The ceramic industry is known to be a labour intensive industry, go forthing developed states at a disadvantage when it comes to labor costs that are on the rise. Furthermore, it seems that the planetary fiscal crisis has worsened this state of affairs. Therefore states with abundant natural stuffs and lower labor costs are strategically positioned in the ceramic industry as their economic system provides for the lifting demand and supply of ceramic goods.
Over the old ages, RAK ceramics has quickly grown in the ceramic industry and has been recognised worldwide due to the quality of their ceramics. The quality of RAK ceramics allowed the company to place itself as a niche in the planetary market place by diversifying their merchandises into international criterions.
ANALYSING PORTER ‘S FIVE COMPETITIVE FORCES WITHIN THE CERAMIC INDUSTRY
The characteristics that define an industry ‘s economic laterality include factors such as the figure of challengers that exist and the range of their competition, market size and its growing, figure of purchasers, demand and supply, economic systems of graduated table, technological alteration, the grade of merchandise distinction and invention.
The construction of the ceramic industry experiences growing in footings of economical, efficient and proficient features which determines the strength of each of Porter ‘s five competitory forces. In this subdivision, the ceramic industry will be analysed in footings of Porter ‘s five forces in order to understand the range of growing and competition that exists within the industry and its attraction. The five forces are:
• Rivalry Among Existing Firms
• Threat of New Entrants
• Threat of Substitute Merchandises
• Bargaining Power of Buyers
• Bargaining Power of Suppliers
Rivalry Among Existing Firms
Competition within the industry is comparatively low due to the industry being Oligopolistic in nature. With that said, there are merely a smattering of rivals within the ceramics industry. RAK ceramics virtually faces no completion in the local market and some competition from states such as China, Bangladesh, Thailand, and Sri Lanka due cheaper beginnings of labor, natural stuffs and imports, giving high quality.
Furthermore, RAK ceramics is known for holding strong schemes to stay competitory such as puting international competitory criterions and joint ventures with other companies in order to use technological progresss to make better line of ceramic goods.
Menace of New Entrants
RAK ceramics has the advantage of non holding local rivals, but the ceramic industry has big sums of fixed costs involved ; therefore the industry is capital intensive, doing it an entry barrier that limits possible menaces of new entrants. In add-on, the demand of mechanization and big investing in technological progresss pose as farther entry barriers.
There has been important growing in the demand for ceramic merchandises over the old ages and states such as Bangladesh that enjoy inexpensive labor, easiness of entree to raw stuffs needed coupled with responsibility free exports to states in Europe due to miss of quota limitation from a generalized system of penchant, increasing the spread between demand and supply, it poses a menace of entry to the international ceramic market.
Imports of ceramic merchandises coming from states such as China besides pose a menace of new entry due to low import costs as they have fabricating workss of their ain that produce big measures of ceramic goods, giving quality.
Menace of Substitute Merchandises
There ceramic industry faces intense competition with low priced goods such as tiles, healthful and table ware that are majorly produced and imported from China due to take down costs. In add-on, the industry faces completion from replacement merchandises offered by companies in other industries.
Like RAK ceramics, other companies within the ceramic industry are confronting competition from makers of replacement merchandises, thereby diminishing one-year net incomes. Consumers frequently purchase replacements of ceramic merchandises due to the convenience in footings of handiness and the attraction of lower monetary values. These replacements include several fluctuations of tiles, dishware and wares such as cyanuramide, steel, glass, aluminum, rocks such as marble, wood, and most normally, fictile wares.
Furthermore, imports of such replacements have quickly increased in the past decennary to a surging fourfold. Manufacturers of these goods have expanded their operations and capacities due to this to maintain up with ferocious competition and exportation, thereby presenting more merchandise lines to pull a broader scope of consumers.
Dickering Power of Buyers
The purchasers of ceramic merchandises, both local and foreign purchasers within this industry, have considerable bargaining power in footings of monetary value dialogue with the marketer. This is because purchaser ‘s shift cost is low, hence, it is quiet easy for a purchaser to exchange to other lower priced ceramic goods or replacements imported from other states mentioned earlier. Keep in head that although RAK ceramics, with virtually no local competition due to miss of ceramic companies in the U.A.E still faces intense competition with Chinese replacement merchandises, thereby implying purchasers within the U.A.E with considerable dickering power.
Dickering Power of Suppliers
As with other high quality ceramic rivals, RAK ceramics imports high quality natural stuffs such as potassium hydroxide felspar, sodium carbonate felspar and clay from states such as Thailand, Malaysia, Indonesia and India, glazes and fritz from European states such as Spain. Furthermore, other imported high quality stuffs include glassy high aluminum oxide porcelain from mines of Germany and UK which are of the highest quality. Therefore the natural stuffs entirely account for most of the entire production, apart from industry and engineering. With that said, it is apparent that the base of providers within the ceramic industry is large plenty to weaken the bargaining power of providers.