Strategic management

Final project
Orascom Construction PLC

Submitted to: Dr. Youssef Shehata

Group: 4S2

Prepared by:
Names Registration No
1 Ahmed el zahwy 21226604
2 Hossam Gharib 21225674
3 Said Samy 21225596
4 Mohamed Abd El Aziz 21220099
5 George Essam Farid 21227429

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Table of Contents
1- General
1.1 Introduction
1.2 History
1.3 Vision
1.4 Mission
1.5 Corporate Governance
1.6 Current Strategy
1.7 Generic Strategy
2- External Environment Analysis
2.1 PESTEL Analysis
2.2 Porter Five Forces Analysis
2.3 Issue priority Matrix
2.4 Value Discipline Triade
2.5 CPM (competitor Profile Matrix)
2.6 External Factor Analysis Summary (EFAS)
3- Internal Environment Analysis
3.1 Value Chain Analysis
3.2 Financial Analysis
3.3 VRIO Analysis
3.4 Internal Factor Analysis Summary (IFAS)
4- SFAS
5- TWOS & IE Matrix Analysis
6- Strategic objectives
7- Recommend 3 corporate strategies
8- Quantitative Strategic planning Matrix (QSPM)
9- Implementation - Balance Scorecard
9.1 Strategic objective 1
9.2 Strategic objective 2
9.3 Strategic objective 3
10- Create operational / marketing and financial plans
11- Final recommendations

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1. General
1.1 Introduction

Orascom Construction PLC is a leading global engineering and construction contractor

with a footprint covering the MENA region and the United States and operations
encompassing the infrastructure, industrial and commercial sectors. The Group owns
50% of BESIX Group, develops and invests in infrastructure opportunities, and holds a
building materials and facilities management portfolio.

Our Case is based on Orascom Construction Egypt as it represents 68% of the

revenues of the company.

200+ 38
Running Projects ENR Int'l Contractors Ranking

20+ 65K
Covered Countries Employees worldwide

1.2 History

1950: Onsi Sawiris established a construction company in Upper Egypt.

1976: Orascom Onsi Sawiris & Co. (OOSC) is founded as a general contractor and
trading company.

1985: OOSC established its first overseas company Contrack International LLC
(Contrack) in Virginia, US.

1998: OOSC was converted from a limited partnership into a joint-stock company
and renamed Orascom Construction Industries S.A.E. (OCI S.A.E.).

1999: OCI S.A.E. IPOs on Egyptian Exchange (EGX) at a value of USD 600 Million
and became the largest company on the EGX. OCI S.A.E. first cement subsidiary,
the Egyptian Cement Company (ECC) commenced operations with a total annual
capacity of 1.5 million tons.

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 2004: OCI S.A.E. acquired a 50% shareholding in the BESIX Group, adding
significant exposure to the European & Gulf construction markets.

2008: Proceeds from the cement divestment are allocated to grow OCI S.A.E’s
Fertilizer investments.

2012: OCI S.A.E. acquired the Weitz company (Weitz) and established a strong
presence in the U.S construction market.

2013: Watts Constructors, a former Weitz wholly owned subsidiary was consolidated
into Contrack – forming Contrack Watts.

2015: Orascom Construction Limited was demerged from OCI N.V. and dual-listed
on NASDAQ Dubai and the EGX.

2017: The group built on its strategy of expanding in the concession business and
entered into an agreement to develop a 262.5 MW wind farm in Ras Ghareb, Egypt.

2018: Orascom inaugurated ahead of schedule two of the largest power plants in the
world, each with a generation capacity of 4,800 MW.

2019: The group further diversifies its revenue streams by expanding its O&M
business, adding three new projects in Egypt, including two water treatment plants
and the Monorail for the New Administrative Capital.

2020: Orascom Construction PLC achieves health and safety and operational
milestones across the Group. Despite a challenging environment impacted by
COVID-19, Projects remained active with enhanced safety precautions.

2021: Orascom Construction PLC continues to reiterate its leadership across key
sectors as it inaugurates the world’s largest water treatment plant. The Group
continues extending work on landmark transportation projects, such as Egypt’s first
high-speed rail and monorail.

1.3 Vision

The company does not have a vision.

The proposed vision

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 To be leading company globally in destination development and partner of choice for
transforming land into thriving centers of life

1.4 Mission

The company does not have a mission.

The proposed Mission
To provide High quality projects & constructions to customers in MENA region, Gulf and
USA, through well employee and Engineers using high latest technologies, with
objective of creating exceptional leading company in the world, having the most
reputable certification and at the same time maximize Profit.

1.5 Corporate Governance

Governance Overview

Orascom Construction is committed to sound principles of corporate governance, high

ethical conduct and good corporate citizenship. Orascom firmly believes that there is a real
connection between these principles and the performance as a company, and that
shareholder value is enhanced by Orascom commitment to and practice of these principles.
Responsibility of the Board of Directors

The board takes ultimate responsibility for the welfare of the company by guiding and
monitoring its business affairs. It is responsible for formulating, reviewing, and
approving the company's strategy and financial performance.

The board has established two principal committees:

Audit And Governance & Nomination and Remuneration

The board meets regularly throughout the year, a minimum of four times. To facilitate
prompt decision making, the day-to-day management of the company's resources is
delegated to its senior management teams, under the leadership of each operating
group’s chief executive officer.

Through its chairman and executive directors, the board maintains regular contact with
the company's advisors and financial and public relations consultants to ensure the full
understanding of the views of shareholders.

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Directors must declare any conflict of interest. A director cannot participate in
discussions or resolutions relating to any matter in which he or she has a material
personal interest without board approval.

In discharging their duties, non-executive directors are provided with direct access to
senior management and outside advisors and auditors. Committees of the board and
individual directors may, with the chairman's approval, seek independent professional
advice at the company's expense in order to perform their duties.

BOARD OF DIRECTORS AND MANAGEMENT

▪ Jérôme Guiraud Chairman - Non-Executive Director
▪ Osama Bishai - Chief Executive Officer - Executive Director
▪ Johan Beerlandt - Independent Non-Executive Director
▪ Sami Haddad - Independent Non-Executive Director
▪ Nada Shousha - Independent Non-Executive Director
▪ Wiktor Sliwinski - Non-Executive Director
▪ Renad Younes - Independent Non-Executive Director

Risk Management

Senior management has overall responsibility for the establishment and oversight of the
Group’s risk management framework. The Board is responsible for developing and
monitoring the Group’s risk management policies.

The Group’s risk management policies are established to identify and analyze the risks
faced by the Group, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities. The Group, through its
training and management standards and procedures, aims to develop a disciplined and
constructive control environment in which all employees understand their roles and
obligations.

The Group’s Audit Committee oversees how management monitors compliance with the
Group’s risk management policies and procedures and reviews the adequacy of the risk
management framework in relation to the risks faced by the Group. The Audit
Committee is assisted in its oversight role by Internal Audit Department. The Internal
Audit Department undertakes both regular and ad hoc reviews of risk management
controls and procedures, the results of which are reported to the Audit Committee.

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 COMMITTEES OF THE BOARD
Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing, and reporting practices
of the Company, and to fulfil the responsibilities set forth in the Committee Terms of
Reference.

Compensation Committee

The Compensation Committee’s role is to discharge the Board’s responsibilities relating

to compensation of the Company’s Managing Director, the adoption of policies that
govern the Company’s compensation and benefit programs, and to fulfil the
responsibilities set forth in the Committee Terms of Reference

1.6 Current Strategy

Four Key Pillars Aimed at delivering top and bottom line shareholder value led by a
commitment to excellence, safety and the environment.

The Group has a four-pronged strategy in place that reflects the core pillars of

its focus: strengthening its construction market leadership, leveraging strategic

partnerships, growing its investments and O&M portfolio, and furthering its

commitment to excellence, health, safety, and the environment as it seeks to

deliver shareholder value.

1. Strengthen Construction Market Leadership

Expand market presence as an EPC contractor across the core markets in the Middle
East, Africa and USA and strengthen capabilities across new and existing sectors.
The company focuses on pursuing well-funded projects where it holds a competitive
edge and capitalize on its proven financing track record across various industries.

2. Leverage Strategic Partnership

The company continues to develop strategic partnerships with industry leaders and
repeat clients to complement and expand its capabilities. Such relationships have
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 enabled the company to execute some of the most challenging projects in the
markets and pursue a pipeline of projects unmatched by others in the industry.

3. Grow Investments and O&M Business

The company’s entrepreneurial drive has led it to the creation of new business lines
alongside the core EPC activities. Capitalizing on the success in cement, fertilizers
and ports. The company is now focused on growing a portfolio of infrastructure
investments and Operation and Maintenance (O&M) projects to create a sustainable
business. The opportunities are wide-ranging and cover sectors such as water
treatment, renewable energy and transportation.

4. Commitment to Sustainable Growth

We firmly believe that integrating our commitment to safety, the environment and
ethical business practices into every aspect of our business model is key to our
success. The company is deeply engaged in the communities and create a safe and
healthy workplace for all the employees.

1.7 Generic Strategy

The Generic Strategy used by Orascom Construction PLC is an integrated strategy

“Differentiation & Cost Leadership”.

The core strategy for the company is differentiation as the company is providing
services and products with a high-end quality, high customer service, rapid product
innovation and advanced technological features with continuous commitment to the
health & safety, the environment and ethical business practices that is higher than
any competitor in the Egyptian market.

In addition, the support strategy is cost leadership as the company has cost control,
projects control and resources management departments in order to reduce and
control the cost without affecting the differentiation strategy, but still the cost is higher
than the competitors in the Egyptian market.

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2. External Environment Analysis

2.1 PESTEL Analysis

1- P- Political

• Stability of government

Egyptians have overwhelmingly approved in referendum constitutional changes that

could allow President Abdul Fattah al-Sisi to stay in power until 2030.

The National Election Authority said 88.8% of those who took part endorsed the
proposals. The turnout was 44.3%.

President Sisi's second term has been extended from four to six years, and he will be
allowed to seek one more term in 2024.

Prime Minister: Mostafa Madbouli (since June 2018)

The new parliament has hardly any dissenting voices. The turnout in the lower house
election was below 30%; low turnout indicates growing public disengagement with the
political process.

The average value for Egypt during that period was -0.93 points with a minimum of -
1.64 points in 2013 and a maximum of 0.05 points in 2000. The latest value from
2021 is -1.02 points. For comparison, the world average in 2021 based on 193
countries is -0.07 points.

✓ Stability of government is an opportunity for investment.

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• Political policy
The constitutional changes expand the military's power to intervene in politics.

The technocratic government is subservient to the president.

Egypt has a mixed economic system which includes a variety of private freedom,
combined with centralized economic planning and government regulation.

Domestic policy is largely focused on economic and social reform.

Continuing to pursue reforms (including enhanced trade policy and facilitation as well
as improvements in the broader business environment) can unleash the private
sector’s potential in higher value-added and export-oriented activities necessary for
job-creation and better living standards.

The average value for Egypt during that period was -0.43 points with a minimum of -0.78 points in
2013 and a maximum of -0.17 points in 2000. The latest value from 2021 is -0.43 points. For
comparison, the world average in 2021 based on 191 countries is -0.03 points.

✓ Political policy is an opportunity for investment.

• Governmental attitude towards foreign and private firms

The armed forces and their various affiliates have assumed an increasingly important
role in the economy, and particularly in infrastructure projects. This trend is likely to
be gradually reversed in the coming years, as the government is under pressure from
the IMF and prospective foreign investors to address the issue of the crowding-out of

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the private sector by military and other state-sector enterprises. However, the army
and the intelligence services are deeply embedded in the Egyptian economy.

The average value for Egypt during that period was 27.7 percent with a minimum of 10.27 percent in
1973 and a maximum of 54.93 percent in 2001. The latest value from 2022 is 30.85 percent. For
comparison, the world average in 2022 based on 139 countries is 54.61 percent.

✓ Currently, Governmental attitude towards foreign and private firms is a

threat to investment.

• Foreign policy

After a decade of domestic turmoil, Egypt is looking to regain its former role as a major
regional player. Growing stability at home, improving economic prospects, and recent
détente across the Middle East have boosted Cairo’s feelings of self-assurance.

Egypt is a member of the League of Arab States (Arab League) and the Common
Market for Eastern and Southern Africa (COMESA).

Egypt has good relations with its European and Arab neighbors, considering Egypt’s
position as a future regional energy hub for its neighbors.

Egypt’s partnership with the UAE, KSA and Bahrain is closely aligned.

Egypt and Qatar are improving relationship and have vast potential to continue growing.

Meanwhile, Turkey has begun to seek dialogue rather than confrontation with Egypt.

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 Major threats along Egypt’s borders, including the political instability in Libya and
Sudan, and water security concerns to its south due to the Ethiopian dam on the Nile
River.

The average value for Egypt during that period was 2.1 percent with a minimum of -0.2 percent in
2011 and a maximum of 9.35 percent in 2006. The latest value from 2021 is 1.21 percent. For
comparison, the world average in 2021 based on 181 countries is 3.60 percent.

✓ Foreign policy is an opportunity for investment.

2- E- Economic

The global economy faced multiple shocks and challenges, the likes of which
have not been seen in years. Recently, global markets have been subject to the
COVID-19 pandemic that put the world on lockdown, followed by the Russo-
Ukraine conflict, which had dire economic ramifications. Consequently, economic
activity has been adversely impacted and Egypt weathered large capital outflows
and rising commodity prices.
The government announced social mitigation packages that include widening
coverage of the Takaful and Karama cash transfer programs, hikes to pensions
and public sector wages, and tax measures, among other actions to alleviate the
impact of rising prices. Moreover, Egypt requested International Monetary Fund
(IMF) support to implement a comprehensive economic program to address the
negative spillovers from global economic conditions and the war in Ukraine,
restore macro-fiscal stability and anchor the structural reform program.

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International Monetary Fund (IMF) staff and the Egyptian authorities have reached a
staff-level agreement on comprehensive economic policies and reforms to be
supported by a 46-month Extended Fund Facility (EFF) Arrangement of US$3 billion.
The new EFF aims to safeguard macroeconomic stability and debt sustainability,
improve Egypt’s resilience to external shocks, strengthen the social safety net, and
step-up reforms that underpin higher private-sector-led growth and job creation.
The IMF arrangement is expected to catalyze a large multi-year financing package,
including about US$ 5 billion in FY2022/23, that reflects broad international and
regional support for Egypt.
The Egyptian authorities have also requested financing under the newly created
Resilience and Sustainability Facility (RSF), which could unlock up to an
additional US$1 billion for Egypt.

Egypt’s overall macroeconomic environment during FY2022/23 is expected to be

undermined by the concurrent shocks, before starting to improve over the
medium-term. Creating fiscal space remains crucial to advance human and
physical capital for the Egyptian population, which exceeds 104 million.

On October 27th, 2022, the Central Bank of Egypt (CBE) took the following
measures to intensify its reform agenda to secure macroeconomic stability and
achieve strong, sustainable and inclusive growth.
▪ Moved to a durably flexible exchange rate regime, leaving the forces of supply
and demand to determine the value of the EGP against other foreign
currencies, while prioritizing the primary goal of achieving price stability, and
building up sustainable, adequate levels of Foreign Exchange Reserves. The
exchange rate depreciated approximately by 25% within approximately one
month from the aforementioned date.
▪ The CBE will work towards building the foundation for a derivatives market to
further deepen the foreign exchange market and enhance its liquidity.

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• Level of economic development

▪ Official reserves and foreign currency assets decreased sharply; jointly

reaching US$37.4 billion at end-August 2022 (from US$54.5 billion at end-
February 2022)—despite financial support from the GCC as well as the
successful issuance of Egypt’s first Samurai bond.
▪ Real GDP growth at market prices recorded a preliminary figure of 5.4% in
2022Q1 and expected the annual real GDP growth to be 5.0% by end of fiscal
year 2022/2023.
▪ Population growth (annual %) 1.9 % as of 2021.
▪ The budget deficit-to-GDP ratio continued to narrow in FY2021/22, thanks to
the uptick in tax and non-tax revenues, as well as the containment of
expenditures. Nevertheless, the debt-to-GDP ratio increased mainly due to the
adverse valuation effect of the exchange rate depreciation.

The latest data from Q2 2023 show economic growth of 2.9 percent, which is a decrease
from the rate of growth of 3.9 percent in the previous quarter and a decrease compared to
the growth rate of 3.3 percent in the same quarter last year. The economic growth time
series for Egypt cover the period from Q3 2002 to Q2 2023.

✓ Level of economic development is an opportunity for investment.

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 • Population income

Egypt from 1990 to 2022. The average value for Egypt during that period was 9015 U.S. dollars with a
minimum of 6211 U.S. dollars in 1991 and a maximum of 12781 U.S. dollars in 2022. The latest value
from 2022 is 12781 U.S. dollars. For comparison, the world average in 2022 based on 177 countries is
22410 U.S. dollars.
✓ Population income is a threat to investment.

• USD Exchange Rate

the average exchange rate for Egypt was 10.8501 Egyptian Pounds per USD with a minimum
of 5.3206 Egyptian Pounds per USD in July 2008 and a maximum of 30.8986 Egyptian
Pounds per USD in September 2023. Actually the USD Exchange exceed 50 EGP 12/2023

✓ USD Exchange Rate is an Threat for investment.

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• Wage and salary levels

The average value for Egypt during that period was 52 points with a minimum of 33 points in 2022
and a maximum of 62 points in 2006. The latest value from 2023 is 33 points. For comparison, the
world average in 2023 based on 179 countries is 56 points.

✓ Wage and salary levels is an opportunity for investment.

• Inflation

The average value for Egypt during that period was 9.7 percent with a minimum of -3 percent
in 1962 and a maximum of 29.5 percent in 2017. The latest value from 2022 is 13.9 percent. For
comparison, the world average in 2022 based on 148 countries is 11.8 percent.
✓ Inflation is threat to investment.

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 • Interest rates

The average value for Egypt during that period was 2.76 percent with a minimum of 1.25 percent in
2003 and a maximum of 4.77 percent in 2019. The latest value from 2021 is 3.85 percent. For
comparison, the world average in 2021 based on 135 countries is 3.61 percent.

✓ Interest rate is a threat to investment

• Unemployment Rate

The average value for Egypt during that period was 9.96 percent with a minimum of 6.96 percent
in 2022 and a maximum of 13.15 percent in 2013. The latest value from 2022 is 6.96 percent.
For comparison, the world average in 2022 based on 176 countries is 7.45 percent.

✓ unemployment rate is a opportunity to investment

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3- S- Social culture

Population 104.14 million.

annual Population growth 1.9 % as of 2021.
Language: Arabic
Religion: (Majority: Islam) & (Minority: Christianity)
Due to the population increase, there is an annual demand for housing units between
500,000 to 700,000. Accordingly, there is a need for infrastructure (energy, water,
transportation, hospitals & schools).

Referring to Hofstede index (Egypt)

4- T- Technological

▪ Applying technology to construction opens the opportunity to improved performance

within the industry. According to research, productivity can increase 30%-45% in the
construction industry by adopting proven technologies, alongside predictability and
reliability. Not only that, but other areas that require close monitoring, such as cost,
scheduling and safety, are also greatly improved. The impact of emerging
technologies on the construction industry has been positive in many aspects.

▪ The new technologies are usually increasing the productivity and efficiency but
expensive.

▪ Over the years, the demand for construction has provided a need for building as
quickly and effectively as possible. New methods, such as prefabrication and off-site
construction, help move the process along by constructing essential components of
building projects off-site so they are ready to go when the sites need them.

▪ The use of artificial intelligence (AI) and machine learning systems is becoming
more prominent in the construction industry. Productivity is significantly boosted for
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 sites that implement these technologies because they can handle specific tasks that
would generally require a human worker to manage. This allows workers to continue
with other more pressing matters on a job site.

▪ The 3D printing technology has the potential to improve the construction industry.
Not only this new technology is more cost and time efficient compared to traditional
methods of construction, but it is also more environmentally sustainable as it
reduces material consumption, construction waste, and carbon footprint.

▪ Modern technology of the digital world saves time for the construction industry. You
can track nearly everything through mobile apps and computer software, saving a lot
of time recording information and communicating progress. You can do everything
from managing preconstruction to field reporting digitally.

▪ Using the 3D Laser scanners to serve construction, engineering & architectural

projects as well as archaeological sites, building models, industrial facilities, oil &
gas platforms. Also, it will help in the facility management service.
▪ A major obstacle that makes construction more difficult is tracking changes to the
models and prints. The development of BIM is one of the most excellent ways for the
construction industry to manage any changes. BIM involves the use of 3D models,
which lead to better design and construction planning. Any changes that need to be
made to the design plans can be made & seen in real-time with BIM (Building
information modeling) technology & provides a visual representation of the
structure.
▪ The technology in the construction industry can provide safer work environments
and top-notch training.
▪ Virtual Reality (VR) and Augmented Reality (AR) programs used to help workers
stay safe. Combining the real world with virtual components ultimately layers digital
interfaces on top of the physical world through digital technology, such as screens in
goggles or glasses. In the construction industry, tools, supplies and equipment can
be simulated and interacted with in real-time in a realistic environment.
▪ When human hands are unavailable, the use of technology becomes a necessity.
Robotics have been developed to perform monotonous and time-consuming tasks,
such as laying bricks and tying rebar. Not only can these robotics perform these
tasks at a much faster rate, but they also do not get physically fatigued the way
human workers do from such work.

✓ Possibilities for new products “opportunity”

✓ Possibilities for improving existing products “opportunity”
✓ Possibilities for improving manufacturing techniques “opportunity”
✓ Possibilities for improving marketing techniques

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5- E- Ecological

▪ Higher temperatures and extreme weather have inflicted crippling losses in countries
across the Middle East and Central Asia. Egypt is highly vulnerable to water scarcity,
droughts, rising sea levels, and other adverse impacts of climate change. Without
adaptation, agriculture, tourism, and coastal communities will be at particular risk.
▪ To support the move to a greener, climate-resilient economy, the Egyptian
government recently launched the National Climate Change Strategy. The private
sector is scaling up adaptation efforts and will play a key role in this transition. To
develop the green finance market, Egypt has also issued the region’s first sovereign
green bond to finance projects in clean transportation and sustainable water
management. As host of COP27, Egypt is also coordinating global action on climate
adaptation, mitigation, and finance.
▪ According to the Ministry of International Cooperation, the Government of Egypt
has been implementing Sustainable Energy Strategy, ISES 2035, which involves
increasing the use of renewables and improving energy efficiency in the power
sector. The government has set targets for renewables to make up a share of 42%
of the country’s electricity mix by 2035.
Accordingly, there are a lot of opportunities for the renewable energy projects.
▪ Construction and demolition waste (CDW) is one of the global challenges which
threaten developed and developing nations. In Egypt, the problem is serious, in
which CDW represent up to 40% of total materials cost in construction projects.
Moreover, the dominant practice of handling CDW in Egypt is illegal dumping which
negatively affects society and the environment. This indicates the negative impact of
CDW on sustainable development in Egypt. According to different studies, it has
been found that there are different factors compiled under six main factors which
may help in CDWR as follows: (1) waste-efficient materials procurement measures;
(2) waste-efficient materials procurement models; (3) green materials procurement
approach of green building (GB) practices; (4) legislation; (5) culture & behavior
measures; and (6) awareness measures.

• Reformulating products
• Modifying process
• Redesign production equipment’s “threat”
• Recycling by-products
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6- L- Legal

▪ The legal system in Egypt is Common Law.

▪ The Government proposes (Build-Own-Operate) strategic projects to the private
sector that encourage the construction companies to look for investments that
provide construction opportunities coupled with long-term recurring income and
Operation & Maintenance contracts across renewable energy, water treatment,
wastewater treatment, transportation and facility management.
▪ A lot of construction material & equipment are imported from other countries that
have good relations with Egypt.
CBE Letter No. 49 of February 13th, 2022 that mandated the use of Letters of Credit
for import finance, has affected importing the material & equipment negatively and
accordingly the construction projects.
However, the CBE began the process of gradually repealing Letter No. 49, and the
CBE will ensure the completion of removal by December 2022. This will serve as a
catalyst for the rejuvenation of economic activity in the medium term.
▪ For the time being, the armed forces & Government are managing and controlling
most of the mega projects in Egypt that put pressure on the private sector to accept
their proposed contracts and claims “if any”.
▪ The corporate income tax rate in Egypt is 22.5% on the net taxable profits.
▪ Tax in interests, dividends and Sales Tax, which is similar to Value Added Tax 14%.
▪ Applying minimum wages & salaries, affect total cost and revenue of the construction
companies, especially that huge number of labors are working in the mega projects.

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 • Laws affecting business firms

The average value for Egypt during that period was 9.28 index points with a minimum of 8.2 index points
in 2010 and a maximum of 10 index points in 2019. The latest value from 2022 is 9.5 index points. For
comparison, the world average in 2022 based on 177 countries is 5.37 index points.

✓ Laws affecting Business Firms is a threat to investment

• Taxes “threat”

The average value for Egypt during that period was 44.79 percent with a minimum of
40.1 percent in 2013 and a maximum of 54.4 percent in 2005. The latest value from 2019
is 44.4 percent
✓ Taxes Firms is a threat to investment

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2.2 Porter Five Forces Model

1) Threat of New Entrants: (low)

✓ Although there are emerging new companies in construction industry, there is

a low risk from potential entrants, since a lot of investment, resources and time
are necessary to build a strong and reputable construction company. The entry
barriers are high as well as the overall risks for new entrants, which is to
advantage for Orascom.

Probability of impact on corporation

High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

2) Bargaining Power of Suppliers: (Medium)

✓ Most of construction materials can be obtained from numerous suppliers and

any supplier can be substituted by another at no significant cost, effort or time
suggesting that there is a high competition between suppliers to construction
companies’ advantage, as prices are driven down. Subcontractors are also
plentiful and the switching costs are low, which has a positive effect for
Orascom.
✓ But on another side, some materials (like steel reinforcement & cement), has
high bargaining powder of suppliers, as few numbers of companies are
offering these items, which allow them to set the price they want even if it was
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 a high price. The impact of higher supplier bargaining power is that it lowers
the overall profitability of Heavy Construction.
✓ In addition, most of the equipment and some materials are imported which
may lead to delays in the construction projects and accordingly less
profitability.
Probability of impact on corporation
High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

3) Bargaining Power of Buyers: (High)

✓ For the less special and less complex project, the customers of construction
companies have many firms available for completing the projects, thus the
buyers have a stronger bargaining power. In general, customers select
contractors by the lowest bid. However, the complexity for the selection of firms
is less for special and more complex projects, since not all construction firms
have the required capabilities. In such cases, the bargaining power is lower.

✓ The higher Bargaining Powder of Buyers appears when Orascom is asked to

work on military or governmental projects with a specific budget which leads to
profit loss.
Probability of impact on corporation
High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

4) Threat of Substitutes: (low)

✓ Products and services in the construction industry are ‘as they are’ it is virtually
impossible to substitute them. The rise of the Boat-home, the mobile-caravan
homes, and holiday cabins are all short-term substitutes. Many other buildings
and large civil construction services cannot be substituted.

Probability of impact on corporation

High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

5) Rivalry Among Existing Competitors: (High)

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✓ There are a limited number of large and well-established construction companies
that could be selected for the largest projects. However, once the assigned
projects are completed, any other large company can be chosen for the new
project. There’s high competition and Orascom competes with different
competitors such as Hassan Allam and Arab Contractors who both tend to offer
lower prices compared to Orascom. However, Orascom has an established
reputation and can leverage its capabilities, experience and well-developed
project management and it is recognized as a leader in the industry and well
known with its ability to perform complicated projects with high quality which
differentiate it from competition.

Rivalry Among Existing Competitors Probability of impact on corporation

(Threat) High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

Market growth in the water treatment & desalination projects “opportunity”

Market growth in water treatment & Probability of impact on

desalination projects (Opportunity) corporation
High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

Market growth in the renewable energy & (Build-Own-Operate) projects

Market growth renewable energy & (Build- Probability of impact on

Own-Operate) projects (Opportunity) corporation
High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

Product differentiation “opportunity”

P a g e 25 | 53
 Product differentiation (Opportunity) Probability of impact on corporation
High Medium Low
Probability of occurrence High 1 2 5
Medium 3 4 7
Low 6 8 9

2.3 Value Discipline Triade

Value Discipline Triad:

1-Orascom

2- Arab Contractors
Leadership
Product

3-Hassan Allam

1-Hassan Allam 1-Orascom

2- Arab Contractors 2- Arab Contractors

3- Orascom 3-Hassan Allam

Product Leadership Probability of impact on Corporation
P a g e 26 | 53
 (Differentiation)– opportunity H M L
H 1 2 5
Probability of Occurrence M 3 4 7
L 6 8 9

Operations Excellence Probability of impact on Corporation

(Cost Leadership) - Threat H M L
H 1 2 5
Probability of Occurrence M 3 4 7
L 6 8 9
Customer Intimacy Probability of impact on Corporation
(Focus) – opportunity H M L
H 1 2 5
Probability of Occurrence M 3 4 7
L 6 8 9

Conclusion:

• Orascom construction meets clients’ expectations and more

when it comes to product leadership which matches the
company’s strategy. Its position is perfect.

• Orascom construction position in customer intimacy is perfect.

• And when it comes to operations excellence, Orascom meets

the desired quality with considerable number of resources
compared to Arab Contractors & Hassan Allam. Its position in
the Cost Leadership needs enhancement.

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2.4 CPM (competitor Profile Matrix)

HASSAN
Industry ORASCOM Arab Contractors
ALLAM
Success Weight
Factors Weighted Weighted Weighted
Rate Rate Rate
Score Score Score
Price 0.1 3 0.3 4 0.4 4 0.4

Quality 0.1 4 0.4 3 0.3 3 0.3

Meeting
0.1 4 0.4 4 0.4 4 0.4
deadline
Business
0.15 4 0.6 3 0.45 3 0.45
Development
Financial ability 0.2 4 0.8 4 0.8 4 0.8
Product
0.15 4 0.6 3 0.45 4 0.6
differentiation
Economy of
0.1 5 0.5 4 0.4 5 0.5
Scale
Projects
0.1 4 0.4 3 0.3 4 0.4
diversity
Total Weight 1 4 3.5 3.85

Conclusion:
Industry Matrix of ORASCOM weighted score is 4 which indicates very good situation.

P a g e 28 | 53
2.5 EFAS (External Factor analysis Summary)

Opportunities refer to favorable external factors that an organization can use to

give it a competitive advantage while Threats refers to factors that have the
potential to harm an organization; the following table shows opportunities and
threats with corresponding weight and rate values.

Weighted
Sr. Opportunities Weight Rate
Score

1 Political policy in the country 0.05 3 0.15

2 Stability of government 0.05 3 0.15

3 Level of economic development 0.05 4 0.20

4 Wage and salary levels 0.03 4 0.12

5 Possibilities for new products 0.03 4 0.12

6 Possibilities for improving existing products 0.03 4 0.12

Possibilities for improving manufacturing

7 0.03 4 0.12
techniques

Market growth in the renewable energy &

8 0.05 4 0.20
(BOO) projects

Market growth in in the water treatment &

9 0.05 4 0.20
desalination projects

10 Product differentiation 0.06 4 0.24

11 Customer Intimacy 0.04 4 0.16

12 Industry Matrix - (competitive advantages) 0.06 4 0.24

Sub- Total (Opportunities) 0.53 2.02

P a g e 29 | 53
 Sr. Weighted
Threats Weight Rate
Score

Governmental attitude towards foreign &

1 0.04 3 0.12
private firms

2 Interest Rate 0.05 4 0.20

3 Inflation effect 0.05 4 0.20

Effectiveness of legal system for the

4 projects that owned / controlled by the 0.04 3 0.12
Armed Forces & the Government

5 Taxation System 0.005 4 0.02

Ecological factors “Redesign production

6 0.005 4 0.02
equipment’s”

7 Bargaining Power of Suppliers 0.03 4 0.12

8 Bargaining Power of Buyers 0.11 4 0.44

9 Rivalry among existing competitors 0.08 4 0.32

10 Cost Leadership 0.06 3 0.18

Sub- Total (Threats) 0.47 1.74

Total Weighted Score 1 3.76

Conclusion:
Since the EFAS of ORASCOM rates 3.76 it means that the business is doing well.

P a g e 30 | 53
3. Internal Environment Analysis
3.1 Porter Value Chain Model

Being a multinational company operating in almost 20 countries, constitutes a huge

burden of keeping the same level of functional targets all over the operating locations, on
the other hand gives a lot of opportunities for bench marking in between, below is the
main activities summery of the company prioritized upon the importance to the customer
for each function in the value chain.

Inbound Logistics
“Purchasing”

• Central Purchasing department is responsible for purchasing process all over Egypt’s
projects, this leads to lowering the cost by achieving the best prices from different
suppliers, but it may cause a little longer duration in the process.
• The Utilized material is the best there is giving the best quality available.
• The status of material lead time & cash flow is affecting the relations with the suppliers
and the delivery time which also need to be somehow controlled, as such implications
could affect the overall rhythm of the operations.
• Being in a group company gives a very good network connections of suppliers,
logistics and custom clearances.

Operations

• Preparing the best-in-class Engineering documentation for the consultant’s approvals,

preparing the technical submittals for fast and clear approvals.
• Implementation as per the global and local standards keeping the best safe operation
of the utilized components, however the knowhow of such standards needs to be
enforced for the global codes.
• Quality & Standards, the organization was one of the first construction companies in
Egypt to achieve ISO certification. With it, they adhere to international standards that
help them minimize waste, errors, and increase productivity.
• HSE is a key pillar, the company is a leader in such aspect, performing in a safe and
healthy operations, taking all the global and local regulations into account while
operating.
• Sustainability is a key target of Orascom operations, giving the proper training to all
employees to be committed with the local and global regulations for the environmental
compliance, in addition to utilizing the best-in-class technologies which ensures the best
energy efficiency available.
• Diversity in the executed projects (power generation, renewable energy,
transportation, water treatment, water desalination, industrial, commercial, housing,
roads, B.O.O projects...etc.) that enhanced their market positioning in both regional and
international markets, and they have the capability to construct multiple fast-track
projects.

P a g e 31 | 53
• Orascom distinctive competencies lie in their processes, being a process-driven
organization, their standards compared to the competitors, the construction skills they
have acquired from all those years and first and foremost the quality they bring to their
customers in every project they work on.

• Relying on mega projects. Medium & small sized projects need to be more efficient.

Outbound Logistics

• The company is operating in almost 20 countries.

• The company is almost covering all over Egypt, for example the company is operating
projects in Cairo, Alexandria, North coast, Red See, Ain Sokhna, Upper Egypt, Toshka,
Sharq Elowaynat & Sinai.

Marketing and Sales

• Marketing and sales department is a leader in preserving the brand image, providing
the proper marketing mix.
• A strong customer relation is already built over the years, which supports in projects
awards. The company has good relations with the military & the government that control
most of the projects in Egypt.
• In addition, the company is considered the best choice for the foreign investors.

After Sales Service

• Orascom facilities, is a dedicated business area for the whole operation and
maintenance contracts, the scope includes the whole market requirements.
• Some challenges available which need to be sorted out due to the spread,
dependability on local supplier will have a great opportunity for solving such challenge.

Bid and proposals

• Providing the most efficient estimate, reflecting the customer requirements in a perfect
technical deliverable.
• Ensuring the quality and consistency of the Company’s professional image in collateral
material and proposals, such competency although available need to be enhanced.
• Being in a group gives a big experience in Commercial terms to save the project
execution due to project technical or commercial variations.
• The pricing is little high compared to the competitors.

Human Resources

• The company provides a healthy environment for employees to grow their technical
and non-technical skills.
• Being an international company provides a several opportunities for relocation and
grow the local competencies accordingly.
• Internal rotation and clear career path have an influence on the performance.

P a g e 32 | 53
 • Competitors’ head hunting of the competent employees impacts the capability of the
company.
• Being a large-scale company, it is a hierarchal organization and needs more flexibility.
Technological Resources

There are information tools or devices that the organization possesses, there is a very
good IT system that lately is trying to enhance the information flow across all levels.

Physical Resources

These are the tangible assets of the organization, and include property, plant,
equipment, trucks fleet and access to sources of raw materials.
A huge central warehouse that provides the construction sector with a lot of the
necessary raw materials for the operations.

3.2 Financial Analysis

Proven Financing Capabilities

Finance team previously secured and arranged debt for complex industrial and
infrastructure projects worldwide across cement, fertilizer, power and infrastructure
sectors, having historically raised USD 18.5 billion of financing over the past 15 years
and having strong relationships with European, UAE, US and Egyptian lenders

There are some cash flow complications but overall, they are one of the few companies
that can hold itself if any crisis occurs.

P a g e 33 | 53
 ➢ Financial Ratios

- Liquidity Ratios
- Profitability Ratios
- Activity Ratios
- Solvency Ratios
- Market Ratios

Balance Sheet (Liquidity Ratios)

Data From Financial

Statements ($ millions) 2020 2021 2022
Current Assets 2,796.0 3,092.1 3,375.1
Inventory 293.0 288.1 307.3
Current Assets –
inventory 2,503.2 2,804.0 3,067.8
Cash 374.8 473.8 505.7
Current Liabilities 2,853.9 3,066.3 3,359.3

Liquidity Ratios Comments

the current asset almost cover
Current Ratio
0.98 1.01 1 current liabilities
the quick asset cover 91% of
Quick Ratio
0.88 0.91 0.91 the current liabilities
the cash cover only 15% of the
Cash Ratio
0.13 0.15 0.15 current liabilities

Liquidity Ratios
1.2

0.8

0.6

0.4

0.2

0
CR QR CR

2020 2021 2022

P a g e 34 | 53
 Income Statement (Profitability Ratios)

Data From Financial

Statements ($
millions) 2020 2021 2022
Total Assets
3,505.30 3,788.50 4,102.40
Total equity
585.70 641.90 688.60
Revenues
3,184.00 3,371.10 3,542.90
Net Profit
131.10 97.10 125.30
Gross Profit
363.50 322.80 346.40
Operating Profit (EBIT)
216.40 150.60 156.30
Earnings per Share
1.04 0.78 0.97

Profitability Ratios Comments

ROA much better among 3
ROA = (NP/TA)
3.74% 2.56% 3.05% years
ROE much better among 3
ROE = (NP/TE)
22.38% 15.13% 18.20% years
EPS = (price common
EPS decrease among 3 years
Stock/No of Shares) 1.04 0.78 0.97
GPM much better among 3
GPM = (GP/R)
11.42% 9.58% 9.78% years
OPM decrease among 3
OPM = (EBIT/R)
6.80% 4.47% 4.41% years
NPM much better among 3
NPM= (NP/R)
4.12% 2.88% 3.54% years

Profitability Ratios
25

20

15

10

0
ROA ROE EPS GPM OPM NPM

2020 2021 2022

P a g e 35 | 53
 Activity Ratios (Short-term
liabilities)

Data From Financial

2020 2021 2022
Statements ($ millions)
COGS
2,820.50 3,048.30 3,196.50
Average Inventory
288.20 290.60 297.70
Revenues
3,184.00 3,371.10 3,542.90
Total Assets
3,505.30 3,788.50 4,102.40
Current liabilities
2,853.9 3,066.3 3,359.3
Average A/R
1,250.90 1,367.20 1,469.20
Average A/P
1,162.60 1,342.60 1,511.30
Purchases
2,820.50 3,048.30 3,196.50

Activity Ratios (Short-term

Comments
liab.)
Total Asset Turnover = Total Assets turnover much better among 3
(R/Average TA) 0.91 0.89 0.86 years
Inventory Turnover =
Inventory turnover much better among 3 years
(COGS/Average inventory) 9.79 10.49 10.74
Average Day in inventory = Average day in inventory much better among 3
(365/inventory turnover) 37.30 34.80 33.99 years
A/R Turnover = (Credit
A/R turnover much better among 3 years
sales/Average A/R) 2.55 2.47 2.41
A/P Turnover = (Credit Total Assets turnover much better among 3
Purchase/Average A/P) 2.43 2.27 2.12 years
Cash conversion cycle CCC
= (inventory turnover+A/R CCC decreasing among 3 years
turnover-A/P turnover 30.20 22.10 12.80

Activity Ratios
40
30
20
10
0
TA Turnover Inventory A/R Turn over A/P Turnover CCC
Turnover

2020 2021 2022

P a g e 36 | 53
 Solvency Ratios (Debt
Ratios) (Long-term
liabilities)

Data From Financial

Statements ($ millions) 2020 2021 2022
Total Assets
3,505.30 3,788.50 4,102.40
Total Equity
585.70 641.90 688.60
Total Liabilities (Total debts) 2,853.9 3,066.3 3,359.3
Operating Profit (EBIT)
216.40 150.60 156.30
Interest Rate
98.5 31.1 27.9

Solvency Ratios (Long-term

Comments
liabilities)
Debt to Asset Ratio (Debt
Total asset cover Total debts
Ratio) 0.81 0.81 0.82
Share of equity about 17% among
Equity to Asset Ratio
0.17 0.17 0.17 3 years
total debts are 4 times equity
Debt to equity Ratio
4.87 4.78 4.88 among 3 years
Asset to Debt Ratio Total asset cover Total debts
1.23 1.24 1.22
Share of equity about 5.5 times
Asset to equity Ratio
5.98 5.90 5.96 among 3 years
operating profit cover interest
Interest coverage Ratio
2.20 4.84 5.60 rate

Chart Title
7
6
5
4
3
2
1
0
Debt Ratio Equity to Asset Debt to equity Asset to debt Asset to equity interest
Ratio Ratio Ratio Ratio coverage Ratio

2020 2021 2022

P a g e 37 | 53
 Market Ratio

Data From Financial

Statements ($
millions) 2020 2021 2022
Market Price per share
6.10 5.21 5.00
Total equity
No of shares
116,761,379.0 116,761,379.0 116,761,379.0
Book value
=(Equity/No of shares) 5.02 5.50 5.90
Earning per shares
(EPS) 1.04 0.78 0.97

Market Ratio Comments

Market to book value
Ratio (M/B) = Market Market to book value Ratio
price per share/Book decrease among 3 years
value per share 1.22 0.95 0.85
Price to earning Ratios Price to earning Ration stable
(P/E) = Market prices go up and down among 3
per Share/EPS 5.87 6.68 5.15 years

Chart Title
8
7
6
5
4
3
2
1
0
2020 2021 2022

M/B P/E

P a g e 38 | 53
3.3 VRIO
Strength/ Competitive
Main Activity Sub Activity V R I O
Weakness Advantage

Suppliers, logistics & custom

Inbound Logistics clearances, Network Strength Yes No No Yes No

Inbound Logistics Material Quality Strength Yes No No Yes No

Inbound Logistics Local Supplier Relations Weakness Yes No No Yes No

Engineering, Technical
Operations competency Strength Yes No No Yes No

Operations Quality & Standards Strength Yes Yes Yes Yes Yes

Operations HSE, Internal Process Strength Yes Yes Yes Yes Yes

Operations Sustainability Approaches Strength Yes Yes No Yes No

Operations Projects diversity Strength Yes Yes Yes Yes Yes

being a process-driven
Operations organization Strength Yes Yes No Yes No

Medium & small sized

projects need to be more
Operations efficient Weakness No No No Yes No

Outbound Logistics Market Spread, operating in

almost 20 countries & allover
Egypt Strength Yes Yes Yes Yes Yes

Marketing and Marketing, Branding and

Sales Marketing Mix Strength Yes No No Yes No

Marketing and Customer Relations, and

Sales Market Reach Strength Yes Yes Yes Yes Yes

Marketing and Best choice for the foreign

Sales investors Strength Yes Yes Yes Yes Yes

Capability for Operation &

After Sales Service Maintenance contracts Strength Yes Yes Yes Yes Yes

Bid & Proposals, Technical

Bid and proposals competency Strength Yes Yes No Yes No

Bid and Proposals,

Bid and proposals Commercial competency Strength Yes Yes No Yes No

Pricing is little high compared

to competitors due to high
Bid and proposals overheads cost Weakness Yes No No Yes No

P a g e 39 | 53
 Strength/ Competitive
Main Activity Sub Activity V R I O
Weakness Advantage

HR Company Environment Strength Yes Yes No Yes No

HR Global Mobility Strength Yes Yes No Yes No

Internal Rotation & Career

HR Path Strength Yes Yes No Yes No

Competitors’ head hunting of

the competent employees
impacts the capability of the
HR company. Weakness No No No Yes No

Hierarchal organization
HR and needs more flexibility. Weakness Yes No No Yes No

Technological Information tools or devices

Resources the organization possesses Strength Yes No No Yes No

Technological
Resources Very good IT system Strength Yes Yes No Yes No

Tangible assets & resources

Physical Resources of the organization Strength Yes Yes Yes Yes Yes

Financial Proven Financing Capabilities Strength Yes Yes Yes Yes Yes

Financial High debt ratio Weakness Yes No No Yes No

High ratio of covering the

Financial interests from EBIT Strength Yes Yes Yes Yes Yes

The company does not

Financial generate enough profits Weakness Yes No No Yes No

Cash flow (liquidity)

Financial complications Weakness Yes No No Yes No

Financial High assets turnover Strength Yes No No Yes No

P a g e 40 | 53
3.4 IFAS

Weighted
Strengths Weight Rate
Score
Quality & Standards 0.08 4 0.32

HSE 0.02 4 0.08

Projects diversity 0.08 4 0.32

Market Spread 0.05 4 0.20

Customer Relations, and Market Reach 0.08 4 0.32

Best choice for the foreign investors 0.05 4 0.2

Capability for Operation & Maintenance contracts 0.005 3 0.015

Tangible assets & resources of the organization 0.08 4 0.32

Proven Financing Capabilities 0.08 4 0.32

High ratio of covering the interests from EBIT 0.05 4 0.20

ROE 0.05 4 0.20

Sub- Total 0.625 2.495

Weighted
Weakness Weight Rate
Score
High overheads cost which reflects of high pricing 0.08 3 0.24

High debt ratio 0.045 4 0.18

The company does not generate enough profits 0.045 4 0.18

Cash flow (liquidity) complications 0.08 3 0.24

Impact of the competitors’ head hunting of the

.025 3 0.075
competent employees

Local Supplier Relations 0.035 3 0.105

Medium & small sized projects efficiency 0.04 3 0.12

Hierarchal organization and needs more flexibility. 0.025 4 0.10

Sub- Total 0.375 1.24

Total Weighted Score 1 3.735
Conclusion:
Since the IFAS of ORASCOM rates 3.735 it means that the business is doing well.

P a g e 41 | 53
4. SFAS

Weighted
Sr Factor Weight Rate
Score
Strengths
S1 Quality & Standards 0.07 4 0.28

S2 Projects diversity 0.07 4 0.28

S3 Customer Relations, and Market Reach 0.07 4 0.28

S4 Tangible assets & resources of the organization 0.07 4 0.28

S5 Proven Financing Capabilities 0.07 4 0.28

Weakness
W1 High overheads cost which reflects of high pricing 0.06 3 0.18

W2 High debt ratio 0.03 4 0.12

W3 The company does not generate enough profits 0.03 4 0.12

W4 Cash flow (liquidity) complications 0.06 3 0.18

W5 Medium & small sized projects efficiency 0.03 3 0.09

Opportunities
O1 Market growth in in the water treatment &
0.04 4 0.16
desalination projects

O2 Level of economic development 0.04 4 0.16

O3 Market growth in the renewable energy & (Build -

0.04 4 0.16
Own - Operate) projects

O4 Product differentiation 0.05 4 0.2

O5 Industry Matrix - (competitive advantages) 0.04 4 0.16

Threats
T1 Interest Rate 0.03 4 0.12

T2 Inflation effect 0.03 4 0.12

T3 Bargaining Power of Buyers 0.07 4 0.28

T4 Rivalry among existing competitors 0.05 4 0.2

T5 Cost Leadership 0.05 3 0.15

Total Weighted Score 1 3.80

P a g e 42 | 53
 5.1 TOWS Matrix

TOWS Analysis is a variant of the classic business tool, SWOT Analysis. Both TOWS and SWOT are having
the same acronyms for Strengths, Weaknesses, Opportunities, and Threats, and in reverse order of the words.

Adding the relationship between the internal and external factors makes TOWS a much more useful matrix than a
standalone SWOT and an obvious next step. The main purpose of a TOWS Analysis is to:

a) Reduce threats
b) Take advantage of opportunities
c) Exploit strengths
d) Remove weaknesses
WEAKNESSES
STRENGTHS
W1- High overheads cost that reflects of high
S1- Quality & Standards.
pricing
S2- Projects diversity
TOWS Matrix W2- High debt ratio
S3- Customer Relations & Market Reach
W3- The company does not generate
S-4 Tangible assets & resources.
enough profits
S5- Proven Financing Capabilities
W4- Cash flow (liquidity) complications
W5- Medium & small sized projects efficiency
OPPORTUNITIES SO Strategy
WO Strategy
O1- Level of economic O2/O4/O5/O1/S1/S1/S2/S3/S4/W1/W3/T1/T2
W1/W2/W3/W4/O5/S4/S1/T2/T1
development. “Market Penetration”
“Profit strategy” Enhance the assets &
O2- Increase in water Use the competitive advantages of Orascom to
resources efficiency by 10% to reduce the
treatment & increase the market share of the water treatment
cost & increase the profit by 2% annually for
desalination projects. & desalination projects by 10% for the coming 5
the next 5 years.
O3- Potential Increase years.
in the renewable
W5/W4/O5/S4/S5/T2/T1
energy & (OBT) O3/O4/O5/O1/S1/S2/S3/S4/S5/W2/T1/T2 “Market
“Profit strategy” Increase the subcontracting
projects. Penetration”
activities (supply & apply) for the Medium &
O4- Product Use financing capabilities to overcome the cash
small sized projects to increase the efficiency
differentiation flow complications & invest in the renewable
by 10% and reduce the cost by 2% annually
O5- Industry Matrix - energy & (Build-own-operate) projects targeting to
for the next 5 years.
(competitive own a share of 30% in the coming 5 years.
advantages).
ST Strategy WT Strategy

T1/T2/T3/T4/T5/O1/O4/O5/S1/S2/S3/S4 No need here for grand strategy

“Joint Venture” with local contractors & foreign "retrenchment" as Orascom has a good
THREATS specialists to overcome the Impact of high position in the market and still making profit
inflation, interest rate, bargaining power of buyers even it is low.
T1- Interest Rate & high competition to increase the market share
T2- Inflation effect by 5% for the coming 5 years.
T3- Bargaining Power
of Buyers T1/T2/T4/T5/O1/O5/S5/S2/S4/W2/W4
T4- Rivalry among “Backward Integration”
existing competitors Use financing capabilities & relation with foreign
5- Cost Leadership lenders to Invest in cement factory to reduce the
effect of inflation & high interest rate on the
construction projects by 10% for the coming 5
years.

P a g e 43 | 53
IE Matrix (As Fred David)

EFAS 3.73
IFAS 3.76

The Matching show our Red Dot, consequently go to strategies of grow

and build

P a g e 44 | 53
 6 strategic objectives

Strategic objective 1: Expansion Strategy “through Concentration”: Market

Penetration
Use the competitive advantages of Orascom to increase the market share of the
water treatment & desalination projects in Egypt by 10% for the coming 5 years.

Strategic objective 2: Expansion Strategy “through Concentration”: Market

Penetration
Use financing capabilities to overcome the cash flow complications & invest in the
renewable energy & (Build-own-operate) projects in Egypt which will generate cash
for 20 years, targeting to own a share of 30% in the coming 5 years.

Strategic objective 3: Expansion Strategy “through Cooperation”: Joint

Venture
Joint Venture” with local contractors & foreign specialists for mega projects in Egypt to
overcome the Impact of high inflation, interest rate, bargaining power of buyers & high
competition to increase the market share by 5% for the coming 5 years.

Strategic objective 4: Expansion Strategy “through Integration”: Backward

Integration
Use financing capabilities & relation with foreign lenders to Invest in cement factory
to reduce the effect of inflation & high interest rate on the construction projects by
10% for the coming 5 years.

Strategic objective 5: Stability Strategy: Profit Strategy

Enhance the assets & resources efficiency by 10% to reduce the cost & increase
the profit by 2% annually for the next 5 years

Strategic objective 6: Stability Strategy: Profit Strategy

Increase the subcontracting activities (supply & apply) for the Medium & small sized
projects to increase the efficiency by 10% and reduce the cost by 2% annually for the next
5 years.

P a g e 45 | 53
7 Recommend 3 corporate strategies
Corporate strategy refers to the overarching plan and direction a company adopts to
achieve its long-term goals and objectives. It involves defining the company's vision,
making strategic decisions on resource allocation, and determining the scope of
business activities.
1. Integration: the process of one company acquiring another company and
merging the operations. It can be through acquisition, merger or takeover.
Integration can happen in several different industries to companies of different
sizes with various products and services.

2. Diversification: a technique you can use to expand a business. This strategy

helps encourage company growth by adding new products and services to
the company's offerings. With these new offerings, the company can pursue
business opportunities outside of its regular practices and markets. In
construction industry, the strategy may be applied by taking on multiple
construction project types, like public or private jobs. It might also mean
branching out into service work, or picking up a new trade or skill that you can
add to your construction repertoire.

3. Intensive: to maximize its profitability and maintain its financial success in the
future. A corporate-level strategy is utilized to help increase competitive
advantage over its competitors and to continue to offer a unique product or
service to consumers It includes 3 strategies

1. A market penetration strategy is when a company works towards a

higher market share by tapping into existing products in existing
markets. It's how a company (that already exists in the market with
a product) can grow business by increasing sales among people
already in the market.
2. A market development strategy is a growth strategy that involves
selling your existing products or services to a new group of
customers. It begins with market research where you: carry out a
segmentation analysis of your existing market. shortlist those
market segments which you feel you should pursue.
3. A product development strategy sets the direction and/or focus for
new products or the steps to revise existing ones. This includes
objectives and goals, funding, marketing and market penetration
tactics.

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 8 QSPM (Quantitative Strategic Planning Matrix)
Strate gic alte rnative -1 Strategic alternative-2 Strategic alternative-3 Strategic alternative-4 Strategic alternative-5 Strategic alternative-6
Marke t Pe ne tration Market Penetration Joint Venture Backward Integration Profit strategy Profit strategy
Key factors Weight
Total Total Total Total Total Total
Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s
Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s Attracti ve n e s
s s s s s s
s s s s s s

Strengths

Quality &
S tandards
0.07 5 0.35 5 0.35 5 0.35 3 0.21 4 0.28 3 0.21

Projects
divers ity
0.07 5 0.35 5 0.35 5 0.35 3 0.21 4 0.28 3 0.21

Cus tomer
Relations , and 0.07 4 0.28 4 0.28 5 0.35 3 0.21 4 0.28 4 0.28
Mark et Reach

Tangible
as s ets &
0.07 4 0.28 4 0.28 4 0.28 3 0.21 4 0.28 3 0.21
res ources of
the org.

Proven
Financing 0.07 5 0.35 5 0.35 4 0.28 5 0.35 3 0.21 3 0.21
Capabilities

Weaknesses
High overheads
cos t which
0.06 3 0.18 3 0.18 4 0.24 4 0.24 4 0.24 4 0.24
reflects of high
pricing

High debt ratio 0.03 3 0.09 4 0.12 3 0.09 3 0.09 3 0.09 4 0.12

The company
does not
generate
0.03 4 0.12 5 0.15 4 0.12 4 0.12 4 0.12 4 0.12
enough profits

Cas h flow
(liquidity) 0.06 3 0.18 4 0.24 3 0.18 3 0.18 4 0.24 3 0.18
complications

Medium &
s mall s ized
projects
0.03 3 0.09 3 0.09 3 0.09 4 0.12 3 0.09 4 0.12
efficiency

Opportunities
Mark et growth
in in the water
treatment & 0.04 5 0.2 4 0.16 4 0.16 3 0.12 3 0.12 3 0.12
des alination
projects

Level of
economic 0.04 4 0.16 4 0.16 4 0.16 4 0.16 4 0.16 4 0.16
development

Mark et growth
in renewable
0.04 4 0.16 5 0.2 4 0.16 3 0.12 3 0.12 3 0.12
energy &
(BOO) projects

Product
differentiation
0.05 5 0.25 5 0.25 5 0.25 3 0.15 3 0.15 3 0.15

Indus try
Matrix -
(competitive
0.04 5 0.2 5 0.2 5 0.2 4 0.16 4 0.16 4 0.16
advantages )

Threats

Interes t Rate 0.03 3 0.09 3 0.09 3 0.09 3 0.09 4 0.12 4 0.12

Inflation effect 0.03 3 0.09 3 0.09 3 0.09 3 0.09 4 0.12 4 0.12

Bargaining
Power of 0.07 4 0.28 4 0.28 5 0.35 4 0.28 4 0.28 4 0.28
Buyers

Rivalry among
exis ting 0.05 4 0.2 4 0.2 5 0.25 4 0.2 4 0.2 4 0.2
competitors

Cos t
0.05 4 0.2 4 0.2 4 0.2 4 0.2 4 0.2 4 0.2
Leaders hip

Total
Weighted 1 4.1 4.22 4.24 3.51 3.74 3.53
S core

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5. Strategic Position and Action Evaluation (SPACE Matrix)

Space Matrix
Rate Competitive advantage Rate Industry strength

Market growth in the renewable energy &

-4 Quality & Standards 4
(BOO) projects
Market growth in in the water treatment &
-4 Projects diversity 4
desalination projects
Customer Relations, and
-4 4 Product differentiation
Market Reach
Tangible assets & resources
-4 4 Industry Matrix - (competitive advantages)
of the organization

-3 High pricing 4 Bargaining Power of Buyers

-3 Local Supplier Relations 4 Rivalry among existing competitors

3 Cost Leadership

Average -3.667 Average 3.857

TOTAL X SCORE 0.19

Rate Environmental stability Rate Financial strength

Level of economic
-4 4 Proven Financing Capabilities
development

-4 Interest Rate 4 High debt ratio

The company does not generate enough

-4 Inflation effect 4
profits

3 Cash flow (liquidity) complications

Average -4.000 Average 3.750

TOTAL Y SCORE -0.25

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 Space Matrix Analyse
2

0
-2 -2 -1 -1 0 1 1 2 2

-1

-1

-2

-2

Conclusion:
ORASCOM is located in the competitive position in the space matrix, so
there is no enough financial capacity for investment in the all strategic
objectives, therefore based on the current financial capacity and after
analysis:

▪ Strategic alternatives 1,2,3 will be implemented.

▪ Strategic alternative 4: will be eliminated since it has the lower score in the QSPM.
▪ Strategic alternatives 5 & 6: will be implemented since the company needs to reduce
the cost & increase the profit.

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6. Implementation - Balance Score Card
6.1. Strategic Objective 1:
Time Frame Time Frame
Strategic
Target KPI Year Year Year Year Year Objective Target KPI Year Year Year Year Year
Objective-1
1 2 3 4 5 1 2 3 4 5
Actual
Increase
Increase market MS /
Finance market 1% 2% 3% 2% 2%
share by 10% Target
share
MS
Increase
Increase customer Actual
customer
satisfaction index / 5% 4% 4% 1% 1%
satisfaction
by 15% Target
Market Customer index (CSI)
penetration Good after Actual
Sustain Complain
for the water sales / 98% 98% 98% 98% 98%
handling 98%
treatment & services Target
Actual
desalination Reduce number of
Increase market Actual
projects in Increase NCR
market share / / 5% 5% 4% 4% 2%
Egypt to 1% 2% 3% 2% 2% quality (nonconformance
share by Target Target
increase report) by 20%
10% market Internal
market Actual
share Process / Enhance Enhance efficiency
share by / 2% 2% 2% 2% 2%
Operation efficiency 10%
10% for the Target
coming 5 Applying Increase accident- Actual
years. safety free working hours / 6% 6% 5% 5% 3%
standards by 25% Target
Actual
Hiring best
200 employees / 100 30 30 30 10
Learning calibers
Target
and
Provide Improve Actual
Growth
needed performance by / 10% 5% 5% 5% 5%
training 30% Target

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6.2 Strategic Objective 2:
Time Frame Time Frame
Strategic
Target KPI Year Year Year Year Year Objective Target KPI Year Year Year Year Year
Objective-2
1 2 3 4 5 1 2 3 4 5
Reaching Actual
Increasing
Finance 30% / 5% 7% 7% 6% 5%
ownership
ownership Target

Increase
Increase customer Actual
Market Customer customer satisfaction / 8% 8% 6% 5% 3%
penetration satisfaction index (CSI) Target
for the by 30%
renewable Reducing
energy & number of
(Build-own- Actual Actual
Reaching Increase NCR (non
operate) ownership / 7% 7% 6% 6% 4%
30% 5% 7% 7% 6% 5% quality conformance
projects in / Target Target
ownership Internal report) by
Egypt to ownership Process / 30%
own a Operation Increase
share of Applying accident- Actual
30% in the safety free working / 5% 5% 4% 4% 2%
coming 5 standards hours by Target
years. 20%
Actual
Hiring best 500
/ 250 100 50 50 50
Learning calibers employees
Target
and
Provide Improve Actual
Growth
needed performance / 15% 10% 5% 5% 5%
training by 40% Target

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6.2. Strategic Objective 3:
Time Frame Time Frame
Strategic
Target KPI Year Year Year Year Year Objective Target KPI Year Year Year Year Year
Objective-3
1 2 3 4 5 1 2 3 4 5
Increase Increase Actual MS
market market share / Target 1% 1% 1% 1% 1%
share by 5% MS
Decreasing Decreasing cost Actual /
Finance 1% 1% 1% 1% 1%
cost by 5% Target
Act. No of
Number of Target 10 JV
contracts / 2 2 2 2 2
JV contracts contracts
Joint Target
Venture Decrease Decrease
Actual /
with local projects projects 1% 1% 1% 1% 1%
Target
contractors duration duration by 5%
Joint
& foreign Increase Increase
Venture Actual
specialists customer customer Actual /
with 5 market Customer 10% 10% 5% 5%
for mega satisfaction satisfaction Target
contractors share /
projects in 1% 1% 1% 1% 1% index (CSI) index by 30%
to increase Target
Egypt to Improving Improving
the market market Actual /
increase the Customer Customer 10% 10% 5% 5%
share by share Target
market retention retention 30%
5%
share by 5% Increasing Increasing
Actual /
for the Internal Process Process 10% 10% 5% 5%
Target
coming 5 Process / efficiency efficiency 30%
years. Operation Decreasing Decreasing Actual /
5% 5% 4% 4% 2%
cycle time cycle time 20% Target
Improving Increasing
Actual /
knowledge knowledge by 4% 4% 3% 3% 1%
Learning Target
& skills 15%
and
Improving Improving tools
Growth Actual /
tools & & technology 6% 5% 5% 5% 4%
Target
technology by 25%

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7. References:

4. https://orascom.com/
5. https://www.worldbank.org/
6. https://www.imf.org/ (International Monetary Fund)
7. https://www.eiu.com/ (Economist Intelligence Unit)
8. https://moic.gov.eg/ (Ministry of International Cooperation)
9. https://www.cbe.org.eg/ (Central Bank of Egypt)
10. https://www.capmas.gov.eg/
https://www.transparency.org/

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