RAK Ceramics success story becomes topic of study at US University
The case study on RAK Ceramics, authored by Kasra Ferdows, Heisley Family Chair Professor of Global Manufacturing, and Professor Stanley D. Nollen, both from the McDonough School of Business, Georgetown University, is being taught as part of the MBA programme and the study is set for distribution internationally.
RAK Ceramics, which started in 1991 with one factory producing just 5000 sq. metres of tiles per day, has now become the largest single ceramic tile manufacturer in the world producing a whopping 100 million square metres of tiles and 3 million pieces of sanitary ware annually from its 15 tile and four sanitary ware factories in six countries. The company exports to 135 country's across five continents.
Professors, Kasra Ferdows and Stanley D Nollen presented a copy of the case study to H.H. Sheikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, at a function which was attended by some 54 MBA students from the University who came to visit the RAK Ceramics plant as part of their "Global Experience" programme. The study was prepared in a time of nine months.
Sheikh Saud said that the success of RAK Ceramics was a clear example of how the emirate could exploit its competitive advantages in the manufacturing sector to create a global leader.
"Now we are trying to duplicate the success story of RAK Ceramics across other industries by helping entrepreneurs set up businesses and make use of the industrial advantages offered by the emirate through entities like Ras Al Khaimah Investment Authority (RAKIA)," Sheikh Saud added.
Elaborating on what made them choose RAK Ceramics as a topic for academic study, Prof. Kasra Ferdows said, "From an academic standpoint, we were fascinated by how a company located in a country not traditionally known in this industry could enter the market and grow rapidly- almost 30 % per year since its establishment, even several times faster than the market".
"The export markets of tiles and sanitary ware were dominated by well- entrenched companies in Italy and Spain, and recently, China. There seemed to have been little room for a new entrant- particularly from a distant place like Ras Al Khaimah, especially when the company had to import raw materials, machinery and labour. And yet the tile manufacturing complex of RAK Ceramics in Ras Al Khaimah was the largest in the world and seemed to be thriving," he added.
He said that the study found out that a combination of several factors were responsible for the company's extraordinary success. ?Good chunk of it depended on the management and RAK Ceramics prided itself in the expertise of its top management and corporate officers and the solid leadership of its CEO, Dr. Khater Massaad, who has been CEO since inception and the clear leader of the company," the study said.
According to Prof Kasra, the decision by the company to start exporting very early on and adoption of high- end technology were critical factors for its success. The strategy to compete in the market on the basis of service and not just as a commodity product also helped the company.
"The company's factories offered the world's widest range of manufacturing technologies for production of porcelain tiles in one site- from the simple 'salt and pepper' to complicated 'Granitec' and 'Twin Press' technologies which allowed them to meet the toughest and most daring technical specifications in the industry- things like matching surface finishes of veneered timber, leather, metal, glass, and fabric paints," the study pointed out.
RAK Ceramics conscious export strategy saw the UAE plant of the company generating almost two- thirds of revenue from exports in 2006. Prof. Kasra said that RAK Ceramics has also been smart in being flexible in the production and supply chain system to meet customer demands and in going out to countries and markets that were left alone by others.
On the future prospects of the company, Prof Kasra said, "So far it seems that they have done things right. They have gone for a capacity expansion programme and still have not been able to meet demand. So it shows the strategy they are following is quite right".
WAM/SA