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Communication challenges facing a consultant to the client organization

2019-04-17T12:12:00.001-07:00

Communicating with clients can be challenging in consulting work as a consultant needs to spend long times at client premises and dealing with multiple stakeholders and usually consulting is done in different countries and that is how a consultant will be exposed to different cultures which may be different and challenging while dealing with.

If you have a client where they live in different time-zone it is important to ask about a suitable time to have a conference call and not to consider your time zone only. Also, client religious holidays and prayer times needs to be considered during communication as this will impact how the clients perceive you in respecting his culture which directly impacts your relationship.

Depending on the culture of your client the selection the meeting venue is different some cultures prefer casual venues while having food while others will prefer a quiet place especially if the language is different. Depending on the client the convenient way of communication will differ in case the client speaks a different language than yours they will be more comfortable having discussions in quite place , you should speak slowly to ensure he is not missing your words , avoid using local dialect as this may not make your client comfortable

Non-verbal communication impacts how the client perceives the relationship, for example, telling jokes may not be appropriate in some cultures or may not be understood, physical contact like kissing is ok for some cultures while some cultures may not accept it.

So it is important before engaging with your client to study the culture you are going to work in and showing the client how you are aware of their culture and considerations also for example learning few native words from your client to use as ice breaker will be of a very positive impact and show how you admire the culture and your client.

The impact of communication methods on the Consultant Client relationship

2019-04-17T12:09:00.000-07:00

Since there are different communication methods that can be used during client engagement and we showed how we can use different methods to communicate with our clients one important aspect needs to be considered is the impacts of communication methods on the client relationship , different communication methods has different impact on the relationship with the client and consequently on your business, so for example it will not be appropriate to have your first interaction with the client via conference call this will negatively impact your relationship when starting a client engagement a face to face meeting will be the best method for communication as it will dissolve many barriers and it will incorporate verbal and non-verbal communication which is the strongest amongst all methods.

Other methods of communication have different impact on how you build the relationship with the client, if you consistently using teleconferencing you are giving you still able to build a relationship with the client based on the way you are able to speak and to demonstrate by speaking only which of course not easy.

On the other hand I see using email for communication has the worst impact on client relationship because it is always factual and addressing business specific points, it lacks any gestures or emotions which makes it difficult for the receiver to explain the emotions of the sender. So, using emails has to be after building a relationship using different ways and emails shall be used more into informative communications and sharing deliverables.

Using webinars has almost zero impact on your relationship with the client as it will more of a one way communication where the consultant will be explaining some topic and the client will be receiver only , interaction is very limited and it is mainly bounded by the discussed topic only and after the webinars is over probably there will be no further communication or it will be very minimum.

Strategic group analysis and strategy Canvas for public transportation in Egypt

2018-02-19T08:44:00.001-08:00

Inner layer of environment, strategic group analysis and the strategy canvas can help to identify strategic gaps and opportunities. Apply these analytical tools to an Egyptian industry of your choice.

The transportation sector in Egypt is considered as one of the important sectors. In my analysis I shall represent the different types of transportation an individual can use in order to navigate the cities of Egypt, and how this type of transportation can form different strategic groups. We will try to simulate how strategy canvas can be represented for this sector and what are the strategic gaps and opportunities we can find.

Starting with identifying different types of transportation available in Egypt and how they form different strategic groups. First let’s start with the common transportation type that most Egyptians use which is the microbus, there are 8880 microbus in Egypt, two million cairens use microbuses daily compared to 4.5 million who use public buses and minibuses and two million use the underground, this means that 23% of cairens use the microbuses, although microbuses are available almost in all Cairo, but we face today many consequences from the high volume of microbuses in Cairo. Due to the level of education an carelessness of microbuses driver you are badly treated inside the microbus, you are forced to pay the fare they set without any regulations. Moreover Egypt as a whole suffers from high accident rate caused by these microbuses, although microbuses facilitate transportation to the Egyptians but when using it to go daily to work it will accompany a financial load on individuals because its fare is considered moderate to most Egyptian

Another type of transportation which I consider it is in the same strategic group with microbuses is the underground. The underground in Egypt was first developed at the beginning of nineteenth. Due its high speed rather than other transportation means I believe the under ground in Egypt is one of the strongest means of transportation in Egypt and can strongly compete with microbuses. But the underground has two problems, the first one it is heavily crowded which means a lot of suffering while moving with it, the second problem it is not found all over Egypt just several places inside Cairo. The microbuses and underground can form one strategic group due to the following reasons:

· Both of them offer relatively fast and cheap means of transportation

· Both of them serve the same market segment

· Both of them operate in Cairo, but the microbuses is more wide spread than Cairo

· Both of them serve about 2 million daily.

Another type of transportation in Egypt is cabs, in Cairo there are thousands of cars running about that painted black and white cars, they are not air-conditioned and their state vary considerably from car to car, they contain no meter you have to negotiate with the driver about the fare, the benefits, these cabs are relatively more expensive than microbuses and underground, that’ why it serves another segment in the Egyptian society. Customers of these cabs suffer from debating with drivers about the suitable fare, the poor state of cars. In March 2006 Cairo introduced the modern yellow cab that includes a meter and air-condition, these cabs follow an organization they are not driven by individuals like ordinary cab. Actually these cabs were introduced to solve the problems of the ordinary cabs but of course they cost more than ordinary cabs. Cairo cab and ordinary cab can form a strategic group because:

· They offer private rides to individuals.

· Both serve in Cairo.

· They serve the segment that can pay for taxi expenses.

· Although service quality is different but it is in the same range of one group.

Another type of transportation in Egypt is the public transportation; they include buses, minibuses and trams. Actually these means of transportation are very cheap, very crowded and very slow compared to other means of transportation, that’s why in Egypt many people prefer microbuses and underground than these public transportation.

To identify strategic gaps and opportunities for the transportation sector we will how these groups can be illustrated in the following graphs;

From the previous illustrations we can find that Egypt most influencing problem in transportation can be illustrated with 3-D graph with these axes: exhaustiveness cost and speed.

The best one can show a problem on a 2-D graph is the first one, it shows a strategic gap between the cost and exhaustiveness of transportation.

This means that

Egyptians are searching for a cheap and comfort means of transportation.

According to my perception if we evaluated the extent to which offerings of different providers address the factors valued by customers, we will rank the following:

1. Transportation cost

2. Exhaustiveness

3. Speed

4. Coverage

According to these 4 factors we can map a strategy canvas perceived value by customers in the transportation means.

By strategy canvas model and the previous illustrations we can find out the strategic gaps and the opportunities suitable to apply for the transportation sector in Egypt.

Strategic Implementation

2018-02-19T08:01:00.000-08:00

Alignment

Abstract

This article focuses on strategic implementation and how action plans is done to create consistency checks and face potential resistance.

Overview

Strategic implementation is not an easy task and due to poor time and efforts are devoted to it ,poor implementation leads to failure in execution phase. Since implementations is an evolutionary process and takes is time consuming a successful actions plans should be adopted to allow flexibility , risks and contingency plans. It is often helpful to break out actions into long term and short term plans. In order to allocate the firm’s resources in an optimal manner 7-S model will be used to build blueprint of an aligned organization, the result will highlight areas need to be changed. In general most people in an organization will wary of change, through this article we will move on approaches and tactics leaders will follow to overcome the resistance

In early 80’s group of consultants and professors created a model named 7-S for effectively organizing a company. The 7 S’s refer to Strategy, Structure, Systems, Staffing, Skills, Style and Shared Values.

To be successful high degree of fit between variable must occur, any variable will change others will change also.

Strategy - firm’s strategy should take into account resources, competitors, customers and supplier in order to create Competitive advantage.

Structure - Structure is the way in which different units of the company are divided and how authority is organized. Optimal structure will depend on many factors. Four common structures include functional, divisional, matrix and network.

1- Functional - the firm is broken out into major functions like manufacturing, R&D, and HR,etc. each of these functional areas maybe have a manager. This works best for firms that are small and in stable environment.

2- Divisional - This organizational structure breaks the firms up into specialized divisions based on characteristics such as product lines, geography or market segment. This model is best suited for large firms, the weaknesses of this model is integration between divisions is minimal.

Systems - The way a firm’s procedures and processes are organized can help support the strategy. These activities can be both formal and informal. The way the systems in an organization are aligned governs almost every activity an employee is involved with.

Staffing - the approach the company take through HR activities is vital to the success of the company. Personnel should be developed and monitored in order to assure they are aligned with the company’s vision.

Skills - The skills of a company are usually identified as what the firm does best. This skills can be technology, systems, management processes, innovation or even customer service procedures.

Style - style is norms employees follow and how they work and interact with each other. What manager say is important as procedures. The style of a firm depends on many factors and can change over time. The style of an organization can also impact how well change is received.

Shared values: values is an unwritten set of ideas that guides the firm. These values are rooted in the mission of the company and influence managers and employees in everyday activities.

Applications

Senior managers should take time to study the current state of each of the elements and then consider the ideal picture of what each element should look like. Based on this analysis, action plans can be developed to get the elements where they need to be. We will next turn on tips when dealing with change results from strategy implementing.

Managing change

Strategic implementations are always accompanied by significant changes these changes are often faced with resistance. The next section we will talk about tactics and strategies to overcome resistance.

Strategies for implementing change

There are two extremes in implementation strategy. At one end of the spectrum is a directive approach. This strategy is commonly referred to as Bold Strokes. On the other end is a participative approach referred to as the Long March.

Bold stroke - When the firm is in crisis, this is the optimal model. The Bold Strokes model attempts to quickly overcome resistance with little involvement from the others. This model is best suited for leaders who have clear plan, trusted and have a good support form shareholders. The benefits of this model include quick results with less time for opposition to build.

Long March - Participation is the hallmark of this model. The goal is to minimize resistance. This framework is best suited for leaders that lack credibility, power or trust. It can also provide a leader time to gather knowledge if unfamiliar with organization, products or customers.

Resistance

Opposition can come in many forms. Diagnosing resistance is vital to overcoming it. In order to prepare for this potential conflict, managers should be aware of the reasons for resisting change. We will talk next about reasons for resistance and later on about tactics to overcome it.

1- Self interest -the person feels they lose something of value if change is implemented

2- Misunderstanding or lack of trust -the may resist because they don’t understand it or not totally told about the implications of change.

3- Different assessments of problems – employee may assess the situation differently form the leader and feel its not best interest for the company

4- Low tolerance of change –part of human nature is to fear change.

Now we will turn our attention to the six tactics to attack resistance.

1- Mandate -When speed is essential and the leader possesses considerable power.it is risky if it leaves dissatisfaction with leader.

2- Include Resistors in Designing/Implementing Change – When other tactics do not work or are too expensive, consider inviting resistors to help with the planning. This can be a relatively quick and inexpensive solution to resistance problems.

3- Negotiation and Agreement – When some group will clearly lose out in a change and when that group has considerable power.

4- Facilitation and Support – When resistance stems from adjustment problems and fear of change, it is best to take a supportive stance. This could include training, listening or giving time off. However it can be expensive and time consuming and may fail.

5- Participation and Involvement – When leaders do not have all the information they need to design the change and when others have considerable power to resist, participatory tactics are necessary. This biggest downside to this strategy is that it is very time consuming if participators design an inappropriate change.

6- Education and Communication – When there is a lack of information or information/analysis is misunderstood, the organization should focus on communication. However, educating and communicating require significant time and effort.

Change implementation

We will talk now about 8-step program for successfully implementing change. This program takes into account alignment and resistance issues.

1- Establish sense of urgency –communicate the importance of change.

2- Form Powerful Guiding Coalitions – Major change requires support from the key senior managers in order to mitigate opposition and resistance.

3- Create a Vision – Create a picture of the future that is easily communicated to constituents both inside the firm (employees) and outside (customers, stockholders).

4- Communicate Vision – Without credible communication, and a lot of it, the hearts and minds of the troops will never be captured.

5- Remove Obstacles – Align structure, reporting lines and systems with the new vision. In some cases, the obstacle might be a person or group of people.

6- Plan for and Create Short-Term Wins – If there is not immediate action, then there is the risk that you will lose momentum. Without short-term gains, too many people may give up.

7- Consolidate Improvements and Produce More Change – Do not declare victory too soon, instead use successful short term wins to build credibility and ensure that changes are lasting.

8- Institutionalize Changes into Organizational Structure – Deliberately show people how the changes have helped improve performance. Ensure the next generation of mangers embodies the new approach.

Conclusion

Strategic implementation is a very complex process. It needs to be driven hierarchal staring from the top management level to the operation level, the strategic implementation should follow a scientific process at all its phases. This implementations should have a defined goals and objectives.

rules and policies should be set to achieve these goals. in order to overcome obstacles that will face the management they have to work on a systematic procedures dealing with this kind of changes these obstacles are mainly implied by the resistances to change. That’s why managers should always look every day for new approaches in dealing with cultural changes.

what are the success factors of ERP implementation a case study using casual loop business dynamics

2018-02-09T12:26:00.000-08:00

•The business solutions softwares today offer a variety of tools that can help organization increase its profits and decrease waste

•These business solutions need to be deployed through the organizations in order to make benefit from its tools
•The implementation processes usually requires a lot of time and effort accompanied by many problems

•In order to use he strong tools of business solutions softwares you need to have a successful implementation

Identifying key variables

•Successful implementation requires some factors to be taken into consideration.

•Strong business solution –suitable business solution that can help organization

•Solution consultants competency –the experience and profession of the consultants who will implement the solution in the organization

•People resistance –people always resist new technology

•investment –how much are the owners wishing to pay

•Technological infrastructure –the level of technology used in networks PC’s etc,….

Time Zone

•For an implementation in a big local company the duration can be approximately 1 year

Reference mode

Marketing Plan Guide a Step by Step Guide - " Marketing Plan for Dummies "

2012-09-08T16:26:00.002-07:00

nThe Marketing Plan

nPurpose

nSituation Analysis

nSWOT Analysis

nGoals

nMarketing Strategy

nMarketing Action Plans

nPurpose of The Marketing Plan

nInterpret Ambiguous Situations

nMake Assumptions Known

nAnalyze/Evaluate Data

nSet Goals & Make Projections

nIs a rigorous method that leads to Rational Decision Making

nRole of the Situation Analysis

nThe Situation Analysis gathers the data that is used in subsequent analyses

lData omitted at this point is often never considered

nCurrent Situation:
Market

nUnderstanding of the Overall Market

lWho are the users

lSize and growth

lWhat wants are being addressed

lVolatility of demand/wants

lHistory & future

lSubstitutes, areas for expansion

nCurrent Situation:
Competition

nDirect & Indirect

nCurrent & Potential:

lWho

lHow many

lHow large

lThreat level

lAnticipated actions

nCurrent Situation:
Macro-environmental

nCultural/Demographic Trends

nSocial/Lifestyle Trends

nEconomic Considerations

nLegal/Political Concerns

nPhysical Environmental Issues

nCurrent Situation:
Your Firm’s Past Performance

nGeneral Trends

lSBU performance

nMarket-based Accomplishments and Failures

lSkills gained or lost

nFuture Considerations

lAnticipated issues

nThe Situation Analysis Leads to the SWOT Analysis

nThe SWOT Analysis identifies the key issues a firm must consider to successfully compete in the industry/market being investigated.

nKey Issues

nElements of the SWOT ANALYSIS are:

lCompany Strengths

lCompany Weaknesses

lEnvironmental Opportunities

lEnvironmental Threats

nThese are best presented as a matrix.

nA SWOT Matrix ID’s:

nStrength—Opportunity Links

nThreat—Opportunity Conversions

nWeaknesses that must be Overcome

nGoals Follow From SWOT

nThe SWOT highlights possibilities and the resources needed to pursue them.

nGoals

nMarketing is how the firm meets many of its financial goals.

nGoals should include

lFinancial objectives

nRevenues

nLevel of Contribution

nReturn on Investment

lMarketing objectives

nShare

nDistribution/Coverage

nExpansion

lNew Products/Markets

nMarketing Strategy

nIs how the plan’s goals are met.

nSets the confidence level that the goals will be met.

nMarketing Strategy

nProduct-Market Specification

lDescribes the users, the needs being fulfilled and the wants satisfied.

nMarket Segmentation

lID variables that can simplify the P-M by dividing it into homogeneous groups of users/potential users.

nMarketing Strategy

nTargeting

lDetermines which of the market segments you want to develop a marketing mix for

nPositioning

lIdentifies how you want the targeted market segment to think about your brand and offering relative to competitors’

nMarketing Action Plans

nAre what implement the marketing strategy—more specifically, are what implement its positioning objective.

nMarketing Action Plans

nProduct Strategy

lCreates form utility that meets needs and wants.

nPricing Strategy

lCreates value perceptions that impact demand.

nChannel Strategy

lCreates time & place utility.

nPromotion Strategy

lCreates awareness & preference

SAP LSMW step by step guide " LSMW for Dummies "

2012-09-08T16:10:00.001-07:00

LSMW Step by Step Guide

ASSESSING AND MITIGATING RISK IN A DESIGN FOR SUPPLY CHAIN PROBLEM

2012-09-08T16:07:00.001-07:00

ASSESSING AND MITIGATING RISK IN A DESIGN FOR SUPPLY CHAIN PROBLEM

GAP Strategic Analysis

2012-09-08T16:02:00.001-07:00

GAP products & Brands

Gap stores offer an extensive selection of classically styled, high quality, casual apparel at moderate price points. Products range from wardrobe basics such as denim, khakis, and T-shirts to fashion apparel, accessories, and personal care products for men and women.

GAP entered the children’s apparel market with the introduction of GapKids in 1986 and BabyGap in 1989. These stores offer casual apparel and accessories in the tradition of Gap style and quality for children ages newborn through pre-teen. GAP also offers maternity apparel.

GAP launched GapBody in 1998 offering women’s underwear, sleepwear, loungewear, and sports and active apparel. GAP also operates Gap Outlet stores, which carry similar categories of products at lower price points.

Brand Names

Old Navy

GAP launched Old Navy in 1994 to address the market for value-priced family apparel. Old Navy offers broad selections of apparel, shoes, and accessories for adults, children, and infants, as well as other items, including a maternity line, consumables, and personal care products.

Banana Republic

Acquired in 1983 with two stores, Banana Republic offers sophisticated, fashionable collections of casual and tailored apparel, shoes, accessories, and personal care products for men and women at higher price points than Gap. They also operate Banana Republic Factory Stores, which carry similar categories of products at lower price points.

Piperlime

Launched in October 2006. Piperlime offers customers an assortment of the leading brands in footwear, handbags, apparel, and jewelry for women and footwear for men and kids, as well as tips,trends, and advice from leading style authorities.

Athleta:

Acquired in September 2008, Athleta offers customers high quality and performance-driven women’s sports and active apparel and footwear that is stylish and functional for a variety of activities, including golf, running, skiing and snowboarding, tennis, and yoga. Customers can purchase Athleta product, as well as an assortment of products from leading brands in women’s active wear, online or through the catalog.

Mission Statement

Gap Inc. is a brand-builder. They create emotional connections with customers around the world through inspiring product design, unique store experiences and compelling marketing.

Objectives

1. Consistently delivering product that aligns with their target customers, with an overall objective of improving their sales trend while delivering healthy margins.

2. Maintaining a focus on cost management and return on invested capital.

3. Generating strong free cash flow and returning excess cash to shareholders.

4. Investing in the future while delivering earnings growth.

Strategy

By the end of 2009, a year witnessing the passing away of Don Fisher, the company founder, the global financial crisis aftermath, a strong change in customers behavior patterns (due to climate change, decreasing disposable income, & general non-spending trends), GAP has maintained a stable – proceed with caution – strategy.

Focusing on the relation with the customer, targeting a tighter bond with stores visitors, was – and still is – the main driver at GAP.

Attractiveness of the Industry – Porter’s Five Forces

A- Rivalry among Current Competitors in the Industry

§ In the apparel industry, rivalry among competitors is high. There are several strong competitors, such as Abercrombie & Fitch and American Eagle. The shortness of the product lifecycle of clothing intensifies competition, since new styles and marketing campaigns are introduced a number of times each year by each competitor. These companies differentiate their products making use of price, marketing, advertising, fashion and technology to retain or steal market share.

§ Big Discount retailers also sell clothing, reducing margins of specialty apparel retailers

§ Move to mimic high fashion in short time over staple clothing

§ Competition over brand image instead of prices

B- Threat of New Entrants/ Barriers to Entry

Barriers to entry into the apparel retail and manufacturing industry is relatively low, however large companies like Gap Inc need not worry about small retailers. For a company to enter the apparel industry and compete with Gap Inc would be very difficult and expensive.

Gap Inc and its direct competitors benefit from economies of scale; they can produce and purchase very large amounts of raw materials and finished articles and can offer them to consumers at significantly lower prices.

These companies also have very large budgets for marketing and advertising, and benefit from being mature in their industry, having very elaborated networks and connections across numerous countries.

§ Thus, the observed barriers to entry are :

§ High capital expense to establish strong retail presence

§ Entrenched brand identity

§ Switching costs away from brand identity

C- Bargaining Power of Customers

Customers have very low buying power. Gap Inc has many clients who make small purchases that have very little effect on total sales individually. Although in some cases rapidly changing fashion desires for core demographics leads buyers to trendy brands

D- Bargaining Power of Suppliers

Bargaining power of suppliers is also relatively low, however it is more significant a threat than bargaining power of customers. Raw material (textile) is important in the apparel industry, and companies importing finished products from manufacturing overseas could possible face the threat of the manufacturer deciding to expand into the retail industry.

Also, Difficulty of training Eastern suppliers leads to exclusive relationships and a reduced volume of good supplier

E- Threat of Substitutes

Threat of substitutes differs for the many different brands within the apparel industry. Higher end clothing faces a higher threat than low-end clothing companies.

Clothing is considered a basic need, and in a time of economic difficulty, consumers will likely substitute designer clothing (i.e. Hugo Boss) for less expensive clothing brands (i.e. Wal-Mart, Target). This should be a point of interest and concern among Gap Inc executives, since they carry a high-end, a mid-range, and a cheaper brand of brands (Banana Republic, The Gap, and Old Navy Respectively).

Summary of External Factor Analysis

EFAS Matrix table

External Factors	Weight	Rating	Weighted Score	Comments
Opportunities § Growing popularity of online shopping § Expansion to the orient, opening branches in China and India § Growth in the foot wear market § Elimination of textile import quotas. § Customer Database and smart cards system. § Fast Fashion.	0.15 0.10 0.05 0.10 0.05 0.05	4 3 2 3 4 1	0.60 0.30 0.10 0.30 0.20 0.05	§ PiperLime and Athleta online stores emergence. § Branches in China & India are already operative, with more branches to come. § The global footwear market is growing, and Gap Inc should try to diversify into shoe retailing. § Better approach to high volume imports from overseas suppliers, and effect on lowering costs. § CAO hiring, better understanding of customers preferences. § The market segment is young enough for Gap to become a primary player by leveraging its economies of scale.
Threats § Decline in consumer spending § Intensive rivalry and competition § Counterfeits and Fakes § Possible governmental tariffs on imports § Increase in market segmentation by niche brands	0.15 0.15 0.10 0.05 0.05	3 3 1 2 3	0.45 0.45 0.10 0.10 0.15	§ Change in executive policies. § Marketing campaigns and sales efforts need to increase. § Copyrights, patents, & defensive actions are needed. § Balancing supply orders to mitigate risk without losing benefits of quantity no-quota § Need to distinguish new PiperLime and Athleta products.
Total	1		2.80

Financial highlights for fiscal 2009 include the following:

Ø Net sales for fiscal 2009 were $14.2 billion compared with $14.5 billion for fiscal 2008, and comparable store sales decreased 3 percent compared with a decrease of 12 percent last year.

Ø Gross margin for fiscal 2009 was 40.3 percent compared with 37.5 percent for fiscal 2008.

Ø Operating margin for fiscal 2009 was 12.8 percent compared with 10.7 percent for fiscal 2008.

Ø Net income for fiscal 2009 increased 14.0 percent to $1.1 billion, or $1.58 per share on a diluted basis, compared with $967 million, or $1.34 per share on a diluted basis, for fiscal 2008.

Ø In fiscal year 2009, they generated free cash flow of $1.6 billion compared with free cash flow of $981 million in fiscal 2008. Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment. For a reconciliation of free cash flow, a non-GAAP financial measure, from a GAAP financial measure

Ø As of January 30, 2010, cash and cash equivalents and short-term investments were $2.6 billion, with no debt outstanding. They believe their cash balances and cash flows from operations will be sufficient for the foreseeable future.

Business and financial priorities for fiscal 2010 are as follows:

Ø Consistently delivering product that aligns with their target customers, with an overall objective of improving sales trend while delivering healthy margins;

Ø Maintaining a focus on cost management and return on invested capital;

Ø Generating strong free cash flow and returning excess cash to shareholders.

Ø Investing in the future while delivering earnings growth. As to continue to focus on regaining market share in North America in fiscal 2010,plan to expand internationally through the following:

Ø Opening first Gap stores in China and Italy

Ø Expanding Banana Republic in Europe;

Ø Opening additional outlet stores in Canada, Europe, and Asia; and introducing their online shopping experience to customers in Canada and Europe.

Supply Chain Performance Measures Literature review

2012-09-08T16:00:00.001-07:00

Supply Chain Performance Measures Literature Review

SAP Discrete Manufacturing Best Practice

2012-09-08T15:58:00.001-07:00

SAP Discrete Manufacturing Best Practice

sap practice test

2012-01-27T06:44:00.001-08:00

Tahrir Square Photos

2012-01-20T09:21:00.000-08:00

ORIENTAL WEAVERS Strategic Audit

2012-01-20T08:39:00.001-08:00

About Oriental Weavers:

Oriental Weavers (OW) is one of the most recognized brands in the machine and handmade woven rug and carpet industry today. Established in 1980 by Mr. Mohamed Farid Khamis, a leading Egyptian entrepreneur and industrialist, the company has grown under his leadership to become the largest machine and handmade rug and carpet manufacturer in the world.

OW is the acknowledged leader in design, quality and innovation within the industry. With a simple vision the company became a leading worldwide exporter and by far the largest player in the Egyptian Market.

OW is the flagship company of the Orientals Group, which is a multinational organization that incorporates several companies dedicated to the production of woven rugs and carpeting, along with companies in other industries such as petrochemicals, property and real estate development, agro-industries, and other investment activities.

OW, located in the 10th of Ramadan City near Cairo, is completely vertically integrated thus providing the company with the advantage of manipulating and producing fine fiber and manufacturing the worlds most innovative rugs and carpets. Most of OW’s raw materials are produced within its subsidiaries. Therefore, it is able to pass on the advantages of complete vertical integration to all its customers.

Oriental Weavers has received worldwide recognition throughout the last decade. Amongst the many awards and recognitions, these are some of the highlights.

OW was awarded UNIDOs "Africa’s Innovative Company" award in the large-scale industries sector for the year 1998.

OW has consecutively won the "Americas Magnificent Rug Award" from 1994 to 2000 and again in 2002, 2005 & 2006 for its innovative designs and exceptional service.

OW has gained the title of "Favorite Area Rug Manufacturer" from industry magazines from 1997 to 2006 variably in service, design, and quality.

OW was awarded the Super-brand status from 2004 to 2006.

Vision

OW’s vision is to enhance our lifestyle worldwide; tomorrow’s homes will require ever-fashionable and inspired floor coverings with distinctive characters at affordable costs.

Mission Statement

OW’s mission is to build a state of the art carpets and rugs company by achieving economies of scale, being aggressively market oriented, being export oriented and internationally competitive, and maximizing the use of local competitive advantages.

Commitment

OW is committed to the pursuit of continued excellence in the manufacture of exquisite rugs and carpets and surpassing all our customers, suppliers and employees expectations. In addition we abide by the following simple belief “everything bows to innovation”. Innovation is our pillar of strength and the driving force behind all of our accomplishments.

Strategy & policies

Vertical integration allows for greater cost reductions and complete control over the manufacturing process. OW’s vertical integration strategy embraces the complete carpet care and rug manufacturing process, from spinning and dyeing yarn to locally producing the polypropylene granules used in making synthetic fibers and blends thus guaranteeing quality and value for every rug.

The company embarked on achieving complete vertical integration in 1983 with the establishment of 10th of Ramadan Spinning Company, to satisfy OW’s wool fiber requirements.

Egyptian Fibers Company (EFCO) and Oriental Weavers Fibers (OWF) were established in 1987 and 1993 respectively, securing OW’s supply of polypropylene fibers. Moreover, EFCO exports a portion of its production to Arab and European countries.

Sphinx, the group’s U.S. distribution arm was established in 1991, and Oriental Weavers International (OWI), the group’s export-oriented facility was founded in 1999 in the tax-free zone in the 10th of Ramadan City. Finally, in 2001, OW and a set of chemically inclined partners launched Oriental Petrochemicals Company (OPC), Egypt’s first polypropylene venture.

This venture was crucial to OWC in that it improved OW’s overall production efficiency significantly, relieved the burden of foreign exchange operating costs and completed OW’s vertical integration vision.

Having vertically integrated the carpet and rug manufacturing business, OW is now looking to continually expand to meet market demand as well as diversify into new complimentary business initiatives.

This is apparent with OW’s new expansion plans apparent with the start-up of the new integrated plant in China, producing BCF yarn, wool spinning, and manufacturing rugs. AS for diversifying, OW has launched new products such as the Axminster (Wall to Wall) carpets and the Gobelin tapestries.

Also, a new factory to produce terry cloth towels and bed sheets is on the verge of starting production. This factory is a joint venture with Miro Radici, one of Europe’s leading textile and energy companies.

Stock Information

OW became a joint stock company in 1986 and launched its IPO in 1997, offering investors a brisk expansion strategy, stable cash flow streams, and high dividend yields. Over the past two and a half decades, cost and production optimization have translated into impressive bottom line results.

Issued and Paid-in Capital

OW’s issued and paid-in capital is currently LE 283.3 million distributed over 56.66 million shares.

The company had two major capital increases in 1997:

- In May ’97, paid-in capital was increased from LE 60 million to LE 110 million distributed over 11 million shares with a par value of LE 10 each.

- OW offered 2.5 million shares at LE 58.4 per share to the public in June 1997, in a bid to secure financing for the company’s capacity expansions.

Afterwards,

- OW carried out a stock split in December 2003, taking the former 13.5 million shares up to 27 million shares.

- A 1:3 stock dividend distributed end of December 2003, increasing paid-in capital to LE 180 million distributed over 36 million shares.

- A 1:9 stock dividend distributed in the first half of 2005, increasing paid-in capital to LE 200 million distributed over 40 million shares.

In January 2006, OW concluded the procedures for the restructuring of its corporate structure. The restructuring entailed the acquisition of the outstanding minority and Khamis family stakes in existing companies and consolidated businesses.

This allowed OW to attain full ownership of existing consolidated subsidiaries, eliminate leakage from the bottom line, mitigate perceived and potential conflicts of interest, and gain full access to the 1.4 million m2 of China based manufacturing capacity.

The restructuring also involved bringing in new entities in related businesses into the OW fold through the acquisition of a controlling stake in MAC and the full acquisition of EFCO.

This allowed OW to achieve full vertical integration, add substantial value to both top and bottom lines, exposure to the fast growing home flooring segment, and achieve control of MAC whilst minimizing dilution impact on existing OW shareholders.

The acquisitions they conducted via a share swap on a relative valuation basis with no cash changing hands. This restructuring led to an issuance of 16.66 million new shares, raising the issued and paid-in capital to LE 283.3 million distributed over 56.66 million shares.

Oriental Weavers products

Area Rugs:

Oriental Weavers is the world leader in area rugs. Their area rugs are designed with functionality in mind.

The various lines are created and produced to suit a variety of flooring needs.

From traditional to transitional, from contemporary to tribal, a new product is introduced every two weeks on average.

Among the company’s most popular introductions are:

Andy Warhol

Oriental Weavers secured a licensing agreement with the Andy Warhol Foundation, paving the way for a new fashion forward line of area rugs inspired by the renowned American icon. The line features a variety of designs from contemporary to floral and spanning nearly 40 years of Warhol’s work in machine made constructions representing a variety of price points.

National Geographic

The National Geographic line is inspired by ancient heritage, nature and the environment. These inspirations are embodied in four distinct collections: Tropical Winds, West Indies, South America and North Africa. The Collection stays true to the spirit of exploration which National Geographic is renowned for.

The Industry’s First Ever 3 and 4 Million Point Rug

Oriental Weavers IS unparalleled within the rug industry in regards to technological innovation. OW introduced the worlds first 3 and 4 million point rugs which combined unique designs with innovative weaving techniques to produce a revolutionary new rug to the market.

Custom Carpets

Custom made rugs and carpets are a newly established division of Oriental Weavers, developed around a simple concept of customer involvement. From matching a swatch of fabric or a sketch, our designers can transform any idea into an exquisite rug or carpet.

What is envisioned by the customer will be directly translated and produced. No color, design or size is impossible. Custom made rugs and carpets by Oriental Weavers bring a unique and truly distinguishable product to any decor

Gobelin Tapestry

The art of Gobelin emerged in the mid-15th century, when Jean Gobelin and Philibert Gobelin established a dyeing factory on the outskirts of Paris. The family business flourished, and in the early 17th century King Henry IV of France turned the establishment into a tapestry factory under Flemish weavers.

The factory commissioned designs by the best artists of the day, setting high standards of execution and encouraging the training of new artisans. The result was the production of magnificent hangings, upholstery, and furniture in a richly ornate style.

Oriental Weavers has stayed true to the creative genius of ancient tapestry producers. Using modern yarns and techniques we have produced distinct collections incorporating the rich history of this century old art form. Choose from a multitude of designs in inspiring colors. With some tapestries there are matching cushion covers available. These collections will be an exquisite feature in any setting.

Picking your Rug

Understanding basic design concepts is very helpful when selecting your rug. A few basic principles in design coordination include:

ω Rugs create the mood. A rug’s shades add intensity and relevance to a space. For example, an area rug can open up and brighten a space by using lighter shades or in contrast, darker shades close it in and make it more intimate.

ω Think Opposite! One design myth is that if you have a patterned sofa in the room then the flooring should be one solid color to avoid making the space seem too busy. If the proper care is taken to ensure the patterns complement each other, pattern on pattern is not only acceptable but can add depth to the décor. A good rule in selecting pattern on pattern is think opposite. If you have a small pattern on the fabric, look at rugs with large patterns.
florals, plaids, stripes and damasks can work together providing they have size distinction and coordinate in color.

ω Texture adds depth. Adding a rug with looped pile or a combination of cut pile and loop pile on top of a smooth surface floor creates another layer to the design.

ω Special shapes and sizes are important. Sometimes what is needed to make a space look unique is to avoid using the standard rectangular rug. By using a round, octagon or oval area rug you can enhance a space.

ω Never try to match the main fabric color. Find a rug that uses as its main color the same family of colors found in the swatch you are coordinating.

Corporate Governance

OW’s Board – Duties and Purpose

OW’s board members are selected from shareholders by majority vote and renewed every 3 years. As is its responsibility, the BOD ensures that management is fulfilling its duties by monitoring the effectiveness of managerial decisions, strategic plans, and policies.

The BOD has a periodical reporting system and convenes every month to review the main performance indicators of the company such as sales, financials, inventory, and productivity, as well as to review capital expenditure needs and status.

There are committees that are responsible for various studies and analysis of topics (as well as others that are called upon as the need arises), such as sales, expenses, technical reviews, etc… that present the outcomes to the BOD. The BOD reviews, approves, and monitors the long-term strategic objectives and business plans of the management team.

The BOD assesses the major risks facing the company and the steps taken by the management to control such risks. The BOD overseas the accuracy of the company’s financial statements, compliance with legal requirements, the qualifications and independence of the company’s external auditors, and the performance of the company’s internal audits.

The BOD reviews and updates the company’s Code of Business Conduct and Ethics to ensure compliance with applicable laws and regulations.

The BOD has complete freedom in consulting with or engaging external advisors in relating activities. Any such expenses are fully covered by OW.

In-time Reporting

As effective and in-time reporting is essential to the BOD’s function, board members enjoy complete access to OW’s management. Nevertheless, board members should ensure that such activity neither distracts management from the business of the day nor disrupts the functional organizational hierarchy.

On the other hand, the BOD encourages senior management to bring managers to its meetings in instances where they can provide specialist insight related to their operation or bring to light opportunities that senior management deems deserving of the BOD’s attention.

Selection of the Board

One board membership is reviewed annually in regards to experience, understanding of manufacturing, distribution, financial expertise, and above all the perceived needs of the BOD at the time.

The selection of new directors is the BOD’s responsibility. The BOD nominates qualified candidates to the committee which includes the Chairman of the Board.

New directors undergo a general orientation process as well as board meetings which are held in various locations to familiarize the members with the company and its facilities.

OW’s BOD includes two independent directors, one from Misr Insurance Company and the other from Misr Reinsurance Company. The remainder of the BOD is composed of management.

Meeting Procedures

Selection of agenda items for BOD meetings
As is in his/her capacity, the Chairman of the Board shall set the agenda for the board meetings in cooperation with the directors to ensure the inclusion of all items of importance to the BOD. In addition, each director has the right to add items to the agenda and/or raise items during the meeting that are deemed important yet not included in the official agenda. Al such additional items must be correctly minuted in the official records of the meeting.

Board materials distributed in advance
To ensure the effectiveness of the board meetings, each director shall attend all the meetings while all the necessary documentation shall be distributed ahead of time including but not limited to the agenda, data to be discussed and any relevant documents that shall enhance the preparedness of the attendees.

Protecting Shareholders
No significant decisions are made without holding an Extraordinary General Assembly to discuss the matter and gain majority approval. General requirements of the law to treat shareholders equally in access to information are followed. These terms ensure the protection of all minority shareholders.

Corporate Social Responsibility (CSR)

Human Rights

Oriental Weavers adheres to the International Declaration of Human Rights. They maintain a set of transparent human resources policies and procedures for both management and labor. Governmental labor offices represent all employees, and the company’s wages, benefits, labor policies, and management procedures comply with and exceed domestic requirements.

They provide a number of additional benefits to the entire workforce including free medical care for employees and their families at a hospital established by the Chairman in the 10th of Ramadan city. Subsidized housing is also provided. The company has also established an annual raffle that applies to all employees. The raffle is run during the Holy Month of Ramadan and the subsequent winners are sent to Hajj, the holy Muslim Pilgrimage.

They have consistently cultivated a policy of fairness and equality for all employees. Employees are encouraged to air any grievances and contribute their ideas to the enhancement of production efficiency and working conditions. Oriental Weavers ensures that all business conducted with suppliers and service providers comply with the International Standards of Human Rights.

They have established a joint committee that is comprised of both management and Union Representatives to continuously monitor and resolve any employee grievances and to enact any recommendations made by the employees to ensure their comfort and safety.

In addition, a board has been put in place responsible for salary reviews and bonuses that is implicitly responsible for fairness in bonuses and is responsible for administering additional funds for any employees that require financial assistance.

Labor Standards

They have made it a policy from their inception of ensuring that senior management interacts with all employees and that boards are formed that have representatives from all departments. This ensures that no opportunity is missed for grievances to be aired and corrective action can be swiftly taken where need be.

All employees know they are part of the Oriental Weavers family they have all individually helped to build the company up to what it has become today.

Absolutely no form of forced or compulsory labor exists at Oriental Weavers.

Oriental Weavers only employs adults over 18 years of age. In addition they make it adamantly clear to all their suppliers and affiliates that Oriental Weavers will not conduct any business with entities that do so. They are very vigilant when it comes to ensuring that no child labor is used directly or indirectly in any component that is required in the manufacture of their product.

They have also established a committee that is responsible for this policy for any manufacturers they use overseas in relation to their hand-made products. Members of this committee are sent on random checking missions to ensure that no child labor is being used to produce the product. Should they discover any illegalities, contracts are terminated on the spot.

Oriental Weavers is an equal opportunity employer. Discrimination is strictly forbidden. Employment guidelines are maintained by the Human Resources Department that is responsible for the welfare of all employees and compliance to any changes in governmental amendments to the employment law.

Environment

Oriental Weavers abides by a corporate environmental policy that commits the company to among other things, consistent improvement of their production processes to minimize the adverse impact of their water, air, noise and solid waste emissions to the environment. Consistent with this internal policy, Oriental Weavers maintains 1SO 9001 (Quality Management System) and ISO 1400I (Environmental Management System) certification.

In addition to these international standards the company complies with a host of client specifications relating to the procurement and use of raw materials in the production process.

For example, European companies such as Ikea and Marks & Spencer require Oriental Weavers to comply with EU environmental and occupational health and safety standards while American companies such as Home Depot require compliance with USEPA standards.

Each of their major clients audits Oriental Weavers for compliance with their respective standards on an annual basis. They in turn extend these compliance standards to their own domestic and international suppliers of raw materials.

Oriental Weavers Industrial Safety and Environment department manages the compliance of the company’s operations with the standards noted above as well as with all standards for environment management and workplace health and safety enforced by the national Environmental Affairs Agency (EAA).

With a staff of 85, the department manages, monitors, and regularly reports on a range of parameters to the EAA in order to maintain their license to operate all facilities.

Oriental Weavers is committed to an effective environmental health and safety management system that ensures the company’s compliance with international and domestic performance standards in all its operations.

Oriental Weavers makes a conscientious effort through monitoring and investment in equipment upgrades to optimize resource input and minimize waste from production processes. For example, their natural wool and spinning and dyeing plant utilizes radio frequency dying technology that eliminates the need for steam boilers and eliminates noise and vibration in the drying process.

Process waste latex is collected and recycled back to the production process. Carpet pile brushing and trimming waste is captured via vacuum units, bagged and sold to independent contractors for the manufacture of automobile mats.

Oriental Weavers is committed to continuously initiating various procedures to recycle waste materials and to always research and develop new ideas in the field of environmental protection under the ISO-14001.

They will endeavor to decrease their emissions even more and continue to contribute to the protection of the environment.

The company was founded on the highest standards of ethics and the Chairman has always enforced the highest ethical conduct in all business practices.

The Board of Oriental Weavers annually reviews and, if necessary, updates the company’s codes of conduct and business ethics.

The Company communicates annually to all Oriental Weavers employees the company’s values and codes of conduct and see that they adhere to it.

Financial Highlights

“2009 actual figures”

• Sales value up 3.17% year over year (Y-o-Y) to reach EGP 3,551 million.

• Net Income after minority for the period reached EGP 312 million - an increase of 0.4%.

• EPS reached EGP 4.06 compared with EGP 3.98 in FY 08 - an increase of 2%.

• Adjusted EBITDA (1) value up EGP 678 million - an increase of 1% Y-o-Y.

• EBT down 1.2% Y-o-Y to reach EGP 397 million.

• Woven Segment sales up 6% Y-o-Y.

• Tufted Segment sales down 1% Y-o-Y driven by a price reduction of 6%.

• Capital:

o Issued and paid-in capital: 373 MEGP

o Number of shares: 74 million shares

o Par value of 5 EGP per share

o Shareholders’ Structure:

§ The Khamis Family 68% - Institutions 24% - Retail 8%.

Notes on performance analysis

a) Revenues grew at a 4-year CAGR “compound annual growth rate” of 13%

Over the 2005-2008 period, revenues exhibited a strong growth of 13%, reaching EGP 3,441mn (up from EGP 2,405mn in 2005). This strong growth was propelled by a strong increase in volumes, reaching 106mn sqm in 2008 (up from 87mn sqm in 2005). Exports/sales volumes decreased to 62% in 2008, down from 64% in 2007.

b) High polypropylene prices pressured gross margin

Gross profit margin was pressured over the 2005-2008 period from a high of 40% in 2005 to a low of 36% in 2008 due to the three-year CAGR growth of 13% in polypropylene prices.

c) EBITDA grew at a CAGR of 3%

EBITDA grew at a three-year CAGR of 3%, reaching EGP552mn in 2008 (up from EGP 505mn in 2005). However, EBITDA margin dropped from a high of 21% in 2005 to 16% in 2008 on increasing polypropylene prices. This was partially offset by lower selling expenses due to lower US sales.

d) Export subsidies made almost 31% of net profits before taxes

OW receives an export subsidy - an average 7% of its export bill. Previously, the company had faced some difficulties collecting its export rebates from the government in due time. Currently, OW promptly collects export rebates as they come due.

e) Fluctuating earning.

Over 2005-2008 period, earnings exhibited a slight growth from EGP 299mn in 2005 to EGP 315mn in 2008. Earnings were pressured in 2006 on higher costs. A 21% growth in earnings was exhibited in 2007 on EGP27mn non-recurring tax benefits resulting from OW Rug manufacturing’s net operating losses.

f) Stable performance in 2009

OWC has survived the global economic crises relatively unscathed, backed by its expansion in the local market. Furthermore, OWC strengthened its position in the global markets, benefitting from the exit of several international manufacturers. OWC increased its US market share by 200 bps (to 25%) and its European market share by 100 bps (to 20%).

g) Expected earnings growth of 4% in 2009

In FY09, earnings are expected to grow 4% YoY despite an estimated 2% lower EBITDA. Assuming that: (i) 23% higher YoY receipts of export rebates in light of the 50% increase in rates in 1H09, and (ii) 46% lower minority interest as a result of the lower earnings OW anticipates it be reported by MAC, OWC’s 53%-owned subsidiary.

h) Hannover fair a success

The confirmed orders OWC received during the Hannover fair (held in January) surged 67% YoY. Industry experts revealed that the industry is starting 2010 on a confident note. Orders received from the Hannover and Atlanta exhibitions represented around 18% of OWC's export sales in 2009.

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External Environment Analysis

Societal environment of Egypt:

1) Political

The Egyptian Constitution provides for a strong executive. Authority is vested in an elected president who can appoint one or more vice presidents, a prime minister, and a cabinet. The president's term runs for 6 years. Egypt's legislative body, the People's Assembly, has 454 members 444 popularly elected and 10 appointed by the president. The constitution reserves 50% of the assembly seats for "workers and peasants." The assembly sits for a 5-year term but can be dissolved earlier by the President. There also is a 264-member Shura (consultative) Council, in which 88 members are appointed and 174 elected for 6-year terms. Below the national level, authority is exercised by and through governors and mayors appointed by the central government and by popularly elected local councils. In March 2007, Mubarak introduced several constitutional amendments that would increase presidential powers and, more significantly, ban any political parties based on religion, race, or ethnicity. The amendments were put to a popular referendum and, despite low voter turnout and boycotts by opposition groups, passed with 75.9% approval.

Main political parties

The multi-party system was restored in 1976 by the then president Sadate. However, in practice it is the ruling National Democratic Party (NDP) which completely dominates the political arena. The Muslim brothers, a brotherhood created in 1928 by Hassan El Banna is the main opposition party of the country. They were banned but in spite of it, they were able to win 88 seats in the People's Assembly in the 2005 elections. The other opposition parties like Wafd, El-Ghad or the Nasserian Party are minority parties and were nearly wiped out in the 2005 elections.

Foreign trade

The Egyptian market is gradually opening up, especially after signing an agreement with the European Free Trade Association (EFTA) in 2006, and a free trade treaty with the United States. Its three primary export partners are the European Union, which represents more than a third of the trade, United States and Syria. Its three primary import partners are the European Union, the United States and China. Egypt mainly exports mineral fuels and oil, cotton, iron and steel. It imports mainly consumer electronic goods and capital goods, nuclear reactors and nuclear-powered boilers, cereals, food products and chemical products. Import volume has doubled and is twice the export volume, a fact which contributed to the deterioration of the country's trade balance.

2) Economical

In the past few years, the cabinet economic team has simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatizations of public enterprises and implemented economic legislation designed to foster private sector-driven economic growth and improve Egypt's competitiveness. Despite these achievements, the economy is still hampered by government intervention, substantial subsidies for food, housing, and energy, and bloated public sector payrolls.

The international economic downturn slowed Egypt's GDP growth to 4.5% in 2009, predominately affecting export-oriented sectors, including manufacturing and tourism. Unemployment is rising. In 2009 the government implemented a $2.7 billion stimulus package favoring infrastructure projects and export subsidies, and is considering up to $3.3 billion in additional stimulus spending in 2010 to mitigate the slowdown in economic growth.

In September 2009 - Egypt was ranked among the world’s 10 most active reformers for the fourth time. The country moved up to 106 from 116 among 183 economies worldwide in the overall ease of doing business ranking. According to the recently released report by IFC and the World Bank “Doing Business 2010: Reforming through Difficult Times”, Egypt made business start-up less costly, expedited the construction permit process, expanded the information available from the private credit bureau, and created commercial courts to speed up contract dispute settlements.

Being a former global leading reformer and a regional leading reformer in 2008/09, Egypt continued to make it easier to deal with construction permits by issuing executive articles for the 2008 construction law and eliminating most preapprovals for construction permits. Contract enforcement was expedited with the creation of commercial courts. Access to credit information has expanded with the addition of retailers to the database of the private credit bureau.

Facts and figures on the Egyptian economy:

GDP (purchasing power parity): $470.4 billion (2009 est.) country comparison to the world: 27 $450.1 billion (2008 est.) $419.9 billion (2007 est.)	GDP (official exchange rate): $188 billion (2009 est.)	GDP - real growth rate: 4.5% (2009 est.) country comparison to the world: 29 7.2% (2008 est.) 7.1% (2007 est.)	GDP - per capita (PPP): $6,000 (2009 est.) country comparison to the world: 133 $5,800 (2008 est.) $5,500 (2007 est.)
GDP - composition by sector: agriculture: 13.1% industry: 37.7% services: 49.2% (2009 est.)	Labor force: 25.8 million (2009 est.) country comparison to the world: 21	Labor force - by occupation: agriculture: 32% industry: 17% services: 51% (2001 est.)	Unemployment rate: 9.7% (2009 est.) country comparison to the world: 113 8.7% (2008 est.)
Population below poverty line: 20% (2005 est.)	Household income or consumption by percentage share: lowest 10%: 3.9% highest 10%: 27.6% (2005)	Distribution of family income - Gini index: 34.4 (2001) country comparison to the world: 90	Investment (gross fixed): 17.9% of GDP (2009 est.) country comparison to the world: 121
Budget: revenues: $48.86 billion expenditures: $61.61 billion (2009 est.)	Public debt: 79.8% of GDP (2009 est.) country comparison to the world: 15 86.5% of GDP (2008 est.)	Inflation rate (consumer prices): 10.1% (2009 est.) country comparison to the world: 193 18.3% (2008 est.)	Central bank discount rate: 11.5% (31 December 2008) country comparison to the world: 48 9% (31 December 2007)
Commercial bank prime lending rate: 11.82% (31 December 2008) country comparison to the world: 67 12.51% (31 December 2007)	Stock of money: $31.72 billion (31 December 2008) country comparison to the world: 27 $27.6 billion (31 December 2007)	Stock of quasi money: $112.2 billion (31 December 2008) country comparison to the world: 21 $102.6 billion (31 December 2007)	Stock of domestic credit: $126.5 billion (31 December 2008) country comparison to the world: 35 $113.9 billion (31 December 2007)
Market value of publicly traded shares: $85.89 billion (31 December 2008) country comparison to the world: 43 $139.3 billion (31 December 2007) $93.48 billion (31 December 2006)	Agriculture - products: cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats	Industries: textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures	Industrial production growth rate: 3.9% (2009 est.) country comparison to the world: 30
Current account balance: $-3.32 billion (2009 est.) country comparison to the world: 160 $-1.331 billion (2008 est.)	Exports: $22.91 billion (2009 est.) country comparison to the world: 64 $29.85 billion (2008 est.)	Imports: $43.98 billion (2009 est.) country comparison to the world: 48 $56.62 billion (2008 est.)	Reserves of foreign exchange and gold: $34.99 billion (31 December 2009 est.) country comparison to the world: 27 $33.85 billion (31 December 2008 est.)
Debt - external: $28.45 billion (31 December 2009 est.) country comparison to the world: 60 $32.12 billion (31 December 2008 est.)	Stock of direct foreign investment - at home: $66.43 billion (31 December 2009 est.) country comparison to the world: 44 $59.13 billion (31 December 2008 est.)	Stock of direct foreign investment - abroad: $12.23 billion (31 December 2009 est.) country comparison to the world: 43 $12.08 billion (31 December 2008 est.)	Exchange rates: Egyptian pounds (EGP) per US dollar - 5.6 (2009), 5.4 (2008), 5.67 (2007), 5.725 (2006), 5.78 (2005)

3) Sociocultural Environment:

Egypt’s total population stood at 80.3 million. Out of this approximately 90% are Muslims while the remaining are Christians. Most of the population inhabits the area near the Nile River and almost half of Egypt’s population is urban, living in the densely populated cities such as Cairo and Alexandria.

One of Egypt’s biggest socio-economic problems is the high unemployment rate which has been growing over the years. The unemployment rate, which has averaged more than 10% over a decade, increased to over 12% in 2005–06. With the population growing at 1.8% per annum, the economic growth of 4.4% is not enough to curb the unemployment rate. While the average growth in employed population during the last five-year period stood at 2.3%, the rise in unemployed population has been much higher during the same period averaging around 8%. The high rates of unemployment and population growth coupled with meager wages in most of the public sector companies contribute to the poverty levels, with close to 20% of Egypt’s population below the poverty line. A big challenge for Egypt in the near future will be to create jobs, as the population within the 20–45 age-group constitutes around 65% of the total population.

The education indicators of Egypt project a poor image of the education system. Only about 58% of the population is literate and there is a big difference in the literacy rates for males and females. Male literacy rate is around 68%, while female literacy rate is just about 47%, indicative of gender disparity. The National Council for Women, a nodal government agency that works for the welfare of women in Egypt, aims to completely eradicate illiteracy among females.

The healthcare system in Egypt is underdeveloped with only around 29% of the population covered by governmental health insurance. Egypt’s public healthcare system is under-funded, with the government committing only around $1 billion in 2005–06 for upgrading the healthcare sector, which represents a meager 2.7% of the total state budget. The ministry of health is the largest institutional financier providing free healthcare services in Egypt but its reach is limited. Almost 65% of the Egyptian people pay for their own insurance through private and other health insurance organizations. The total spending on healthcare in Egypt is only about 4% of its GDP.

4) Technological Environment:

Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by 2014 and the Egyptian IT market growth is forecasted to remain below pre-economic crisis levels in 2010, but economic recovery, tenders delayed from 2009 and higher incomes boosted by pay raises for civil servants and other groups should help to keep sales on an upwards trajectory.                                                 .

A number of policies have been implemented to attract foreign investment in IT outsourcing, including local employment subsidies, lower corporate taxes and deductions for training costs. The Egyptian minister of state for administrative development has said that 200 government services will soon be available online through a new e-government portal. The portal will offer 70 services in both English and Arabic. According to the Ministry for Administrative Development, more than 20 government agencies currently offer services and licenses online.                                                   .

Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast to reach around US$1.3bn in 2014. Egypt's IT market will stay hardware dominated, with spending on PCs sustained by initiatives like the 'Computer for Every Student' and 'PC for Every Home' programs. Hardware accounted for an estimated 62% of Egypt's IT spending last year. Households account for 20-25% of unit sales, with almost 1-1.5mn households said to possess a computer at present.                                      .

Overall spending on software remains rather low, which reflects the relative immaturity of Egypt's IT market. One market driver has been a significant fall in software piracy, with the illegal software usage rate, as measured by the Business Software Association, falling a further 1% to 59% in 2008. While large corporations have long understood the business case for deploying technology, small and medium-sized enterprises is increasingly beginning to see such investments as important if they are to avoid being overtaken by more tech-competent competitors. .

In 2008, Egypt continued liberalization of the telecoms market, with the award of a second national fixed license. This development, which followed the award of 3G licenses to three mobile telecoms service providers in 2007, is likely to drive new opportunities for IT vendors. As well as generating additional spending on IT products and services from the telecoms sector, the spread of internet should provide a boost to the PC market over the next few years.

The Egyptian IT services market is dominated by demand from government, finance and telecoms sectors, which account for more than 25% of Egypt's total spending.

5) Legal

A. Environmental laws

According to the Law 4/1994 for the Protection of the Environment, the Egyptian Environmental Affairs Agency (EEAA) was restructured with the new mandate to substitute the institution initially established in 1982. At the central level, EEAA represents the executive arm of the Ministry.

The Principal Functions of the Agency Include:

• Formulating environmental policies.

• Preparing the necessary plans for Environmental protection and Environmental development projects, following up their implementation, and undertaking Pilot Projects.

• The Agency is the National Authority in charge of promoting environmental relations between Egypt and other States, as well as Regional and International Organizations.

B. Tax Rate

The standard rate of corporate income tax is 40%. The rate is 32% on profits arising from export operations and on profits of an industrial company as long as they arise from its industrial activities.

C. Withholding Tax

Any business operating in Egypt must withhold against any payments-- made to any contractor or supplier of goods or services-- the following basic percentages:

i. Contracting and supplying: 1%

ii. Services: 3%

iii. Commissions: 10%

iv. Professional fees (under LE 500): 10%

v. Professional fees (over LE 500): 15%

vi. Leasing of property or selling of goods for trading or manufacturing: 1% - 5% (to be added on the payee's tax liability account.

D. Corporate Tax Exemptions and Deductions

· Almost all business expenses are deductible including depreciation, interest, royalties, rent, profit sharing payments to employees, legal expenses, pension and Egyptian state social insurance contributions.

· Profits of companies located in the free zones.

· capital gains are applicable in some cases of asset replacement.

· All tax holidays granted under Investment Law No.8/1997.

· Joint stock companies employing more than 50 employees and maintaining proper books of accounts are granted a tax holiday for a five-year period. Also, hotels and tourist projects are granted a tax holiday for a five-year period which can be extended to ten years if the project is located in a remote area.

· For joint stock companies listed in the stock market, a deductible allowance is made that is equal to interest income, which can be earned on a bank deposit (currently 10.5 percent).

· Ninety percent of income generated by companies from their movable capitals which have been subject to the new tax imposed by Law 187 of 1993.

E. Personal Income Tax

Taxable Income

Tax Law No. 187 of 1993 distinguishes among the following categories of income of individuals (as well as partners in partnerships):

Salaries and wages.
Commercial and industrial profits
Income from immovable property
Income from movable capital
Noncommercial profits.

Taxation of Foreigners

Foreigners that have been working in the country for more than 183 days with their annual salaries varying from LE 1.00 to LE 50,000 are subject to paying a 20 percent income tax. However, if the employee's annual income exceeds LE 50,000 then they will be liable to pay 32 percent income tax.

Social Insurance Contribution Rates

Wager	Employer(%)	Employee(%)
On basic monthly salary up to L.E. 500 / month	26	14

On variable pay (such as production incentive bonuses)-up to L.E. 500/month	24	11

Labor force and laws

Labor force

Government, armed forces & public sector : 36%

Agriculture : 34%

Private sector : 30%

The Egyptian labor market is regulated by the new unified Labor Law No. 12 for 2003. The new Law comprises 257 articles that address all the legal aspects regulating the Egyptian labor market. The new law aims at increasing the private sector involvement and at the same time achieving a balance between employees' and employers' rights. Amongst the most important issues that the new law addresses is the right of an employer to fire an employee and the conditions pertaining to this as well as granting employees the right to carry out a peaceful strike according to controls and procedures prescribed in the new law.

The Carpet Industry

Carpet industry history, developments and future trends

Regarding the role of Oriental Weavers in this industry, they are known as the "Trend Setters" Oriental Weavers major achievement in that aspect is to change the whole idea of carpet industry by innovation in first place the carpet design was simply based on what call the mirror effect with very few designs and limitations in coloring, and in order to compete they believe that the key component in their strategy is to be innovative.

Innovation has always been key , innovation not only puts them in the fore front of their industry, but also created the demand for new standards of quality and designs. They made history by pushing technology; incorporating creative solutions that have taken the industry by surprise year after year. They gave the world its first 2 Million points, then 3 Million points and recently the 4 Million point/m2 carpet.

The future trends for this industry, to answer that question you need to be aware of the global floor covering market, the hard floor covering represent around 70% of the flooring market globally and the remains is for soft floor covering, however to correct the conception that other floor covering like the hard wood, marble, etc.. consider a threat for the soft floor covering actually the carpet and area rugs consider complementary products to whatever kind of floor covering, in addition that the projected growth for carpet ranging between 3:5% globally.

Moreover, the global trend in the industry in general not only the carpet industry is to more affordable products in especially in residential level, and the concept of product that sell, on the other hand on other aspects of business such as the commercial like the hospitality, entertainment ,etc,.. that catered more to higher-end products there is booming globally in GCC region that benefits of petrodollars wealth, Egypt booming in real estate and tourism and even in the US market despite the slowing down in the economy as US become more and more favorite destination for tourists taking advantage of the weaker dollar.

OW are tackling these aspects first by the continues enactments in operations cycle to maintain the same quality with more affordable price point, simultaneously the company introduce new product (Ax-minister) catered to higher end with high net profit margins, for hospitality and contacts business, which consider the fastest growing segment in the business.

Key success factors

of the carpet manufacturer in the Industry, applied on OW.

ω In order to generate profit in this industry companies must have the economies of scale, especially that this industry is a very capital intensive industry which also justify why is it hubbed not in China nor Asia but in the US and Europe, and to frame OW in the overall picture, Oriental Weavers CAPEX expenditure from 2002:2007 is approx 1.7 billion, in addition many of their machinery become fully depreciated which will not be the case of someone deciding to establish a new factory at the same economical and vertical integration model of OW, the operating cost and considering the high depreciation cost will be unfeasible.

ω The vertical integration model, vertical integration is key to growing the market for, economically - priced, quality carpets and rugs. They are a turnkey solution from producing the polypropylene granules used in making synthetic fibers and blends; spinning & dyeing yarn; weaving & finishing to packaging & delivery a fully integrated production process.

ω The massive distribution network in local market as they have over than 200 outlets form small khan to 1000-m2 showroom, moreover the strong brand loyalty in the local market.

ω OW exports to over than 100 with appareled roster of blue ship client and to work of them you must be massive in terms of volume and truly be considered as the world largest machine-made manufacturer worldwide, in other word the economies of scale the Group have.

ω The effective tax rate for the group ranging between 13:15% which is far below any other competitors in Europe with tax rate of 30:35% or in China with corporate tax rate reach 33.5% .

ω Effects of trade agreements like QIZ, FTA with turkey and EU-partnership in company’s exports and imports. Oriental Weavers is considered export oriented with more than 65% of the group output to export, therefore the effect for these FTA's is significant for the group and is considered one of the advantages for the group comparing to other competitors, in addition that OW International the biggest subsidiary is under the free zone system exempted from customs duties.

Competitiveness of the Market

External Environment Analysis summary - EFAS Matrix Table

External Factors	Weight	Rating	Weighted Score	Comments
Opportunities § Improvements in local demand environment. § Improvements in Export demand front. § Extension of the current export rebate program (running to 2012) § Launching a new fiber plant in the offered free zone area by the government (East Port-Said) § Expansion to new markets	0.15 0.15 0.10 0.15 0.15	4 3 3 4 2	0.60 0.45 0.30 0.60 0.30	§ Private consumption has recovered from its lows, growing at 6-7% y-o-y for two consecutive quarters, consumer credit expanded to an EGP89bn record high and broader economic activity has built momentum for the fourth straight quarter. § Evidence of a correction in the global economy and a humble & slight comeback from the 2008 crisis. § Export sales could increase when the Egyptian government extends the rebate program period § OWC will launch the first phase of its EGP1.3bn industrial complex by establishing a new fiber plant with an annual capacity of 400k tons/year and an estimated Capex of EGP250mn. It is to be finished in mid-2011. § Chasing Chinese forgery manufacturers to their already tapped markets through new distribution arms. As well as other non-entered yet markets
Threats § A highly cyclical industry § Fluctuations in costs of raw material (polypropylene) § Competition abroad	0.12 0.10 0.08	3 4 2	0.36 0.40 0.16	§ The carpet and rug industry is cyclical in nature. Demand is closely tied to housing activities, such as new construction and refurbishment. The industry is very sensitive to changes in broader economic indicators, such as consumer income, corporate spending, and interest rate levels. § Polypropylene represented around 40% of total costs incurred in 9M09, prices are driven in large part by oil and gas prices, in addition to market forces. Which might impose a risk on OW margins § Competition comes from major US players such as Shaw Industries, Mohawk, and Beaulieu of America. As well as Turkish & Belgian manufacturers.
Total	1		3.17

Corporate Culture at OW

Oriental Weavers believes that a strong code of ethics and values is crucial for the success of the organization. OW fully committed to servicing personnel and meeting all their needs by providing various social benefits and services through programs such as housing schemes, sponsoring of annual pilgrimage trips, and providing medical coverage for employees and their families.

Corporate Resources

Marketing

Oriental Weavers operates in a number of markets; each with its own demographics, characteristics and drivers.

EGYPT; Oriental Weavers has always held a strong position in the local market with a domestic market share exceeding 85%. Because of its position as the undisputed leader in the local market, OW has historically focused its strategy on the international market (last year 65% of total revenues came from overseas). Yet, 2008 has seen the Company implementing a strategy of shifting a portion of product capacity to the local market in order to offset any possible slowdowns in the export markets. This strategy has been fruitful as local sales witnessed an increase of 29%, generating a local to export sales ratio of 40:60. In 2008, total sales from Egypt amounted to EGP 1.376 million.

This aggressive growth in the local market is the direct result of investing in new showrooms throughout the country to cater increasing the demand. OW currently operates a total of 108 showrooms and outlets locally, while MAC has 100 showrooms and EFCO presently has one mega showroom.

On November 11, 2008 OW proudly announced the opening of its El Baron showroom; this 3200 square-meter store in Katameya is the largest rug showroom in the Middle East. This showroom encompasses all brands of Oriental Weavers under one roof including La Boutique, OW Life-Style and OW Classics.

This new showroom will offer the widest range of collections from contemporary oriental and hand-tufted rugs, to imported modern Chinese and Indian hand-knotted rugs, authentic hand-made Persian rugs, and Gobelin tapestries.

Additionally, Oriental Weavers is proud to announce that it has open in 6th of October City, the largest rug showroom globally with a total area of 11,500 square-meters. The showroom has been opened in the second half of 2009.

Another impressive store in the coastal town of Alexandria covering a space of 8500 square-meter has been opened early 2009. Finally two 8,000 square-meter stores were scheduled to open in the touristic cities of Hurghada and Sharm El Sheikh in 2009.

Other smaller showrooms have opened later in 2009 in the areas of Luxor, Bahteem, and Mit Ghamr:

Moreover in response to increasing demand for more upscale products in both the custom and contract markets, Oriental Weavers has further developed two new store brands, “la Boutique" stores, which targets those interested in custom made products, and "OW Lifestyle" stores, which addresses the new demand for ultra modern styles. There are eight La Boutique stores, and two OW lifestyle stores.

INTERNATIONAL MARKET;

GCC Countries: Oriental Weavers exports its products to many Arab countries, especially the GCC countries, which represented 6.3% of total sales for the year 2008.

North American Market: Oriental Weavers enjoys a strong presence in the North American Market. With a fully equipped distribution arm servicing the USA and Canada, Oriental Weavers is one of the main players in the region.

Moreover MAC (a subsidiary of the Oriental Weavers Group holds a 20% market share of the North American tufted carpet industry. However, as the West endured a financial crisis leading to low consumer confidence, Oriental Weavers suffered a decrease of 4% in sales to the US market.

The main subsidiary to be affected was Oriental Weavers USA (OWUSA). On the other hand, MAC one of the company’s main subsidiaries, managed to grow sales to the US by 12%. in total, the US market still managed to contribute to 28% of total sales for 2008.

Europe: Although the North American market is the largest market for Oriental Weavers in terms of exports, the company still has a major presence in the European Union, specially the UK, Germany and Italy. Revenues from the EU contributed 19.4 % of Oriental Weavers 'total export sales in 2008.

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Operations and Logistics

Integration allowing for synergies

OWC is a vertically and horizontally integrated rug manufacturer.

(a) Backward vertical integration

Backward vertical integration allows OWC to procure its fiber inputs locally, ensuring a guaranteed supply and giving OWC more lenient credit terms, greater cost reduction, and complete control over the manufacturing process. This is done through three companies, namely: OPC, EFCO, and Oriental Weavers Fibers (OWF).

The required polypropylene granules are provided by OPC, which supplies 80- 90% of OWC's needs. This reflects favorably on OWC’s raw material costs by reducing the stocking period from 6 months to only 1 month. The reduction is made possible by:

· Lower transportation expenses

· Lower finance charges.

Moreover, the Egyptian Company for Propylene and Polypropylene Production is expected to add further polypropylene capacities once it starts its operations in 2010.

OWF supplies around 50% of OWC's total fiber requirements and the remaining requirements are procured from EFCO. Meanwhile, carpet and rug production processes are carried out through:

· Oriental Weavers Carpets (OWC)

· Oriental Weavers International (OWI)

· MAC & New MAC

· OW China, and

· OW USA

(b) Forward vertical integration

Internationally, OWC’s forward integration strategy paved the way for international recognition through its dedicated distribution arm, OW USA (Sphinx), and its worldwide warehousing facilities in the US, UK, Germany and Canada.

(c) Horizontal integration

In accordance with OWC’s management strategy of expanding into the home furnishing industry rather than remaining dedicated solely to floor coverings, OWC has diversified its portfolio to include new products: tapestries (Gobelin) and Axminster. These products are free of polypropylene, and thus, they are not exposed to risks associated with rising polypropylene prices.

Human resources management

Human rights:

Oriental Weavers adheres to the International Declaration of Human Rights. Ow maintains a set of transparent human resources policies and procedures for both management and skilled workers. Governmental labor offices represent all employees, and the company's wages, benefits, labor policies, and management procedures comply with and exceed local requirements.

Non-Discrimination Policy:

OW has consistently cultivated a policy of fairness and equality for all employees. OW is an equal opportunity employer and therefore discrimination is strictly forbidden within the corporation.

Labor Standards and Benefits:

OW provides a number of additional benefits to the entire workforce including free medical care for employees and their families at a clinic established by the Chairman in 10th of Ramadan city. Additionally, subsidized housing is also provided by the company. Rigid laws against child labor are also in place.

In addition OW makes it adamantly clear to all their suppliers and affiliates that Oriental Weavers will not conduct any business with entities that do so.

Plans regarding improving the company’s departments or products in the coming period:

Concerning the departments, the company continuously improves the quality of production and other operations aspects and most important the human asset of the company OW provides written documentation, workshops as well as on-site training. Production employees are all given on the job training under strict technical supervision.

Internal Factors Summary Analysis – IFAS

Internal Factors	Weight	Rating	Weighted Score	Comments
Strengths § 85% market share in Egypt § Full control over the supply chain § 25% market share in US § Strong presence in European and middle eastern markets § Strong cash balance in March 2009 § Flexible diversified portfolio § Very Low tax rates compared with any competitor	0.10 0.20 0.10 0.05 0.05 0.05 0.05	4 5 3 3 4 5 4	0.40 1.00 0.30 0.15 0.20 0.25 0.20	§ Market domination, trend setter. § Turn-key solution from producing the polypropylene granules to the biggest showrooms. § MAC (a subsidiary of the OW holds a 20% market share of the North American § The EU contributed 19.4 % of OW total export sales in 2008. § Hannover exhibition, OWC received a 67% increase in confirmed orders, reflected the pick-up in international markets. § Great flexibility to allocate capacities between local and international markets. § Tax rate for the group ranging between 13:15%, competitors in Europe with tax rate of 30:35%
Weaknesses § Limited capacity VS order backlog § Fluctuating earnings § Heavy Debt § High CAPEX demands § Exposure to U.S market conditions.	0.15 0.05 0.05 0.05 0.10	4 3 2 3 3	0.60 0.15 0.10 0.15 0.30	§ OWC will increase its woven capacities by almost 3.4mn sqm by adding seven new looms to its plants. § In 2007 on EGP27mn non-recurring tax benefits resulting from OW Rug § Increase of debt during the next 3 years § Business is growth-capped in future investments. § Decrease in sales because of decline in customers spending (MAC & Sphinx)
Total	1		3.80

Strategic factors Analysis summary (SFAS Matrix)

Selecting the most important opportunities and strengths from the EFAS table, and the most important strengths and weaknesses from the IFAS table, the SFAS table is constructed to show the following analysis:-

Strategic Factors	Weight	Rating	Weighted Score	Comments
Strengths § 85% market share in Egypt § 25% market share in US § Flexible diversified portfolio	0.11 0.08 0.09	4 3 5	0.44 0.24 0.40	§ Market Domination § 20% MAC market share. § Great flexibility to allocate capacities between local and international markets.
Weaknesses § Limited capacity VS order backlog § Exposure to U.S market conditions § High CAPEX demands	0.10 0.06 0.08	4 3 3	0.40 0.18 0.24	§ Increase in capacity by adding 7 new looming lines § Decrease in sales because of decline in customers spending (MAC & Sphinx) § Business is growth-capped in future investments.
Opportunities § Improvements in local demand environment. § Launching a new fiber plant in the offered free zone area by the government (East Port-Said). § Improvements in Export demand front.	0.10 0.12 0.08	4 4 3	0.40 0.48 0.24	§ Private consumption has recovered , consumer credit expanded and broader economic activity has built momentum . § OWC will launch industrial complex by establishing a new fiber plant with an annual capacity of 400k tons/year. § Evidence of a correction in the global economy and a humble & slight comeback from the 2008 crisis.
Threats § A highly cyclical industry § Fluctuations in costs of raw material (polypropylene) § Competition abroad	0.07 0.07 0.04	3 4 2	0.21 0.28 0.08	§ Demand is closely tied to housing activities, such as new construction and refurbishment. The industry is very sensitive to consumer income, corporate spending, and interest rate levels. § Polypropylene represented around 40% of total costs incurred, prices are driven by oil and gas prices, in addition to market forces. § Competition comes from major US players such, as well as Turkish & Belgian manufacturers.
Total	1		3.59

Strategic Alternatives and Recommended Strategies

Strategic Alternatives (TOWS Matrix)

Weaknesses	Strengths	Internal Factors IFAS External Factors EFAS
W1 Limited capacity VS order backlog W2 Fluctuating earnings W3 Heavy Debt W4 High CAPEX demands W5 Exposure to U.S market conditions.	S1 85% market share in Egypt S2 Full control over the supply chain S3 25% market share in US S4 Strong presence in European and middle eastern markets S5 Strong cash balance in March 2009 S6 Flexible diversified portfolio S7 Very Low tax rates compared with any competitor
*W5 O2 O3* Diversification Concentric Strategy “C” *W1 W2 O4* Cost Reduction Strategy “B”	*S1 S2 S6 O1* Horizontal Integration strategy “C” *S5 S7 O3 O4* Stability (No Change) strategy “C” *S4 S6 O2 O5* Stability (PWC) strategy “C”	Opportunities
		O1 Improvements in local demand environment. O2 Improvements in Export demand front. O3 Extension of the current export rebate program (running to 2012) O4 Launching a new fiber plant in the offered free zone area by the government (East Port-Said) O5 Expansion to new markets
*W5 T3* Retrenchment strategy	*S2 T2* Vertical Integration Strategy “C” *S1 S6 T1* Stability (Profit) Strategy “C”	Threats
		T1 A highly cyclical industry T2 Fluctuations in costs of raw material (polypropylene) T3 Competition abroad

Review of Current Mission and Objectives

Oriental Weavers is the world’s largest machine woven carpets producer. Its global leadership is supported by diverse product mix, highly flexible and responsive production capacity, fully integrated supply chain and technological advantages. Its subsidiary MAC dominates world jet printed rugs, claiming one third of the global market.

They enjoy a unique business model that sustains growth witnessed in :

ω A global, low-cost producer using efficiency, technology and geography to deliver superior margins

ω Full integration – backward and forward – smoothes and optimizes costs.

ω Economies of scale and scope.

ω Flexible production capacity quickly responds to market conditions.

ω Production across all price points fully penetrates markets.

ω Global experience and presence ensures unmatched global market intelligence.

Strategic alternatives (selected)

1. Growth strategy: Vertical integration

TOWS Matrix – Option S2 T2

This strategy is recommended to be adopted through the opening more polypropylene facitlites to control over the fluctuating prices .

Pros	Cons
• Increased control on the supply resources • Limit the raw material prices fluctuations • Increase competitive edge towards competitors • Increase diversification	• The fluctuating prices of oil can affect the polypropylene industry • Over integration of polypropylene industry can hurt OW’s main business

2. Growth Strategy: concentric diversification

TOWS Matrix – Option W5 O2 O3

This strategy should can be applied through introduction of new diversified products like padding, broadloom.

Pros	Cons
• Increase market share in US • More diversified portfolio • The US market mainly imports these products • Limited number of direct competitors	• The expansion to the high risks in the US market • The financial crises in US strongly affected the spending of disposable income • The geographic location is so far from the central management in Egypt

3. Retrenchment strategy :turn around strategy

TOWS Matrix – Option W5 T3

This strategy is to be adopted through the selling of OW USA subsidiary and keep MAC as the only subsidiary in the US.

Pros	Cons
• Avoid the effects of the financial crises on the US market. • Decrease the level of CAPEX • It will give the opportunity to the board to focus more on the Asian markets.	• Loose the market share achived in US • Decrease in the growth rate of OW worldwide • MAC alone will have a limited opportunity with competitors.

Recommended Strategy

Growth Strategy: concentric diversification

TOWS Matrix – Option W5 O2 O3

This strategy should can be applied through introduction of new diversified products like padding, broadloom.

These categories show indications of becoming very successful categories for the company are projected to attribute some growth to OW USA. The company has made huge strides in taking a share of this market, which was previously serviced by a small number of rug underlay companies.

In the area rug business, OW USA is seeing vendor consolidation of suppliers, as a result of the financial difficulties and issues of service facing many of the smaller importers and rug suppliers. OW has raised its service level to take full advantage of this trend whereby retailers are moving away from large numbers of suppliers to fewer and more manageable ones, who can reliably handle a greater portion of their needs at higher service levels. giving OW USA a significant edge over competitor companies, which are “import only” suppliers in

the market. OW USA is also expected to do well in the moderately-priced woven patterned goods market. Mainly due to a limited number of direct competitor.

On a final note, the Company anticipates a brighter future in the US as market researchers forecast a 3% increase in the US flooring market between 2012 and 2017. Similarly, a 2.44% increase in the Carpet and Rug market is expected during the same period.

Strategy Implementation

· OW has to invest in new production lines for the new products taking into consideration the capacities and the expected demand

· OW should start products distribution agreements with large department store in US

· OW should focus on cost reduction on its manufacturing operations through the application of advanced manufacturing techniques like just in time JIT and lean manufacturing

· The expected cash inflows and out flows should be calculated so that no disturbance in the cash could affect OW USA current operations

· Pro-forma financial statements should be developed depending on the expected cash investments and the expected sales and revenues.

· OW has to study the American customers behaviors, preferred colors , quality their focus either it is price or cost oriented ,all these patterns can help OW to produce a highly competitive products and helps in increasing the market share in US.

Evaluation and control

1. The main evaluation tool to measure the perfomrnace of OW in the US market is it market share percentage.

2. To measure the effectiveness of distribution we can measure the rate of increase of distribution channels.

3. COGS, inventory levels, and cycle times should be measured to evaluate the effectiveness of the manufacturing operations.

4. The profitability measures like ROI ,ROA is very important

5. Benchmarking against other competitors.

-----------------------------------

Does ERP systems achieve a significant change in ROI in Egypt? Research Proposal

2012-01-20T08:29:00.000-08:00

1. Introduction:

1.1.Overview

The ERP systems today are forming the highest level of integration between the business and the IT technology, Many companies all over the world are now are implementing ERP systems in order to get the benefits of this new technology. This technology will offer organizations many benefits like conveniently run their businesses with advanced functionality, a modern supportable operating environment with, reduced inventory, improved ability to satisfy customer orders on time, ability to generate custom reports, and increased data access. Many of these benefits can fall under the umbrella of perception you may find some people resist the change ,others don’t have a feasible facts about the benefits of these systems, and many reasons can limit the expansion of these systems.

1.2.Importance of study

Imagine a business owner have a very big successful business and you are a salesman work at ERP provider company and want to make persuade this owner to buy your ERP solution package, you’ll explain the benefits and the add values from this ERP solution but the owner will simply ask you about two main things, first: how much it will cost me? And how much I will earn from your ERP package?. Actually your answer will be very confusing as the cost will be very high and you can not know how much approximately this business owner will earn.

Another thing we have to know is how efficient are the ERP systems, how we can compare between different ERP providers and what are the modifications needed to enhance the performance of these ERP systems.

1.3.Organization of the proposal

First we will define the ERP and its benefits, and then we shall define the ROI and what it measures.

Then we will define:

· the research question

· new knowledge added from this study

· major implications

· And, finally methods and approaches that will be used.

2. Literature review

2.1.ERP Implementation

Shanks and Parr (2000) defined ERP implementation as "the process of developing the initial business case and planning the project, configuring and implementing the packaged software, and subsequent improvements to business processes". ERP implementation is considerably different from any traditional information system implementation for many reasons: (1) the integrated nature of ERP applications causes dramatic changes on work flow, organizational structure and on the way people do their jobs; (2) ERP systems are not built but adopted, this involves a mix of business process reengineering and package customization, (3) ERP implementation is not just a technical exercise but it is a socio-technical challenge as it poses new set of management procedures. In that sense, it has become clear that ERP implementation differs from traditional systems development where the key focus has shifted from a heavy emphasis on technical analysis and programming towards business process design and human elements (Gibson, 1999).

2.2.Critical Success Factors

Critical Success Factors (CSFs) approach was first used by Rockhart (1979) in IS area. Critical success factors for ERP projects have been studied from a number of different perspectives. Many researches were conducted about the critical success factors of ERP implementations, many researches focused on the topic from different perspectives. fiona fui-hoon nah and santiago delgado critical success factors for enterprise resource planning implementation and upgrade, the place and key success factors of enterprise resource planning (ERP) in the new paradigms of business management john Gunson and jean-Paul de Blasis , the place and key success factors the impact of critical success factors across the stages of enterprise resource planning implementations Toni m. Somers and Klara nelson, supply management: the ROI in ERP by frank O’nell, Consona corporation it emphasis only on supply chain and prove that there is a benefit from the ERP, the “secret sauce” that maximizes ROI for ERP how to jumpstart software updates or installations with strategic business process improvement and self-fund improvements by Tim Allen, what's so hard about calculating the ROI of ERP? and why the controversy over ROI from ERP? by r. Michael Donovan.

The most important research that this study will be built on is, nucleus research the real ROI from SAP.

The critical success factors cited from many researches in ERP implementation and upgrade to identify a comprehensive list of factors and then organized them into seven main categories - (I) Business Plan and Vision, (2) Change Management, (3) Communication, (4) ERP Team Composition, Skills and Compensation, (5) Project Management, (6) Top Management Support and Championship, and (7) System Analysis, Selection and Technical Implementation.

All researches talks about the critical factors of successful ERP implementation and all measurements are based on the time frames budgets and sometimes the effect on ROI the research question in our study is Does ERP systems achieve a significant change in ROI in Egypt?

2.3.Why we will use the ROI to measure the effectiveness of ERP system?

Since implementing an ERP is considered as a capital investment like any capital investment organizations can invest in we will use the accounting methods to measure the effectiveness of this investment

What Does Return On Investment - ROI Mean?
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
The return on investment formula:

ROI =

Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.

3. Thesis statement

This research aims to measure the real ROI( Return on investment) of organizations in Egypt that implemented different ERP (SAP ,Oracle and Great plains only) systems for 3 years or more neglecting the scope of implementation, the size of the organization.

4. Implications of research

By conducting this research we will prove the effect of ERP systems on organizations in Egypt. This study will encourage business owners to have a better decision about investing in ERP systems, it will guide them whether to invest in ERP systems or invest in other forms of investment.

Also this study will help ERP systems providers to know how their solutions impact on business in Egypt and will work on improving their solutions in way that makes the ROI higher.

I think this study can be the starting point for a new era of competition between ERP providers on introducing new ERP systems with higher ROI effect on organizations in Egypt.

Finally the most benefit will go to organizations and governments because this severe competition will result in very integrated and powerful ERP systems that increase organizations profits and efficiency.

5. Approaches and methods

5.1.Methods

To measure the effect of ERP systems on ROI in organizations in Egypt we will take a sample of organizations, we will contact Sap, Oracle and Microsoft and get the customers who bought their licenses in Egypt for more than 3 years

Measurements

Sample of ERP systems customers that implemented a full ERP system or only some modules will be interviewed, the interviews will include CEO’s, CFO’s, departments’ managers and normal end users.

The interviews will be about the ERP implementation and its impact on ROI, the interviews will include questions about :

· Why and when did you select your ERP?

· Which ERP solutions have you implemented?

· How long did your ERP deployment take?

· Did you stay within your deployment budget?

· What are the most significant returns and benefits from your ERP applications?

· How much did you spend on the project; in particular, how much did you spend on software, hardware, consulting, training, and personnel?

· What were the key deployment challenges?

· Do you think that the costs of your ERP deployment have been outweighed by the returns?

Other questions may be used based on the design of the interview questions.

5.1.1. Reliability

In order to make sure the measuring tool is reliable More than one person is interviewed within the same organization

5.1.2. Validity

This interview asks directly on the return from ERP, the results of this research are based only on the answers of the interviews questions not on actual calculations.

5.2.Sampling

Since many companies implemented SAP, ORACLE, and Great plains in Egypt we will take a sample of 40 companies and if possible to take more it will be better

Stratified Sampling is used because we have three groups of samples, companies running SAP, companies running ORACLE and companies running Great Plains

Each group members will be randomly selected. the number in each group will not be same but will be taken as a weight of the following equation:

Weight of SAP companies =

Weight of ORACLE companies =

Weight of Great plains companies =

5.3.Sources of samples

Contact of ERP providers in Egypt, get a list of their customers who implemented ERP for 3 years or more, and then randomly choose from each group based on the equations mentioned before

5.4.Assumptions and limitations

· This research is applied in Egypt only

· This research measures the effect of ERP systems on ROI based on SAP, ORACLE and Great plains only.

6. References

Frank O’Nell, CONSONA CORPORATION, Supply Management: The ROI in ERP

surface mount technology

TIM ALLEN, The Secret Sauce” that Maximizes ROI for ERP, strategic finance 2006

Invetopedia aforobes digital company

http://www.investopedia.com/terms/a/asset.asp

Financial accounting standards board (FASB)

http://www.fasb.org/home

John gusnon and jean-paul de blasis, the place and key success factors of enterprise resource planning (erp) in the new paradigms of business management,

toni m. somers and klara nelson, the impact of critical success factors across the stages of enterprise resource planning implementations, Proceedings of the 34th Hawaii International Conference on System Sciences – 2001

M. H. Rasmy , Assem Tharwat and Sondoss Ashraf , Enterprise Resource Planning (ERP) Implementation in the Egyptian Organizational Context

fiona fui-hoon nah and santiago delgado, critical success factors for enterprise resource planning implementation and upgrade, journal of computer information system ,issue 2006

R. Michael Donovan, Why the Controversy over ROI from ERP?, Performance Improvement

Nucleus Research, Research Node D32, the Real ROI from SAP www.nucleusresearch.com

Supply Chain Risk Management

2012-01-20T08:25:00.000-08:00

1. Introduction

On March 17, 2000, lightning hit a power line in Albuquerque,New Mexico. The strike caused a massive surge in the surrounding electrical grid, which in turn started a fire at a local plant owned by Royal Philips Electronics, N.V., damaging millions of microchips. Scandinavian mobile-phone manufacturer Nokia Corp., a major customer of the plant, almost immediately began switching its chip orders to other Philips plants, as well as to other Japanese and American suppliers. Thanks to its multiple-supplier strategy and responsiveness, Nokia's production suffered little during the crisis. on contrast, Tdefon AB L.M. Ericsson, another mobile phone customer of the Philips plant, employed a single sourcing policy. As a result, when the Philips plant shut down after the fire, Ericsson had no other source of microchips, which disrupted production for months. Ultimately, Ericsson lost $400 million in sales.' (Ericsson has since implemented new processes and tools for preventing such scenarios (MIT Slaon Management Review. 2004).

Risk management practices, techniques and tools have been used extensively in the many different fields for years. The importance of supply chains tools and techniques used in optimizing it were developed more .During the last twenty-odd years, supply chain management practices have evolved toward more lean process approaches in order to reduce waste within the overall chain. Concepts such as just-in- time, virtual inventory, supplier evaluations, and reductions in the number of distribution facilities have reduced total supply chain costs, despite of the goal of these tools to optimise the supply it generated on the other side a higher risks on businesses

Businesses have witnessed many supply chain malfunctions due to supply and demand disruptions: the affected companies reported, on average, 14% increase in inventories, 11% increase in cost, and 7% decrease in sales in the year following the disruption.

Supply chain identified risks

External risks can be driven by events either upstream or downstream in the supply chain:

Demand risks related to unpredictable or misunderstood customer or end-customer demand.
Supply risks related to any disturbances to the flow of product within your supply chain.
Environment risks that originate from shocks outside the supply chain.
Business risks related to factors such as suppliers’ financial or management stability.
Physical risks related to the condition of a supplier’s physical facilities.

Internal risks are driven by events within company control:

Manufacturing risks caused by disruptions of internal operations or processes.
Business risks caused by changes in key personnel, management, reporting structures, or business processes.
Planning and control risks caused by inadequate assessment and planning, and ineffective management.
Mitigation and contingency risks caused by not putting in place contingencies.

2. Challenges facing supply chains

With outsourcing and off-shoring increasing the geographical dispersion of supply chains,

The attention on supply chains risks have increased due to increased disruptions.

For example, while global configurations of their supply chains provide access to cheap

Labour, raw materials and markets in emerging economies, companies are facing nowadays challenges in meeting variable lead teams, and fluctuating currencies , and greater delivery .A failure of any one element in a supply chain causes disruptions for potentially all partnering companies upstream and downstream (Biao Yanga and Ying Yang , 2010 ).

According to MANUJ AND MENTZER ,2008 they cited that The objective of supply chains is profit maximization (balance between productivity (efficiency) and profitability (effectiveness) (Mentzer and Firman 1994) to move

Moving of goods between nations and different places to enhance the whole profitability of organizations, the goods have to pass through different changing conditions, differences in economies, cultures, politics, infrastructure and competitive environment, Economic challenges include such considerations as transfer prices, tax rates, duties, exchange

Rates, Infrastructural differences such as availability of different transportation modes, air, sea or rail, and type of documentation; and the number and nature of intermediaries and facilitators (banks, warehouses, Transport agencies, etc.) All these circumstances need strategies and plans to mitigate the risks and disruptions.

The high variability and the need of resources create major challenges to reach high customer service levels, anticipated costs, and desired profitability. Political factors such as stability of government, law and order, and sanctions have implications for supply chain structure and related costs. In sum, global supply chains have potentially more delay points, greater uncertainties, and hence the need for greater coordination, communication, and monitoring(MANUJ AND MENTZER ,2008 ).

However (Gautam Basu et al,, 2008) short listed risks that supply chains may face in the following points;

· Increased chains of outsourcing, which elongates end-to-end supply chains

· Regulations and legislations imposed by government entities, complications of international trade

· The increased levels of economies variability , thus results in additional variability in demand and supply and make it more difficult to accomplish demand supply balancing

· The existence of short life products and the rapid rate of technological development, which increase inventory obsolescence.

· Increasing of customers numbers who are seeking high service levels by requiring better on-time delivery, order fill rates and overall service level efficiencies.

· capacity constraints, is also a major obstacle in meeting increased demand,

· Natural disasters and external environmental events.

Supply chain risks can be categorized into different types; supply chain business risks can come from external environment, Business strategies and policies, Business process execution, People Analysis and reporting, Technology and data (Desheng Dash Wu and David Olson, 2010).

3. Supply chain management risk theories

Supply chain risk can be broadly defined as an exposure to serious disturbance arising

within a supply chain affecting its ability to effectively serve the end customer market. (Abhijeet Ghadge1 et al, 2011). According to Abhjjeet Ghage Risk management in supply chain is driven by systemic interrelationships focusing at identification and reduction of risks not only at organization level but focusing on the entire supply chain. To manage global supply chain risk, companies need to follow a path from risk identification to strategies to deal with risks.( IlaManuj and John T. Mentzer ,2008) in their literature they categorized the uncertainties in logistics as strategic , tactical and operational , also they mentioned that there are two critical factors affects the uncertainty of supply chain lead times and supplier reliability. According to (Janat Shah ,2008) literature Unlike the demand side, the firm has a greater control on the supply side and the uncertainty in the supply chain can be handled by choosing the appropriate partners in the chain however she mentioned that several events occurred in the past years decreased the importance of the supplier uncertainty , also she mentioned that companies need to focus on both demand uncertainty and supply chain disruptions, supply chain disruptions are events that have very little probability of occurrence but high impact on the supply chain performance. Supply chain risk management systems comprise the set of systems and processes used to manage supply chain disruptions Sharma Satyendra Kumar , 2009) . disruptions of the supply chain may occur due to natural disasters , fire , machine breakdown , political instability , etc...

according to Sharma the risk management approach is to supplement planning and execution efforts that need to be conducted during real disruption situations by answering the following questions;

· Strategy: Do I have the right supply chain structure that is aligned with my risk management objectives?

· Tactical: Do I understand all potential risk events or deviations from the desired operating plan? And do I have the contingency plans in place, ready-to-go when these events happen?

· Execution: Do I know when to put my alternative plan into action? And how do I learn from the experience to improve my reflexes for future events?

A straightforward approach for viewing supply chain risk management focuses on two fundamental aspects of a potentially disruptive event(Gautam Basu et al , 2008):

1. Probability (likelihood) of the event actually occurring

2. Impact (consequence) of the event on the supply chain, and subsequently the overall business

Today increasing the level of interdependencies between supply chains increases the levels of complexity of the supply chains and raises the risk of disruptions for the whole chain, any disruption that happen to any of the members of the supply chain may result in a sever disruption in the whole supply chain, risk in supply chain can be defined as uncertain varaotion or disruption which can impede flow of information and resources in the supply network. ( Putu Dana et al , 2007 ).

4. Supply Chain Risk Management Frameworks

Supply chain risk management methods and frameworks have evolved in the last decades and developed over time , many tools today are used for estimating and calculating the estimated risks, these models are not limited to supply chain risks but , used in estimating risks in different fields (Gautam Basu et al. , 2008 ) categorized the supply chain risk models into four categories

a. Deterministic analytical models, which include mathematical programming models (e.g. linear, nonlinear, integer, dynamic programming). Applications to supply chain include scheduling production, distribution planning, raw material sourcing, facility location, inventory level setting, replenishment timing and order quantity specification, and resource balancing.

b. Stochastic analytical models, where at least one of the variables involves uncertainty, and is assumed to follow a particular probability distribution. Examples of supply chain applications include inventory and production management problems, where demand and yield are represented as random variables respectively.

c. Economic models, which tend to be focused on buyer-supplier relationships. These models have a traditional base in determining the financial risks to either sellers or buyers, given various assumption

d. Simulation models, which are (usually) data driven representations facilitated by sampling from specified probability distributions.

4.1. Scenario planning model

According to (Aman Deep and Samir Dani,2010 ) they used scenario planning model this model which was a commonly used in the mid 80’s , the scenario planning model focuses three key levels , strategic , tactical and operational , each levels is feeding into the other. The involvement in terms of team composition should Each stage has a set of input and output with the aim of developing a comprehensive scenario at the end; the following figures describes the scenario planning model;

At each levels of the scenario planning different teams are involved and different questions are actions are taken; on the strategic levels the involvement is for the top management, the questions that are asked at these stage are like;

· What might the economic landscape look like in the next 5- 10 years?

· What social/technological changes might affect the organisation in the future?

For the tactical levels the involvement is for seniors management in different departments production, sales, finance, etc... The questions that may be addressed here are like;

· What will be the logistics structure be like?

· What will happen to our number of production and distribution sites? Will it go up or down?

· Where will be expanding internationally?

· What issues might arise from these changes?

While on the tactical level the involvement is for middlemen in different department, sales, finance and etc.., the questions here are like;

· Where will we be in the next one year?

· What is happening to our key performance indicators?

· Where do we think are our weaknesses?

This research indicated that scenario planning is important process for supply chain risk management, however the researchers concluded that The initial qualitative process has provided insights into the lack of strategic risk planning and the time lag in between scenario planning and risk management.

4.2.Supply chain risk assessment methodology

(Yang Chu and Brian Squire, 2010) introduced SCRA (supply chain risk assessment ) methodology. The methodology consists of eight major steps. The results of this analysis is a detailed information about the critical risks a firm may face and their treatment actions and also help a firm Restructure its supply chains by analysing risks associated with key design variables.

According to the researchers The SCRA methodology helps supply chain professionals in understanding specific elements of managing risks and to understand key elements of managing supply chain.

4.3.Global Supply Chain Risk Management and Mitigation Model

(IlaManuj and John T. Mentzer ,2008) developed model for supply chain risk management and mitigation they concluded that This framework for global supply chain risk management provides three main benefits. First, it offers an integrated framework for managing global supply chain risk decisions with the aid of linked tables. This step-by step approach forces the decisions to move out of typical intuitive thinking and preset mental models. it provides an understanding of the constituents of risk, creates a risk profile, and uses the risk profile to generate a set of appropriate strategies in the context of global supply chain. This frame work is 5-step model as follows;

· Step 1 : Risk Identification

· Step 2: Risk Assessment and Evaluation

· Step 3: Selection of Appropriate Risk Management Strategies

· Step 4; Implementation of Supply Chain Risk Management Strategy(s)

· Step 5: Mitigation of Supply Chain Risks

4.4.Supply chain risk management process

(Janat Shah, 2008) developed a structured process oriented approach for the supply chain risk management, it consists of four steps;

a. Identification of supply chain risks :

The identification of risks included complete analysis of sources that may cause damages or disruptions in the supply chain

b. Analysis and assessment of supply chain risks :

Supply risk assessment evaluates the effect of risks on the company’s performance , it considers the probability of occurrence of unfavourable event and its effect on the firm , one way of calculating this factor is multiplying the probability of occurrence by the estimated effect

c. Constructing probability and impact matrix :

clearly identifying the risks and their classification in a way that help the company to priotarize its actions and take the right steps at the right time ; the proposed supply chain risk probability and impact matrix is as follows;

d. Developing risk management plan:

Understanding supply risks through assessments will makethe companies able to take the appropriate action. The different possibilities for managerial action in supply risk management are:

· Avoidance (eliminate):

· Reduction (mitigate): Involves methods that reduce the severity of the loss or the likelihood of the loss from occurring

· Transference (outsourcing or insure): Insurance, hedging, contracts and risk sharing plans.

· Retention (accept and budget): Acceptance of risks through reserves for contingencies.

4.5.Postponement

(Biao Yang and Ying Yang , 2010) suggested the use of postponement philosophy to reduce the risks of supply chain disruptions , the idea depends on postponing some activities that should occur until other actions occurs , for example companies don’t start full production until a guaranteed no. Of sales orders are already placed, this strategy gives a chance to change in the configurations of products to the last minute in case any disruptions happen to any of the suppliers and a replacement component should be used.

5. Risk mitigation strategies

Unfortunately, there is no silver-bullet strategy for protecting organizational supply chains. Instead, managers need to know which mitigation strategy works best against a given risk. (MIT SLOAN MANAGEMENT REVIEW, FALL 2004 )

5.1.Dual Sourcing for Mitigating Supply Side Risks

The dual sourcing concept depends on having two suppliers. The first is a main supplier for fixed volumes with higher efficiency and low transaction costs, catering to the majority of requirements and the second, for flexible

Quantities, with lower and higher volume limits and who consequently charges a higher price (Janat Shah,2008)

5.2.Location of Secondary Source to Mitigate Supply Side Risks.

The decision to go for a second resource (place ) mainly depends on where will be the second location For example it may not make much sense for a manufacturer in the US to locate both its sources in a single country or region from the point of view of maintaining steady supplies. In such a case, any disruption in the country or the regions will dramatically affect both places. Another concern may be the stability of the country where the vendor is located. A third issue is the spreading out of suppliers geographically so that a natural calamity does not have the same debilitating effect on all. (Janat Shah,2008)

5.3.Designing for risk

According to (Sharma Satyendra Kumar, 2009) he designed an implementation steps to help mitigating supply chain risks and they are as follows;

a. State the risk management objective: Documenting the risk management objective helps provide the corner stone on how to cope with risk management strategies and the importance of it to the other cross functional areas. Start by asking some basic questions at a high level to create a vision for Risk Management:

· Why are we doing this?

· What is it that we want to protect ourselves against Disruptions?

· What should we do? (Alternatives)

· How long it will take to recover? (Time)

· How much inventory do we need to carry to cover for disruptions? (Cost)

· How will we know success? (Metrics)

b. Determine the risk appetite: This step is about gaining a deeper understanding of what risks you want to protect yourself against.

· It should be comprehensive: there is no standard set of risks or road map to tell about the risks you may encounter

· It should be interactive: discussions and focus groups would be an effective way to realize the risks of the firm’s supply chain.

· It should be iterative: The discussion format helps to evolve the questionnaire by verifying, adding, modifying, or deleting questions to get to the one that is right for you.

· It should be both qualitative and quantitative: Since tolerance for risk varies by individual, there is an element of subjectivity to the exercise. The ability to capture these inputs across multiple respondents and "normalize" the answers for the group will require knowledge of data collection and analysis methods to accomplish this exercise.

c. Define the Risk Management organization: The risk profile helps the executive team understand (at a high level) if there are indeed gaps in the current risk management strategy and subsequently create the appropriate organization that is tasked with closing these gaps. The organization chart should also identify the appropriate risk management counterparts in the partner organizations upstream and downstream in the supply chain.

d. Perform the SWOT analysis: In addition to reviewing the data from the risk appetite survey, a SWOT analysis (Strengths / Weaknesses / Opportunities / Threats) can be an effective tool to help the members of the risk management team get aligned on a shared, high-level view of the risk management strategy.

e. Design the optimal supply chain network: The final task in the strategy phase is to ensure that the supply chain network is designed to meet the stated risk management

5.4.Tailoring Risk Management Approaches Leading

The (MIT SLOAM MANAGEMENT REVIEW FALL 2004) wrote about tailoring risk management approaches according to requirements and the degree to trade off. Companies mitigate risk by building various forms of reserves, including inventory, capacity, redundant suppliers and responsiveness. Managers must take care about the cost to build a reserve and the trade off they would accept. Three key relationships influence this optimal balance.

The first relationship is the increasing cost of risk reduction. It means using of high levels of inventory to cover risks of demand increase. Costs are much more than covering a low level of risk.

The second relationship shows that pooling forecast risk, receivables risk or some other risk reduces the amount of reserve required for a given level of risk coverage. Thus, the required level of inventory needed to mitigate forecast risk decreases as it is pooled.

The third relationship shows how the benefit of pooling once a company clearly understands its supply-chain risk, it can select the appropriate general mitigation approach and specific tailored strategy. (MIT SLOAM MANAGEMENT REVIEW FALL 2004).

6. Conclusion

Supply chains are vulnerable, in part, because they have never been as extended as they are today. Companies must also increasingly manage stakeholder expectations about issues such as quality, environment, and health and safety of workers. Now the risk of disruption has further increased because of extreme business volatility.

Today supply chains are facing many challenges because of the globalization, extension of members in the supply chain, the new tools for optimizing operations like lean manufacturing , just-in-time , etc... , all these circumstances put the supply chain under great risks of nor meeting demands or losing money due to high conservative strategies.

Managing risks have been identified and analyzed using different techniques and methods, some of these methods depends on simulations and complicated computer software , other methods depend on trends and the markets analyses . The problem here is that there is no clear or a well identified approach for measuring the supply chain risks

Some researchers talked about the mitigation strategies for the supply chain risks, however there is lack of researches taking about this issue, and I see the reason behind that is there is no clear methods and tools to best evaluate the supply chain risks and hence there will be lack for mitigation tools.

7. List of References

Abhijeet Ghadge, Samir Dani1 and Roy Kalawsky2 1School of Business and Economics, Loughborough University, Loughborough, UK, Supply Chain Risk Management An analysis of Present and Future Scope,2011

Aman Deep, Samir Dani, Scenario Planning In Supply Chain Risk Management, The 10th International Research Seminar on Supply Chain Risk Management,2010

Biao Yanga and Ying Yangb, Postponement in supply chain risk management: a complexity Perspective, International Journal of Production Research Vol. 48, No. 7, 1 April 2010, 1901–1912

Desheng Dash Wuab and David Olsonc , Enterprise risk management: a DEA VaR approach in vendor selection, International Journal of Production Research Vol. 48, No. 16, 15 August 2010, 4919–4932

Gautam Basu, Mondher Ben-Hamida, Karen Butner, Eric Cope,Henry Dao,Léa Deleris, Jin Dong, Mary Helander, Kaan Katircioglu, Bonnie Ray, Jason Torpy, Supply Chain Strategy, Industrial Sector, Supply Chain Risk Management:A Delicate Balancing Act A multi-faceted view on managing risk in a globally integrated enterprise, IBM Global Business Services,2008

IlaManuj and John T. Mentzer , Global Supply Chain Risk Management , Journal Of Business Logistics, Vol. 29, No. /, 2008

Janat Shah, Supply Chain Risk Management: Academic Perspective, IMRC 2008 Round Table

Sharma Satyendra Kumar, Risk Management in Supply Chains, Advances In Management Vol. 2 (11) November (2009)

Sunil Chopra and ManMohan S. Sodhi , Managing Risk To Avoid

Supply-Chain Breakdown, Mit Sloan Management Review Fall 2004

Yang Chu, Brian Squire, A Methodology For Identifying, Categorising And Prioritising Sources Of Supply Chain Vulnerability, The 10th International Research Seminar on Supply Chain Risk Management,2010

Egyptian Revolution 25 / 1

2012-01-20T07:10:00.000-08:00

THE BASICS

What's Going On In Egypt?: Protests started on Tuesday, January 25, when -- inspired by the successful revolution in Tunisia -- thousands began taking to the streets to protest poverty, rampant unemployment, government corruption and autocratic governance of President Hosni Mubarak, who has ruled the country for 30 years. These were the first protests on such a large scale in Egypt since the 1970s. Read more here.

Why Egypt Matters: Why is the story gaining traction? There are a number of factors that make Egypt's unrest important, in both that country, the Middle East, and the world. Click here to see the top reasons why Egypt should matter to you.

What It's Being Called: The Egyptian revolution is also referred to as the Egyptian Protests, Days of Rage, the Papyrus Revolution and the Lotus Revolution.

Quick Facts About Egypt: Established in 3100 B.C., Egypt today has a population of approximately 79 million. Its people speak Arabic and 99% are Egyptian. The country staged its first modern revolution in 1919 and established independence in 1922. Continued instability due to remaining British influence led to a second revolution in 1952 and the creation of the Egyptian Republic in 1953.

TIMELINE OF KEY DEVELOPMENTS

Tuesday, 1/25: First Day Of Demonstrations
Wednesday, 1/26: Protests Resume For Second Day
Thursday, 1/27: Egypt Shuts Down The Internet
Friday, 1/28: Mubarak Speaks, Says He'll Form A New Government
Saturday, 1/29: Anonymous Internet Users Help Egypt Communicate
Sunday, 1/30: Hillary Clinton: Egypt Must Transition To Democracy
Monday, 1/31: Egypt's New Government Is Announced, Sworn In
Tuesday, 2/1: President Mubarak Says He Won't Run For Re-Election
Wednesday, 2/2: Internet Service Returns In Egypt
Thursday, 2/3: Foreign Journalists Rounded Up
Friday, 2/4: "Day of Departure" Protests Held Across Egypt
Saturday, 2/5: Members Of Ruling Party Leadership Resign
Sunday, 2/6: Government Agrees On Concessions
Monday, 2/7: Google Executive Released In Egypt
Tuesday, 2/8: Freed Activist Energizes Protests
Wednesday, 2/9: Widespread Labor Strikes Throughout Egypt
Thursday, 2/10: Despite Rumors, Mubarak Refuses To Step Down
Friday, 2/11: Mubarak Resigns As President, Leaves Cairo

Five Smart Ways to Save Money on Shipping

2011-07-20T05:04:00.000-07:00

There's a funny sequence in an old I Love Lucy episode that ends with Lucy and Ethel on roller skates, loaded down with jars of "Aunt Martha's Old Fashioned Salad Dressing." Their idea had been to "skate down" their shipping costs by hand delivering the product to their customers. As absurd and funny as the idea was, it highlighted a very real problem — the cost of overhead often shaves off a company's profit margins, and finding ways to reduce that overhead can make or break a business.

Here are some suggestions for cutting your shipping expenses (while still offering your customers excellent service) by using all of your business's available resources:

1. Organize a shipping routine. Map out each of the steps you currently take when shipping products to your customers. Be sure to include the supplies — boxes, mailing labels, tape — you use to complete each step. Once you've finished, look for steps that you can eliminate. The idea here is to work toward making the shipping process more economically efficient. Once you've streamlined the process to your satisfaction, create an operations manual that outlines the steps for your employees who handle shipping. In addition to having an outline of all your steps, you'll also have a complete list of your shipping supplies.
2. Keep a running total. Next to each supply, write an estimate of what you use, how much of it you use, and how much it costs, both monthly and annually. This process gives you an overview of your expenses in terms of your various shipping supplies.

3. Shop sales and buy in bulk. One of the most basic ways to cut shipping expenses is to shop sales and buy in bulk. Now that you know what you're using and how much of it, you can check discount office supply stores and inquire about wholesale or business rates. Every savings, no matter how small, adds up in the long run. You can sometimes get discounted or even free shipping supplies from the company you use for shipping. For example, both UPS and FedEx offer free packaging and labels to businesses that use their services. The U.S. Postal Service also offers some shipping supplies at no charge, depending on how you ship. Free supplies include priority mail flat-rate boxes, express mail envelopes, and a variety of forms and labels.

4. Recycle. Another great way to save on shipping costs is to recycle your supplies. Some of the items you can reuse include boxes; padded envelopes (particularly the large ones); bubble wrap; Styrofoam packing peanuts; cardboard mailing tubes; and CD and DVD mailers. Recycling requires that you save shipping items until you reuse them. Boxes store best by breaking them down and stacking them flat. Garbage bags are an excellent way for storing packing material, such as packing peanuts. Shredded paper also works well as a packing material. Recycling is great, but don't get carried away with it. The idea is to cut expenses without cutting your level of service.

5. Print it yourself. Another great idea for saving money on shipping supplies is to print things like mailing labels yourself instead of outsourcing the job to a professional printer. Printing can be costly, and writing labels out by hand is both time consuming and unprofessional looking. Computer software and color inkjet printers are available for every application imaginable. You can print the labels right from your mailing list, which will save you both time and money.

Find Specific Franchise Locations for Sale

2010-05-16T14:24:00.000-07:00

Step-by-Step Guide to Buying a Franchise:

Create a Buyer's Profile

Create a buyer's profile and share it with people who can bring you potential deals to review. The individuals include the franchisor, business brokers, accountants, lawyers, and other franchisees. This one-page profile should contain your background, type of franchise wanted, the names of any potential franchisors you'd consider, the geographic areas you're interested in, the maximum price you'd be willing to pay (state about 90 percent of your real number and indicate that you have all cash).

You also want to give the criteria for existing franchisee locations you'll consider, including the minimum number of years the location has been in business (at least three) and minimum required historical income.

This profile will help filter out most of the junk you'd otherwise receive. If anyone brings you deals that are significantly outside your stated written criteria, immediately reject the deal and don't work with that person any longer.

Contact the Franchisor and the Area Developer
After you've created your buyer's profile, contact the named franchisors and their area developers if applicable. Typically a franchisor grants an area developer the right and the obligation to develop a number of outlets in a certain geographic territory.

Sometimes the franchisor will have a list of locations that are for sale, and the area developer will know of owners who wish to sell their franchises. Remember, though, that they're much more motivated to sell you a new location, so be patient and keep digging for the information you need. And be careful -- area developers could try to steer you toward locations that are struggling or overpriced.

Contact Business Brokers and Businesses-for-Sale Web Sites
The next step is to contact a number of business brokers. Unlike in residential real estate, many business brokers don't cooperate, so be sure to discuss your criteria with a number of brokers. Also check out the Web sites that specialize in listing small businesses for sale, like BizBuySell.com. Remember, you may not see the name of the franchise you're interested in, but that doesn't mean they aren't listed. Many franchisors forbid their franchisees from using their franchise name in listings (another reason that franchises are hard to sell). For instance, a Subway for sale might be listed as "World's #1 Sandwich Franchise."

Contact Franchisees and Ex-Franchisees
Locate the franchise stores in the geographic area you're interested in and visit the stores in person. It's likely you'll be able to meet the owner, but if the owner is absent, don't tell the staff that you're interested in buying the location. When you meet with the owner, share your buyer's profile and engage in a discussion about buying into the franchise. Even if a store isn't listed for sale, the owner may express an interest in selling, and/or they'll indicate which other owners may be interested in selling. This could be a great way to buy a location that's under the radar.

Also be sure to contact ex-franchisees listed in the FDD. These ex-franchisees may be able to give you insider information that you would otherwise find difficult to obtain, including current franchisees who want to sell. Plus you'll probably get some good information about how the franchise operations really run.

Contact CPAs and Attorneys
Be sure to contact CPAs and business attorneys and share your buyer's profile with them. They could have franchisee clients who want to sell or can point you to other professionals who may have inside information.

Consider Small Towns
Finally, be sure to consider franchises in small towns. Franchise operations in these areas are often extremely difficult to sell, which means their prices may be lower than in more densely populated areas. It also means that there's less likelihood for serious competition, and generally rents and labor costs are lower, so average profitability could be significantly higher. If you're geographically flexible, this may be the best way to buy a franchise.

Cell Phone Maker Claims Apple Infringes on Patents

2010-05-16T14:19:00.000-07:00

By JESSICA MINTZ THE ASSOCIATED PRESS
Publication: Charleston Daily Mail (West Virginia)
Date: Thursday, May 13 2010

SEATTLE - Taiwanese cell phone maker HTC Corp. said it filed a legal complaint against Apple Inc., saying its iPhone, iPod and iPad devices infringe on HTC patents.

The move escalates a patent dispute between the two electronics companies, as Apple tries to maintain the iPhone's supremacy against Android,

the increasingly popular mobile software upstart from Google Inc.

HTC, which makes several Android phones including the new Droid Incredible, said it filed a complaint with the U.S. International Trade Commission on Wednesday seeking to block U.S. sales of the gadgets. In its statement, HTC did not say what patents it believes Apple has violated.

HTC's complaint is not likely to block sales of Apple products any time soon. Patent disputes are common among technology companies and often take years to resolve. The cases often lead to licensing agreements rather than outright bans on imports, as HTC is seeking in its complaint.

Apple filed its own lawsuits against HTC in March, saying HTC's cell phones violate 20 of Apple's iPhone patents. Apple's complaints were made before the trade commission and in U.S. District Court in Wilmington, Del.

Android phones, like the iPhone, support multitouch screens. Users sweep their fingers across the

Concepts of Leadership

2010-05-16T14:13:00.000-07:00

Good leaders are made not born. If you have the desire and willpower, you can become an effective leader. Good leaders develop through a never ending process of self-study, education, training, and experience. This guide will help you through that process.

To inspire your workers into higher levels of teamwork, there are certain things you must be, know, and, do. These do not come naturally, but are acquired through continual work and study. Good leaders are continually working and studying to improve their leadership skills; they are NOT resting on their laurels.

Before we get started, lets define leadership. Leadership is a process by which a person influences others to accomplish an objective and directs the organization in a way that makes it more cohesive and coherent. Leaders carry out this process by applying their leadership attributes, such as beliefs,values, ethics, character, knowledge, and skills. Although your position as a manager, supervisor, lead, etc. gives you the authority to accomplish certain tasks and objectives in the organization, this power does not make you a leader...it simply makes you the boss. Leadership differs in that it makes the followers want to achieve high goals, rather than simply bossing people around.

Bass' (1989 & 1990) theory of leadership states that there are three basic ways to explain how people become leaders. The first two explain the leadership development for a small number of people. These theories are:

Some personality traits may lead people naturally into leadership roles. This is the Trait Theory.
A crisis or important event may cause a person to rise to the occasion, which brings out extraordinary leadership qualities in an ordinary person. This is the Great Events Theory.
People can choose to become leaders. People can learn leadership skills. This is the Transformational Leadership Theory. It is the most widely accepted theory today and the premise on which this guide is based.

When a person is deciding if she respects you as a leader, she does not think about your attributes, rather, she observes what you do so that she can know who you really are. She uses this observation to tell if you are a honorable and trusted leader or a self serving person who misuses authority to look good and get promoted. Self-serving leaders are not as effective because their employees only obey them, not follow them. They succeed in many areas because they present a good image to their seniors at the expense of their workers.

The basis of good leadership is honorable character and selfless service to your organization. In your employees' eyes, your leadership is everything you do that effects the organization's objectives and their well being. Respected leaders concentrate on what they are [be] (such as beliefs and character), what they know (such as job, tasks, and human nature), and what they do (such as implementing, motivating, and provide direction).

What makes a person want to follow a leader? People want to be guided by those they respect and who have a clear sense of direction. To gain respect, they must be ethical. A sense of direction is achieved by conveying a strong vision of the future.

The Two Most Important Keys to Effective Leadership

A Hay's study examined over 75 key components of employee satisfaction. They found that:

Trust and confidence in top leadership was the single most reliable predictor of employee satisfaction in an organization.
Effective communication by leadership in three critical areas was the key to winning organizational trust and confidence:

Helping employees understand the company's overall business strategy.
Helping employees understand how they contribute to achieving key business objectives.
Sharing information with employees on both how the company is doing and how an employee's own division is doing - relative to strategic business objectives.

So in a nutshell -- you must be trustworthy and you have to be able to communicate a vision of where the organization needs to go. The next section, "Principles of Leadership", ties in closely with this key concept.

Principles of Leadership

To help you be, know, and do; (U.S. Army, 1973) follow these eleven principles of leadership (later chapters in this guide expand on these and provide tools for implementing them):

Know yourself and seek self-improvement - In order to know yourself, you have to understand your be, know, and do, attributes. Seeking self-improvement means continually strengthening your attributes. This can be accomplished through self-study, formal classes, reflection, and interacting with others.

Be technically proficient - As a leader, you must know your job and have a solid familiarity with your employees' tasks.
Seek responsibility and take responsibility for your actions - Search for ways to guide your organization to new heights. And when things go wrong, they always do sooner or later -- do not blame others. Analyze the situation, take corrective action, and move on to the next challenge.
Make sound and timely decisions - Use good problem solving, decision making, and planning tools.
Set the example - Be a good role model for your employees. They must not only hear what they are expected to do, but also see. We must become the change we want to see - Mahatma Gandhi
Know your people and look out for their well-being - Know human nature and the importance of sincerely caring for your workers.
Keep your workers informed - Know how to communicate with not only them, but also seniors and other key people.
Develop a sense of responsibility in your workers - Help to develop good character traits that will help them carry out their professional responsibilities.
Ensure that tasks are understood, supervised, and accomplished - Communication is the key to this responsibility.
Train as a team - Although many so called leaders call their organization, department, section, etc. a team; they are not really teams...they are just a group of people doing their jobs.
Use the full capabilities of your organization - By developing a team spirit, you will be able to employ your organization, department, section, etc. to its fullest capabilities.

Factors of leadership

There are four major factors in leadership:

Follower
Different people require different styles of leadership. For example, a new hire requires more supervision than an experienced employee. A person who lacks motivation requires a different approach than one with a high degree of motivation. You must know your people! The fundamental starting point is having a good understanding of human nature, such as needs, emotions, and motivation. You must become to know your employees' be, know, and doattributes.

Leader
You must have a honest understanding of who you are, what you know, and what you can do. Also, note that it is the followers, not the leader who determines if a leader is successful. If they do not trust or lack confidence in their leader, then they will be uninspired. To be successful you have to convince your followers, not yourself or your superiors, that you are worthy of being followed.

Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when you "set the example," that communicates to your people that you would not ask them to perform anything that you would not be willing to do. What and how you communicate either builds or harms the relationship between you and your employees.

Situation
All are different. What you do in one situation will not always work in another. You must use your judgment to decide the best course of action and the leadership style needed for each situation. For example, you may need to confront an employee for inappropriate behavior, but if the confrontation is too late or too early, too harsh or too weak, then the results may prove ineffective.

Various forces will affect these factors. Examples of forces are your relationship with your seniors, the skill of your people, the informal leaders within your organization, and how your company is organized.

Attributes

If you are a leader who can be trusted, then those around you will grow to respect you. To be such a leader, there is a Leadership Framework to guide you:

BE KNOW DO

BE a professional. Examples: Be loyal to the organization, perform selfless service, and take personal responsibility.

BE a professional who possess good character traits. Examples: Honesty, competence, candor, commitment, integrity, courage, straightforwardness, imagination.

KNOW the four factors of leadership - follower, leader, communication, and situation.

KNOW yourself. Examples: strengths and weakness of your character, knowledge, and skills.

KNOW human nature. Examples: Human needs, emotions, and how people respond to stress.

KNOW your job. Examples: be proficient and be able to train others in their tasks.

KNOW your organization. Examples: where to go for help, its climate and culture, who the unofficial leaders are.

DO provide direction. Examples: goal setting, problem solving, decision making, planning.

DO implement. Examples: communicating, coordinating, supervising, evaluating.

DO motivate. Examples: develop moral and esprit in the organization, train, coach, counsel.

Copied

Five Traits of High-Potential Employees

2010-05-16T14:11:00.001-07:00

by Eric J. Frankel

As the parent of 10th-grade twins, their differing levels of motivation toward academics are both fascinating and unnerving. While one says "no thanks" to schoolwork, the other thinks "never enough." An array of factors makes them perform in the way they do or do not: environment, confidence, maturity, interest level and vision.

No matter the managerial oversight (mom and dad), the training and learning (teachers) or the incentives (grades, college), they respond to academics at their own pace, in their own style and based upon their own internal stimulus.

The academic world is reminiscent of the unique emotions each individual carries toward specific subject matter and learning situations. While many have the ability to perform at an "A level," talent managers must find that unique combination of environment, industry and team that optimizes motivation and potential.

Do your key employees carry a "never enough" attitude, an unrelenting desire to move forward, and recognize progress as the only option, regardless of what recent business and personal situations dictate?

Talent managers need to ensure that leaders and high-potential employees:

1. Accentuate the exceptional.

Employees' best traits are magnified and spread exponentially when they are at the top of their game. In sports, the player with smarts and leadership skills vastly raises overall team performance. The "never enough" mentality delivers focus and charisma to generate immense functional and organizational buzz and goodwill.

2. Embrace their environment.

Certain situations don't captivate us. For instance, I left a large multinational company more than two decades ago because even though partners were seeking my involvement in sales and marketing, I had no interest. Six years later, I started my own business and embraced sales and marketing. At my previous employer, the timing, the industry and the people were wrong; as an entrepreneur, my creative passions and latent sales and marketing skills awoke.

3. Share knowledge.

The "never enough" crowd not only gets it (combined intellect as well as business and interpersonal savvy), but they also share it by investing time and energy to drive the performance of peers, subordinates and the entire organization. "Top-echelon employees don't just focus on narrow self-interest; they understand personal progress means a genuine desire to collaborate with others and promote the shared success of the organization, " according to Carol Bellini of Transforming Strengths LLC.

4. Possess vision where others don't.

To individuals with the "never enough" mentality, clarity results from hard work; listening intently to internal and external colleagues or thought leaders; and relying on finely tuned instincts.

5. Forge ahead with attitude.

To individuals who say "never enough," adversity is only a temporary obstacle; recession translates to innovation; problem means opportunity; and competition is recast as differentiation.

Case Study DELL – Lean Manufacturing

2010-05-16T14:02:00.000-07:00

ERP Implementations : Failures, Risks and Key Success factors

2010-05-16T13:52:00.000-07:00

1. Introduction

The ERP (enterprise resources planning) systems are new kind of information management systems that promise ultimate integration between financials, operations human resources, customer service and all departments within organization. This kind of integration helps organizations to perform its business processes in more effective way and consequently it will help organizations to improve its profitability.

In order to deploy your organization with ERP system you have to select the suitable ERP package that best suits your organization’s requirements because as far as ERP system can be your future competitive advantage towards your competitors it can also be the decision that will lead you to bankruptcy (Bulkelery, 1996; Davenport, 1998; Markus et al., 2000).

Owens Corning claims ERP software helped it save $50 million in logistics, materials management, and sourcing. It also led to inventory reductions because material planners had access to more up-to-date and accurate data that improved the company's ability to track and control system-wide inventory and forecast future demand. At the same time Whirlpool experienced major setbacks with its ERP system, which was implemented to improve the shipping and invoicing processes within the company.

Essential steps such as risk assessment benefit analysis, performance objectives, and cash flows are typically discarded. In their place, expenditures are made based on naïve assumptions that the computer will magically transform a company into a paragon of efficiency. This misguided approach sets up a sequence of events that often leads to a failure of objectives. The resulting conclusion is that the ERP software was a bad investment decision.

2. The reasons behind why ERP implementation would fail

In a recent survey, information technology managers identified three primary reasons for the failure of all IT-related projects: poor planning or poor management (cited by 77 percent), change in business goals during the project (75 percent), and lack of business management support (73 percent). Since ERP is an IT-related project, the above are valid reasons for explaining ERP implementation failures. (Industrial management pub. 1 Jan 2002).

a. Poor leadership and participation from management

The commitment of leadership in the ERP implementation is very important because ERP implementation will encounter a major changes in the business processes so without the top management commitment, setting goals and objectives and take decisions about changing some business processes the ERP implementation will lack the captain.

b. Extra sophisticated customization

Because the nature of ERP that it changes the way of doing business BPR (business process reengineering) many companies are reluctant to any changes and resist any change in their business , these unnecessary requirements requires a very sophisticated customization in the ERP systems and cancels the best practices that the ERP is designed for.

c. Unrealistic expectations

Many companies assumes that their ERP systems will turn around the business and the productivity will be boosted up , but in reality the organizations are expected to have some disruptions in its business for a while , then the benefits of the ERP will be increase gradually.

d. Poor training and education

The training phase in any ERP implementation is very important because the end users are in face to face with their future system; if this phase is poorly managed and delivered its circumstances will be reflected on the end users and their ability to interact with the ERP system and taking the maximum benefit from it.

e. Improper ERP package selection

Not selecting the suitable package can mismatch between the organization’s objectives and the software , the organization has to choose the suitable package that best suits the organization’s requirements and to avoid the future mismatch between the selected package and the organization.

f. Lack of consultants experience

The team that implements the ERP should be capable of analyzing and understanding the organization’s business and put out the suitable solutions that best fit with the organization. Lack of experience or inability to understand the organization’s current business can lead inapplicable ERP solutions.

g. ERP is viewed as IT project

If the ERP project is viewed as just an IT project it will lack of contribution from the key personnel in the business areas and thus, the implementation will lack of re-engineering and adding more solutions to the organization.

h. Poor project management

Limited ERP knowledge, capability and poor project management skills, , especially in managing consultants, and reporting implementation problems to top management whenever necessary are reasons for exercising ineffective project management of ERP implementation. The failure to plan, lead, manage and monitor the project is a core factor that results implementation failure, because the ERP system is complex, and project teams are required to collaborate with top management, different departments, users and consultants during implementation process.

i. Poor quality of business process re-engineering BPR

The lack of clear vision of why or how to conduct BPR, consultants would provided unprofessional advice for conducting BPR. These advices would include lots of workarounds to resolve problems associated with business process mismatch.

j. Users’ resistance to change

The lack of knowledge of ERP systems and a standardized business processes can lead the users to resist the implementation and refuse to participate in BPR and give full information to the consultants. The workloads of the users during the implementation can also lead them to resist because they have no time to discuss with the consultants about the ERP and the analysis of their business.

k. Data accuracy and consistency

The data provided during the implementation is very important because the ERP is built upon it. Because many organizations don’t have a standardized set of data across the organization many ERP implementations suffers from the lack of inaccurate data or the data is redundant across the organization.

l. Poor IT infrastructure

In order to cut implementation costs or insufficient resources a poor IT infrastructure may be used leading to a slow and a bad performance of the ERP system.

3. Risk Management

To minimize the risk of the ERP project, the application of a risk management plan at different ERP implementation project stages is recommended; selection, implementation, and usage. A planned and systematically adopted risk management procedure throughout the ERP project reduces the possibility to risks occurring. Consequently, major mistakes are made in the early stages of the ERP project, even prior to the implementation process. the efficiency of risk management when it is introduced at the earliest possible opportunity in the life cycle of the system in question, when planning issues are most important and the criteria for system selection are determined. Instead of using ready-made risk lists, a company might consider identifying their own, company-specific ERP implementation risk list. These risks could be complemented by common risk lists. The risk assessment process contains risk identification, risk analysis, and risk prioritization. Risk identification produces lists of project-specific risk items that are likely to compromise a project’s success. Risk analysis assesses the loss in probability and magnitude for each identified risk item. Risk prioritization produces a ranked ordering of risk items that are identified and analyzed. To be effective a risk assessment method should consider several potential aspects (technology, market, financial, operational, organizational, and business) and link them to the project life cycle, stated in “Risk Management in ERP Project in the Context of SMEs Päivi Iskanius, Engineering Letters, 17:4, 2009”.

How to evaluate and control the risks you face

Risk Analysis is a formal framework that helps you to assess the risks that you or your organization faces. A good risk analysis will help you to decide what actions to take to minimize disruptions to your plans. It will also help you to decide whether the strategies you could use to control risk are cost-effective.

How to use the tool

Here we define risk as “the perceived extent of possible loss”. Different people will have different views of the impact of a particular risk: What may be a small risk for one person may destroy the livelihood of someone else. One way of putting figures to risk is to calculate a value for it as:

Risk = probability of event x cost of event

This allows you to compare risks objectively.

According to [M Sumner, “Risk Factors in Enterprise-Wide/ERP Projects” Journal of Information Technology, Vol 15, 2000, pp.317-327] risk factors in ERP projects.

Risk category	Risk factor
Organizational fit	Failure to redesign business process Failure to follow an enterprise-wide design, which supports data integration
Skill mix	Insufficient training and re-skilling Insufficient internal expertise Lack of business analysts with business and technology knowledge Failure to mix internal and external expertise effectively Lack of ability to recruit and retain qualified ERP systems developers
Management structure and strategy	Lack of senior management support Lack of proper management control structure Lack of a champion Ineffective communications
Software systems design	Failure to adhere to standardized specifications which the software supports Lack of integration
User involvement and training	Insufficient training of end-users Ineffective communications Lack of full-time commitment of customers to project management and project activities Lack of sensitivity to user resistance Failure to emphasize reporting
Technology planning/integration	Inability to avoid technological bottlenecks Attempting to build bridges to legacy applications

You are still free to define your own risks that are more likely to occur in your organization depending on the surrounding circumstances and the current situation you are facing in your ERP implementation.

Managing risks

Once you have prioritized your own risks that may affect your ERP implementation you have to plan how to manage these risks and minimize them risks could be managed through different ways like:

· Implement specific programs that eliminate a specific risk e.g. Change management.

· Increase resources in a specific area

· Develop and follow up action plans to overcome specific risks.

4. Key Success factors

The ERP implementation is simply an IT project but it is a functional strategy that turns over the business of an organization this function strategy is achieved through implementing some kind of information management systems “ERP” so this strategy or implementation don’t; require only IT oriented people or just a separate department that is responsible for implementing a strategy but the ERP implementation requires full involvement of all organization’s department and action plans that support the whole organization to change the way performs its business .

Several factors have been identified as a key success factors for ERP implementations, these factors are identified based on different researches performed in different organizations in different countries.

a. Top management support

The role of the top management is considered one of the most important factors because the way the top management will act towards the ERP implementation will affect the whole project they have to understand what the ERP will provide to the organization, they have to financially support the project to achieve its objectives and their authorities to change current business processes to support the ERP system.

b. Business process re-engineering

The business processes should have the adequate time to be analyzed and modeled not to be viewed as just installation of IT software because the good understanding of business process will have a significant effect on the BPR and will help on selecting the best solutions and provide an added value to the organization.

c. Excellent project management techniques are used

The implementation teams should be professionally coached , the project objectives must me clearly stated and reviewed , accurate and professional scheduling should be developed , action plans and efficient use of resources , high level of communication channels between team members, top management and end users should be fully managed and developed.

d. End users involvement

I see end users involvement is very important because it will help in better developing BPR and understanding the small problems that frequently occur in business.

e. Extensive education and training provided

Education is arguably the most important and widely recognized critical success factor because user understanding and buy-in are essential. A successful implementation requires a critical mass of knowledge to enable people to solve problems within the framework of the system. This critical mass of knowledge includes general education about the ERP system for everyone — from top management down to the end users — before the implementation begins. It includes a massive amount of end user training before and during implementation as well as follow-up training after the implementation.

To make end user training successful, the training should start early, ideally before the implementation begins. Executives often dramatically underestimate the training costs necessary for a successful ERP implementation. Top management must be prepared to spend a significant amount of money on this training and incorporate it as part of the formal ERP budget because the full benefits of ERP cannot be realized until end users are using the new system properly. If the employees do not understand how a system works, they will simply invent their own processes using those parts of the system they know how to manipulate. It has been suggested that reserving 10 percent to 15 percent of the total ERP implementation budget for training will give an organization an 80 percent chance of a successful implementation.

All too often, top management expects employees to be able to use the new ERP system effectively with only the education and training received before and during the implementation. Yet, much of the learning process comes from hands-on use under normal operating conditions after the implementation period is over. Thus, there is an ongoing need for a designated individual, preferably the implementation team leader, to keep in contact with all system users and monitor the use of the new system.

Periodic meetings of system users should be convened to help identify problems with the system and to encourage the exchange of information gained through experience and increased familiarity with the system. As problem areas are identified, post-implementation training should be immediately provided.” Umble, Elisabeth and J.Umble, M. Michael, Industrial Management; Jan/Feb2002, Vol. 44 Issue 1”

f. Suitable ERP package selection

The choice of the suitable package is very important because the decision of implementing ERP doesn’t mean that the organization will buy a new IT software but the decision involves achieving a specific objectives. The ERP packages may differ from product to another, the organization has to review all the possible choices of packages and select on the basis of the suitability and most conformance with the organization’s business and objectives taking into account the cost benefit analysis.

g. Clear objectives and strategic goals

The ERP implementation must has a strategic objective to achieve and these objectives must be communicated to the whole implementation teams, these objectives can be for example “achieving competitive advantage over competitors through implementing the ERP systems which will enhance the supply chain management in the organization”.

h. Change management

The top management and the implementing team have to identify the points of resistance and develop a counter change management plans that can overcome the resistance that will occur during the implementation, a specific teams must be formed to work on the change management programs and follow its achievement of goals and its compliance with the main strategic goals of the ERP implementation.

5. Conclusion

Enterprise resource planning “ERP” are just IT software that are developed by IT companies, these Software are used today as a strategic tools and are implemented in organizations as a type of function strategies, like any strategy you will apply in your life this strategy can take you to a glorious sides or can drew you down.

Because the ERP implementation is somehow a strategies that requires a different way of implementations other than function strategies some companies that tried to implement ERP suffered a lot of problems and losses.

Because of the large number of implementations performed during the last decades many researches were developed identifying the failure reasons of and ERP implementation.

Further researches were conducted on how to better manage your ERP implementations through the risk analysis methods and how to act towards the risks that may appear during the implementation.

Furthermore, a success factors have been identified as a recommended actions during ERP Implementations, I believe that no one on earth can guarantee the success or failure of a specific ERP implementation but all we can provide are a recommendations on how to best utilize your ERP implementation.

Finally I recommend any organization that will to the previous failure and success stories, and implement ERP to get back try to get a strategy on how to implement their ERP in a successful way.

References

Yuan-Du Hsiao , Ching-Chow Yang , Wen-Tsann Lin, and Wei-Cheng Lee “A study on key failure factors for introducing enterprise resource planning” Human Systems Management 26 (2007) 139–152

D. L. OLSON* and F. ZHAO “CIOs’ perspectives of critical success factors in ERP upgrade projects” Enterprise Information Systems, Vol. 1, No. 1, February 2007, 129–138

Päivi Iskanius “Risk Management in ERP Project in the Context of SMEs” Engineering Letters, 17:4, 2009

Joseph F. Brazel and Li Dang “The Effect of ERP System Implementations on the Management of Earnings and Earnings Release Dates” JOURNAL OF INFORMATION SYSTEMS Vol. 22, No. 2 Fall 2008 pp. 1–21

Noe Garca-Sanchez and Luis E.Perez-Bernal “Determination of Critical Success Factors in Implementing an ERP System: A Field Study in Mexican Enterprises” Information Technology for Development, Vol. 13 (3) 293–309 (2007)

Ada Wong, Harry Scarborough , Patrick Y.K. Chau, and Robert Davison “Critical Failure Factors in ERP Implementation”

Mika Ojala, Inka Vilpola, Ilkka Kouri “ Risks in ERP Project – Case Study of IS/ICT Management Capability Maturity Level and Risk Assessment”

Umble, Elisabeth J., Umble, M. Michael “Avoiding ERP Implementation Failure” industrial Management; Jan/Feb2002, Vol. 44 Issue 1, p25, 9p

James Manktelow “Mind tools Essential skills for an excellent career” Version 1.00 – 1 August 2003

Traci barker and Mark E.Forlik “ERP implementation failure : case study” , information system management fall 2003

Egypt PEST Analysis

2010-05-13T10:52:00.000-07:00

Key FACTS about Egypt:

Full name: Arab Republic of Egypt
Capital: Cairo
Population: 80.3 million
Area: 1 million sq km
Major language: Arabic
Major religions: Muslim 90% , Coptic 9% & other Christian 1%
Currency: Egyptian Pound
Main exports: Petroleum, petroleum products, cotton, Textile, Metal product and Chemicals.
Geographical Location: Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula

To make an external scanning on Egypt, we have to know what characterizes the political, economical, sociocultral and technological environments in Egypt.

Economical Environment:

Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but has opened up considerably under former President Anwar EL-SADAT and current President Mohamed Hosni MUBARAK. Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth, but is postponing further economic reforms because of global economic turmoil. With the installation of the 2004 Egyptian parliament, the Government of Egypt began a new reform movement, following a stalled economic reform program begun in 1991, but moribund since the mid-1990s.

In the past year, the cabinet economic team has simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatizations of public enterprises and implemented economic legislation designed to foster private sector-driven economic growth and improve Egypt's competitiveness. Despite these achievements, the economy is still hampered by government intervention, substantial subsidies for food, housing, and energy, and bloated public sector payrolls. Moreover, the public sector still controls most heavy industry.

Facts and figures on the Egyptian economy:

GDP (purchasing power parity): $470.4 billion (2009 est.) country comparison to the world: 27 $450.1 billion (2008 est.) $419.9 billion (2007 est.)	GDP (official exchange rate): $188 billion (2009 est.)	GDP - real growth rate: 4.5% (2009 est.) country comparison to the world: 29 7.2% (2008 est.) 7.1% (2007 est.)	GDP - per capita (PPP): $6,000 (2009 est.) country comparison to the world: 133 $5,800 (2008 est.) $5,500 (2007 est.)
GDP - composition by sector: agriculture: 13.1% industry: 37.7% services: 49.2% (2009 est.)	Labor force: 25.8 million (2009 est.) country comparison to the world: 21	Labor force - by occupation: agriculture: 32% industry: 17% services: 51% (2001 est.)	Unemployment rate: 9.7% (2009 est.) country comparison to the world: 113 8.7% (2008 est.)
Population below poverty line: 20% (2005 est.)	Household income or consumption by percentage share: lowest 10%: 3.9% highest 10%: 27.6% (2005)	Distribution of family income - Gini index: 34.4 (2001) country comparison to the world: 90	Investment (gross fixed): 17.9% of GDP (2009 est.) country comparison to the world: 121
Budget: revenues: $48.86 billion expenditures: $61.61 billion (2009 est.)	Public debt: 79.8% of GDP (2009 est.) country comparison to the world: 15 86.5% of GDP (2008 est.)	Inflation rate (consumer prices): 10.1% (2009 est.) country comparison to the world: 193 18.3% (2008 est.)	Central bank discount rate: 11.5% (31 December 2008) country comparison to the world: 48 9% (31 December 2007)
Commercial bank prime lending rate: 11.82% (31 December 2008) country comparison to the world: 67 12.51% (31 December 2007)	Stock of money: $31.72 billion (31 December 2008) country comparison to the world: 27 $27.6 billion (31 December 2007)	Stock of quasi money: $112.2 billion (31 December 2008) country comparison to the world: 21 $102.6 billion (31 December 2007)	Stock of domestic credit: $126.5 billion (31 December 2008) country comparison to the world: 35 $113.9 billion (31 December 2007)
Market value of publicly traded shares: $85.89 billion (31 December 2008) country comparison to the world: 43 $139.3 billion (31 December 2007) $93.48 billion (31 December 2006)	Agriculture - products: cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats	Industries: textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures	Industrial production growth rate: 3.9% (2009 est.) country comparison to the world: 30
Current account balance: $-3.32 billion (2009 est.) country comparison to the world: 160 $-1.331 billion (2008 est.)	Exports: $22.91 billion (2009 est.) country comparison to the world: 64 $29.85 billion (2008 est.)	Imports: $43.98 billion (2009 est.) country comparison to the world: 48 $56.62 billion (2008 est.)	Reserves of foreign exchange and gold: $34.99 billion (31 December 2009 est.) country comparison to the world: 27 $33.85 billion (31 December 2008 est.)
Debt - external: $28.45 billion (31 December 2009 est.) country comparison to the world: 60 $32.12 billion (31 December 2008 est.)	Stock of direct foreign investment - at home: $66.43 billion (31 December 2009 est.) country comparison to the world: 44 $59.13 billion (31 December 2008 est.)	Stock of direct foreign investment - abroad: $12.23 billion (31 December 2009 est.) country comparison to the world: 43 $12.08 billion (31 December 2008 est.)	Exchange rates: Egyptian pounds (EGP) per US dollar - 5.6 (2009), 5.4 (2008), 5.67 (2007), 5.725 (2006), 5.78 (2005)

Source: CIA the world fact book - USA

Egypt Risk Assessment

Rating: B

Risk Assessment

The economy grew strongly in 2007 driven by domestic demand. The government's liberal approach since 2004 has fostered a climate of confidence conducive to consumption and investment. The economy has also benefited from oil country boom via their investments and emigrant worker remittances. In this context, the business environment is improving with the Coface payment incident index remaining below the world average. While the gas sector has continued to develop, manufacturing, construction, tourism, and communications have achieved excellent performance. The outlook for 2008 is bright with growth likely to reach between 7.0 and 7.5 per cent. .

The external financial situation remains healthy amid the good trend on foreign currency earnings and the increase in foreign direct investment fuelled by the privatizations. Debt service is low and Egypt is building up foreign exchange reserves. However, the fiscal deficit and public sector debt remain a source of concern. Controlling public spending and reducing the debt necessitates a spending overhaul that will take time. Regional conflicts and poverty have strengthened Islamist opposition movements. In this context social climate is tense and officials have exercised caution in pursuing reforms.

STRENGTHS

The business climate has benefited from an active reform program and a regional economic boom.
Egypt boasts diversified sources of foreign exchange (the Suez Canal, tourism, private transfers, and oil and gas exports).
Foreign exchange reserves are high.
The country enjoys the political and financial support of Western countries.

WEAKNESSES

The interest on public debt and the cost of subsidies weighs on public finances limiting the capacity for infrastructure development.
The banking system is not yet capable of meeting the economy's needs.
The tourism sector, whose revenues are of fundamental importance to the current account balance and economic growth, remains vulnerable to the terrorist menace

Performance statistics: Source: The international Monetary Fund

Subject Descriptor	Units	Scale	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Gross domestic product, constant prices	National currency	Billions	354.70	367.20	378.90	391.00	407.00	425.20	454.30	486.50	521.39	545.89	570.44
Gross domestic product, constant prices	Annual percent change		5.38	3.52	3.19	3.19	4.09	4.47	6.84	7.09	7.17	4.70	4.50
Gross domestic product, current prices	National currency	Billions	340.10	358.70	378.90	417.50	485.30	538.50	617.70	744.80	896.50	1,038.60	1,182.62
Gross domestic product, current prices	U.S. dollars	Billions	99.16	95.40	87.51	81.38	78.80	89.79	107.38	130.35	162.62	187.96	208.46
Gross domestic product, deflator	Index		95.88	97.68	100.00	106.78	119.24	126.65	135.97	153.09	171.95	190.26	207.32
Gross domestic product per capita, constant prices	National currency	Units	5,603.52	5,675.47	5,740.91	5,809.81	5,932.95	6,074.29	6,371.67	6,610.05	6,933.32	7,116.81	7,291.09
Gross domestic product per capita, current prices	National currency	Units	5,372.83	5,544.05	5,740.91	6,203.57	7,074.34	7,692.86	8,663.39	10,119.57	11,921.54	13,540.36	15,115.71
Gross domestic product per capita, current prices	U.S. dollars	Units	1,566.42	1,474.48	1,325.85	1,209.27	1,148.71	1,282.77	1,505.96	1,771.00	2,162.45	2,450.41	2,664.41
Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP	Current international dollar	Billions	247.52	262.03	274.76	289.63	309.65	333.35	367.76	405.11	443.43	471.51	500.25
Gross domestic product based on purchasing-power-parity (PPP) per capita GDP	Current international dollar	Units	3,910.25	4,049.93	4,162.96	4,303.62	4,513.88	4,762.12	5,157.97	5,504.17	5,896.67	6,147.12	6,393.94
Gross domestic product based on purchasing-power-parity (PPP) share of world total	Percent		0.59	0.60	0.60	0.60	0.59	0.59	0.60	0.62	0.64	0.66	0.67
Implied PPP conversion rate	National currency per current international dollar		1.37	1.37	1.38	1.44	1.57	1.62	1.68	1.84	2.02	2.20	2.36
Inflation, average consumer prices	Index, 2000=100		100.00	102.43	104.92	108.28	117.06	127.36	132.71	147.25	164.48	191.20	207.36
Inflation, average consumer prices	Annual percent change		2.85	2.43	2.43	3.21	8.11	8.80	4.20	10.95	11.70	16.24	8.45
Inflation, end of period consumer prices	Index, 2000=100		100.00	102.23	105.04	109.26	122.05	127.76	137.01	148.73	178.75	196.55	212.27
Inflation, end of period consumer prices	Annual percent change		2.54	2.23	2.75	4.01	11.71	4.68	7.24	8.55	20.18	9.96	8.00
Population	Persons	Millions	63.30	64.70	66.00	67.30	68.60	70.00	71.30	73.60	75.20	76.70	78.24

Technological Environment:

Egypt

's IT market will stay hardware dominated, with spending on PCs sustained by initiatives like the 'Computer for Every Student' and 'PC for Every Home' programs. Hardware accounted for an estimated 62% of Egypt's IT spending last year. Households account for 20-25% of unit sales, with almost 1-1.5mn households said to possess a computer at present. .

Sociocultural Environment:

Egypt

’s total population stood at 80.3 million. Out of this approximately 90% are Muslims while the remaining are Christians. Most of the population inhabits the area near the Nile River and almost half of Egypt’s population is urban, living in the densely populated cities such as Cairo and Alexandria.

One of

Egypt

’s biggest socio-economic problems is the high unemployment rate which has been growing over the years. The unemployment rate, which has averaged more than 10% over a decade, increased to over 12% in 2005–06. With the population growing at 1.8% per annum, the economic growth of 4.4% is not enough to curb the unemployment rate. While the average growth in employed population during the last five-year period stood at 2.3%, the rise in unemployed population has been much higher during the same period averaging around 8%. The high rates of unemployment and population growth coupled with meager wages in most of the public sector companies contribute to the poverty levels, with close to 20% of Egypt’s population below the poverty line. A big challenge for Egypt in the near future will be to create jobs, as the population within the 20–45 age-group constitutes around 65% of the total population.

The education indicators of

Egypt

project a poor image of the education system. Only about 58% of the population is literate and there is a big difference in the literacy rates for males and females. Male literacy rate is around 68%, while female literacy rate is just about 47%, indicative of gender disparity. The National Council for Women, a nodal government agency that works for the welfare of women in Egypt, aims to completely eradicate illiteracy among females.

The healthcare system in

Egypt

is underdeveloped with only around 29% of the population covered by governmental health insurance. Egypt’s public healthcare system is under-funded, with the government committing only around $1 billion in 2005–06 for upgrading the healthcare sector, which represents a meager 2.7% of the total state budget. The ministry of health is the largest institutional financier providing free healthcare services in Egypt but its reach is limited. Almost 65% of the Egyptian people pay for their own insurance through private and other health insurance organizations. The total spending on healthcare in Egypt is only about 4% of its GDP.

Political Environment:

Political structure

The Egyptian Constitution provides for a strong executive. Authority is vested in an elected president who can appoint one or more vice presidents, a prime minister, and a cabinet. The president's term runs for 6 years. Egypt's legislative body, the People's Assembly, has 454 members--444 popularly elected and 10 appointed by the president. The constitution reserves 50% of the assembly seats for "workers and peasants." The assembly sits for a 5-year term but can be dissolved earlier by the President. There also is a 264-member Shura (consultative) Council, in which 88 members are appointed and 174 elected for 6-year terms. Below the national level, authority is exercised by and through governors and mayors appointed by the central government and by popularly elected local councils.In March 2007, Mubarak introduced several constitutional amendments that would increase presidential powers and, more significantly, ban any political parties based on religion, race, or ethnicity. The amendments were put to a popular referendum and, despite low voter turnout and boycotts by opposition groups, passed with 75.9% approval.

Main political parties

Environmental laws

According to the Law 4/1994 for the Protection of the Environment, the Egyptian Environmental Affairs Agency (EEAA) was restructured with the new mandate to substitute the institution initially established in 1982. At the central level, EEAA represents the executive arm of the Ministry.
The Principal Functions of the Agency Include:
.	Formulating environmental policies.
.	Preparing the necessary plans for Environmental protection and Environmental development projects, following up their implementation, and undertaking Pilot Projects.
.	The Agency is the National Authority in charge of promoting environmental relations between Egypt and other States, as well as Regional and International Organizations.

Foreign trade

Tax Rate

The standard rate of corporate income tax is 40%. The rate is 32% on profits arising from export operations and on profits of an industrial company as long as they arise from its industrial activities.
Withholding Tax
Any business operating in Egypt must withhold against any payments-- made to any contractor or supplier of goods or services-- the following basic percentages:
Contracting and supplying: 1%
Services: 3%
Commissions: 10%
Professional fees (under LE 500): 10%
Professional fees (over LE 500): 15%
Leasing of property or selling of goods for trading or manufacturing: 1% - 5% (to be added on the payee's tax liability account.
Corporate Tax Exemptions and Deductions

Almost all business expenses are deductible including depreciation, interest, royalties, rent, profit sharing payments to employees, legal expenses, pension and Egyptian state social insurance contributions.
Profits of companies located in the free zones.
capital gains are applicable in some cases of asset replacement.
All tax holidays granted under Investment Law No.8/1997.
Joint stock companies employing more than 50 employees and maintaining proper books of accounts are granted a tax holiday for a five-year period. Also, hotels and tourist projects are granted a tax holiday for a five-year period which can be extended to ten years if the project is located in a remote area.
For joint stock companies listed in the stock market, a deductible allowance is made that is equal to interest income, which can be earned on a bank deposit (currently 10.5 percent).
Ninety percent of income generated by companies from their movable capitals which have been subject to the new tax imposed by Law 187 of 1993.

Personal Income Tax
Taxable Income
Tax Law No. 187 of 1993 distinguishes among the following categories of income of individuals (as well as partners in partnerships):

Salaries and wages.
Commercial and industrial profits
Income from immovable property
Income from movable capital
Noncommercial profits.

Taxation of Foreigners

Social Insurance Contribution Rates

	Employer(%)	Employee(%)
On basic monthly salary up to L.E. 500 / month	26	14

On variable pay (such as production incentive bonuses)-up to L.E. 500/month	24	11

Labor force and laws

Labor force

Government, armed forces & public sector : 36%

Agriculture : 34%

Private sector : 30%

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