Great Wall: A case of finding proper market entry strategy

Company Overview

Thirty years back Mr Md Shamsul Huda started his business as an importer of tiles and sanitary product by launching Bengal Agency during the 80s. For business, he had to travel to the ceramic manufacturing industries in Italy, Spain, China and India. Gradually he found a gap for local tiles and sanitary manufacturing in Bangladesh. As the market of local ceramic industry was pacing up, he had started with Great Wall Ltd in 2005, producing only tiles and sanitary products. By the time Great Wall was initiated, Bengal Agency already had 10 outlets and total 60 dealers to distribute the product all over the country. Hence, he knew about the local demand long before the tiles being produced.

When Great Wall started its commercial operation in 2006, Mr Huda already knew about the nature of the market, its distribution system and a gap for local tiles with cheap price. Of course the quality is lower than the imported tiles, still the demand is increasing gradually in the local market. It is the combination of vast experience, existing distribution system through Bengal Agency and high knowledge about the market that makes Great Wall a sure success. By 2019, the company has 9% share (second largest company) in the local tiles and sanitary market competing with other 25 tiles manufacturing companies. When local and international giants like RAK, X ceramics, Akiz ceramics etc are struggling to keep their market share, Great Wall is successfully managing its high market growth and profit through continuous innovation and development, although the quality of the products are not suitable for export yet. Currently, the company has the production capacity of 45000 square meters of tiles per day compared to 8000 sqm/day in 2006. Furthermore, Great Wall has the license to produce Cotto's tiles in its factory under Cotto Brand. Starting from 1979, SCG Group in Thailand has commenced the manufacture of mosaic tiles for exporting to Europe, USA and Japan. This marks the origin of COTTO brand which has been running business of ceramic tiles until the present day. However, producing high quality product under Cotto's brand does not ensure enough brand recognition of Great Wall.

Ceramic Industry

Currently, ceramics industry in Bangladesh has reached maturity stage with lots of new comers in the market and chances of growth is becoming stagnant. Total 70% of all the tiles and sanitary market now belongs outside of Dhaka. Companies are now having 15-20% left-over inventory of their production which never happened before. The recent increase of gas price has also increased the unit production cost by BDT 2.00. The import of raw materials is also causing pressure to the industry due to importing more than 70% of total raw materials from the countries like India. All these issues make competitive pricing very difficult in the global tiles and sanitary market.

The resource and standard needed to produce high quality product for exporting tiles or entering into international market is highly lacking, although there remains promising demand for exporting. For example, US ceramics companies are now moving back from China because of the recent trade war which has created further opportunities for the countries such as India and Bangladesh. However, the quality, offered price and design of Indian tiles is superior to than that of Bangladesh. Most of the local companies in Bangladesh including Great wall is copying the design from foreign companies without their own patent product. As those companies use thousands of design continuously, patenting each design is also very difficult and not financially feasible.

The overall Business Model Canvas is highlighted below:

Key Partners

: Cotto Thailand (Global Tiles manufacturer)

: Raw material suppliers (India)

: SCG group in Thailand: to distribute smart board (for doors) in Bangladesh

: Three cargo transport company

Key Activities

: Manufacturing Tiles and Sanitary products

: Import/procuring raw materials

: Dealership distribution and management

Value Propositions

: Competitive Pricing

: Quality product in local market

: Brand

: High product & service satisfaction

Customer Relationships

: Dealer summit: two times a year

: Executive dealership: only sell GW's product

: Commission based dealer

: Personal marketing

Customer Segments

: Industrial buyer

-Real Estate

-Bulk buyer

: Dealers

: Direct customers

Key Resources

: Mr Md Shamsul Huda: Managing Director

:Continuous development

: Bengal Agency: sister concern of Great Wall

: Unique Distribution system

; Control on the supply chain

Channels

:Transportation company to reach dealer

: Bengal Agency to reach direct customer

: Dealership

Cost Structure

: Fixed Cost (land, Machine procurement etc)

: Manufacturing cost (Utility, raw materials, labor etc)

: Import cost

: Marketing cost

Revenue Stream

: Selling through dealers

: Bengal Agency outlet sales

: Selling licensed tiles (Cotto)

Problem Statement

Great Wall is also feeling the same pressure from the industry. Although the monthly revenue is currently around BDT 80 Crore, the MD, Mr Huda is thinking about the future of the company. He has assigned his Executive Director (ED) Mr Khaled to consider possible new entry strategy of the company for either domestic or international market.

Question No 1 Marks 15

As the executive director Mr Khaled, which entry strategies you should propose to the Managing Director considering if Great Wall wants to focus on:

A) To increase the overall quality of the product.

B) To grow the market share and company size rapidly in the local market.

C) To enter in the US market.