Spartek Case Study

Company Background

Incorporated 1983, First year of Production 1985, IPO in 1985

Objective Manufacturing and dealing in "Ceramic and Stoneware Glazed

and Unglazed Wall and Floor Tiles, Ceramic Capacitates and all types of
Ceramic Electronic components, Ceramic Earthenware and Porcelain
Sanitary ware, and Glassware articles of industrial and domestic application

Technical collaboration with leading manufacturer in USA SFT

Plant Andhra Pradesh (Proximity to clay mines & Madras Major market

Started With 12,000 TPA Expanded To 26,000 TPA 40,000 TPA Approved

Distribution network concentrated in southern and western India

Sales (1988) 40% south, 30% west (mainly Bombay), 30% north and east

Swot Analysis
Strength
1. Strong brand image
2. Fast firing cutting technology
3. First mover dvantage
4. Strong hold in AP
5. Quality

Weakness
1. Retail visibility is low in north and
east
2. Nil Exports
3. No Diversification

Opprtunities
1. Increasing demand for products
2. Expand and capture the market
share
3. Market ripe for consolidation

Threats
1. Competition capturing higher market
share
2. Capacity utilization reducing

Possible Options

Diversification

Expansion

Acquisition of company

Diversification

Why should company opt for diversification?

Increase in competition within same product line hampering the sales

Look to enter in new markets

Increase in Brand Equity

Why shouldnt company opt for diversification?

More risk is involved as the failure rates are high

High technology cost for setting up new equipment

Lack of expertise in the domain

Expansion

Why should company expand?

Booming housing sector with 70% to 80% of new construction dominated by

residential units

Can expand in the untapped regions to gain revenues from those regions

The units manufactured after expansion can be exported to foreign markets

Why shouldnt company expand?

The market share will already be captured by competitors within the time it
plans and executes the expansion

Expansion Costs

Expanding the dealer network will be a challenge as it is already facing

challenges in creating existing dealer network

Acquisition of Company

Why should the company go for acquisition?

To utilize the existing market share of acquired company

To reduce the existing competition

To utilize the technology and the expertise of acquired company

Why shouldnt the company go for acquisition?

Huge debt burden if acquired company is in huge debt

Acquiring cost can be higher than the actual cost of the acquired company