MN 3042 BUSINESS ECONOMICS & FINANCIAL

ACCOUNTING Group Assignment 01

Analyzing Sri Lankan Ceramic Industry
using Porters Five Forces Model
Level 4 Semester 7
Date of Submission 4
th
August 2014







Abeyrathna D.K.M.R.P 100007E CPE
Abeysundara N.D 100014X ME
Dissanayake D.M.P.P. 100107K ME
Hemarathna D.D.U.M. 100186A ME
Karavita K.L.B. 100238L ME
Kosgahakumbura K.N.M.D.S.K. 100265P ME
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Table of Contents
1 Introduction ........................................................................................................................ 1
2 Porters five force model .................................................................................................... 2
2.1 Current competition or the Extent of Competitive Rivalry ......................................... 3
2.1.1 Sri Lanka Market Context .................................................................................... 3
2.1.2 International Market Context ............................................................................... 4
2.2 Potential competition or threat of Potential New Entrants .......................................... 5
2.3 Threat of substitute products ....................................................................................... 7
2.4 Bargaining Power of Buyers ..................................................................................... 10
2.5 Bargaining Power of Suppliers ................................................................................. 12
3 Conclusion ........................................................................................................................ 14
4 References ........................................................................................................................ 16


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1 Introduction
Ceramic industry in Sri Lanka have history about several centuries. The historical ruins are
given a very important evidence to the rich variety of ancient craftsmanship. The distinctive
and excellent designs of ceramic products are manufactured by the ceramic industry in Sri
Lanka. That is properly explain the influence of Sri Lankan heritage.
Raw materials such as Kaolin, Ball clay, Calcite, Dolomite, Feldspar, Silica quartz which are
used in the ceramic industry can be take in Sri Lankan earth with high quality. Some other
chemicals that are used in the manufacture of ceramic products are imported from other
countries. The product categories and the availability of raw materials are affected for
geological distribution of the industry.
Eg: Porcelain manufactured-Matale, Dankotuwa, Kosgamuwa
Tableware manufactured-Piliyandala, Negombo
Tiles manufactured- Balangoda, Jalathara, Horana, Meepe
There is only one company in Sri Lanka that has done full operations in ceramics ranging to
produce tile to crockery to sanitary ware. The Lanka ceramics Ltd has quasi monopoly of
80% raw materials.
Sri Lanka ceramic industry is mainly manufactured porcelain tableware, porcelain
ornamental ware & glazed wall and floor tiles for the world and local market. Mainly for
USA, Australia, Italy, Germany, UK, France, Canada, Netherlands, Japan and Singapore .Sri
Lankan ceramics quality is equal to or better that of any ceramic manufactures product in the
world. Therefore Sri Lanka is a world leader in traditional ceramic production. Nearly $47
million products export per year. However Lankan ceramic products are controls less than
1% of the global market and currently our share of market is reducing by other ceramic
productions of some other countries. Because of their low cost and high amount of
production.
There are have some problems for Ceramic industry. Problems with raw materials,
Machinery, other competitors, Government and Policy Environment, Energy, Labor force,
Researches. Those are analyzing by using five force model in this report.



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2 Porters five force model
The Five force model was originated from Michael E. Porters 1980 book Competitive
Strategy: Techniques for analyzing industries and competitors. Since then the model is used
as an analytical tool for analyzing a company, Industry and its corporate strategy.
The Porter's Five Forces model can be used to good analytical result alongside other
analytical models such as the SWOT and PEST Analysis tool. Five factors that act together to
get sophisticated idea about the nature of competition of industry were identified by Porter.
Porters five forces
Michael porter had identified following five rules of competition. By analyzing of those
forces in an industry can be identified weaknesses of the companys strategy. As well as it
can be used to strengthen companys position and develop a new strategy.
Rivalry among existing competitors
In this force analyze how competitive and profitable a company is in competitive industry.
Threat of substitutes
This force is increased When market have many substitute products with better quality or
Attractive prices and when customers can switch from one to another product or service
without high cost.
Threat of new entrants
The force get idea about how easy or not for enter a particular industry. When an industry is
profitable and have only few barriers to enter that industry, other companies try to involve
that industry. More companies compete each other for same market. As a result profit start to
fall. It is more important to generally existing companies for increase some barriers to enter
to deter new entrants.
Bargaining power of buyers
When bargaining power is strong, lower price or higher quality products are demanded.
Therefore profit of producers is decreased.
Bargaining power of suppliers
When suppliers have high bargaining power, they can sell product higher priced or without
high quality to their buyers. That is reduced the profit of customer.


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2.1 Current competition or the Extent of Competitive Rivalry
The ceramic tile market of the Sri Lanka has achieved rapid growth during past few years. It
is case to increase the competition between tile manufacturing companies. The competition of
the Sri Lanka tile industry can be divided into competition among local market and
competition among international market.
2.1.1 Sri Lanka Market Context
The local tile market has very competitive market and it shows sign of an oligopolistic
market. The oligopoly consists within the following tile manufacturing companies.
Royal Ceramics Lanka PLC
Royal Ceramics Lanka also called as Rocell. They manufacture both porcelain and
ceramic tiles and it has the 35% shares of the Sri Lankan floor tile market.
Lanka Ceramic PLC
The main activity of the Lanka Ceramic Company is to be manufacture of ceramic
tiles for local and international market. Lanka Ceramic has the 25% shares of the Sri
Lankan floor tile market.
Lanka Wall Tile PLC
Lanka Wall Tile PLC also a major tile manufacturer of Sri Lanka. It is the one of the
best companies which makes the modest range of tiles suitable for renovations and
period finishes. Lanka Wall Tile PLC has 55% shares of the Sri Lankan wall tile
sector and it dominates the local wall tile sector.

Other than to above companies there are few tile manufacturing companies in the local
market. Because of the oligopolistic market those companies is facing tough situation of the
local market. Not only that, recently the Royal Lanka PLC has bought control of both Lanka
Ceramic PLC and Lanka Wall Tile PLC. The Royal Lanka Company now had a monopoly in
the tile market.
Even Sri Lanka has lower tile consumption with compared to other countries, In the Sri
Lankan market there are about 30 ceramic tile companies are in operation and most of them
are imported ceramic tiles form other countries like China, India, Indonesia, Thailand and etc.
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[Source: Ceramic Sector Statistics and CBSL Annual Report 2010]

According to the Table 1 we can clearly identified that the amount of imported tiles between
two adjacent years are rapidly increased. The imported tiles are much cheaper than the Sri
Lankan tile. It has cause to increase the competition between the tile companies of the local
market. Through the recent budget proposal the Sri Lankan government has proposed to
increase the import cess by 50% for the imported tiles to protect the local tile manufactures.
This action has directly affected to the increase the price of imported tiles and also it is cause
to decrease the price competition of the local market. The gain of this decision has compactly
collected by Royal Ceramics Lanka PLC because of their monopoly in the local tile market.
Actually they can now control the price of tiles as their wish. Currently Royal Ceramics
Lanka PLC is controlling the competition of the local tile market.
2.1.2 International Market Context
Sri Lanka tiles are not limited to local market. Sri Lanka is famous for the manufacturing of
excellent quality tiles in the international market. The Sri Lanka products are exported to the
foreign counties such as United Kingdom, Australia, Japan, Germany, Italy, New Zealand,
USA, India and Singapore. But in the international market there are many other tile exporting
countries and Sri Lankan companies have a tough market competition at the international
market. Sri Lankan tile exporting market is heavily depending on the Europe. But Per capita
income is still not good in the most of European countries and it is not good for Sri Lankan
tile industry.

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2.2 Potential competition or threat of Potential New Entrants
As per explained in above chapters, Sri Lankan Ceramic industry can be categorize under the
monopolistic economic industry. So when considering threat of potential new entrants in this
industry, main competition occurs through foreign market. Mainly these foreign countries are
China, Bangladesh and Thailand. Due to the global impact of rising labor cost, the developed
countries are placing more orders to third world developing countries for quality ceramic
wares with low cost. Hence, the export demand for these countries is growing rapidly. Due to
this strong growth, the number of competitors increases among these countries. And these
competitions roughly equal to the size of capabilities of each country.
Threat of potential new entrants in Sri Lankan ceramic industry is mainly depend on
capabilities of the potentially equivalent countries to entering the international market. Entry
barriers and abilities of new ceramic industries can be categorized as follows.
Economies of scale
Today Sir Lankan ceramic industry can achieve large scale production capacity by one firm
from the least cost, due to their industrial stability with current monopoly situation in the
country. Technically this affects to increase specialization and reach best economics of scale
due to indivisibilities in fixed costs with large production capacity. This most efficient level
of production in Sri Lankan ceramic industry is cause to minimize the average total costs of
production. When considering countries like Bangladesh, their domestic marketplace is yet
weakly competitive and form in small and medium scale. So Sri Lanka has low threat of
potential new entrants with countries like Bangladesh. Ceramic industry of China also faced
this low production capacity due to large number of industries with lack of row materials. But
new entrance of multinational company like China & Bangladesh can easily reach high
production capacity ignoring above barriers and also these larger firms can easily access to
capital for low rates. So that cause to high threat for surviving of Sri Lankan ceramic
industry.
Legal barriers such as patents and franchises
Some ceramic industries enter to the market with new ideas and new technologies. Due to
their new innovative designs, manufacturing technology, new clay compositions and new
ceramic wares design they get patents. These patents restrict to follow their methods as
exclusive licenses for a given length of time. These like situations badly affect to the Sri
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Lankan ceramic industries in many times and this mainly happen due to lack of innovative
research in Sri Lankan industry.
Advertising and branding
Sri Lanka supplies quality ceramic products, like glazed wall, floor tiles to discerning buyers
in the world market in long time period. These buyers are USA, Australia, Italy, Germany,
UK, France, Canada, Netherlands, Japan and Singapore. Sri Lanka is rich in minerals, such as
kaolin, silica quartz, ball clay, feldspar and dolomite, which are used in the manufacture of
ceramic products. The excellent quality and purity of these materials contribute to the high
standard of the products, which are now of international repute. So in this case, Sri Lankan
ceramic brand names are well established from long time period among most buyers around
the world. Then Customers who have long-standing relationships with Sri Lankan ceramic
can be difficult to win over by a new market entrance of foreign industries without heavy
advertising expenditure. Under these like situations threat of potential new entrants in Sri
Lankan ceramic industry is generally low.
High initial capital requirements
Ceramic industry require a larger financial outlay in order to enter the industry. For example:
according to Bangladesh Ceramic Wares Manufactures Association (BCWMA), a medium
scale ceramic plant in Bangladesh needs around Taka 10 crore (Taka 100 million) in initial
investment .The initial startup cost for a Ceramic manufacturing plant is colossal especially
on plant and machinery. The typical payback period of setting up a plant is nearly 4 to 5
years. Hence this makes it unattractive for potential players of similar countries to enter the
industry. Because high investment costs for start-up, it is often prohibitive for small players
who lack adequate cash for investment to enter the market. Then heavy initial capital
requirement for ceramic industry is a barrier and this reduces threat of potential new entrants.
Restrictive regulations
Last few years cease on importation of certain categories of construction stones such as tiles,
granite, marble etc. were reduced from 30% to 20% per cent by the government. This may
directly affect to the local tiles manufactures. Because countries like China and other
potential new entrants can capture the local market due to this cheaper imports cost. It can be
caused to severe price competition and squeezing the margins of the local industry.

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Sri Lankan ceramic industry has not expanded fast enough due to the lack of clarity on
government policy towards raw material and the level of protection accorded to the industry.
Due to stringent rules on local ball clay mining, local tile manufacturers try to import ball
clay from countries such as India and China. This is badly affect to the quality of the ceramic
production and cost of the product due to adverse exchange rate fluctuations, thereby
negatively impacting on potential earnings and this case to create potential new entrants to
the market and also harm the Sri Lankan ceramic brand names among foreign customers.

Past few years Sri Lankan ceramic industry lost many market due to lack of GSP+ tax
reduction. Because of this reason exporting in the European Union was restrict and this also
cause to major role in discouraging companies to enter the local market.

Switching costs
Like above mentioned, Government cess reduction for imports of ceramic products like tiles
marbles etc. affect to reduce cost of imports ceramic product. So, foreign countries like China
captured the local market due to their low selling cost since long time period. With these
reasons local ceramic industries have to give move effort to switching this customers. If there
is a higher cost involved when switching from the existing chines and other foreign product
to the local ceramic product and it also does not give a benefit then the customers will be
reluctant to switch to the local products and make it harder for existing companies and new
entrants to gain good market share.
2.3 Threat of substitute products
Sri Lanka supplies high quality ceramic products to local and global market. Sri Lankan
ceramic industry consist porcelain table ware, porcelain ornamental ware, and glazed wall
and floor tiles. Main global buyers are USA, Australia, Germany, UK, France, Canada,
Netherland, Japan and Singapore. Srilanka is in monopoly situation in tile manufacturing
industry but there are low-priced china sanitary wares, tiles and table wares available in local
market. Srilankan ceramic industry faces to a competition with those products and other
substitute products.
Substitues in market can be identified as product to product substitus and substitution of
need.Floor polishing, apply floor carpets and painting floors can be identified as substiuting
need of floor finishing. there are many substitute products available in market instead of floor
tiles for example wooden flooring, bamboo flooring, ply board, marble stones, terrazzo and
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other artificial stones for both interior and exterior usage. These alternatives directly replace
the needs of floor tiles. In past these substitute were used for special purposes and used as
complementary products, but now they have expanded their target market portion by using
new technology. In today substitutes of floor tiles can be applied wide range of construction
applications. Therefore it has become a severe threat to tile industry.

Customers attraction to substitute of floor tiles mainly depend on relative price performance
of substitutes, appearance/finish/quality, durability, fad or fashion and safety. low cost
substitutes are exerting competitive pressure on the existing companies of ceramic industry.
Cross-price elasticities can be identified as major threat s of substitute products. This concept
imply that, when the price of substitute products varies it affect to demand of the considering
product. There are no local manufactures in srilankan ceramic tile industry. Although
srilankan is in monopoly situation in tile industry, several foriegn tile brands are available in
srilankan market. Foriegn suppliers like China and Italy have been manufacturing ceramic
tiles in low cost using new technlogy. They are manufacturing a bulk volume ceramic tiles
because of their higher rate of production. Due to the influence of economic scale they can
be sold them at relatively low prices. This situation causes to demand become to more
elastic, because customers have more alternatives. Srilankan ceramic industry has to find
solutions how to face sucessfully in this situation. They can reduce their profit margins and
increase their sales or they can be promoted their business maintaining quality of their
products .
Ceramic industry has been continously changing with time to time due to varing customers
fashions. Innovative product designs are essential. Green housing is a nowel concept in
construction industry wich mainly forcus to use eco-friendly materials. According to potters
five forces perspective this also a threat for ceramic industry, because they are willing to use
wood based materials instead of ceramic. Ceramic floor tiles has some undesirable properties
like, slipping when it get wet. This can be dangerous and caused injuries. So considering this
fact Samson Reclaim Rubbers Ltd introduce innovation called as safety play tiles. They
produce using rubber base new materials them conforming with international standards. In
present their target market is hotels, play grounds, public parks and schools construction
industries. In future they are willing to introduce their products to homes construction
industry. Safety play tiles provide some extra aspects like minimization injuries, so more
customers hane inspired to switch to SPT(Safety Play Tiles). Definetly, this is a severe threat
for ceramic floor tile industry. They should surf solutions to modify ceramic structure
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considering the safety aspects and the solutions should be low cost. They can prevent
customers switch to other substitutes by reducting their profit magins and selling products at
low prices.

Although several substitutes are availabe, customers have to pay their attention on switching
cost, when they are changing their manufacture or supplier. This include search costs,
learning costs, equipment costs, installation costs, financial risk and psychological risk. If
substitute tile need high installation cost, equipments, machineries and technical knowledge,
they are not economical. Customers have some psychological risk in their mind.

When considering global market, srilankan ceramic products has good demand because of
their quality. Main problem associated with srilankan ceramic manufacturing industry is high
energy cost. Top manufactures in global market has done low cost manufacturing using
economic of scale, high technlogical machineries and easily achiveable energy sources.
terracotta tiles and PVC floorings are main substitues in global market.they have captured
significat portion of global market.custormers have some psychological risk in their mind to
switched to ceramic tiles so successful marketting stratergies need to capture the global
market.
modern market trend in tile industry is flooring PVC tiles.some desirable properties and
qualities they consists like low cost than ceramic tiles, easily replace when get damage, anti-
slipping, less scratching or wearing and wide range of designs and colors available.they
manufacture including wood texture can use instead of wood flooring.

There are new technologies available to improve the qualities of ceramic tiles. digital printing
technology can be changed the appearance of ceramic tiles by printing high definition
permanent images with good surface finish.using this technology ceramic tile can be give
apperarance of wood, marble, stone, metal, granite, textiles ect. There fore ceramic products
can increase their market portion and give a threat to competitors. They can introduce as
substitutional products for marble, wood flooring. Water jet technology and nano technology
is another two technology can be adoped and improve properties of ceramic products.

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2.4 Bargaining Power of Buyers
Porters Five Forces is a framework that can be executed to classify and analyze of level of
competition within an industry. The current market position and in formulation of strategic
policies can be analyzed by the Porters Five Forces. Those five forces were recognized by
Michael E Porter as the key forces that influencing an organization.
Buyer Bargaining Power is a one of Porters Five Forces that shape the competitive structure
of an industry implement that consumer can force the businesses to realize them to provide
higher quality products, better customer service, and lower prices while reducing profits in
industries. Several factors were considered to determine the Buyer Bargaining Power.
Powerful customer has ability to influence the industries more percentage.
Power of buyers is high when,
Number of buyers smaller for number of sellers (buyers are more concentrated than
sellers)
Threat of backward integration is high
Buyer is price sensitive
Buyer switching costs are low
Substitutes are available
Buyer is well-educated regarding the product
Buyer purchases comprise large portion of seller sales
Buyer purchases product in high volume
Product is undifferentiated
Power of buyers is low when,
Buyers are less concentrated than sellers
Threat of backward integration is low
Buyer switching costs are high
Buyer is not price sensitive
Buyer purchases comprise small portion of seller sales
Buyer is uneducated regarding the product
Product is highly differentiated
Buyer purchases product in low volume
Substitutes are unavailable
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When the Ceramic industry in Sri Lanka in taken into account, there is heavy influx of
cheaper tiles are circulating around the country, imported from China, India and Indonesia
which is preferred by income elastic customers all over the country.




However, Local manufactures go on premium prices to products due to high quality and
durability. Hence considerable local demand still exists. As well as customers can exert high
amount of pressure on manufactures due to the availability of cheap imports.
Buyers are more concentrated than sellers with respect to local Ceramic industry. But the
gradual increment of GDP, there is a developing trend to buyers pay attention toward the
Ceramic products. As result of this trend the buyers become less concentrated. Those causes
loosen the buyer bargaining power. Because the availability of Ceramic companies richly
buyer switching costs are low. Hence it strengthens the buyer bargaining power. When
consider about local market actually buyers arent well educated about the product. It may
limit the bargaining power. But the drastic development of the technology inside the country
customer can launch a detailed survey about the product and as well as the industry. This
causes the increase the bargaining power. Unless the Hotel industry and large constructions,
the purchases product in low volume in the local scenario which influence loosen the
bargaining power.
Ceramic manufacturers of Sri Lanka have managed to create a solid stand in the
international market. Hence the Ceramic manufactures are targeting the international markets
as well. Sri Lanka has got a huge opportunity in ceramic market due to increasing demand
from the developed countries. The international buyers bargaining power has got a
reasonable strength to negotiate the price concession and favorable terms that are provided by
competitive foreign manufactures due to high quality and durability.
The reviewing the cumulative of the buyers bargaining power associate with Sri Lankan
Ceramic industry we can conclude that the buyers bargaining power is moderately high at the
current situation of the Sri Lankan Ceramic industry as concern.
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2.5 Bargaining Power of Suppliers
The bargaining power of suppliers of the Ceramic industry can be analyzed by identifying the
required products and services for the process. In fact products here can be categorized as the
raw materials, half-finished products or the finished products. Generally the suppliers power
would increase when there are only a few large suppliers, if the supply resource is scarce, if
the cost of switching to an alternative supplier is high, if the product is easy to distinguish and
loyal customers are reluctant to switch, if the customer is small and unimportant if there are
no or few substitute resources available. On the other hand the bargaining power of the
suppliers can be reduced when the following factors act negatively in the point of view of the
suppliers.
The raw material is the critical suppliers end and gain 30%-40% of the production cost of the
process. China clay and the ball clay are two types of primary raw material that is being used
in the ceramic industry. Sri Lanka riches with the above mentioned two types of clay in the
county and the suppliers got less power before the new government regulations of the mining.
As though the mining cost of the required raw materials were less in the past, there were
many suppliers. But with the new government regulations regarding the mining, the few
suppliers would continue their efforts and the suppliers end got powerful. As the backward
integration for this effect ceramic manufactures tend to own and maintain their own mines for
the raw materials. That strategy acts for decreasing the power of the suppliers.
The other raw material that would require for the manufacturing operation are mainly the
additive and the Glaze material that would enhance the quality of the ceramics that make an
outstanding quality that ensure the standards within the international market. Fire clay,
feldspar, quarters plaster of Paris, aluminum oxide, aluminum hydro oxide, zinc oxide,
coloring items and liquid gold can be categorized for the above material. Even though few
suppliers for them from Sri Lanka, Many of the suppliers outside the country as with the less
resources available within the country. In fact Sri Lankan suppliers bargaining power is high,
Manufactures tend to export the raw material. China, Rumania, Indonesia, Italy and South
Africa. The bargaining power is less with present of the competition among each of the
countries. But with the cluster formation of the suppliers end in each of the countries and the
uniqueness of the material the bargaining power has been increased. The exact raw material
should be used to acquire the finest quality in order to proceed the reputation made by the Sri
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Lankan ceramic industry and the difficult to switch to the alternative raw materials also
would strength the bargaining power of the suppliers.
The other critical factor of the suppliers point of view is the Energy requirement for the
manufacturing process. About 35% of the production cost is regarding the energy
requirement. For the drying and the firing process the LP gas would require and for the
automation activities and for the operation of the other machineries such as continuous
conveyers, fans, blowers and the air cleaners. The LP gas market is a monopoly in the point
view of the Gas prices. The suppliers end is stronger as with the presence of the government.
The price variation is controlled by the government policies but company vise there is a little
difference for the industry Gas price in two companies of Litro and Laugfs. To complete the
production activities the LP gas is a must for the industry. The technical support for the LP
gas handling and regarding the LPG accessories is new to the Sri Lanka. Few experts remain
in the industry regarding the technical assistance, therefore the bargaining power of the
suppliers in that scope is very high. To overcome the suppliers ceramic manufactures tends
to switch between the two gas suppliers of Sri Lanka, Litro and Laugfs according to the
seasonal price ranges.
Most of the machineries for the manufacturing are imported from the Germany, Italy, USA,
and China and even sometimes from the India. The machineries are conveyers, automated
systems, sensor systems, blowers, fans, dustings, burners, dryers and kilns. There are many
available suppliers for the machineries worldwide and therefore the bargaining power for the
suppliers is much less in the scope. But concerning about the quality of the machineries the
German and Italy products gain more power as the manufacture according to the order base.
Technical assistance of the machineries would provide by the quite a few number of
Engineers and Technicians in Sri Lanka though the machineries manufacture outside the
county, for some repairs and maintenance activities company assistance would require. In
that occasion the bargaining power of the suppliers is high. To overcome this Sri Lankan
technical organizations include separate sections intuitions to improve the R&D sector of the
ceramic industry with the collaboration of the industry leaders.
Examples: NAITA, NERD, CINTEC-ITI
The bargaining power of the suppliers for the Sri Lankan ceramic industry can be identified
as for the different sections such as raw materials, energy, machineries and technical
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assistance. The power of the suppliers behave differently in each of the facts and as a
combine conclusion it can be said that the bargaining power of the suppliers is playing
powerful role and would necessary actions to overcome by the industry.




3 Conclusion
Sri Lankan ceramic industry in terms of Porters five forces model has been analyzed. The
analyses show that this market structure couldnt be used for a complete analyses of the
ceramic industry as a cluster for the Sri Lanka. The ceramic industry recently has transferred
into a monopoly and the behavior of the ceramic industry is different in the long term
business in the Sri Lankan context. Porters Five Forces Model can be used to get a general
view of external factors of an industry. Obviously This Porters Five Forces Model may
helpful to the managers of the ceramic companies to take decision to make an expansion and
to introduce new designs to market. By using this model, the managers can easily identify the
opportunities and threats to their company.
Although it has many advantages, it can be identified some limitation of the model. Porters
Five Forces Model has assumed that not any changes in the industrial environment. But when
consider about the tile industry there are plenty of changes happening time to time. Like
Customers requirements can be changed, new designs and new companies can be entered to
the market, production can be vary in case of climate changers, government rules and
regulations can be changed, rupee depreciation etc. If considering tile importing or exporting
company required to repeat their analysis continuously. Porters Five Forces Model just uses
few external factors to analyze a particular company. Managers may need to consider about
same other external factors like monopolize of the ceramic manufacturing industry, import
CESS and other taxes. Then managers may need to use this model with combination of other
external models. Use of two or more models is not good for a company, because it will take
extra time and cost.
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On the other hand the marketing strategies of the different customer segmentation of the
market has not been analyzed in this method. Marketing mix and the customer segmentation
will make sure the solidity of the line of business of an organization. Although the bargaining
power of the customers is being analyzed, the exact customer segmentation or in a case niche
market concept is not fully analyzed in this method. Customer identification and customer
orientation analysis are not done. Pricing of the ceramic sector and the influences of the
pricing for the industry is not identified. The concept is merely a fact analysis but not use any
mathematical values that can compare the industry level time to time. Mathematical values of
the current company status would be more useful for an industry to identify the present
situation of a company. This requirement is not completed by the concept. Public relation of
the company is all about the company reputation. There are not any fact has been considered
regarding the public relation and the company reputation. Therefore the concept is not
applicable for the analysis of the company. Human resources behavior of the company is
another major area that should be considered. The behavior of the labor resources and the
human capital for a company also should be come into the picture of the analyses. And the
porters model is expressed the more external factors rather than the company internal factors.
The behavior of the company internal factors for an example the co-operative culture would
polish the position of the industry. These mentioned factors have not been covered by the
model.
Research and development and the technological aspects have not been taken into the
consideration directly in the concept. There are many other factors affect for a sustainable
organization. As much as the economic factors can be considered, sociological factors such
as consumer behavior, sociological behavior of the customers are more important for the long
term existence of an industry. The environmental factors also paly dominant role in the
current sustainable development concept. There are not any facts have to be consider
regarding the sociological and Environmental sectors by this method. Political and
governmental regulation are also an interesting fact regarding the business that have not been
covered by the model. Legal environment also emerge many influences for the company
existence the issues regarding the legal facts have not been considered in this analyses.
Therefore that can be identified that this model is just focusing economic factors but not all
the macro economic factors. There are many other factors that have to be considered when
analyzing the industry structure of the Sri Lankan ceramic industry.
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There are many other alternatives for the porters five forces analyses. SWOT analyzing
method is one such analysis that can be used to identify the external and internal forces act on
the company. Strength and the weaknesses can be used to identify the internal behaviors of
the organization while the opportunities and Threats can make the overall behavior of the
external facts for the company or the industry. Porters six forces analyses is one of the
alternative. . This is an extension of Porters five forces by adding Competition as sixth
force. This is more robust than SWOT analysis which mentioned above. The other best
method of analyzing is the PESTLE analysis. Political, Economic, Sociological,
Technological, Legal and Environmental issues are being discussed by this method and the
factors mentioned as not covered by the Porters Five forces model are covered by the method.


4 References
1. http://www.businessballs.com/portersfiveforcesofcompetition.htm
2. http://www.cgma.org/Resources/Tools/essential-tools/Pages/porters-five-
forces.aspx?TestCookiesEnabled=redirect
3. http://www.mindtools.com/pages/article/newTMC_08.htm
4. www.banglajol.info/index.php/JBT/article/download/9983/7416
5. http://webcache.googleusercontent.com/search?q=cache:aOyRHDk07csJ:www.asiase
curities.net/files/research_papers/1335158750TILE_SECTOR_UPDATE___2012.pdf
+&cd=1&hl=en&ct=clnk&gl=lk
6. http://www.strategy-formulation.24xls.com/en108
7. http://strategiccfo.com/wikicfo/buyer-bargaining-power-one-of-porters-five-forces/