North South University

MGT 368.16 Fall 2020, Mid-Term Examination (Written part)

Course Instructor: Mohammad Asif Gazi (MAG)

Name: Tahamina sultana tarin Full marks: 35

ID: 1610078030 Last time to submit: 1:00pm

Answer all the following questions. Answer must be written within the given page limit. Write
the answer using Times New Roman, font size 12 and line space 1.5. There will be penalty if you
exceed the space given for each answer.
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 Key Activities Value Customer Customer

: Cotto Thailand : Manufacturing Propositions Relationships Segments
(Global Tiles Tiles and Sanitary : Competitive : Dealer : Industrial buyer
manufacturer) products Pricing summit: two -Real Estate
: Raw material : Import/procuring : Quality times a year -Bulk buyer
suppliers raw materials product in local : Executive
(India) : Dealership market dealership: only : Dealers
: SCG group in distribution and : Brand sell GW’s
Thailand: to management : High product product : Direct customers
distribute smart & service : Commission
board (for satisfaction based dealer
doors) in : Personal
Bangladesh marketing
: Three cargo
transport
company Key Resources Channels
: Mr Md Shamsul :Transportation
Huda: Managing company to
Director reach dealer
:Continuous : Bengal
development Agency to reach
: Bengal Agency: direct customer
sister concern of : Dealership
Great Wall
: Unique Distribution
system
; Control on the
supply chain
Cost Structure Revenue Stream
: Fixed Cost (land, Machine procurement etc) : Selling through dealers
: Manufacturing cost (Utility, raw materials, : Bengal Agency outlet sales
labor etc) : Selling licensed tiles (Cotto)
: Import cost
: Marketing cost

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.

You should answer reflecting your critical analytical thinking.

Use 2 page max to answer

ANSWER QUESTION 1 FROM HERE, Max 2 pages
A) To increase overall quality of the product great wall company can go for management
contract. By ensure the quality of the product they can grab the local market attention
more. Because people are more focuses on quality as foreign products are available in the
market. So it they can ensure the quality they might give it in a low price then foreign
product. As well as this company is unable to ensure the quality of the product for
exporting. If they hire a foreign expert who have the knowledge in ceramic industry in
that market like USA it might help Great wall to improve their quality of product. Till
now Great wall is managed to fulfill the demand of local market because they have the
knowledge of local taste but there is other competitors are present also who offers foreign
product in local market which motivate to change local taste. Also for expanding their
business in foreign market they do not have enough knowledge about their demand and
taste. If they hire a management expert from foreign market, they can give the guidance
to ensure the quality as like foreign product. If Great wall can hire management team
from Chinese market as local market have demand of Chinese product, also it will help
them to export quality product in US market as previously china were the main
distributor of ceramic in US market. It might be costly but it will have a long term impact
in their business. Through this they can use this management technics and skill after
management contract is finished. So they can ensure entire quality of the product for
long.
B) To grow the market share and company size in the local market Great wall can go for
Horizontal merger. If two companies belong in the same industry and merge together it
means horizontal merger. If great wall want to grow their market share they will need to
merge with a company belong to the same industry. Other merger like vertical or product
extension might help them to increase market company size but it might not increase the
market share as long as it does not belong to the same industry. RAK, X ceramic and
Akiz ceramics are the main competitor of Great wall but still they are struggling to keep
their market share. If they can merge with any of these companies they can grow their
market share in local market, increase the company size as well as remove one of their
main competitors in local market. If company like RAK is willing to merge will Great
wall this will be a best option to merge with otherwise they can merge with any small
 company who has been barely surviving in the market. If they go for horizontal merger
together they might have more capital to enter into the foreign market.
C) To enter into the US market Great wall can go for indirect exporting. Great wall is doing
well in local market as they are successfully fulfilling the customers demand. But after
fulfilling the demand of the local market they still have excess capacity to produce more.
Currently, the company has the production capacity of 45000 square meters of tiles per
day compared to 8000 sqm/day in 2006. So that means they can use these excess capacity
by producing more and export them in foreign market as long as they fulfill the local
market demand. So for exporting they can export in US market as there is a gap. Great
wall can use their excess capacity by produce more and supply that in the US market.
They can use indirect exporting as ceramic is a very sensitive thing so it will reduce the
risk of damages at time of shipping also reduce the shipping cost. So it will be a safe
entry in US market for Great wall.
Question No 2 Marks 15
Now, re-design the business model canvas considering the strategies you have suggested in the
Question 1, particularly for the entry strategies in the local market (for the point A & B in QS 1).
Explain theoretically the changes listed in the adjusted business model canvas.
Answer from here

Refined Business Model Canvas of Great Wall:

Key Partners Key Activities Value Customer Customer

: Cotto Thailand : Manufacturing Propositions Relationships Segments
(Global Tiles Tiles and Sanitary : Competitive : Dealer : Industrial buyer
manufacturer) products Pricing summit: two -Real Estate
: Raw material : Import/procuring : Quality times a year -Bulk buyer
suppliers raw materials product in local : Executive
(India) : Dealership market dealership: only : Dealers
: SCG group in distribution and : Brand sell GW’s
Thailand: to management : High product product : Direct customers
distribute smart & service : Commission
board (for satisfaction based dealer
doors) in : Foreign : Personal
Bangladesh quality marketing
: Three cargo product in
transport local market
company Key Resources Channels
: RAK ceramic : Mr Md Shamsul Transportation
Huda: Managing company to
Director reach dealer
:Continuous : Bengal
development Agency to reach
: Bengal Agency: direct customer
sister concern of : Dealership
Great Wall : RAK ceramic
: Unique Distribution showrooms to
system reach direct
; Control on the customer
supply
: Management
contract
Cost Structure Revenue Stream
: : Fixed Cost (land, Machine procurement etc) : Selling through dealers
: Manufacturing cost (Utility, raw materials, : Bengal Agency outlet sales
labor etc) : Selling licensed tiles (Cotto)
: Import cost :RAK outlet sales
: Marketing cost
:Management contract cost

Explain the changes from here, Max 2 pages

As we have already mention about entry strategies like management contract for improving
Great wall’s product quality and Horizontal merger for increase share and company growth. So
these decisions will bring changes in their Business Model Canvas.

Key partnership: As long as we have suggested the best possible merger with RAK ceramic so
they can be the key partner of Great wall ceramic. Because after merging with RAK ceramic
they can influence the decision making process as well as profit sharing partner. RAK ceramic
can take decisions for Great wall operations.

Key resources: As resource bundle needs to be valuable, rare and inimitable so management
contract can be a resource bundle for Great wall. Because management contract is something
which is about hiring the best skilled management team from foreign country. So this skill is
valuable for the company and rare for local company because anyone or any company might not
have that much capital to hire them also these skills cannot be copied. So it will be a key
resource for Great Wall Company.

Value proposition: If Great wall take management team from foreign market like china they
will help the company to produce or maintain foreign quality in their product so they can make
the local customer feel the foreign taste with quality in local product which other company might
not give.

Channels: If Great Wall Company will merge with RAK ceramic then there will be another
option to reach their customers through RAK ceramic showroom. Because RAK ceramic have
their own showrooms to reach their customers so if they merge the channels will be more
distributed and strong to reach the customers.

Cost structure: There will be another major cost will be added to the cost structure if Great
Wall Company hires management team through management contract. Management contract is
very costly but at the same time very effective for the company.
Revenue stream: RAK outlet sale will be added with revenue stream if both companies merge
together. At the time two companies merge together everything along with revenue will be
shared between them.
Question No 3 Marks 5
Explain the resource bundle and value proposition which must be considered if Great Wall wants
to enter in the US market.
Your answer must remain within this page
Key resources:
Mr. Md shamsul huda who is managing director of Great wall and have experience on foreign
market like Itali, Spain, China etc. So he himself is the resource bundle as his experience is
valuable also rare because most of the company directors might not have this experience. So he
can better understand the US market and export as per their demand.
Continuous development: As for exporting in US market, Great wall can easily grab their market
by continuous development as they have already doing this. They always try to fulfill the
customer demand as per their changing taste. So if they continuously develop their product they
can easily cope up with US market otherwise they can’t survive.
R&D capability: Managing director of Great wall have already visited many ceramic
manufacturing company in foreign countries so he have the ability to research other market as
well as develop their product so it will help to enter in US market and serve them quality
product.
Value proposition
Competitive pricing: They have the ability to set the price comparatively lower. And if they get
into the foreign market they can grab economic of scale so that they can reduce their cost as they
have access capacity of production.
Quality product in US market: Great wall will have to ensure the best quality in US market.
Local quality might not satisfy the US market. So match the quality with US market is important.
High product & service satisfaction: Great Wall has to export the high quality product serve it
within the US importer’s demandable time.
Low production cost: As Bangladesh has the low labor cost so it ultimately reduce the
production cost which will help to export the product at cheap price in US market.
END HERE