Industry overview and the position of Monno ceramic industries Ltd :

Ceramics industry is a growing manufacturing sector

in Bangladesh. The industry started during the late
1950s when the first Cceramic industrial plants were
established. Monno Ceramics was incorporated in
Bangladesh on 21st April, 1981. Currently the
company is listed in both DSE and CSE. the company
is in the business of producing high quality Porcelain
and Bone China tableware products.

Industry analysis based on porters five forces model:

Competitive Rivalry within the industry:
Major market players are shinepukur, Monno, fu wang, Standard .
The industry has a oligopolistic competition, with Monno having the second largest
markets share and its closest competitors also having a significant market share, creating
significant pressure on Monno ceramic industries limited.
Consumers do have any cost of switching to other competitors, which crates high
intensity in rivalry.
But its important to note that Monno maintain some competitive advantage as it
differentiates its products with premium products and services, which cause a moderate
level of intensity in competition.
The industry is mature and growth rate has been moderately low which cause the
intensity of competition among the companies to be moderately high due to all of them
seeking to increase market shaper from established firms like Starbucks.
This industry does not have over capacity currently and all these factors contribute to the
intensity among rivals to be moderately high.
Consumers Response to Company Preference:
Company name
Shinepukur
Monno
Artisan

Frequency
23
21
5

Percent
46
42
10

Cumulative percent
46
88
98

Bengal fine
Total

1
20

2
100

100

Parameter Competitive Rivalry within the industry

Condition

Effect

Primary investment

High

Rivalry

Market growth: export

High

Rivalry

Market growth: Domestic

High

Rivalry

Probability of competing rivals making fresh moves

Medium

Rivalry

Existing product diversity / differentiation

Medium

Rivalry

Possibility of production capacity development by competitors

Medium

Rivalry

Threat of New Entrants:

There is a moderate threat of new entrants into the industry as the barriers to entry are
not high enough to discourage new competitors to enter the market
More than a dozen factories were set up in the last decade thanks to natural gas
supply and

cheap labour. Big conglomerates, such as RAK, Abul Khair and Akij

groups have also forayed into the market.

The competitive threat of potential entry is not strong enough to place significant
competitive pressure on the existing.
Gas-based,

labor-intensive,

skills-oriented business.

The

industry is quite

concentrated industry forming an oligopolistic structure as there are few big players
in the market
The incumbent firms like Monno ceramic industries average a larger scale and scope,
yielding them a learning curve advantage and favorable access to raw material with
the relationship they build with their suppliers
Threat of New Entrants

condition

Effect

Pool of new entrants

Medium

New entrants immediate access to industrys required technology

and
technical knowledge

Low

Threat of
New
Entry
Threat of
New
Entry

New entrants immediate access to suppliers

Medium

Probability that new entrants would earn attractive profits

High

Threat of
New
Entry
Threat of
New
Entry

Bargaining Power of Buyers:

Both individual and professional buyers are available.
Bargaining Power of Buyers
Number of potential customers
Number of actual customers
Imposed cost for switching to an alternative product

High

Buyer Power

Medium

buyer Power

Low

Buyer Power

High

Buyer Power

Probability of potential customers using another

companys product
Companys financial dependency on selling to customers

High

Buyer Power

Bargaining Power of Suppliers:

Ceramic industry needs to import raw materials for producing ceramic wares. Raw
materials are clay, feldspar, quarters plaster of Paris, aluminum oxide, aluminum hydro
oxide, zinc oxide, coloring items and liquid gold
Suppliers enjoy high bargaining power in this sector.

Bargaining Power of Suppliers

Number of key suppliers

Medium Supplier Power

Suppliers ability to bargain for prices and favorable terms

Medium

Switching cost from one supplier to another

Medium Supplier Power

Suppliers power on product quality

Medium Supplier Power

Threat of Substitute Products:

Supplier Power

 The ceramic industry is already in fierce competition with low-priced sanitaryware,

tiles and table wares, mostly imported from China. Besides, this sector is also facing
strong competitive pressure from firms in other industries offering substitute
products.
The demand for low-priced, attractive and convenient substitutes of ceramic
tableware such as melamine wares, aluminum wares, steel kitchen wares, glass wares
and plastic wares are raising and the local manufacturer of these products are also
drawing significant profits from the thriving domestic market for crockery.
Condition

threat of Substitutes
Switching cost of end users

low

Availability of substitutes High

high

Attractiveness of substitutes price

Medium

Effect
threat of
substitutes
Threat of
substitutes
Threat of
substitutes

Profitability analysis:
Table 01: Gross Profit Margin (in percentage)
Name
2006200720082007
2008
2009
FU
23.7
22.1
21.9
WANG
Monno
21.2
18.2
20.8
Shinepukur 32.9
32.6
33
Standard
18.1
14.3
11.9

20092010
25.1

20102011
29

mean

S.D

C.V

24.4

Industry
mean
23.8

11.95

20.9
34.2
19.5

20.5
33.4
16.8

20.5
33.4
16.8

23.8
23.8
23.8

1
1
4

6.37
2.42
21.08

Table 02: Operating Profit Margin (in percentage)

2006200720082009Name
2007
2008
2009
2010
Fu wang
4
-4
-.4
6.8
Monno
14.1
12.1
13.3
11.7
Shinepukur 27.1
26.7
27.80
29.60
Standard
4
-6.40
-2.20
3.20

20102011
14.2
12.5
28
3.80

mean

Industry
mean
4.1
4.1
4.1
4.1

S.D

C.V

7
2
6
4

146.4
179.8
54.83
-2289.4

Table 03: Net Profit Margin (in percentage)

200620072008Name
2007
2008
2009
Fu wang
2.4
-2.5
.8
Monno
-.4
.6
.1
Shinepukur 12.5
.7
14.7
Standard
2.70
-6.40
-2.20

20102011
15.3
3.7
11.3
2

mean

Industry
mean
4.1
4.1
4.1
4.1

S.D

C.V

7
2
6
4

146.4
179.8
54.83
-2289.4

20092010
7.8
.5
15.8
3

4.8
.9
11
-.2

4.8
.9
11
-.2

Table 04: Return on Asset (ROA) (in percentage)

Name
20062007200820092007
2008
2009
2010
Fu wang
1
-.90
.30
2.80
Monno
-.30
.60
.10
.40
Shinepukur 4.30
4
3.70
4.90
Standard
2.2
-3.2
-1.2
2.1

20102011
6.10
3
2.40
1.7

mean

20102011
10.2
10.9
4.8
3.90

mean

1.90
.80
3.90
.3

Industry
mean
1.70
1.70
1.70
1.70

S.D

C.V

3
1
1
2

145.76
171.25
24.68
779.50

Industry
mean
4.50
4.50
4.50
4.50

S.D

C.V

5
5
5
5

124.5
151.8
41.48
816.90

table 05: Return on Equity (ROE) (in percentage)

Name
Fu wang
Monno
Shinepukur
Standard

20062007
2.7
-.4
16.7
4

20072008
-1.6
2.2
8.9
-6.80

20082009
.8
.5
10.1
-3.10

20092010
7.3
1.7
11.2
5.20

3.9
3
10.3
.60

Major factors which influence profitability:

The industry suffers due to irregular power and gas supply .
Ceramic manufacturers pay high tariff on gas compared to other sectors.
The industry faces high import duty on certain ceramic raw materials from 7.5 percent to
15 percent
This industry lacks high level manufacturing and industrial engineering techniques
The local ceramic tableware manufacturers have become the victim of the 2008 financial
crisis.
No government support through lower interest rate.
Above the analysis we can understood that the position of monno ceramics is second. And the
profitability of this firm was badly affected by political unrest. According to its management
it has halted its production line for a lack of raw materials. We are also holding back our
expansion plans for the political uncertainty, said Moynul Islam, vice-chairman of Monno
Ceramic. But right now the condition of market is well so it will regain its pioneer position in
this industry

Strategies for creating competitive advantage:

Basically Monno maintains both product differentiation strategy and cost leadership:

Monno Ceramics considers quality and brand image

Monno Ceramics considers competitors prices.

Monno Ceramics consider cost-based pricing approach.

Monno is equipped with the latest Japanese and German technologies. Isostatic press machines
form Sama & Dorst GmbH allows us to produce complicated shapes at consistent quality

Monno Porcelain & Bone China factories are perhaps unique in being able to offer under one roof
the flexibility and versatility of many manufacturing methods as best suit the size or nature of the
product.