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SPARTEK CERAMICS

Outline of the Case


• Spartek Ceramics, a leading Madras based ceramic
tile company
• Works with the motto: “Innovation that Pays”
• Plant capacity of 26000 TPA
• Trail blazing success of the company has lead to
flurry of new entrants
• Company in dilemma to choose the right corporate
strategy
Key Challenges and Issues
• As there are many new Entrants in the market the MD
of Spartek Ceramic is wondering as to what steps
should be taken to maintain the growth pace of the
company – Should he expand or diversify or acquire?
Facts of the Case
• Major Competitors HR Johnson & Somany
Pilkingtons
• Excess capacity available in the market – organic
growth may create unnecessary capacity
• Target Market of Spartek Ceramics – Middle income
housing,
• Influencing agents of Spartek Ceramics – Building
architects/ Engineers
Models used

Strategy

Expansion Diversification

Acquire Venture in to Venture in to


Increase own
company in new segment new segment
capacity
similar business on their own by acquisition
STRENGTHS (+) •Area of project management
• Good track record in the capital market and strand brand image
• 40000 TPA capacity passed by the government
• Retained earnings High cash generation

WEAKNESSES (–)
•Dealers retaining higher margins, giving lesser discounts to customer
•Lost its technological edge as competitors have caught up
• Dealership concentrated in Southern and Western markets

OPPORTUNITIES (+) • Diversify into a related field by raising the capacity of utilization
• Capacity Expansion and diversify into a totally unrelated field
• Aacquire an existing company & modernize its plants
• Efficient Distribution network
• Booming construction industry, especially housing industry, which drives
the demand of the rile industry

•High competitive rivalry within the industry: over-crowding of industry


THREATS (–)
•High threat of new entrants due to absence of any ma entry barriers and
delicensing of the industry
•HR and SPL, the top two ceramic tile manufacturers. come in the floor tile
segment
Analysis
Recommendations
Conclusion