Styl 2000 that is to say has never conducted a wider research on what are those important forces influencing company´s business. Thanks to a long-term existence in this branche and thanks to various relationships between both top management members and employees and colleagues active in the same field, a lot of information is usually gained through informal channel without however claiming complexity of such information.
This chapter should discuss where the company has to expect problems in the main direct five forces which impact company´s well being. We will discuss potential entrants, suppliers, buyers, substitutes and competitors. The last mentioned factor is to be handled more precisely since knowing competitors and their marketing strategy will outline limits within which we are going to operate with company´s marketing strategy itself.
7.2.1 Potential Entrants
There is always threat of new potential entrants on the market since technology is moving fast forward, producers from abroad assume Czech market to be good environment prepared enough for accepting their goods. On the other hand is this threat decreased by high capital requirements and difficult access to distribution channels since the market seems to be shortly before saturation. On the other hand, lack of knowledge and experience represent natural limits for competitors´entry.
long-term cooperation takes long time to be established
could be possible if coming with new ideas or materials, however rather not feasible because of continous technology development
Resource: own considerations In TAB. 27 there are the possibilites of entry of potential competitors into the specific area of facades, or pensile facades, together with evaluation of the threat coming from them. As we can see, there is no serious problem represented by any of them, only planning studios could in five years reach the stage of feeling neccessity to diversify this way. Styl 2000 should therefore not be much afraid of potential entrants, but should also keep an eye mainly on those mentioned.
Suppliers play an important role in the construction business. There are few famous and popular producers of construction material whose reputation has been won over decades and who are known in the Czech republic, there are however also many suppliers who intend to share market with the old companies and are good and go-ahead enough to be able to cut one piece of market share after another. We could said that barganing power of suppliers is rather small and is being weakened. Another important fact is that switching cost are high both for suppliers and for wholesalers in this branch, lead therefore to reciprocal loyalty.
The most important suppliers for different product groups were mentioned in chapter 6.3. The cooperation of the company is rather long-lasting and therefore very conservative (the suppliers have not been changed for more than 10 years and no new are expected to be used). This approach may be cost saving thanks to no additional cost on looking for a new supplier (see ) but is rather prohibitive in terms of flexibility for customers´needs and constant innovations in order to offer customers better services. We therefore suggest (after knowing the segment and product the company will concentrate on) to change suppliers´ portfolio.
Buyers on the contrary posses high bargaining power since, speaking of B2B customers who constitute almost 90 percent of company´s business, they do not only present a credible threat of backward integration (mainly really big investors and construction companies not rarely address directly producers when not expecting added value from wholesalers in order to reach lower price), but also are aware of the fact that they represent always an important item in total sales (in contrary to ordinary customers – private persons). TAB. 28 shows in fact all possible buyers and in another TAB. 40 we describe the profile of a buyer we would like to have. The reasons are separately stated below.
TAB. 28 Buyers versus Product Groups
Architects and studios
<192 000 CZK
≤314 625 CZK
≤438 000 CZK
≤559 875 CZK
≥682 500 CZK
Resource: calculations based on internal documents The figures displayed in the table say that in 2007 some items in the product portfolio were not sold at certain buyers (those in grey). The completed cells are colourfully discern as for financial amount originated from the business with these in different product groups.The lowest business as for products was done with mosaics, while concerning buyers the lowest profit came from Architects and planning studios (altogether 893 500 CZK) followed by the Investors (1 077 500 CZK) and finally with Construction companies (1 198 000 CZK). Coming out of this we would suggest the concentration on both last mentioned with the highest orientation on pensile facades.
7.2.4 Potential Substitutes
As already mentioned in chapter on technology, products are very different and there can be found many substitutes to any material. At this moment also quality starts to play its role, and price of course. When considering all three different product groups, mostly threatened through this are ordinary business items since substitutes to them can be found in any hobby market. Both remaining – realisation products and services represent without doubts areas where substitutes can indeed be found, but the threat of these is rather small.
Resource: internal documents (research on substitutes) As stated in the table above the highest risk of being substituted is posed on business product of ceramics and slightly lower on mosaics. Supporting constructions and pensile facades are in this view very well off. We should however be aware of the fact that technology mentioned in chapter 7.1.4 is impacting gradually also these fields and it is therefore possible that in five years the situation will be completely different. That is why we would suggest using the opportunity of being highly resistent to substitutes and concentrate in the strategy on pensile facades or supporting constructions.
As for competitors, Styl 2000 cannot compete with large companies with more than 100 poeple, but is pretty much successfull in facing threats of smaller companies. Although sometimes forced to use price competition, Styl 2000 makes better use of new product introductions and increasing care of customers. In numerous cases however had the top management of Styl 2000 to ascertain this customer care to be unsufficient, or better somebody´s competitive advantage to be higher in this factor.
Main competitors of Styl 2000 are Mramor Trading Ostrava, Ceram Objekt, FASTEC, TRIANGEL and Karpata CS s.r.o. Pardubice. There is pretty high rivalry among these firms since all of them concentrate mainly of facade tiles and do not diversify, therefore their switching cost are too high to be willing to back off the competition. In TAB. 30 below there are the main characteristics of individual companies (competitors) featured.
TAB. 30 Main company´s competitors
Mramor Trading s.r.o.
development of net of stores with floor tiles and cladding
northern Moravia, spreading into other regions
catalogue on CD for architects
instruction visits (for architects) at producer´s
studies of plans, 3D drawings, assembly of materials
own stone-mason workshop – production from natural stone
pensile facades are displayed on the last place of presentation
offer consists of mainly Italian ceramics, but also other materials
Ceram Objekt s.r.o.
facades, swimming pools, floor tiles and cladding, ceramic materials
all Czech Republic, from 1992
colours and formats tailored at wish (from 500 m2)
All materials, German Moeding and Italian ceramics
Laying also floor tiles and cladding
36000 m2 in the years 1996-2008, but usually none more than 2000 m2
KARPATA CS s.r.o.
Retail in ceramic cladding and floor tiles
Wholesale of ceramic claddings
Adhesives and mastics
Prague and surroundings, from 1991
Bad presentation, no additional information
Resource: internal materials, competitors web pages In TAB. 30 we used as the main assessment cathegories main interests of the companies, region of operation and year of establishment and further claimed advantage. In the summary to each competitor there is characteristic which will help us in describing where is the potential advantage or disadvantage of this competitor. Main interest will help us define which competitors are oriented mainly on facades, namely pensile facades, and which not in order to find direct competitors and/or only substitutional competitors. Operating region further says where Styl 2000 should be more aware of potential competition while the year of establishment shows if any of competitors can be compared to Styl 2000 as for its history. This is one of the possible sources of competitive advantage. In claimed advantage we assumed to find items especially attractive for customers from which our company could take the inspiration.
As for general assessment, situation in building industry is by entrepresis being active here is considered to be slightly worse than in previous periods, the same was valid also for level of total demand, while the unsufficient demand was named as the biggest barriers for further production growth (only 28,3% do not feel the same). The situation is for next three months expected to be stabilised (as 88,5% believe). The same is expected for six months with only a little less respondents to believe this (74,7%).61 The average period of advance orders i 8,9 months, prices are expected to rise mainly steadily at approx. 37% of production, twice as many respondents do not expect any rise.