I-Overview: ABC was a public company originally found in 1897. that has been nationalized in 1963. until it had been privatized in 1997 and acquired by the Luxor Investment group represented by Ahmed el Zayat as a CEO and board president. Luxor group is an American investing group concentrating on investing more than the concern itself. Zayat’s vision and aims: Marinading local market laterality and transforming the company from a domestic beer maker to a taking border transnational drinks company. II-Situation Analysis: -General Environment Analysis oDemographic Trends? 350 million Muslim in the MENA part.
? Platform for easy entree to many states? Population size: 60. 2 million in 1994? Age construction: 60 % under 25 old ages? Cultural mix/religion: 94 % Muslims and 6 % Coptic Christians oEconomic Trends? GDP increasing steadily ( 6. 11 % ) •Average per capita is USD 50/ month •Inflation decreased from 21. 10 % in 1992 to 8. 3 % in 1996 •Different authorities tendency: deregulating of the economic system? Denationalization of publically owned endeavors? Liberalization of fiscal markets and trade? Trade liberalisation attempts? Removing the ceiling on nominal involvement rates? Depreciation of the EGP against the dollar oPolitical Legal Trends.
? Tax holidays for freshly manufactured or upgraded workss •6 old ages revenue enhancement vacation for Sharkia works •10 old ages revenue enhancement vacation for Nile Brewery? High Tax on imported beer and liquors •1200 % for non-touristic countries and 300 % for touristic. ? High responsibilities on vinos were to take topographic point for the coming 4 old ages. ? Stable political environment: peaceable dealingss with neighbouring states & A ; no military differences? Sale of intoxicant is legal. ? The Egyptian labour jurisprudence governs the expiration of lasting or impermanent employees ; accordingly a company can non easy fire an employee. oSocio-cultural tendencies? Religious and conservative society?
Alcoholic drinks were non culturally accepted as it was banned by Islam? Anti-secular motions III-Industry Analysis ( Porter’s theoretical account ) a. Menace of new entrants I. Government promise no more entrants for 2 more old ages ii. High initial costs for new rivals: 1. Building distribution web ( furthermore. it was about impossible to open new mercantile establishments. so acquisition of already available alcoholic mercantile establishment was the practical solution ) 2. Constructing new workss B. Competition among company I. Monopoly. no local rivals ii. Protection from imported merchandises by revenue enhancement barriers 300 % for touristic locations and 1200 % for other mercantile establishments. degree Celsius.
Menace of utility merchandise i. Alcoholic market: no viing replacements were available two. Non-Alcoholic Malt Based: many merchandises were available. but ABC merchandises were differentiated because they are malt based which were perceived as healthier and as more natural than soda sugary drinks. three. Non-Alcoholic soda drinks: many replacements were available. Were executing ill. d. Bargaining power of purchasers i. Buyers are limited in pick between the ABC low-cost drinks or highly expensive imported drinks. e. Bargaining power of providers i. Dina Modern Agricultural company 41 % which represents a large per centum of ABC’s supplies.
Any struggle will hesitate a menace on ABC such as deficit in supplies and break of production. IV-ABC Market analysis: a. NAMB i. ABC has market laterality since its origin. B. Beer I. Offered as proprietary local trade names. trade names produced under licence and imported labels. two. ABC has 99. 2 % market portion c. Wine I. Estimated market demand of 2 million instances ( current is merely 1 million instance ) two. 188 % addition in ingestion from 1999 to 2000 ( after heightening quality and packaging ) three. Imports declined by 15 % V-Internal Analysis a. Fiscal I. Good fiscal indexs 1. Doubled net incomes per portion 2.
350 % addition of the book value per portion 3. Quadrupled its production capacity 4. Introduced more than 3o new merchandises 5. Consistent one-year net incomes growing from 25 % -30 % 6. 27 % returns on invested capital 7. 34 % net border B. Selling: I. Deep apprehension of the market. its sections and its demands. two. Bandwidth covering the market needs. 1. Liquors 2. Wine 3. Alcoholic Beer 4. Non Alcoholic Beer ( NAMB ) 5. Soft Drinks three. High growing rates in some markets: 1. In vino: 30 % growing rate per anuum c. HR I. Professional squad of directors with two. Stocks option for employees and directors to pull extremely qualified members iii.
Interests alliance of employees with direction and stakeholders. d. Brand I. Strong trade name presence and consciousness in the local market two. Association with international trade names such as Carlsberg. three. Brand breadth: it had a merchandise to run into every gustatory sensation. e. Distribution web I. Strong distribution web 1. Range: 1200 employee. 500 truck. & A ; 17 depots 2. Gouna Distribution and Trading 3. Agencies ii. Super Stores ( 43 shops ) three. Home bringing f. Production i. Upgraded and expanded installations 1. Sharkia Brewery ( NAMB & A ; CSD ) 900. 000 hl 2. Obour Brewery ( Alcoholic Beer ) 600. 000 hl 3.
Badr ( NAMB ) 675. 000 hl 4. Ginaclis ( vino ) 5. 500. 000 litres ( storage capacity ) 5. Ginaclis ( Spirits ) 1. 050. 000 litres ( distillment capacity ) two. Affiliation with expertness organic structures improved choice 1. Supervision with Ginestet Groupe on vino production 2. Carlsbery squad on beer production g. Management Performance: I. Classified as one of the best 200 best managed little concerns in 2001 two. Honored with Meed’s Business-to-consumer merchandise fabricating award in 2002 for concern excellence. VI-SWOT: Strengths: -ABC’s monopoly place in the local market -Regional presence and laterality for the NAMB line.
-Excellent fiscal public presentation -Excellent profitableness rates -Wide assortment of merchandises functioning every demand -Highly qualified directors and employees -Well established distribution & A ; retail web ( can be considered as one of the stongest barriers against new entrants ) Weaknesses: -ABC’s portion monetary values was undervalued Opportunities: -A possible NAMB market of 350 million Muslim in the MENA part market -A possible market of 11 million Coptic Christians in Egypt -Tourism recovery in the part taking to an addition in ingestion -Increase in the ingestion rates of drinks -Increase in the GDP of local market.
-The addition in per centum of disposable income -Government promise of non leting new entrants for the coming 2 old ages Threats: -Demand instability due to spiritual and wellness concerns every bit good as dependance on touristry -Removing revenue enhancement barriers on imported drinks -Strict prohibition in publicizing alcoholic merchandises in the local media -Religious motions against alcoholic drinks -Repulsion of employees due to spiritual political orientation. Strategic Quest: Al Zayat and ABC at hamlets. lacerate between selling ABC or purchasing ABC from Luxor Group! Strategic Alternatives: A. Selling ABC to Heineken Professionals:
-ABC would leverage Heineken in: a. International concern experience and strong bridgehead in 160 state b. Facilitation of ABC to entree international markets leveraging Heineken resources such as distribution webs. selling channels. trade name association. brand/product debut. etc -Faster growing and enlargement rates by working Heineken resources. -Maximizing value for stockholders Cons: -The company would be perceived as a foreign entity. which might impact trade name trueness. -ABC. will go one of many subordinates at Heineken which might hold negative effects on ABS such as: degree Celsius.
Bing used in transportation costs operations. doing ABC function other subordinates and doing losingss d. Serving the planetary strategic ends of Heineken which might non ever for the best involvement of ABC. B. MBO: Al Zayat geting ABC jointly with Banque Misr Pros: -ABC go oning its success narrative leveraging the experience and tactics of el Zayat. -With the Banque Misr joint venture. the company would be perceived as national entity and would have more support from the authorities and citizens. -Maximizing value for stockholders if acquired with the same sum as Heineken group. Cons: -Slower international enlargement.
-Religious motion coercing Banque Misr from drawing out from alcoholic ( or any non-Islamic friendly concerns ) . Recommended Action: I would urge selling ABC to Heineken because Heineken’s resources and international presence will assist ABC turn in a sky rocketing velocity. At the same clip. Heineken’s acquisition maximizes the stockholders value ( i. e. Luxor Group ) who originally appointed Al Zayat for this intent. However. ABC and Al Zayat have to do certain that the Heineken’s schemes. ends and involvements are aligned with ABC’s and non working ABC to function any other subordinates without a return.
Although. this can non be guaranteed. yet a deep professional analysis can calculate the type of the relation and if the involvements are aligned or conflicting. If Heineken’s involvements were conflicting with ABC. so ABC should give Heineken’s purchase and resources and expression for another purchaser whose involvements are more aligned with ABC. Note: Harmonizing to the instance. Heineken decided to implement the five twelvemonth program that has been drawn up earlier by the ABC. which might be a positive index that ABC would go on its roadmap for the coming 5 old ages.
