negative due to heavy accrued losingss from past old ages which make return n equity negative in all 3 old ages but it tends to come in positive due to gain coevals in last three old ages and expected net income coevals in approaching old ages excessively.
d. Strategic Cost Management Processes:
Cost direction has become a critical endurance accomplishment for many houses in today ‘s extremely competitory environment. But it is non sufficient to merely cut down costs. Alternatively, costs must be managed strategically. Strategic cost direction is the application of cost direction techniques so that they at the same time better the strategic place of a house and consequence in decreased costs.
Though NTCL follows traditional cost accounting techniques to pull off cost like other companies in the industry that determine the cost. Comparing those with the criterions to happen out discrepancy and taking actions to cut down discrepancies. Yet to some extent NTCL is involved in strategic cost direction by concentrating on the cost of each value concatenation factor. Chiefly their operations derive the major cost part, which is about 60 % of the entire cost. The company needs to pull off it efficaciously. The dislocation of their operations cost is: Natural stuff is about 10-15 % , labour about 20 % , other over caputs 10 % but energy and gas cost is the major ball of their entire operations cost which is about 55 % , due to high cost involved in the operations company has adopted following procedure to cut down some of the above costs, and avoid other new costs.
The company uses split engineering in its operations in which two tiles are produced in one rhythm that reduces the cost. Furthermore, they have stand by system of electricity to avoid suspension of production in instance of any major dislocation of electricity that may do arrest of production that increases the idle clip of labour, and tick over of clip of machinery, hold in on clip bringing of orders to the clients. To avoid hapless quality and defect costs, the company follows bar cost steps whose cost is less than what it costs in hapless quality and defects by holding quality planning, Quality betterment squad meetings, quality instruction and preparation, procedure capableness rating. Company is able to command over cost to some extent but it has non achieved its full aims of cut downing cost and bettering efficiency as shown in company ratio tendencies in profitableness ratios which are inconsistent due to cost of gross revenues up and downs. Though company has strategic cost direction procedure but the job lies in executing of procedure.
Strengths and Failings
Competitive Gross saless Force
Company ‘s liquidness status is weak
90 % of the distribution is handled straight by the company.
Low selling attempts to advance merchandise.
R & A ; D Department Develops Dyes itself which saves the high importation cost.
Not much importance given to trade name edifice.
Monopoly of supplying tiles to the industrial sector.
Lack of proficient accomplishments in labour.
Acid & A ; Alkaline cogent evidence tiles with low scratch.
Very low production of 2000 metre / twenty-four hours.
Sole user of German Technology for fabrication.
Use for adorning front lift as tiles do non fall off
National Tiles and Ceramics Limited ( NTCL ) offers Tiles that are chiefly designed to accommodate Factory/Industry architecture needs. This is besides stated earlier that the company is after the section of Industrial consumers who want to put in tiles to go at par with the quality criterions so that they can pull foreign clients and investors for themselves. Their chief concerns are that the tile should be lasting, alkalic and HCL cogent evidence, H2O and chemical cogent evidence. They are least concerned with the assortment of colourss, design or other aesthetics of the tiles. Keeping all this in position National Tiles is the lone company that caters to all such demand and this is why we characterized their scheme as Focus Differentiation. For this a diagrammatic presentations is as follow:
National Tiles is in the 4th quarter-circle and the company enjoys a monopoly state of affairs at that place. Bing in the 4th quadrant National Tiles have made the Industry construction more attractive for themselves as the purchasers are non the same as the other industry participants are non concentrating to this section entirely. Their beginning of clay from providers are specific and since they are the alone clients for that sort of clay which suits the high temperature, the provider power over them is zero as there is no other participant demanding that clay. Bing in the 4th quarter-circle they have no direct rival so competition has farther gone down.
Rivals that include Shabbir Tiles, Master Tiles and Karam Tiles are all distinguishing their merchandises to provide the broad audience which is the residential section. Residential section is significantly bigger than the Industrial sector. All of them are non specialized in one type of Tile offering but they are rather diversified. Shabbir and Master Tiles non merely offer beautiful ceramic tiles but besides offer porcelain and granite Tiles. Porcelain tiles are every bit abrasion resistant than so the National Tile ‘s Industrial Tile offering but porcelain is an expensive surrogate. Karam ceramics Limited as the name suggest besides offers other ceramic merchandises and assortment of bed room, bath room, kitchen and drawing and dining room tiles. This is the ground that all of them are placed in the same quarter-circle that is Broad Differentiation.
Fred David ‘s Input/Matching/Decision Model
Initiate operations and supply in untapped countries ( S1, S2, O1 )
Attempts can be made to trade name the tiles which can bring forth immense grosss ( W2, W3, O4 )
Company should present new scope of tiles in colourss and designs to provide to the family sector ( S1, S3, O4 )
Provide basic proficient preparation to unskilled workers ( W4, O3 )
Company can present customization in thickness of tile to provide the demands of industrial clients consequently ( S1, S6, O2, )
Increase production to provide to increasing demands ( W5, O3, O4 )
Spend to better consciousness on tile characteristic which are of import for industrial sector ( S1, S4, S5, O2 )
Build on trade name & A ; selling disbursal for tile use on front lift of houses and offices, havelis, etc. ( O1, O4 )
Company can travel for backward integrating and get providers of natural stuff – clay and mitti ( T1, T2, S3 )
Negotiate with authorities to increase import duties on foreign tile merchandises ( T3 )
Initiate activities to construct trade name with available financess to make branding barriers for new entrants ( W3, T5 )
The Financial Strength of the company is in a really weak place. The company did non endure operational losingss but the net income after revenue enhancement is besides non applaudable. Stockholders Equity has been turned negative because of the heavy losingss suffered by the company in the old old ages which has made Return on Equity besides negative. Negative return on equity indicates that it is non in a safe place. Current Ratio, which determines the short term debt paying ability, is besides in a awful place. Current ratio is calculated by spliting current assets over current liabilities. National Tiles current ratio for the old ages 2008-2010 is less than one, which indicates there are non equal current assets available to run into up the short term claims of providers and creditors.
Inventory turnover is besides low. In 2010, Inventory turnover was 2 times. This means that stock list supplied to the market merely required two times to be restocked once more, nevertheless due to the nature of merchandise it can non be 7-8 times that markets demands stock list to be restocked but it could be around 4-5 times but in the instance of National Tiles the client they are aiming is chiefly Industries, the ratio is hapless but justified. Return on Entire Assetss remained positive during 2008-2010 nevertheless the lower rate of return is besides really hapless public presentation index of the company. Operating net income is besides non in a good place which leads it towards the worst side in the Space Matrix presented after the account of the other factors.
In the Ceramic Tiles Industry, there are no important barriers which can curtail the entry of possible rivals and this has besides been explained in the Industry Analysis presented in the earlier portion of the study. Technology in the fabrication of Tiles has non drastically changed and the mechanization in the Industry is besides non really high, but the Technology in usage by National Tiles Ceramics Limited is rather old and this besides consequences in high fuel and gas ingestion as the works is non cost effectual, maintaining this in position farther Technological alterations can hold unfavourable impact on National Tiles. Rate of Inflation in the state has long moved to duplicate digit figure of 10 % CPI. The nature of merchandise is such that monetary value alterations have non much impact on demand ; it may be possible that the ingestion may increase a spot in the on-going building and development in the state, if the monetary values will travel down, but it can non bring on more ingestion because other economic factors ( GDP rate, rising prices, unemployment etc ) have more impact on demand than merely monetary value.
Market portion of National Tiles is really low. Harmonizing to company functionary, production capacity for National Tiles is 2000 metres per twenty-four hours whereas rival ‘s production capacity on an estimate footing ranges between 15,000-20,000 metres per twenty-four hours. This information can be used to picture market portion of National Tiles.
Product Quality of National Tiles is superior as it matches with demands of its Industrial client. The characteristics of the merchandise are hardness, lastingness, Alkaline and HCL, cogent evidence and H2O soaking up resistant. The merchandise has been marketed to the clients through effectual PR with clients so overall client relationship of the company is besides good. National Tiles has works which is non up-to-date but due to technological know-how they have been able to do dyes and some chemicals that undergo as natural stuff input in the production of Tiles. Company has forward integrating i.e. 90 % of the distribution is done by the company ‘s authorised gross revenues mercantile establishments and it has been explained in the Industry Analysis that supplier power over the companies in Tile industry is none.
Industry has growing possible because people are traveling off from surrogates like marble and mosaic towards Ceramic Tiles and urbanization rate in metropolitan metropoliss of Pakistan increasing. On aggregative footing there is non much branding done so with stigmatization and other selling and quality betterment initiatives the industry net income potency may increase. Resources and production capacity are good utilized in the industry which can be attributed to the fact that the entire production or capacity use of the companies ‘ lucifers with the demand for tiles as there is non much competition in the industry.
Internal External Matrix ( IE )
National Tiles falls in the fifth cell which represents HOLD AND MAINTAIN scheme. It denotes that the National Tiles is a reasonably stable organisation that is go oning to construct upon its strengths, along with working good to take advantage of most of the chances that arise and avoid the menaces that exist in the external environment.
The company is in a strong place internally every bit good as externally, which is why the best scheme for it would be to prolong this place in the industry. This requires the preparation of intensive schemes like market incursion, and/or merchandise development. Therefore National Tiles should concentrate on these schemes and make up one’s mind which one is most appropriate to adopt.Grand Strategy Matrix:
Upon measuring National Tiles on competitory place and market ( industry ) growing, we see that it falls into the first quarter-circle which means that it is in an first-class strategic place. For National Tiles, market incursion, market development, and merchandise development would be appropriate schemes to follow.
Since it already has a well-established competitory advantage in the tile industry and there is high potency, therefore National Tiles should present new scope of tiles in colourss and designs to provide to the family sector, and it should originate operations and supply of tiles in the untapped rural countries of the state. The company can besides construct upon its competitory advantage by branding its merchandise and distributing consciousness to the possible through publicity.
Quantitative Strategic Planning Matrix ( QSPM )
Develop place tiles by adding line of place tiles which involves fabricating tiles with different designs with aesthetic and colourss, since consumer tiles have a good potency for growing since everyone wants tile in their places as the populating criterion of people have raised over the past old ages. They spend more on supplying their places with different things in which shocking their places with tiles is besides included. Rapid urbanisation is besides a back uping factor for developing a new merchandise to provide places, since rapid urbanisation increases the building activities therefore increases the potency for place tiles. International market participants are holding surplus capacity and they may seize with teeth the large ball of Pakistani Market portion by come ining into Pakistan since China is already increasing its export to Pakistan. To provide to this competition, it is the demand of the hr to develop the merchandise that delivers more than what an international participant offers to clients in Pakistan.
Since company has an border of holding German engineering, which can be upgraded for consumer tiles development without buying wholly new machinery that will minimise the cost to buy the new machinery company can avail this chance to develop the merchandise and portion the resources of industrial tile section. Company ‘s ability to hold Acid & A ; Alkaline cogent evidence tiles with low scratch can besides be shifted to place tiles which will besides make a new strength for a company to vie maestro tiles, shabbier tiles and karam tiles in place tile section and it will assist the company to increase its market portion in tile industry.
National Tiles with Split Technology produces two tiles in one rhythm thereby doing it possible to market them at an low-cost attractive monetary value. With superior quality and aesthetics, other companies like Shabbir Tiles and Master Tiles offer higher monetary values. However, National tiles largely cater to the industrial sector doing customized tiles of 15mm thickness as required by the mills, therefore they are able to bear down a higher monetary value from their industrial clients, therefore positioning them at a topographic point higher than its rivals on the canvas.
Shabbir Tiles were the first one to present installing stuff in Pakistan and update their equipments. Following them is the public presentation of Master and Karam. National Tiles rank lowest in public presentation on this facet as the tiles require particular bonds secured installing.
National tiles are corrosion and scratch resistant. As they are largely used outdoor they have sun fast colourss and weatherproof. Karam, Shabbir and Master tiles are every bit good when it comes to quality and criterion and needs to be polished to keep the radiance and expression of the tiles. Furthermore, if installed at a topographic point with direct exposure to sun will ensue in bleached colourss and splintering of tiles. However, this is non the instance with national tiles, therefore doing them superior in quality.
Tiles are available in assorted sizes by all these companies. It starts from 8×8 to different sizes for floors and walls. Shabbir Tiles was the innovators of big size ceramic tiles in Pakistan and offer a broad scope of sizes for indoor and out-of-door tiles. However, now all the companies are offering tiles in multiple sizes. National tiles rank lowest because they offer comparatively lesser size assortment, justified as they cater largely to the industrial sector.
The company should wholly extinguish incorrect bringing orders wholly. This will guarantee that the clients ‘ trueness rises. For this they will necessitate to hold a strong communicating between the salesrooms, ordering-taking section, mill and transit section. Furthermore, they will hold to be argus-eyed over the sum of stock list they are maintaining at manus. Besides, if one salesroom falls short of stock list, strong communicating will assist covering the deficit through immediate supply signifier nearest location.
The company should cut down the overall rhythm of merchandise gross revenues ; get downing from the order signifier and stoping at the bringing and review of the merchandise. Use of latest soft-wares available in the market for managing the complete order-delivery procedure can be utilized.
The company should raise three value giving characteristics for the clients.
Brand name: National Tiles should work on doing their name an icon of quality and singularity in the tile industry. This will do clients utilize their name with pride as ‘brand names ‘ are now a vector for mensurating life position. Associating themselves with branding will assist the company in reaping on to over-looked facets and characteristics.
Aestheticss: NTCL should farther develop their merchandise by raising the aesthetics in the tile offering. Raise should be made in colour, designs and forms.
Easy Installation: National tiles, soon ranks lowest on this value vector. Installation is the first point at which the client really experiences the merchandise he has bought. You get highest points for giving the best first experience. NTCL should seek to hard currency in on this facet by supplying easy installing. This could be done through directing a company representative to steer the labour, etc.
These are three new value vectors which will assist the company in making an un-contested infinite and giving them a sustainable competitory advantage over their rivals. These are:
Environment friendly recycled content: They can follow the latest tendency of ‘going green ‘ and doing environment friendly merchandises. For this they can utilize recycled stuff for the tile fabrication which is lasting. This will salvage cost and give them a competitory advantage over other tile makers.
Tiles with Fabric Top: Soon tiles are being offered in different top coatings like glazed, glassless, matte, porcelain manner, etc. The company can convey in a new thought of tiles with fabric top coating. This will be an attempt towards uniting the rug industry with the tile industry and making an un-contested infinite.
Customization: Another creative activity vector can be customization of the tile. This will be a combination of merchandise and service. The company representative will supply consultancy services to the client to take the customized form, colour, etc harmonizing to the subject of the room or country in which the tile is traveling to be installed. This will be feasible as nowadays people are demanding ornament, subject, manners, etc when planing their places or offices.
Wholly eliminate miscommunication amongst employees. This will assist in accomplishing all the other value vectors explained above. Furthermore it will back up in efficient working of all the sections in the company every bit good.
Unhealthy struggles which can take to riotous behaviour should be reduced. This can be done through listening to employees and doing the organisation into a learning organisation.
Customer Support to Clients: Traders at the salesroom and gross revenues individuals should better their support services. This can be done thorough preparation the gross revenues squad for after gross revenues services.
Hiring experient labour: Harmonizing to a Harvard professor ‘s research, engaging experienced and talented labour at all degrees in the organisation paves a smoother manner towards company ‘s success. The company should raise this facet to assist in company accomplishing its aims.
Technical cognition of employees should be created as soon the proficient cognition is non at par with international criterion. They can direct their employees to international preparation Sessionss or classs to larn accomplishments required to accomplish the new scheme.
Raise the mechanization degrees through soft-wares as stated above. This will besides assist in accomplishing the ‘reduce ‘ aims, therefore giving n overall impact.
Create: Order Online: The Company should back up online telling therefore cut downing paperwork and clip. Customers ( particularly from the present coevals ) will besides experience convenience in the online telling method. For this they should make an synergistic portal to give easiness to clients
IMPLEMENTATION OF CHOSEN STAREGY THROUGH TIPPING POINT LEADERSHIP
Obstacles are attached with any action program to develop merchandise or in the debut of new merchandise. Harmonizing to the research workers there are normally four hurdlings that come across during execution of new schemes and action programs in any organisation. Those hurdlings are:
To get the better of these hurdlings, the company can utilize the freshly researched theoretical account of The Tipping Point Leadership. This is rather the antonym of the conventional wisdom. Conventional wisdom merely focuses on the mass of the company, majorly dwelling of the employees of the organisation.
On the other manus tipping point strategically focuses on extremes ; the people and their activities that have an influence over the company public presentation. Advantage of utilizing tipping point is that it can be implemented without raising the cost and the alteration is fast. You act upon merely on a few focussed facets and generate faster consequences.
Cognitive hurdlings are the obstruction in employees recognizing that their organisation needs a alteration. Most frequently companies, to rouse their employees, insist that company must carry through superior consequences. However, this is non so easy to carry through. To derive the employee involvement, change the attitude on must allow the employees see and see the demand to alter.
To get the better of the cognitive hurdle it is recommended to allow the employee know their worst operational jobs and dissatisfied clients. In national tiles, to follow alteration and implement the distinct schemes, it is needed to give cognition to their employees about the client ‘s feedback and other jobs that need to be worked out by conveying out alterations in procedure and merchandises. But first and first measure would be to pass on the chosen scheme at all degrees.
Motivational hurdlings, as the name suggests, are the hurdlings to actuating employees in working with new scheme like schemes extracted from The Reconstructionist View. Once the company senses the demand to alter in an organisation, it becomes really of import for directors to guarantee that their employees proceed in a direct, important and relentless mode. It ‘s rather common that scheme fails because top employees did n’t win in executing of scheme decently. The three focused factors of cut downing demonisation are top bananas, fishbowl direction and atomisation.
At National Tiles, the direction can get the better of motivational hurdlings through following techniques:
Identify the top bananas within the mill employees and the gross revenues squads. Involve and develop them about the new scheme. Supply him with the tract to do an feeling which other employees pick up on for following. For illustration the top banana is a certain director of salesroom to whom his squad couples look up to. Brief him about the merchandise development scheme and his place in the organisation. Train him for the execution of the new action program, like converting and negociating orders with new clients
Another method can be the goldfish bowl. For this all the executives and directors can be made to sit in one room to brainstorm actions, hurdlings, restraints and issues which can originate during the execution stage and so join forcesing and proposing ways to work out them.
Resource hurdlings are the obscureness that directors faces while conveying alterations with limited resources and clip. It is believed that company needs more resources to put to death greater displacement in scheme. However, company barely of all time has the resources they feel they needed to acquire planned strategic consequences.
Research says that leaders that apply tipping point leading seldom need to save their clip and energy to obtain excess resource. In fact, they have already identified their cold musca volitanss ( activities that greater resources input but low public presentation impact ) and hot spots ( activities that have low resource input need but big expected consequences ) in their companies.
In NTCL they have marketing and gross revenues squad who can tag their cold and hot musca volitanss and arrange their attempts consequently. These cold and hot musca volitanss can be the patronage. Besides the company can pull off stock list by keeping a proper prognosis system in order to avoid barricading their pecuniary resources in overstocked stock list. Furthermore the company can work on the facet which they are already implementing, that is, bring forthing the natural stuffs themselves and besides the chemicals required. This will salvage cost and besides they will avoid the hazard of running short of natural stuffs every bit good as fluctuation in its monetary value.
Balanced Business Scorecard
If the company is to prosecute scheme of merchandise development ( debut of fabric-layered tiles ) , its first end should be to pull new clients from the family sector, and retain the current 1s. Because such tiles would largely be demanded by interior adorning companies and residential sector as people would hold much more assortment in colour, design and size to take from when they decorate their places. Besides they would be widely used by companies in offices because they are lasting and would give a more professional expression compared to rugs. Besides, companies do n’t desire to confront the fuss of acquiring the carped cleaned or changed every hebdomad. Such tiles prove to be more lasting and worthwhile. To guarantee consciousness among the mark market for these new tiles, the company would hold to greatly concentrate on and heighten their selling and publicity activities.
The above ends could be measured by the per centum addition in the gross revenues of the company.
To capture 10 per centum of the antecedently non-catered market ( i.e. residential sector and concern offices ) .
The Company would take the enterprise to get down client consciousness plans to unclutter any misconceptions they may hold about the merchandise. For illustration ; they would be made cognizant that the gum and chemicals used in the rug tiles would be atoxic, and would non be wellness risky or contribute to indoor pollution.
To pull New clients for New Product ( fabric layered tile )
Percentage of addition in Gross saless from the New Product
To capture 10 % of the residential Tile market
Originate a run to make consciousness about the new merchandise
To liquidness ( speedy ratio ) of the
Increased stock list turnover and increased quick ratio
To better speedy ratio from 0.31 ( 2010 ) to 0.5 of the entire current liabilities
Incentivize gross revenues reps to increase gross revenues.
Internal Perspective ( Value Chain )
Integration of internal information systems
Reduced yearss in over all clip to finish order boulder clay bringing rhythm
No more returns / ailments due to incorrect orders
20 % Reduction in Lead clip
100 % Elimination of incorrect order bringings
Execution of ERP & A ; SAP systems
Schemes should be consistent with the company objectives.
Individual employee engagement and part
Proper bipartisan communicating of schemes
Promote feedback from employees
To bring forth originative New merchandise thoughts
To hold 1 merchandise thought per employee per month
Enabling a Culture where everyone can take part and lend