Elsewedy Electric Cables International Business and Global Strategy Final Version

El Sewedy Electric Cables
(International Strategy Planning)
Ahmed Mahmoud Ahmed Hammad

Amira Hassanien Taki
Supervised by: Dr. Saneya El Galaly, PhD

Table of Contents
Table of Contents.........................................................................................................................................1
I. Introduction.........................................................................................................................................4
El Sewedy Electric Cables Company’s Timeline of Key Events.................................................................5
II. Current Situation.................................................................................................................................5
Current Performance................................................................................................................................5
Strategic Posture......................................................................................................................................5
III. Corporate Governance.....................................................................................................................7
Board of Directors...................................................................................................................................7
Top Management.....................................................................................................................................8
IV. External Environment: Opportunities and Threats...........................................................................9
Societal Environment..............................................................................................................................9
1) Political – Legal...........................................................................................................................9
2) Economy......................................................................................................................................9
3) Socio-cultural.............................................................................................................................10
4) Technology................................................................................................................................10
Task Environment (Industry).................................................................................................................10
1) Threat of new entrants: Low......................................................................................................11
2) Bargaining power of buyers: Low..............................................................................................11
3) Threat of substitute products or services: Low...........................................................................11
4) Bargaining power of suppliers: Low..........................................................................................12
5) Rivalry among competing firms: Moderate...............................................................................12
V. Internal Environment: Strengths and Weaknesses..............................................................................17
Corporate Structure................................................................................................................................17
El Sewedy Electric Cables Page 1 of 73

Corporate Culture..................................................................................................................................17
Corporate Resources..............................................................................................................................19
1) Marketing..................................................................................................................................19
2) Finance......................................................................................................................................24
3) Research & Development..........................................................................................................29
4) Operations and Logistics............................................................................................................30
5) Human Resources Management.................................................................................................31
VI. Strategic Audit “External”.............................................................................................................37
1) Review Mission Statement........................................................................................................37
2) Drivers for Globalization:..........................................................................................................38
I. Recommended Market.......................................................................................................................43
II. Chile External Environment: Opportunities and Threats...................................................................48
Societal Environment............................................................................................................................48
1) Political – Legal.........................................................................................................................48
2) Economy....................................................................................................................................49
3) Socio-cultural.............................................................................................................................49
4) Technology................................................................................................................................49
5) Environmental...........................................................................................................................49
Task Environment (Industry).................................................................................................................50
1) Threat of new entrants: Low......................................................................................................50
2) Bargaining power of buyers: Low..............................................................................................50
3) Threat of substitute products or services: Low...........................................................................50
4) Bargaining power of suppliers: Low..........................................................................................50
5) Rivalry among competing firms: Moderate...............................................................................51
III. Analysis.........................................................................................................................................55
TOWS Matrix........................................................................................................................................55

BCG.......................................................................................................................................................57
GE-Mckinsey Directional Matrix IE-Matrix (Internal –External Matrix)..............................................58
SPACE MATRIX...................................................................................................................................59
GRAND STRATEGY MATRIX............................................................................................................61
IV. QSPM (quantitative Strategic Planning Matrix)............................................................................62
V. Defining International Strategis:........................................................................................................64
a. Exporting...........................................................................................................................................64
b. Foreign production............................................................................................................................64
c. Licensing:..........................................................................................................................................64
d. Joint ventures.....................................................................................................................................65
e. Ownership:........................................................................................................................................66
VI. Recommended Specific Strategy:..................................................................................................66
1. Business Strategy:..........................................................................................................................66
2. Functional Strategy:.......................................................................................................................67
b. Operational Strategy......................................................................................................................67
VII. Recommended Measure.................................................................................................................68

I. Introduction
The purpose of this report is to analyze El Sewedy Electric Cables Company’s internal and
external environment and come up with a relevant new strategy that could be implemented
by the company in the near future in order to go globally.
El Sewedy Electric Cables Co has become a significant contributor to the economic growth
in Egypt through its development into a well-established group with extensive holdings.
With the goal of providing our customers a one-stop solution in terms of Designing,
Engineering, Procurement and Construction.
Even during lean economic times, El Sewedy Electric Cables Co has been able to maximize
its commitment to improve efficiency by ensuring that its management possesses the
expertise and talent necessary for the most critical business needs and has thus succeeded in
maintaining a solid financial position.
Therefore, the group has succeeded in becoming, a leader in cables manufacturing. In
addition to: introducing the concept of Energy Management in order to improve energy
efficiency and reduce energy use, thereby reducing costs.
Our turnover has been rapidly rising during the past few years to reach 15.17 billion EGP in
2011; also our Cables production capacity is the first highest one in the region, with 282
thousand tons/annum in 2011.

El Sewedy Electric Cables Company’s Timeline of Key Events
Year Event
1938 El Sewedy family started its business as a trader in electrical equipment
1960 Turning into a distributor for the only cables manufacturing at that time
1984 Egypt's first private sector cables factory Arab Cables
1996 Established the second factory, Egytech Cables
Established the first plant for producing PVC compounds and master batch,
Egyplast
1997 Establishing Egypt’s first special cables , Fiber Glass Poles and Telecom
Solutions production plant
Beginning production at power cable joints and modular terminators factory
Producing the 220KV high voltage underground cable for the first time in Egypt
Established Elastimold Egypt, a joint venture with ELastimold-Thomas & Betts
1998 Establishing Egypt’s first copper rods production plant
Established SEDCO, for Cable Accessories
2007 Start of production at United Wires (galvanized steel wires) in Egypt
Acquisition of 100% of Al Wataniya Cables in Egypt
2008 Acquiring a 30% stake in M. Torres Olvega, a leading Spanish wind energy
turbine manufacturer
Establishing Egypt’s first wind energy turbine and tower production facility
Acquiring PSP, an Egyptian engineering company specializing in power
generation projects
Acquiring Egyptian Co. for Electrical Insulators (ECMEI), a producer of electric
ceramic insulators
Establishing Egypt’s first dry transformer production facility
2009 Established El Sewedy Transformers Egypt
2010 The corporate name has changed from El Sewedy Cables to El Sewedy Electric
Acquired total 90% stake in M.Torres Olvega Industrial
Established Siag El Sewedy Towers (SET), a joint venture with SIAG
Acquired 3W Networks
II. Current Situation
Current Performance
1. One of the largest producers of cables (Market leader)

2. For the nine months ended 30 September 2019, El Sewedy Electric Co revenues
increased 14% to EGP34.55B. Net income decreased 22% to EGP2.72B
Strategic Posture
1. Vision: To Be Your First Choice.

2. Mission: Sharing Success With Our Clients Through Producing Worldwide
Cables That Meet Their Needs And Exceed Expectations.
3. Values:
 Quality
Quality of our products, operations and people contribute an important added
value to our customers.
 Performance
We live our values in all what we do. We expect the best performance from
ourselves and one another.
 Customer Focus
We understand the needs of all of our customers; we meet or exceed their
expectations all the time.
 Environment Responsibility
We contribute to preservation of the global environment.
 Team Work
We think & work together to accomplish more than we can do on our own.
 Integrity & Trust
We say what we mean and mean what we say, we honor our word and keep
our commitments.
 Working Safely
We work safely to protect ourselves and those with whom we work
4. Objectives: Owing to a successful growth rate year after year and aligning with
the expansion strategy of the company, by operating in 8 diversified energy
segments; Cables & Accessories, Electrical Products, Energy Measurement
&Management, Transformers, Communications, Wind Energy Generation, Solar
Energy Solutions, Projects & Development.
5. Strategies:

 Maintain the industry leading position, through producing cables and
executing projects with high Quality standards, conforming to international
standards & Customers requirements, continuous learning and improvement,
benchmarking and exchanging experience both internally and externally..
 Preserve our manpower, through implementing Occupational Health, Safety
and Environmental legal and other requirements through that our company
put restriction to limit Environmental pollution and reduce injuries and
occupational diseases to preserve the health and safety of our manpower in
order to make work environmental safer
 Keep continuous improvement of our performance.
6. Policies:
 High quality product is the priority.
 Creating economies of scale in operations.
 Gaining control over supply chain and distribution channel.
 Sharing in country mega projects.
III. Corporate Governance
El Sewedy Electric believes that a clear governance structure is essential to

continued growth and success. Corporate governance is a system of rules,
practices and processes by which a company is directed and controlled. This
involves balancing the interests of many stakeholders such as shareholders,
management, customers, suppliers, financiers, government and the community at
large. Governance structure facilitates quick decision-making driven by the scale,
scope and complexity of the business. The structure allows for a clear separation
between management and shareholders and, minimizes conflicts of interest
throughout all operations. They believe clearly defined operational structures
facilitate rapid and effective decision-making and result in greater accountability
and improved profit margins.

Board of Directors
1. Board members:
 Sadek Ahmad Sadek El Sewedy; Non-Executive Chairman of the Board
(Since 2011)
 Ahmad Ahmad Sadek El Sewedy; Managing Director, Executive Member of
the Board
 Mohammed Ahmad Sadek El Sewedy; Executive Member of the Board
 Amr Mohammed Ahmad Labib; Executive Member of the Board (Since 2015)
 Hisham Hussein Al Khazendar; Independent Member of the Board
 Ahmad Fikry Abdul Wahab; Independent Member of the Board (Since 2014)
 Abdul Rahman Ahmad Ahmad Sadek El Sewedy; Executive Member of the
Board (Since 2017)
 Ahmad Sadek Ahmad Sadek El Sewedy; Non-Executive Member of the Board
(Since 2017)
 Ahmed Saad El Din Abou Hendia; Independent Member of the Board (Since
2017)
 Amr Nabil Mohammed Othman; Independent Member of the Board (Since
2017)
2. Publicly traded on the Egyptian Stock Exchange; 68% of shares owned by the
three founders and 32% free float (available for exchange)
Top Management
Top management approach to focus on key acquisitions and partnerships, while
increasing revenue base through integration and diversifying its product and service
portfolio.
Strong branding to ensure products and services are easy to use and of high quality
and create scale economies to continue to lead the industry in terms of innovation
1. Ahmed Saad El Deen Abou Hendya; Independent Member of the Board (Since
2017)
2. Hisham Hussein Al Khazendar; Independent Member of the Board

3. Amr Nabil Mohammed Othman; Independent Member of the Board (Since 2017)
4. Ahmad Fikry Abdul Wahab; Independent Member of the Board (Since 2014)
5. Ahmad Sadek Ahmad Sadek El Sewedy; Non-Executive Member of the Board
(Since 2017)
6. Amr Mohammed Ahmad Labib; Executive Member of the Board (Since 2015)
7. Tarek Yahya Mohammed Ahmad; Director of Investor Relations, IR- Contact
(Since 2011)
8. Abdul Rahman Ahmad Ahmad Sadek El Sewedy; Executive Member of the
Board (Since 2017)
9. Mohammed Ahmad Sadek El Sewedy; Executive Member of the Board
10. Sherif Mohammed Mohammed El Zini; Chief Financial Officer (Since 2015)
11. Ahmad Ahmad Sadek El Sewedy; Managing Director, Executive Member of the
Board
12. Sadek Ahmad Sadek El Sewedy; Non-Executive Chairman of the Board (Since
2011)
IV. External Environment: Opportunities and Threats
Societal Environment
1) Political – Legal
 Political stability, that promotes economic growth and which leads to increased demand
(O)
 New legislation, such as the Reconciliation Law in building violations, which leads to the
delivery of electricity to a larger number of units that leads to an increase in demand (O)
 Central bank initiatives
a. Real estate financing initiative (O)
b. Small and Medium Enterprises Support Initiative (O)
 War on terrorism, which impedes development in these regions (T)
 Regional instability, that hinder FDI inflow to the region as a whole (T)

1) Economy
 GDP Growth (5.6%) (O)
 Population Growth (2%), The more the population increases the more is the demand on
power & electricity (O)
 Unemployment decreased to 7.5 %, that foster purchasing power thus foster demand (O)
 Decreasing Interest rate , which leads to enhanced borrowing and, consequently, to
enhanced production and operation (O)
 Energy price increases, due to cancelation of energy subsidies (T)
 Inflation Decreases, that foster purchasing power thus foster demand (O)
 Appreciating of Egyptian currency, that reinforce purchasing of imported raw materials
also foster purchasing power thus foster demand (O)
 Appreciating of Egyptian currency, that impede exporting of final products (T)
 Establishing new cities (O)
 Establishing new power stations (O)
 New national mega projects (O)
a. Tunnels of the Suez Canal
b. Road network development
 Electrical interconnection projects with neighboring countries (O)
 Worldwide Recession (T)
2) Socio-cultural
 Slum development projects (O)
 Nominal wage growth fell below inflation (T)
 Poverty line raising, as population living below the national poverty line in FY18
increased to 32.5 % (T)
3) Technology
 Changing the landline telephone cables from copper to optical fibers (O)
 Renewable Energy, generation power from renewable sources (wind and sun) (O)

Task Environment (Industry)
Cost Structure:
Affected by raw material (copper and aluminum) imported from foreign market leading
the company to be exposed to foreign exchange risk (T).
Maturity:
In the Field for over 70 years puts the company under the matured industry (T).
Cyclicality:
The Company works in a cyclical industry which basically means that it is sensitive to
any change in the economy (T).
Profitability:
It is a profitable industry in Egypt as it generates an extraordinary high volume of profit
(O).
Dependence:
High dependent on the prices of the raw materials makes it very risky for any company in
this industry (T).
1) Threat of new entrants: Low

 Huge production capabilities, through establishing many factories thus
gaining market share that hinder new competition (O)
 Company quality certificate make it difficult for new market entrants (O)
 Huge amount of the required capital to establish new factory (O)
4) Bargaining power of buyers: Low

 Large customer base (O)
5) Threat of substitute products or services: Low

 No substitute for electric conducting cables (O)
 Wi-Fi is a considerable substitute for network cables (T)

6) Bargaining power of suppliers: Low
 High power over supply chain and distribution, through backward integration
(O)
 High distribution power (O)
7) Rivalry among competing firms: Moderate

 Industry leader (O)
 Largest market share; through making backward and forward integration
foster company position (O)
 Increased Competition, that led to lower profitability per ton, and longer
average collection periods (T)

Pool of Opportunities & Threats
Opportunities Threats
O1: Political stability T1: War on terrorism
O2: New legislation
O3: Real estate financing initiative T2: Regional instability
O4: SMEs Support Initiative
O5: GDP Growth
O6: Population Growth T3: Energy price increases
O7: Unemployment decrease
O8: Decreasing Interest rate T4: Worldwide Recession
O9: Inflation Decreases
O10: Appreciating of Egyptian currency
T5: Nominal wage growth fell below inflation
O11: Establishing new cities
O12: Establishing new power stations
O13: New national mega projects T6: Poverty line raising
O14: Electrical Integration through borders
O15: Slum development projects T7: Foreign exchange risk
O16: Replacing telephone cables
O17: Renewable Energy
O18: High volume of profit T8: Matured industry
O19: Huge production capabilities
O20: Quality certificate T9: Cyclical industry
O21: Required Huge capital
O22: Huge customer base T10: Raw material prices sensitivity
O23: No substitute for electric cables
O24: High power over supply chain
O25: High distribution power T11: Wi-Fi substitute
O26: Industry leader
O27: Largest market share T12: Increased Competition
Opportunities & Threats Strategic Myopia (Filtration)
These factors will be removed as it has no impact on organization:

T2: Regional instability

Pool of Opportunities & Threats After Strategic Myopia (Filtration)
O1: Political stability T1: War on terrorism
O2: New legislation
O3: Real estate financing initiative T3: Energy price increases
O4: SMEs Support Initiative
O5: GDP Growth
O6: Population Growth T4: Worldwide Recession
O8: Decreasing Interest rate T5: Nominal wage growth fell below inflation
O9: Inflation Decreases
O10: Appreciating of Egyptian currency
T6: Poverty line raising
O11: Establishing new cities
O12: Establishing new power stations
O13: New national mega projects T7: Foreign exchange risk
O14: Electrical Integration through borders
O15: Slum development projects T8: Matured industry
O16: Replacing telephone cables
O17: Renewable Energy
O18: High volume of profit T9: Cyclical industry
O19: Huge production capabilities
O20: Quality certificate T10: Raw material prices sensitivity
O22: Huge customer base T11: Wi-Fi substitute
O25: High distribution power T12: Increased Competition
O26: Industry leader
O27: Largest market share

External Factors Priority Matrix (Prioritization)
O5: GDP Growth O19: Huge production O11: Establishing new

O6: Population Growth capabilities cities
O7: Unemployment O20: Quality certificate O12: Establishing new
decrease O22: Huge customer base power stations
T8: Matured industry O23: No substitute for O13: New national mega
H
T9: Cyclical industry electric cables projects
T11: Wi-Fi substitute O26: Industry leader O14: Electrical Integration
O27: Largest market share through borders
O15: Slum development
projects
Probability O1: Political stability O8: Decreasing Interest O16: Replacing telephone
of O4: SMEs Support Initiative rate cables
occurrence O10: Appreciating of O9: Inflation Decreases O17: Renewable Energy
M Egyptian currency T3: Energy price increases O24: High power over
T1: War on terrorism T5: Nominal wage growth supply chain
T6: Poverty line raising fell below inflation O25: High distribution
power
O2: New legislation O18: High volume of T10: Raw material prices
O3: Real estate financing profit sensitivity
initiative O21: Required Huge T12: Increased
L
capital Competition
T4: Worldwide Recession
T7: Foreign exchange risk
L M H
Probable impact on organization
*Factors exists in Low Priority (colored) Cells will be excluded.

EFE (External Factor Evaluation)
Key External Factors Weight Rating (1 – 5) Weighted Score

Opportunities
O5: GDP Growth 0.02 5 0.10
O6: Population Growth 0.02 5 0.10
O7: Unemployment decrease 0.01 5 0.05
O8: Decreasing Interest rate 0.02 4 0.08
O9: Inflation Decreases 0.01 4 0.04
O11: Establishing new cities 0.10 5 0.50
O12: Establishing new power stations 0.10 5 0.50
O13: New national mega projects 0.10 5 0.50
O14: Electrical Integration through borders 0.10 5 0.50
O15: Slum development projects 0.10 5 0.50
O16: Replacing telephone cables 0.10 5 0.50
O17: Renewable Energy 0.02 4 0.08
O19: Huge production capabilities 0.01 5 0.05
O20: Quality certificate 0.01 4 0.04
O22: Huge customer base 0.01 4 0.04
O23: No substitute for electric cables 0.01 4 0.04
O24: High power over supply chain 0.02 3 0.06
O25: High distribution power 0.02 3 0.06
O26: Industry leader 0.05 4 0.20
O27: Largest market share 0.04 3 0.12
Threats
T3: Energy price increases 0.03 1 0.03
T5: Nominal wage growth fell below inflation 0.01 2 0.02
T8: Matured industry 0.02 1 0.02
T9: Cyclical industry 0.02 1 0.02
T10: Raw material prices sensitivity 0.01 2 0.02
T11: Wi-Fi substitute 0.01 3 0.03
T12: Increased Competition 0.03 1 0.03
Total Score 1 4.23
*Weights and ratings scale have been created according to the Strategic Audit Guide

V. Internal Environment: Strengths and Weaknesses
Corporate Structure
The Wires and Cables sector represents the largest sector of the group with 81.5% of total
revenues
 Egytech
 United Metals
 United Wires
 United Industries
 Elsewedy Cables
o Egypt
o Algeria
o KSA
o Syria
o Ethiopia
o Yemen
 Doha Cables
 Libya Cables
 Giad Elsewedy Cables
 UEIC Elsewedy
.
Corporate Culture
Core Values
Quality
Quality of products, operations and people contribute an important added value to customers
Performance
Live our values in all what we do. We expect the best performance from ourselves and one
another

Customer Focus
We understand the needs of all of our customers; we meet or exceed their expectations all the
time.
Environment Responsibility
We contribute to preservation of the global environment.
Team Work
We think & work together to accomplish more than we can do on our own.
Integrity & Trust

We say what we mean and mean what we say, we honor our word and keep our
commitments.
Working Safely
We work safely to protect ourselves and those with whom we work.
Five values that guide operations and help us achieve our mission.
1. Integrity
 Be ethical, honest and transparent
2. Customer Satisfaction
 Offer an exceptional customer experience locally and globally  Deliver quality
products and services and innovative solutions
3. Excellence
 Excel in every aspect of our business
 Approach challenges with a determination to succeed
4. Ownership, Commitment and Collaboration
 Assume responsibility for actions and decisions
 Execute and deliver with a sense of urgency
 Demonstrate equality, humility and respect for others
 Collaboration and teamwork

5. Innovation
 Identify, develop and deploy leading edge technology
 Pursue improvement tools
Corporate Resources
1) Marketing
The Wires and Cables sector represents the largest sector of the group with 81.5% of
total revenues.
Wires and Cables includes the manufacturing of:
Power Cables Special Cables

Winding Wires Raw Materials
All products are provided by factories operating under El Sewedy Cables:

 United Industries
Product Range:
Special Cables
Magnet Wire
Fiber Optics
Magnet & varnish wire
Locations
United Industries has its factory located at 10th of Ramadan City, Industrial zone
A3, 60 km east of Cairo with expressways linking it to Egypt’s major
Mediterranean and Red Sea ports.
The Head office is located in: Plot no. 27, 1st District, 5th Settlement, New
Cairo, Cairo – Egypt
 United Wires
Product Range:
Low Carbon Galvanized Steel Wires
High Carbon Galvanized Steel Wires
Locations
Factory: Industrial city A3, 10th Of Ramadan City, Egypt

 Egytech Cables
Product Range:
Designing, manufacturing and supplying of:
Medium voltage cables up to 33 kV
High voltage cables up to 150 kV
Extra high voltage cables up to 220 kV
Over head transmission lines up to 500 kV
Optical Ground Wires, 220 kV
Turn Key Projects
Optical Ground Wires Projects
Locations
Factory: 10th of Ramadan city , A3-Industrial zone
Head office:Plot no. 27, 1st District, 5th Settlement, New Cairo, Cairo – Egypt.
 EgyTech A1
Product Range:
Control and low voltage power cables up to 1 KV
Medium voltage power cables up to 36 KV
High and Extra high voltage power cables up to 150 KV
Overhead transmission lines
Locations
Egytech Cables A1 factory is located in the 10th of Ramadan City Industrial zone
(60 km east of Cairo with expressways linking it to Egypt’s major Mediterranean
and Red Sea ports).
The Head office is located in: Plot no. 27, 1st District, 5th Settlement, New Cairo,
Cairo – Egypt.
 United Metals
Product Range:
Copper Rods
Locations

The factory is located in 10th of Ramadan City, 60 km east of Cairo with
expressways linking it to the major Mediterranean and Red Sea ports.
The Head Office is in Plot no. 27, 1st District, 5th Settlement, New Cairo, Cairo –
Egypt.
 EgyPlast
Product Range:
PVC compound
Soft PVC
Rigid PVC
Master Batch
White Master batch
Black Master batch
Color Master Batch
Special effect Master batch
Additive Master batch
Locations
Egypt
Egyptian Company For Plastic Industry Elsewedy- EGYPLAST
Egypt Head office
Plot no. 27, 1st District, 5th Settlement, New Cairo, Cairo – Egypt
Egypt Factory
PC # A6, 3rd industrial zone – Elrobeky Region -10th of Ramadan –Elsharkia –
EGYPT
Syria
Elsewedy for Plastic Industry - Sedplast
Main office & Factory
Industrial city ; Adra, PC # 21,bedside Elsewedy cables factory – Reaf Damascus
- Syria

 El Sewedy Cables KSA
Product Range:
Low voltage power cables
Medium voltage power cables
High & Extra high power cables
Overhead Conductors
Winding Wires
Locations
Factory
Yanbu Al-Sinaiyah, Saudi Arabia
Offices
Dammam Office
Jeddah Office
Riyadh Office
 El Sewedy Cables Algeria

Product Range:
Low voltage cables (0.6/1 KV)
Indoor and Building Wires (450/750 V).
Special Cables
Overhead Transmission Lines up to 500 KV
Raw Materials Used

Cables are manufactured from Copper & Aluminum as conductors, and insulated
with PVC or XLPE. Cables could be armored with steel wires or tapes or with
Aluminum wires or tapes and other materials depending on the application and
customer requirements. Accordingly Cables are tailored products that include a
wide range of sizes and construction
Locations
Elsewedy Cables Algeria (Power Cables) 153 Rue Ali Khodja, El biar , Algerie.

 Doha Cables
Product Range:
Extra High Voltage Cables (XLPE 132KV & 220 KV)
High Voltage Cables 66 KV
Medium Voltage Cables up to 36 KV
Low Voltage Cables & Earthing Conductors up to 1 kV
Low Smoke Halogen Free Cables (LSHF & LSF Cables)
Heat Resistant Flexible Cables
Flexible Cables
Control Cables
Instrumentation Cables
Special Cables Shielded or Unshielded
Flame Retardant Cables, Fire Resistance Cables, Chemical and Alkaline
Resistance Cables
All Kind of Overhead Transmissions Lines
Fiber Optic Cables
OPGW (Optical Fiber Ground Wire)
Location
Head Office:KIA Motors Showroom Building, 3rd Floor, Al Rayyan Road, Al-
Sadd, Doha Qatar.
P.O.Box:22487
Factory: MIC Community Area, Mesaieed, Qatar
 El Sewedy Cables Ethiopia PLC

Product Range:
Low Voltage Cables
Medium Voltage Cables
High Voltage Cables
Overhead Conductors
Special Cables

Fiber Optic Cables
Copper telecom cables
Telecom Accessories
Winding Wires
Locations
Head Office & Factory : Edna Mall 5th Floor P.O. Box 3239 Code 1250 Addis
Ababa, Ethiopia
 UEIC
Product Range:
Magnet Wires
Locations
The Factory located at AL OJAIMI Industrial City, AL-Kharaj Road- After 3rd
industrial city.
The Head Office is in Al Siteen Street – Al Malaz– Riyadh – International
Commercial Center
Market Share and Major players:

El Sewedy Cables
1.21% Giza Cables

13.17% El Sewedy
Giza Elctro Cables
15.37% Electro
46.10%
International
Cables
24.15% Other

Key Success Factors:
El Sewedy El Giza Cables Electro
Score Weighted
Score Weighted
Score Weighted
Weight
Key Success Factors
Rating
Rating
Rating
Price Competition 0.08 3 0.24 2 0.16 3 0.24
Global Expansion 0.11 4 0.44 3 0.33 1 0.11
Management 0.07 3 0.21 3 0.21 2 0.14
Technology 0.09 5 0.45 2 0.18 3 0.27
Product Lines 0.10 5 0.50 3 0.30 2 0.20
Customer Loyalty 0.10 4 0.40 4 0.40 3 0.30
Market Share 0.09 5 0.45 3 0.27 4 0.36
Advertising 0.07 4 0.28 4 0.28 3 0.21
Product Quality 0.10 5 0.50 4 0.40 2 0.20
Product Image 0.10 5 0.50 4 0.40 2 0.20
Financial Position 0.09 5 0.45 3 0.27 2 0.18
TOTAL 1 4.42 3.20 2.41
2) Finance
a. Key figures
Consolidated Income Statement

Chang
EGP Q3-2019 Q3-2018 e 9M‐2019 9M‐2018 Change
Sales
Wires & Cables 4,913,465,631 5,589,739,950 16,878,845,327 17,521,852,288
Electrical Products 1,526,462,246 1,469,170,977 4,370,674,663 4,252,777,591
Turnkey Projects 6,552,938,343 3,156,028,443 13,296,975,082 8,541,032,695
Total Sales 12,992,866,220 10,214,939,370 27.2% 34,546,495,073 30,315,662,575 14.0%
COGS (11,256,713,949) (8,436,988,585) (29,249,231,533) (25,133,295,986)
Gross Profit 1,736,152,271 1,777,950,785 ‐2.4% 5,297,263,540 5,182,366,589 2.2%
Gross Profit Margin 13.4% 17.4% 15.3% 17.1%
SG&A (666,712,238) (510,336,419) (1,949,515,946) (1,543,784,640)
Other Operating Income 311,089,220 112,117,075 366,438,804 241,924,314

Consolidated Income Statement
Chang
EGP Q3-2019 Q3-2018 e 9M‐2019 9M‐2018 Change
Other Operating Expense (323,952,469) (188,577,828) (475,475,960) (471,764,323)
Income from Investments 102,659,591 120,624,318 295,611,406 439,399,910
EBITDA 1,358,961,181 1,477,494,421 ‐8.0% 4,081,466,933 4,323,993,639 ‐5.6%
EBITDA Margin 10.5% 14.5% 11.8% 14.3%
Depreciation & Amortization (199,724,806) (165,716,490) (547,145,090) (475,851,789)
FX Gain / (Loss) (95,762,514) 1,341,641 (172,879,721) (76,805,365)
EBIT 1,063,473,861 1,313,119,571 ‐19.0% 3,361,442,122 3,771,336,485 ‐10.9%
Interest Expense (106,582,302) (87,598,264) (330,711,158) (260,442,729)
Interest Income 152,077,706 243,907,674 572,652,600 895,007,220
Interest Income / (Expenses) 45,495,404 156,309,410 241,941,442 634,564,491
EBT 1,108,969,264 1,469,428,981 ‐24.5% 3,603,383,564 4,405,900,975 ‐18.2%
Tax (277,373,215) (306,523,406) (818,246,454) (828,001,996)
Net Income 831,596,049 1,162,905,575 ‐28.5% 2,785,137,110 3,577,898,979 ‐22.2%
Minority Interest (2,643,577) (33,529,823) (67,913,697) (74,390,071)
Net Income After Minority Interest
828,952,472 1,129,375,752 ‐26.6% 2,717,223,413 3,503,508,908 ‐22.4%
Net Income Margin 6.4% 11.1% 7.9% 11.6%
Declining Operating Profit Margin has been showed in Income (W).
Consolidated Income Balance sheet

EGP 12/31/2018 3/31/2019 6/30/2019 9/30/2019
Long Term Assets
Fixed Assets 5,952,750,656 6,147,491,105 6,915,364,905
Investments 1,337,379,690 1,374,810,177 2,149,413,769 2,284,760,328
Other long‐term Assets & Good will 302,558,414 323,030,842 325,873,312 361,270,841
Other long‐term Receivables 2,430,070,435 1,982,647,537 1,640,815,191 1,525,733,176
Total Long‐term Assets 9,952,797,578 9,633,239,212 10,263,593,375 11,087,129,250
Current Assets
Inventories 9,334,088,479 8,703,231,497 9,607,615,051 9,926,786,649
Receivables 11,318,561,524 13,272,677,998 13,023,173,488 13,173,302,970
Other Debit balance 6,394,477,999 6,999,216,244 7,007,335,559 8,296,300,141
Due from Related Parties 483,068,527 543,478,811 731,891,446 634,030,656
Cash & Cash Equivalents 8,685,415,249 8,242,997,811 9,742,196,214 9,121,888,303
Total Current Assets 36,215,611,778 37,761,602,361 40,112,211,758 41,152,308,719
Total Assets 46,168,409,356 47,394,841,573 50,375,805,133 52,239,437,969
Current Liabilities
Bank Overdraft & Short‐term loans 8,422,374,380 7,307,794,913 7,941,712,132 8,517,362,112
Accounts Payable 4,749,888,548 4,048,399,640 3,971,502,930 4,295,030,428

Consolidated Income Balance sheet
EGP 12/31/2018 3/31/2019 6/30/2019 9/30/2019
Other Credit balance 13,409,603,894 15,718,146,122 18,720,380,446 18,097,987,769
Due to Affiliates 356,209,224 336,731,274 478,603,817 461,548,309
Provisions 1,161,476,310 1,259,454,792 1,311,845,524 1,410,396,475
Total Current Liabilities 28,099,552,355 28,670,526,741 32,424,044,849 32,782,325,092
Issued and Paid Capital 2,184,180,000 2,184,180,000 2,184,180,000 2,184,180,000
Retained Earnings 11,632,446,467 12,335,069,479 10,823,932,431 11,631,650,909
Others 1,835,766,332 1,708,940,860 1,655,911,109 1,607,761,564
Total Parent's Shareholders' Equity
15,652,392,799 16,228,190,339 14,664,023,541 15,423,592,473
Minority Interest 516,570,863 547,780,997 527,392,763 520,323,143
Total Equity 16,168,963,661 16,775,971,336 15,191,416,304 15,943,915,616
Long‐term Loans 251,035,810 404,108,366 1,171,070,950 1,836,800,821
Other long‐term Liabilities 1,648,857,530 1,544,235,130 1,589,273,030 1,676,396,440
Total Long‐term Liabilities 1,899,893,340 1,948,343,496 2,760,343,980 3,513,197,261
Total Liabilities& Equity 46,168,409,356 47,394,841,573 50,375,805,133 52,239,437,969
b. Revenues
Q3‐ Q3‐ %Chang 9M‐ 9M‐ %Chang

Wires &Cables Segment Financial Highlights 2019 2018 e 2019 2018 e
7,067,41 8,684,54 24,201,66 26,673,45
Revenues Before Intercompany Sales (EGP 000’s) 1 1 ‐18.6% 9 9 ‐9.3%
4,913,46 5,589,74 16,878,84 17,521,85
Revenues After Intercompany Sales (EGP 000’s) 6 0 ‐12.1% 5 2 ‐3.7%
Gross Profit (EGP 000’s) 446,808 653,696 ‐31.6% 2,031,500 2,252,957 ‐9.8%
GP Margin Before Intercompany Sales 6.3% 7.5% 8.4% 8.4%
GP Margin After Intercompany Sales 9.1% 11.7% 12.0% 12.9%
Cables Sales Volumes (Tons) 30,788 26,530 16.1% 96,504 89,681 7.6%
Cables Gross profit per ton(EGP) 11,780 17,326 ‐32.0% 17,051 18,560 ‐8.1%
Wires & Cables Segment

Revenue from wires & cables fell by 3.7% y‐o‐y in 9M 2019, recording EGP 16,878.8 million.
Volumes sold expanded by 7.6% y‐o‐y to 96,504 tons in 9M 2019. Gross profit from wires &
cables fell by 9.8% y‐o‐y to record EGP 2,031.5 million in 9M 2019. Gross profit per ton
decreased by 8.1% y‐o‐y to EGP 17,051 in 9M 2019, down from EGP 18,560 in 9M 2018.
c. Profitability Ratios

Profitability: TTM vs 5 Year Average Margins El Sewedy Industry
Gross margin TTM 15.65% 17.33%
Gross Margin 5YA 19.08% 14.27%
Operating margin TTM 9.90% 10.73%
Operating margin 5YA 12.28% 6.54%
Pretax margin TTM 11.27% 11.61%
Pretax margin 5YA 14.75% 4.56%
Net Profit margin TTM 9.24% 8.64%
Net Profit margin 5YA 11.87% 3.24%
Revenue/Share TTM 21.4 93.29
Basic EPS ANN 2.29 5.45
Diluted EPS ANN 2.29 5.45
Book Value/Share MRQ 7.07 30.36
Tangible Book Value/Share MRQ 6.49 30.36
Cash/Share MRQ 4.18 15.19
Cash Flow/Share TTM 2.3 9.72
TTM = Trailing Twelve Months
5YA = 5-Year Average
MRQ = Most Recent Quarter
Above Average Net Profit margin (S).
Profitability decreases compared to 5 Years Average

d. Liquidity ratios
Liquidity Ratio : MRQ El Sewedy Industry
Quick Ratio MRQ 0.95 0.82
Current Ratio MRQ 1.26 1.08
LT Debt to Equity MRQ 11.91% 2.34%
Total Debt to Equity MRQ 67.13% 102.90%
Liquidity ratio for El Sewedy is less than for the industry that shows El Sewedy high
ability to pay off current debt obligations without raising external capital.
e. Efficiency ratios
Management Effectiveness: TTM vs 5
El Sewedy Industry
Year Average Margins
Return on Equity TTM 28.13% 27.81%
Return on Equity 5YA 36.44% 9.17%
Return on Assets TTM 8.94% 9.53%
Return on Assets 5YA 12.08% 3.61%
Return on Investment TTM 24.53% 26.95%
Return on Investment 5YA 32.77% 8.75%

Effecincy decreased compared to 5 years Avarage
Other Ratios El Sewedy Industry

Valuation
P/E Ratio TTM 5.82 5.7
Price to Sales TTM 0.52 0.47
Price to Cash Flow MRQ - 16.35
Price to Free Cash Flow TTM 12.3 -
Price to Book MRQ 1.59 1.41
Price to Tangible Book MRQ 1.73 1.41
EPS(MRQ) vs Qtr. 1 Yr. Ago MRQ -26.61% 216.87%

EPS(TTM) vs TTM 1 Yr. Ago TTM -20.72% 222.44%
5 Year EPS Growth 5YA 121.20% 8.71%
Sales (MRQ) vs Qtr. 1 Yr. Ago MRQ 27.19% 19.05%
Sales (TTM) vs TTM 1 Yr. Ago TTM 13.65% 27.43%
5 Year Sales Growth 5YA 22.99% 9.51%
5 Year Capital Spending Growth 5YA 44.70% -5.78%

Other Ratios El Sewedy Industry
Efficiency
Asset Turnover TTM 0.97 1.1
Inventory Turnover TTM 4.24 5.17
Receivable Turnover TTM 4.09 4.21
Dividend Yield ANN 6.42% 2.54%

Dividend Yield 5 Year Avg. 5YA 6.46% -
Dividend Growth Rate ANN 38.67% 81.71%
Payout Ratio TTM 41.52% -
3) Research & Development

.R&D department is located mainly at subsidiary in Iskraemeco, Slovenia, where
more than 100 electrical engineers work on innovating our products, raising
standards, and developing sustainable integrated energy solutions for our clients.
R&D is a vital aspect of our business and 15% of Iskraemeco revenues worldwide are
reinvested in the R&D department.
8) Operations and Logistics

All products adhere to and comply with industry certifications, European standards,
and other international and product-specific standards. Cables and accessories are
produced through nine divisions:
• Power Cables
• Special Cables
• Fiber Optic Cables
• Winding Wires
• Cables Accessories
• Raw Materials
• Insulators and Fittings
• Explosion-proof Equipment
• Fiber Glass Poles

The Copper and Plastics products are the main components for production of wires &
cables more than 50% of the group’s production of copper and plastics is consumed
by the group’s companies.
Elsewedy Electric has a closely aligned federation of fully localized production and
distribution centers with a global coordination center in Cairo while holding an
expansive worldwide distribution network. We make considerable investment in ICT
infrastructure to link geographically dispersed factories and offices allowing for the
sharing of data and knowledge, leading to reduced costs and improved time efficiency
and operations.
Operational Excellence:
• Deliver cost-effective
• Deliver High-quality products and services
• Deliver products to local and global customers
• Enhance internal efficiency processes and measures
•Strong Internal Audit team that handles operational excellence
All-Inclusive Service: Elsewedy Cables Cables and accessories represent the largest
sector of the Elsewedy Electric Group. Our 25 years in cable manufacturing, calibrated
equipment, state of the art machinery, and high-quality raw materials guarantee
satisfaction to our clientele around the world.
9) Human Resources Management

 Human resources department has clear policies for:
• Sick leave
• Employee benefits (including social insurance)
• Employee end of service
• Employee medical care (including medical insurance)
Overseas travel These policies adhere to local laws in the countries where we
operate, and more importantly, recognize the value of the people who make Elsewedy
Electric the success that it is.
 Competency Development Guide

To use the internal Competency Development Guide as a framework for defining the
behaviors, skills and knowledge for all employees to have this collection of
competencies and behavioral practices allows for successful job performance and
enables the Group to succeed at a global level.
HR function is to ensure well-crafted framework based around the Group’s vision,
core values and corporate strategy.
The Competency Guide identifies nine competencies (five core and four leadership)
we expect employees to work toward. Elsewedy’s core competencies include result
orientation, communication, innovation, customer focus and teamwork. Leadership
competencies include strategic thinking, managing change, decision making and
delegation.
 Staff Training
o frequent Management Development Programs and Skillset Enhancing
Trainings across the Group.
o functional role training programs cover topics such as preventative
maintenance, mechanical and electrical maintenance, production, quality,
health and safety, supply chain and procurement management, and
information technology.
o All new hires complete our Employee Orientation Trainings, which
acquaints them with the Group’s structure, key departments, Ethics &
Code of Conduct Handbook, zero tolerance of harassment policy,
Competency Development Guide, and compliance and audit roles and
policies. Employees in Egypt also have the opportunity to visit several of
our factories, including EgyPlast, Iskraemeco Egypt, Elsewedy Electric
Cables and Elsewedy Electric Transformers.
o Health and Safety training
 Performance Reviews

All employees undergo annual performance reviews in the areas of
instruction compliance, communication skills, teamwork, safety
consciousness, and general attitude and commitment. Specific goals and
objects are also considered, as are the nine competencies from the
Competency Development Guide. These nine competencies are further
utilized during performance reviews as a reference guide for indicators on
which each employee will be assessed. Employees are assessed on their
performance in these areas on a scale ranging from new learner to expert.
In addition to the nine competencies, key performance evaluation criteria
include adherence to safety specifications, policies and standards.

Pool of Strengths & Weaknesses
Strengths Weaknesses
S1: Above Average Net Profit margin. W1: Declining Operating
S2: Extensive and wide variety of electrical cables products Profit Margin.
and services. W2: Increase in copper prices.
S3: Largest production in Egypt with over 50% market share. W3: Highly competitive market.
S4: Fast decision making due to El-Sewedy family hold 68 of W4: No Clear Employee
shares and have the right to make decisions. Development Plan.
S5: The company has successfully entered the Saudi Arabia, W5: No Talent Acquisition or
Syria, Ethiopia, Algeria and Qatar. Retention Program.
S6: Copper and Plastics are manufactured and consumed by W6: Decline in revenue in the
group helps in cost leader and producing. last year.
S7: Competitive quality of cables and services.
S8: Largest market share in cable industry.
S9: The company targets all three sectors: public, private, and
professional end-users.
S10: El Sewedy has strong business links with some
competitors as its favored customers.
S11: Market credibility in terms of product quality and
delivery.
S12: Technical knowhow.
S13: Strong historical track record.
S14: High revenue.
S15: Capital Spending Growth.
S16: Corporate governance to secure shareholders right.

Strengths & Weaknesses Strategic Myopia (Filtration)

W6: Decline in revenue in the last year
Pool of Strengths & Weaknesses after Strategic Myopia (Filtration)
S1: Above Average Net Profit margin. W1: Declining Operating
S2: Extensive and wide variety of electrical cables products and
Profit Margin.
services.
S3: Largest production in Egypt with over 50% market share. W2: Increase in copper prices.
S4: Fast decision making due to El-Sewedy family hold 68 of
W3: Highly competitive market.
shares and have the right to make decisions.
S5: The company has successfully entered the Saudi Arabia, W4: No Clear Employee
Syria, Ethiopia, Algeria and Qatar.
Development Plan.
S6: Copper and Plastics are manufactured and consumed by
group helps in cost leader and producing. W5: No Talent Acquisition or
S7: Competitive quality of cables and services.
Retention Program.
S8: Largest market share in cable industry.
professional end-users.
S10: El Sewedy has strong business links with some competitors
as its favored customers.
S11: Market credibility in terms of product quality and delivery.
S13: Strong historical track record.
S14: High revenue.
S16: Corporate governance to secure shareholders right.

Internal Factors Priority Matrix (Prioritization)
S1: Above Average Net S9: The company targets S3: Largest production in
Profit margin all three sectors: public, Egypt with over 50%
S10: El Sewedy has private, and professional market share
strong business links end-users S6: Copper and Plastics
with some competitors as S14: High revenue are manufactured and
H
its favored customers S15: Capital Spending consumed by group helps
W1: Declining Operating Growth in cost leader and
Profit Margin W5: No Talent Acquisition producing
or Retention Program. W2: Increase in copper
prices
S4: Fast decision making S5: The company has S11: Market credibility in
Probability of due to El-Sewedy family successfully entered the terms of product quality
occurrence hold 68 of shares and Saudi Arabia, Syria, and delivery.
M have the right to make Ethiopia, Algeria, Qatar. S2: Extensive and wide
decisions variety of electrical cables
W3: Highly competitive products and services
market
S13: Strong historical S16: Corporate S7: Competitive quality of
track record governance to secure cables and services
shareholders right S8: Largest market share
L in cable industry
S12: Technical knowhow
W4: No Clear Employee
Development Plan.
L M H

IFE (Internal Factor Evaluation)
Weighted
Key Internal Factors Weight Rating Score
Strengths
S1: Above Average Net Profit margin 0.06 5 0.30
S2: Extensive and wide variety of electrical cables products
0.06 5 0.30
and services
S3: Largest production in Egypt with over 50% market share 0.06 5 0.30
S5: The company has successfully entered the Saudi Arabia,
0.07 5 0.35
Syria, Ethiopia, Algeria and Qatar.
S6: Copper and Plastics are manufactured and consumed by
0.07 4 0.28
group helps in cost leader and producing
S7: Competitive quality of cables and services 0.06 4 0.24
S8: Largest market share in cable industry 0.06 5 0.36
0.06 5 0.30
professional end-users
S10: El Sewedy has strong business links with some
0.06 5 0.30
competitors as its favored customers
S11: Market credibility in terms of product quality and
0.07 4 0.28
delivery.
S12: Technical knowhow 0.07 5 0.35
S14: High revenue 0.07 3 0.28
S15: Capital Spending Growth 0.05 5 0.25
Weaknesses
W1: Declining Operating Profit Margin. 0.06 4 0.24
W2: Increase in copper prices 0.06 4 0.24
W4: No Clear Employee Development Plan. 0.03 3 0.09
W5: No Talent Acquisition or Retention Program. 0.03 3 0.09
Total Score 1.00 4.55
VI. Strategic Audit “External”
1) Review Mission Statement

i. Current Mission Statement :
Sharing Success With Our Clients Through Producing Worldwide Cables That Meet
Their Needs And Exceed Expectations.
Mission Elements Existence
ii. Criticize
Customer √
Product or Service √ Mission:
Markets X
Technologies X
Concern for (Survival, Growth, Profitability) X
Philosophy
El Sewedy Electric Cables √ Page 38 of 73
Self-concept √
Concern for Public Image √
Concern for Employees X
iii. New Mission Statement:
Sharing Success with Our Clients in Global Market to Meet Their Needs and
Exceed Their Expectations through Providing Worldwide Cables Using Hi-Tech
in a Competitive Price with Reasonable Profit, While Caring about
Environment and Our Staff and Their Safety.
iv. Objectives:
Owing to a successful growth rate year after year and aligning with the expansion
strategy of the company, by operating in 8 diversified energy segments; Cables &
Accessories, Electrical Products, Energy Measurement &Management, Transformers,
Communications, Wind Energy Generation, Solar Energy Solutions, Projects &
Development.
2) Drivers for Globalization:
i. Market
Elsewedy Cable industry market growth in Egypt is decreasing last two years. Competition is
often intense, forcing firms to get by on slim profit margins. By contrast, Chile is not served at
all (developing economies). Less intense competition, combined with strong market demand,
implies that companies can command higher margins for their offerings. Chile is the world’s
largest copper producer, Chile, has not developed into a major fabricator on a global scale.

Rather, Chile has successfully leveraged its resource base by establishing a competitive mining
industry, ensuring the benefits of copper are channeled to the population, and encouraging
diversification in industries with growth potential. Chile’s fabrication meets the needs of local
industry and infrastructure, and little more. Facilitating the development of a competitive
domestic manufacturing industry more broadly is the most effective way to encourage copper
fabrication over the longer term. Elswedy opportunity when entering Chile is to Earn higher
margins and profits.
World Copper Production

Production
Rank Country/region
(thousand tons of)
World 19939
1 Chile 5503
2 Peru 2445
3 China 1656
4 United States 1260
5 Congo 1094
6 Australia 859
7 Zambia 797
8 Mexico 742
9 Russia 705
10 Indonesia 622
11 Poland 620
12 Canada 605
13 Kazakhstan 540
14 Brazil 419
15 Mongolia 384
16 Iran 314
17 Spain 204
18 Laos 153

The percentages of participation in global copper reserves in Chile (36%) and Zambia (4%)
representing around 40% of theses Other countries also have significant reserves, such as Peru
(12%), the USA (7%) and China (6%). It is worth noting that the State-owned Chilean company,
CODELCO owns 17% of global reserves.
Here is comparison between Chilean Market and the Egyptian Market, Chilean Market prices are
more stable, Consumer Price Index “CPI” for Chile 2.6% while for Egypt 12.25% indicates that
prices are stable .
Egypt is doing more business in 2019 due to Economic Growth and Political Situation, but for
Chile business rate is on average. Also, there is a huge opportunity for Exportation 69,229.9 M.$
for Chile while for Egypt 25,604.0 M.$.

Chile Egypt
Markets
US Dollar exchange rate 12/26/2019 751.04 16.0417 1/2/2020

US Dollar exchange rate
[+] [+]
Stock ExchangeYTD % 12/30/2020 0% -0.44% 1/2/2020
Stock ExchangeYTD %
[+] [+]
Prices
CPI (overall index) [+] Dec-18 2.60% 10.30% Apr-16 CPI (overall index) [+]
Money Market
Key rates [+] 10/24/2019 1.75% 12.25% 11/18/2019 Key rates [+]
Business
Doing Business [+] 2019 56º 120º 2019 Doing Business [+]
IPI Year on Year [+] Jan-19 -0.90%
Passengers vehicles Year Dec-17 270,113 133,391 Dec-17

Passengers vehicles Year
[+] [+]
Annual Vehicles/ 1,000 p. Annual Vehicles/ 1,000 p.
Dec-17 20.45 1.91 Dec-17
[+] [+]
19,500 2018
Motor vehicle production
[+]
Vehicles / 1,000 people 2015 247.34 64.42 2015 Vehicles / 1,000 people [+]
[+]
Taxes
Standard VAT [+] 1/1/2006 19.00% 14.00% 1/1/2017 Standard VAT [+]
Top tax rate + SSC [+] 2018 35.00% 22.50% 2018 Top tax rate + SSC [+]
Trade
69,229.9 25,604.0
Exports [+] 2017
M.$ M.$
2017 Exports [+]
Exports % GDP [+] 2017 24.93% 13.93% 2017 Exports % GDP [+]
65,062.5 61,627.0
Imports [+] 2017
M.$ M.$
2017 Imports [+]
Imports % GDP [+] 2017 23.43% 33.52% 2017 Imports % GDP [+]
i. Government:
In order to decide the benefit of investment in Chile, we have to compare Chilean government to
Egyptian one to be able to evaluate benefits and risk, below a comprehensive comparison

Chile Egypt
Government
Annual GDP [+] 2018 298,180M.$ 249,559M.$ 2018 Annual GDP [+]
GDP per capita [+] 2018 15,921$ 2,573$ 2018 GDP per capita [+]
Debt [+] 2018 76,183 231,126 2018 Debt [+]
Debt (%GDP) [+] 2018 25.56% 92.65% 2018 Debt (%GDP) [+]
Debt Per Capita [+] 2018 4,068$ 2,383$ 2018 Debt Per Capita [+]
Deficit (M.$) [+] 2018 -4,366 -23,475 2018 Deficit (M.$) [+]
Deficit (%GDP) [+] 2018 -1.47% -9.41% 2018 Deficit (%GDP) [+]
Expenditure (M.$) [+] 2018 75,597.00 75,104.20 2018 Expenditure (M.$) [+]
Education Expenditure (M.$) 2016 13,390.90 6,423.40 2008
Education Expenditure (M.$)
[+] [+]
Education Expenditure Education Expenditure
2016 21.18% 10.94% 2008
(%Bud.) [+] (%Bud.) [+]
Gov. Health Exp.(M.$) [+] 2018 15,479.90 4,518.00 2016 Gov. Health Exp.(M.$) [+]
Gov. Health Exp. (%Bud.) 2016 19.74% 4.22% 2016 Gov. Health Exp. (%Bud.) [+]
[+]
Defence Expenditure (M.$) 2018 5,627.80 3,112.20 2018 Defence Expenditure (M.$) [+]
[+]
Defence Expenditure Defence Expenditure (%Bud.)
2018 7.41% 4.14% 2018
(%Bud.) [+] [+]
Expenditure (%GDP) [+] 2018 25.36% 30.11% 2018 Expenditure (%GDP) [+]
Expenditure Per Capita [+] 2018 4,036$ 774$ 2018 Expenditure Per Capita [+]
Education Expenditure P.C 2016 737$ 85$ 2008 Education Expenditure P.C [+]
[+]
Gov. Health Exp. P.C. [+] 2018 834$ 38$ 2016 Gov. Health Exp. P.C. [+]
Defence Expenditure P.C. [+] 2018 300$ 32$ 2018 Defence Expenditure P.C. [+]
Moody's Rating [+] 7/26/2018 A1 B2 4/17/2019 Moody's Rating [+]
S&P Rating [+] 7/13/2017 A+ B 5/11/2018 S&P Rating [+]
Fitch Rating [+] 8/30/2019 A B+ 11/25/2019 Fitch Rating [+]
Corruption Index [+] 2018 67 35 2018 Corruption Index [+]
Competitiveness Ranking [+] 2019 33º 93º 2019 Competitiveness Ranking [+]
Fragile States Index [+] 2018 40.7 88.7 2018 Fragile States Index [+]
RTI Raking [+] 9/28/2018 50º
Innovation Ranking [+] 2018 47º 95º 2018 Innovation Ranking [+]
Annual GDP per Capita in Chile is almost 8 s the annual GDB per Capita in Egypt. Dept for
Chile is very low almost 0.25% percent of that for Egypt. Chile has a good financial rating, better
education and health expenditure.

Chile is traditionally considered as a model in Latin America in terms of political and financial
transparency. It has also been one of the fastest growing economies in Latin America over the
last decade, enabling the country to significantly reduce poverty (World Bank). According to the
Chilean Central Bank, GDP grew 4% in 2018 and is expected to grow 3.4% in 2019 and 3.2% in
2020 (IMF). Coface also projects a 3.5% GDP growth in 2019. Chile's economic recovery after
years of low commodity prices relied on higher consumption and private investment, increasing
wages, lower interest rates, private-sector confidence, higher copper prices, growing mining
production, and - to a lesser extent - on increased wholesale trade and commercial services
(World Bank).
According to IMF estimates, inflation reached 2.4% in 2018 and is expected to increase slightly
to 3% in 2019 and 2020; the Government's balance closed at -1.8% of GDP in 2018 and is
projected to decrease to -1.6% in 2019 and -1.4% in 2020. The Government's gross debt was
estimated at 24.8% of GDP in 2018 and is likely to rise to 26% in 2019 and 26.7% in 2020.
Chile's National Statistics Institute calculated a nearly identical 2.43% average inflation in 2018,
as the IMF. Chilean Finance Minister Felipe Larraín also alluded to a 1.7% fiscal deficit as the
lowest in the last four years (EFE). Inflation should improve through fiscal austerity measures
announced by the Treasury Department, particularly due to 1.6% of GDP in spending cuts over
the next four years. The Chilean economy remains vulnerable to international copper prices,
international demand (particularly from China), climate and earthquake risks, inadequate R&D,
vulnerable road network and energy grid, high energy prices and a poor educational system
(Coface). In the context of the increased pressure resulting from a recent US-China trade war, the
major issue to be tackled by the Chilean government in order to revive economic growth is to
reinforce commercial cooperation with new trade partners in Asia. Advancing on key tax,
pension and migration reforms represents another major challenge for the policymaking agenda.
Chile's unemployment rate decreased to 6.9% in 2018, with projections estimating 6.5% and
6.2% rates for 2019 and 2020, respectively. The country has the highest GDP per capita in the
region (USD 15,068; Coface), but also high levels of inequality and informality (OECD). Factors

in wealth disparity include the current tax system that handicaps mostly lower and middle-
income classes. Chile has notably invested heavily in renewable energy, which is expected to
account for up to 20% of its energy generation by 2020.
I. Recommended Market
Investing in Chile
Foreign investment has become, together with exports, one of the fundamental elements of
Chilean economy. Chile is a model and a pioneer in South America in the development of
polices to attract investment, relying on clear and stable legal mechanisms.
In general, the policy framework is characterized for equal treatment of domestic and foreign
agents, free access to almost every economic sector and a State with transparent regulation
policies towards the activity of investors.
If a foreign-born citizen wishes to invest in Chile, the same as a domestic agent, he/she must
comply with the legal requirements set by Chilean country.
In general, prior proceedings are:
Every legal entity requires to carry out the following proceedings before the Internal Revenue
Service (SII, in Spanish):
 Registration of RUT (taxpayer number) to perform economic and commercial

operations.
 Business Start-up ('Iniciación de Actividades') at the Unit of the Internal Revenue
Service with jurisdiction over the place in which the legal residence or Head Office of the
taxpayer is located (where the activities will take place).
 Accreditation of legal residence.
Once authorized by the Business Start-up Declaration, you may request the stamping of
documents, which entitles you to tax credit of VAT (IVA, in Spanish), and others, e.g. invoices,
waybills, etc.
Defining and Evaluating Mode of Entry:
Government Measures to Motivate or Restrict FDI

Chile’s foreign investment policy is based on simplicity, transparency and non-discrimination
towards foreign investors. Over the past years, the Government has worked to simplify
investment procedures. On a fiscal level, foreign investors benefit from a moderate corporate tax
and they are guaranteed access to the formal foreign exchange market, including free remittance
of capital and profits. The country also offers investors a large range of solutions and has
established a programme called 'The Innovation Policy Platform ' in order to encourage
investment. These measures have notably led to the development of a new type of company, the
'Simplified Limited Company' (‘empresa individual de responsabilidad limitada' - EIRL) that
allows a foreigner to create a business in Chile without needing a local partner. Also, joint stock
companies can be formed without a local partner (but another legal entity is required).
In 2016, the Government established a new foreign investment promotion and attraction strategy
that included the creation of a new national investment promotion agency, InvestChile.
InvestChile assists overseas companies with their investments in Chile. The Government has
identified five priority sectors for investment: mining industry services, sophisticated food
industry, exportable technological services, tourism and energy/logistics.
Under the 2016 investment law (N° 20.848), investments of at least USD 5 million are exempt
from VAT on imports of capital goods for up to the first USD 5 million, for several sectors
(mining, industrial, forestry, energy, infrastructure, telecommunications and R&D). While tax
invariability is no longer granted as under the former law, from 2016-2020, foreign investors will
be able to lock in a ten-year effective income tax rate of 44.45% for investments of at least USD
50 million.
Bilateral investment conventions signed by Chile
In 1991, Chile was a signatory of the Washington Convention of 1965, establishing the
International Centre for Settlement of Investment Disputes (ICSID). As of 2016, Chile
has signed 54 bilateral investment treaties (BITs), of which 37 are in force.
 Based on the above government facilities the best mode of entry is FDI

Main International Economic Cooperation
Chile is a member of several regional and international organisations. The country is a member
of the UN, WTO, the OAS (Organisation of American States), ALADI (Latin American
Integration Assocation) and SELA (Latin American Economic System). Since 2010, Chile is a
member of the OECD. On the other hand, it withdrew from the Andean Pact in 1976. With Peru,
Chile is the only South American member country of APEC (Forum for Asia-Pacific Economic
Cooperation). Since the beginning of the 1990s, Chile has conducted a policy of regional trade
agreements. Thus, foreign companies that set up a business in Chile to develop industrial
production can benefit from privileged access to the region's markets. 'Economic
complementarities' agreements have been signed within the framework of the Latin American
Integration Association (ALADI) with Bolivia (1993), Peru (1998), Colombia (1993), Ecuador
(1994) and Venezuela (1993). Within the framework of the ALADI, Chile signed the
MERCOSUR, an association agreement in force since 1996, aiming to establish a gradually free
trade area starting in 2006. However, because of the economic situation of some neighbours,
Chile's desire to maintain the level of its external Customs tariff (quite a lot lower than that of
Mercosur) and to keep the autonomy of its foreign trade policy, this project has been postponed.
In 1999, a free trade agreement was signed with Central America (El Salvador, Honduras, Costa
Rica and Guatemala). The free trade treaty between Chile and EFTA (Iceland, Norway,
Switzerland and Liechtenstein) came into force on 1 December 2004. Chile signed a trade
agreement with the United States in 2004. This agreement has stimulated trade significantly,
without having any noteworthy influence on FDI flows. The agreement of association between
the EU and Chile, called the 'fourth generation' because of its wide field of application (political,
economic, commercial and cooperation chapters), is the most ambitious foreign trade agreement
concluded up to now, as it includes commitments to liberalise services, specifically financial
services, and measures concerning investment (pre-establishment). Other trade agreements
include those with South Korea (2004), China (2006), Canada (1997) and Mexico (1998). In
September 2007, a free trade treaty came into force with Japan (Chile's third top trade partner)
and another free trade treaty between Chile and Australia came into force in March 2009. Chile

signed a trade agreement with 21 other countries in the São Paulo Round of the Global System of
Trade Preferences among Developing Countries (GSTP).
County Risk of Chile: International Trade
Chile has a very open economy, highly dependent on international trade, which represented
55.7% of the country's GDP in 2017 (Banque mondiale). The country mainly exports copper
(50% of its exports), fruits and fish products (which record the highest increase). Imports involve
mainly fuels, minerals and oil, machinery, vehicles, electric equipment and electronics. Services
account for 13% of exports and 17% of imports.
Chile's top three exporting partners are China, the United States and Japan while its main
importers are the United States, China and Brazil. Chile has signed Free Trade Agreements
(FTAs) with several important economies, notably the European Union, the United States, China
and South Korea and is a member of the Pacific Alliance since 2012 with Mexico, Colombia and
Peru. Its comparative economic advantages (revenue from mining, competitive and counter-
seasonal agriculture sector) have given it access to the large markets of North America, Europe
and the Asia-Pacific (and recently to other South American countries, especially Brazil). Chile
also signed a trade continuity agreement with the UK in the midst of the latter's Brexit
uncertainty, ensuring continued trade relations. Challenges to Chilean trade include replacing the
failed Union of South American Nations with ProSur to strengthen economic integration and
trade relationships in the region (Buenos Aires Times).
Chile's trade balance remains structurally positive, amounting to USD 7.9 billion in 2017 and
benefiting from the recovery of copper exports. However, export of goods and services fell 0.9%
in 2017.
Strong points for FDI in Chile

 Macro-economic stability, growth perspective and low level of risk
 A top Latin American importer per capita, enjoys excellent solvency

 High purchasing power (for Latin America)
 Welath of natural resources (coper, agriculture)
 Internationalised Chilean companies
 Labour laws that tend to be favourable towards business, mainly due to the flexibility of
working hours and uncomplicated procedures for the dismissal of employees
 Foreign companies can also benefit from privileged access to regional markets through
different free trade agreements.
Risk of Investment in Chile
Weak points for FDI in Chile:
 Lack of innovation, very weak spending in research and development
 Investment in network industries is not substantial
 Vulnerability to fluctuations in commodity prices and dependence on Chinese imports
 Electric and road infrastructure is insufficient for the size of the territory
 Lack of qualified work force. The activity rate of the working population is rather low, in
particular among women and young people.
 Persisting economic inequalities resulting in political and social tensions (e.g strike in
mining sector)
ii. Cost
While copper is a major input into the cable fabrication industry, there will be a competitive
advantage from sourcing copper inputs locally. The price of copper is set by international
commodity exchanges and varies little throughout the world. Hence, even though Chelie is an
important copper producer, fabrication of cables in Chile has much cost advantage from buying
copper in Egypt then manufacture it in Egypt.

iii. Competition:
Entering Chile Enables Elsewedy to Confront international competitors more effectively

or thwart the growth of competition. International competition is substantial and
increasing, with multinational competitors invading markets worldwide The firm can
enhance its competitive positioning by confronting competitors in international markets
or preemptively entering a competitor’s home market to destabilize and curb its growth.
VII. Chile External Environment: Opportunities and Threats
Societal Environment
1) Political – Legal
 Political stability, that promotes economic growth and which leads to increased demand
(O)

 Open Trade Regime (O).
 Business-friendly Environment (O).
 Increased efficiency and transparency (O).
2) Economy
 GDP Growth (4%) (O).
 Low Unemployment rate, that foster purchasing power thus foster demand (O)
 Decreasing Interest rate, which leads to enhanced borrowing and, consequently, to
enhanced production and operation (O)
 Higher Tax Rate (35%), compared to Egypt (22.5%) (T).
 Higher VAT (19%), compared to Egypt (14%) (T).
 OECD High Income, may affect production cost thus hinder competition (T).
 Doing Business Rank (59) (S).
 Substantial Investments in Infrastructure, including energy, are foreseen to support the
higher rate of economic growth (O)
 Low Inflation Rate, that foster purchasing power thus foster demand (O)
 Encouraging FDI, through improving the business climate (O).
 Low Debt Ratio (O)
 Inadequate linking areas of production and processing with export gateways (T).
 Worldwide Recession (T)
10) Socio-cultural
 High Inequality (T)
 Poverty line decreasing (O)
11) Technology
 Enhancing Labor Skills and productivity through improvements in the quality of
education and a strong labor training program (O)
12) Environmental
 Highly Exposed to Extreme Natural Events as Earthquakes, Tsunamis and Floods (T).

 Trade-Offs Difficulties that are being accentuated by Climate Change (T).
 Pollution issues, related to air quality (T).
Task Environment (Industry)

Cost Structure:
Affected by raw material (copper and aluminum) imported from foreign market leading
the company to be exposed to foreign exchange risk (T).
Maturity:
In the Field for over 70 years puts the company under the matured industry (T).
Cyclicality:
The Company works in a cyclical industry which basically means that it is sensitive to
any change in the economy (T).
Dependence:
High dependent on the prices of the raw materials makes it very risky for any company in
this industry (T).
1) Threat of new entrants: Low

 Company quality certificate make it difficult for new market entrants (O)
 Huge amount of the required capital to establish new factory (O)
13) Bargaining power of buyers: Low

 Large customer base (O)
14) Threat of substitute products or services: Low

 No substitute for electric conducting cables (O)
 Wi-Fi is a considerable substitute for network cables (T)
15) Bargaining power of suppliers: Low

 High power over supply chain and distribution, through backward integration
(O)

 High distribution power (O)
16) Rivalry among competing firms: Moderate

 Industry Key Player (O)
 Increased Competition, that led to lower profitability per ton, and longer
average collection periods (T)
Pool of Chile’s Opportunities & Threats

O1: Political stability T1: Higher Tax Rate
O2: Open Trade Regime T2: Higher VAT
O3: Business-friendly Environment T3: OECD High Income
O4: Increased efficiency and transparency T4: Inadequate linking areas of production and
O5: GDP Growth processing with export gateways
O6: Substantial Investments in Infrastructure T5: Worldwide Recession
O7: Unemployment decrease T6: High Inequality
O8: Decreasing Interest rate T7: Highly Exposed to Extreme Natural Events
O9: Low Inflation Rate T8: Trade-Offs Difficulties / Climate Change
O10: Doing Business Rank (59) T9: Pollution issues, related to air quality
O11: Encouraging FDI T10: Foreign exchange risk
O12: Low Debt Ratio T11: Matured industry
O13: Poverty line decreasing T12: Cyclical industry
O14: Enhancing Labor Skills and productivity T13: Raw material prices sensitivity
O15: Availability of Raw Material T14: Wi-Fi substitute
O16: Quality Certificate T15: Increased Competition
O18: Huge customer base
O21: High distribution power

O22: Industry Key Player
Chile’s Opportunities & Threats Strategic Myopia (Filtration)

O10: Doing Business Rank (59) T6: High Inequality
Pool of Chile’s Opportunities & Threats after Strategic Myopia (Filtration)
O1: Political stability T1: Higher Tax Rate
O2: Open Trade Regime T2: Higher VAT
O3: Business-friendly Environment T3: OECD High Income
O4: Increased efficiency and transparency T4: Inadequate linking areas of production and
O5: GDP Growth processing with export gateways
O6: Substantial Investments in Infrastructure T5: Worldwide Recession
O7: Unemployment decrease T7: Highly Exposed to Extreme Natural Events
O8: Decreasing Interest rate T8: Trade-Offs Difficulties / Climate Change
O9: Low Inflation Rate T9: Pollution issues, related to air quality
O11: Encouraging FDI T10: Foreign exchange risk
O12: Low Debt Ratio T11: Matured industry
O13: Poverty line decreasing T12: Cyclical industry
O14: Enhancing Labor Skills and productivity T13: Raw material prices sensitivity
O15: Availability of Raw Material T14: Wi-Fi substitute
O16: Quality Certificate T15: Increased Competition
O18: Huge customer base

Chile External Factors Priority Matrix (Prioritization)
O5: GDP Growth O15: Availability of Raw O12: Low Debt Ratio
O6: Substantial Investments Material O14: Enhancing Labor
in Infrastructure O16: Quality certificate Skills and productivity
O7: Unemployment O19: No substitute for O19: Slum development
H
decrease electric cables projects
T11: Matured industry O22: Industry Key Player T1: Higher Tax Rate
T12: Cyclical industry T2: Higher VAT
T14: Wi-Fi substitute
O1: Political stability O8: Decreasing Interest O20: High power over
O4: O4: Increased rate supply chain
Probability
efficiency and transparency O9: Inflation Decreases O21: High distribution
of M
O11: Encouraging FDI power
occurrence
T9: Pollution issues, related T3: OECD High Income
to air quality
O2: Open Trade Regime O17: Required Huge T4: Inadequate linking
O3: Business-friendly capital areas of production and
Environment T5: Worldwide Recession processing with export
O13: Poverty line T7: Highly Exposed to gateways
L
decreasing Extreme Natural Events T13: Raw material prices
T8: Trade-Offs Difficulties / T10: Foreign exchange sensitivity
Climate Change risk T15: Increased
Competition
L M H
Chile EFE (External Factor Evaluation)

Opportunities
O5: GDP Growth 0.02 5 0.10
O6: Substantial Investments in Infrastructure 0.10 5 0.50
O7: Unemployment decrease 0.01 5 0.05
O8: Decreasing Interest rate 0.02 4 0.08
O9: Low Inflation Rate 0.01 4 0.04
O12: Low Debt Ratio 0.10 5 0.50
O14: Enhancing Labor Skills and productivity 0.10 5 0.50
O15: Availability of Raw Material 0.10 5 0.50
O16: Quality Certificate 0.10 5 0.50
O18: Huge customer base 0.10 5 0.50
O19: No substitute for electric cables 0.10 5 0.50

O20: High power over supply chain 0.02 4 0.08
O21: High distribution power 0.01 5 0.05
O22: Industry Key Player 0.01 4 0.04
Threats
T1: Higher Tax Rate 0.04 4 0.16
T2: Higher VAT 0.03 4 0.12
T3: OECD High Income 0.03 1 0.03
T4: Inadequate linking areas of production and 0.01 2 0.02
processing with export gateways
T11: Matured industry 0.02 1 0.02
T12: Cyclical industry 0.02 1 0.02
T13: Raw material prices sensitivity 0.01 2 0.02
T14: Wi-Fi substitute 0.01 3 0.03
T15: Increased Competition 0.03 1 0.03
Total Score 1 4.39
*Weights and ratings scale have been created according to the Strategic Audit Guide
VIII. Analysis
TOWS Matrix
IFE S1: Above Average Net Profit margin. W1: Declining Operating
(Internal Factors) S2: Variety of products and services. Profit Margin.
S3: Huge production Capabilities. W2: Increase in copper prices
S4: Fast Decision Making. W4: No Clear Employee
S5: Expanding Capabilities. Development Plan.
S6: Cost Leadership. W5: No Talent Acquisition or
S7: Competitive Quality. Retention Program.
S8: Largest Market Share.
S9: Targets All Sectors.
S10: Cooperation with Competitors.
S11: Credibility (Quality and Delivery).
EFE S13: Strong historical track record.
(External Factors) S14: High revenue.
Opportunities SO (Max - Max) WO (Min – Max)
O5: GDP Growth
O6: Substantial Investments in 1- Open new production facility in 1- Get benefit of decreasing
Infrastructure Chile to get benefit of GDP growth (S1, interest rate to finance the

O8: Decreasing Interest rate S5, S7, S11, S14, S15 / O5, O6, O7, operation of the projected new
O9: Low Inflation Rate O14), (Market Development). production facility, the career
O12: Low Debt Ratio development plan and talent
O14: Enhancing Labor Skills 2- Economies of scale will hinder new acquisition program (W4, W5 /
and productivity competition (S2, S3, S6 / O6, O15), O8), (Market Development).
O15: Availability of Raw (Cost Leadership).
Material
O16: Quality Certificate 3- Staff diversity and geographical
O18: Huge customer base expansion to incorporate new services
O19: No substitute for electric on existing products (S2, S12 / O5),
cables (Related Diversification).
O20: High power over supply
4- Merge or acquire existing firm (S1,
chain
S2, S3, S4, S5, S7, S10, S11, S12, S15 /
O6), (Horizontal Integration)
5- Acquire cooper mine to insure
supply of raw materials (S1, S5, S12,
S14 / O14, O15) (Backward
Integration)
Threats ST (Max - Min) WT (Min - Min)
T1: Higher Tax Rate
T2: Higher VAT 1- Making extensive marketing 1- Capitalize on digital marketing
T3: OECD High Income campaigns, promotions and use of initiative to reduce operating cost
T4: Inadequate linking areas of celebrities depending on Prominent and hinder competition (W1 /
production and processing with brand image, outstanding customer T15), (Cost Leadership).
export gateways service and Geographic expansion to
T11: Matured industry avoid the threat of competition (S7,

T12: Cyclical industry
T13: Raw material prices S11, S13 / T15), (Market Penetration).
sensitivity
T14: Wi-Fi substitute 2- Acquire cooper mine to get rid of
T15: Increased Competition volatility of raw material prices (S1, S5,
S12, S14 / T12, T13) (Backward
Integration)

BCG
MARKET SHARE
" Cash Generation"
High Low
Question Mark
Fast Star
(Problem Child)
Market
Growt
h Rate
Slow Cash Cow Pets / Dog
- EL Sewedy Electric Cable has high market share & matured / slowly growing market, but
still has potential for growth with MEGA projects specially in developing and emerging
counties, consequently it will consider in Cash Cow stage.
- BY BCG hypotheses the Product generate excess cash (Generate high cash & consume
lows cash).
- In order to keep the product in CASH COW stage Company has to apply Product
Development Strategy which require cash for R&D and produce a new version of the
product that has some extra features like (Incorporate new services on existing products,
…)
- Market Development Strategy, the company can go for opening new markets in other
locations like Latin American especially Chile, as it has the needed resources (cooper)
necessary for electric cable production to compete in Latin American region. That will
affect the growth rate and product become again in the star stage.
- As long as the competition in slowly growing market, by the time market share will be
shrunk & reach decline. So Related Diversification Strategy will be recommended by
producing new related product that combines electric cables with turbine to attract
consumers heading towards all-in-one solutions, and it will be a question mark, and it
will use excess cash generated from cash cow.

- Market Penetration Strategy also could be used through extensive marketing
campaigns, promotions and use of celebrities, using excess cash generated from cash
cow. That will affect the growth rate and product become again in the star stage.
- Horizontal Integration also could be used through strategic alliance or joint venture with
competitor like Nexans in Chile infrastructure projects.
- Backward Integration by acquire cooper mine to benefit of availability of raw material

thus get rid of volatility of cooper prices using excess cash generated from cash cow.
GE-Mckinsey Directional Matrix IE-Matrix (Internal –External Matrix)
IFE T.W.S
5 – 3.67 3.67 - 2.33 2.33 - 1
3.67 – 5
IFE = 4.55
EFE = 4.39
EFE
T.W.S
2.33 - 3.67
1 - 2.33
By Analysis the business unit is located in a Strong Internal - Strong External cell so,
we will follow the Integration Corporate Strategy & Intensive Corporate Strategy as
we need to grow and build.
Horizontal Integration through strategic alliance or joint venture with competitor like
Nexans in Chile infrastructure projects.

Product Development Strategy which require cash for R&D and produce a new
version of the product that has some extra features like (Incorporate new services on
existing products, …)
Market Development Strategy, the company can go for opening new markets in
other locations like Latin American especially Chile, as it has the needed resources
(cooper) necessary for electric cable production to compete in Latin American region.
That will affect the growth rate and product become again in the star stage.
Market Penetration Strategy also could be used through extensive marketing
campaigns, promotions and use of celebrities, to gain power over competitors.
Related Diversification Strategy will be recommended by producing new related
product that combines electric cables with turbine to attract consumers heading
towards all-in-one solutions.
SPACE MATRIX
Internal strategic position External strategic position
CP IP
X- Axis (+ve)
Market share (-1)

(-ve)X- Axis
Growth potential (5)

Product & Service Quality (-1) Profit potential (5)
Economic of scale (-2) Capacity utilization (4)
Brand Image (-2)
Av = -6 / 4 = (-1.5) Av = 14 / 3 = 4.6
FP SP
Y- Axis (+ve)
Y- Axis (-ve)
Net Profit margin (4) Matured Industry (-2)

Revenue (4) Cyclical Industry (-3)
Working capital (4) Profitable Industry (-1)
Av = 12 / 3 = 4 Av = -6 / 3 = (-2)
Vector direction
x 3.1 CP+IP
y 2 FP+S
P

FP
5
CP 0 IP
SP
From the above Table & matrix;

- El Sewedy Electric Cables Co exists on the aggressive quadrant, so it means that org. has a
very good internal and external position.
- Aggressive strategies will be the best choice in that situation.
Recommended Strategies:-
1- Market penetration: Will be used through extensive marketing campaigns, promotions
and use of celebrities using strong financial position to penetrate Chile Market through
FDI then Latin American Market through exporting.
2- Market Development : As organization have a good competitive position & best

industry position.
3- Horizontal integration: Co. can merge or acquire other companies to increase its market
share.
4- Vertical integration: It also recommended to take over supplier (Mind) or distributer

(FW or backward integration) to try to cut costs/ control revenues to enhance financial
potion.

5- Product Development Strategy using The success of employees, R&D, structural and
strategic investment, and Technological knowhow to produce a new version of the
product that has some extra features like (Incorporate new services on existing products,
…)
6- Related and Unrelated Diversification Strategy will be recommended as it has a good

CP, FP, IP & SP, by producing new related product that combines electric cables with
turbine to attract consumers heading towards all-in-one solutions.
GRAND STRATEGY MATRIX

Rapid Market Growth
Quadrant 2 Quadrant 1
Strong
Weak Competitive
Competitive
Position Quadrant 3 Quadrant 4
Position
Slow Market Growth

► Quadrant I
► continued concentration on current markets (market penetration and market

development) and products (product development) is an appropriate strategy
List if Recommended Strategies repeated in all the 4 analytical tools
Strategy
Market Penetration
Backward Integration
Horizontal integration
IX. QSPM (quantitative Strategic Planning Matrix)
Market Backward Horizontal

Key Strategic Factors Weight Penetration Integration Integration
AS TAS AS TAS AS TAS
Strengths
S1: Above Average Net Profit margin 0.06 5 0.30 3 0.18 2 0.12
S2: Extensive and wide variety of electrical 0.06 1 0.06 3 0.18 4 0.24

cables products and services
S3: Largest production in Egypt with over
0.06 - - - - - -
50% market share
S5: The company has successfully entered the
Saudi Arabia, Syria, Ethiopia, Algeria and 0.07 3 0.21 1 0.07 5 0.35
Qatar.
S6: Copper and Plastics are manufactured and
consumed by group helps in cost leader and 0.07 3 0.21 1 0.07 5 0.35
producing
S7: Competitive quality of cables and services 0.06 2 0.12 4 0.24 3 0.18
S8: Largest market share in cable industry 0.06 4 0.24 1 0.06 3 0.18
S9: The company targets all three sectors:
0.06 4 0.24 1 0.06 2 0.12
public, private, and professional end-users
S10: El Sewedy has strong business links
with some competitors as its favored 0.06 2 0.12 1 0.06 4 0.24
customers
S11: Market credibility in terms of product
0.07 5 0.35 1 0.07 4 0.28
quality and delivery.
S12: Technical knowhow 0.07 - - - - - -
S14: High revenue 0.07 2 0.14 4 0.28 3 0.21
S15: Capital Spending Growth 0.05 1 0.05 5 0.25 3 0.15
Weaknesses
W1: Declining Operating Profit Margin. 0.06 - - - - - -
W2: Increase in copper prices 0.06 - - - - - -
W4: No Clear Employee Development Plan. 0.03 - - - - - -
W5: No Talent Acquisition or Retention
0.03 - - - - - -
Program.
Opportunities
O5: GDP Growth 0.02 2 0.04 4 0.08 3 0.06
O6: Substantial Investments in Infrastructure 0.10 - - - - - -
O7: Unemployment decrease 0.01 4 0.04 1 0.01 3 0.03
O8: Decreasing Interest rate 0.02 5 0.10 1 0.02 3 0.06
O9: Low Inflation Rate 0.01 3 0.03 1 0.01 5 0.05
O12: Low Debt Ratio 0.10 4 0.40 5 0.50 2 0.20
O14: Enhancing Labor Skills and productivity 0.10 - - - - - -
O15: Availability of Raw Material 0.10 - - - - - -
O16: Quality Certificate 0.10 3 0.15 1 0.10 2 0.20
O18: Huge customer base 0.10 5 0.50 1 0.10 4 0.40
O19: No substitute for electric cables 0.10 3 0.30 1 0.10 5 0.50
O20: High power over supply chain 0.02 - - - - - -

O21: High distribution power 0.01 5 0.10 1 0.01 3 0.03
O22: Industry Key Player 0.01 2 0.02 5 0.10 3 0.03
Threats
T1: Higher Tax Rate 0.04 - - - - - -
T2: Higher VAT 0.03 3 0.09 1 0.03 2 0.06
T3: OECD High Income 0.03 5 0.15 1 0.03 4 0.12
T4: Inadequate linking areas of production 0.01
3 0.03 1 0.01 5 0.05
and processing with export gateways
T11: Matured industry 0.02 - - - - - -
T12: Cyclical industry 0.02 5 0.10 1 0.02 3 0.06
T13: Raw material prices sensitivity 0.01 4 0.04 5 0.05 3 0.03
T14: Wi-Fi substitute 0.01 - - - - - -
T15: Increased Competition 0.03 5 0.15 1 0.03 4 0.12
STAS 4.38 2.67 4.42
Thus Market Penetration is the recommended strategy.
X. Defining International Strategis:
a. Exporting
Exporting is the most traditional and well established form of marketing of Elswedy cables
produced in Egypt in Chilean markets. No direct manufacturing is required in Chile, significant
investments in marketing are required. The tendency may be not to obtain as much detailed
marketing information as compared to manufacturing in marketing country; however, based on
situation of cable industry in Chile, this mode of entry will support Elsewedy in reaching a new
market in America and Europe and will make a competition between Elswedy and local cable
manufacturing in Chile.
The advantages of exporting are:
 manufacturing is home based thus, it is less risky than overseas based

 gives an opportunity to "learn" overseas markets before investing in bricks and mortar
 reduces the potential risks of operating overseas.

The crucial point here that Chile the largest copper manufacturing county and Elsewedy prices
will not be competitive due to missing the advantage of copper production in Chile that will
enhance the prices, moreover transportation cost will increase the prices and the price will not
match the prices range in Chile.
b. Foreign production
Besides exporting, other market entry strategies include licensing, joint ventures, contract
manufacture, ownership and participation in export processing zones or free trade zones.
c. Licensing:
Licensing is defined as "the method of foreign operation whereby a firm in one country
agrees to permit a company in another country to use the manufacturing, processing,
trademark, know-how or some other skill provided by the licensor"
Licensing involves little expense and involvement. The only cost is signing the agreement and
policing its implementation.
Licensing gives the following advantages:
· Good way to start in foreign operations and open the door to low risk manufacturing
relationships
· Linkage of parent and receiving partner interests means both get most out of marketing
effort
· Capital not tied up in foreign operation and
· Options to buy into partner exist or provision to take royalties in stock.
The disadvantages are:
· Limited form of participation - to length of agreement, specific product, process or

trademark
· Potential returns from marketing and manufacturing may be lost

· Partner develops know-how and so licence is short
· Licensees become competitors - overcome by having cross technology transfer deals
and
· Requires considerable fact finding, planning, investigation and interpretation.
Those who decide to license ought to keep the options open for extending market
participation. This can be done through joint ventures with the licensee.
d. Joint ventures
Joint ventures can be defined as "an enterprise in which two or more investors share ownership
and control over property rights and operation".
Joint ventures are a more extensive form of participation than either exporting or licensing. Joint
ventures give the following advantages:
· Sharing of risk and ability to combine the local in-depth knowledge with a foreign
partner with know-how in technology or process
· Joint financial strength
· May be only means of entry and
· May be the source of supply for a third country.
They also have disadvantages:
· Partners do not have full control of management

· May be impossible to recover capital if need be
· Disagreement on third party markets to serve and
· Partners may have different views on expected benefits.
If the partners carefully map out in advance what they expect to achieve and how, then many
problems can be overcome.

e. Ownership:
The most extensive form of participation is 100% ownership and this involves the greatest
commitment in capital and managerial effort. The ability to communicate and control 100% may
outweigh any of the disadvantages of joint ventures and licensing. However, as mentioned
earlier, repatriation of earnings and capital has to be carefully monitored. The more unstable the
environment the less likely is the ownership pathway an option.
Once in a market, companies have to decide on a strategy for expansion. One may be to
concentrate on a few segments in a few countries - typical are cashe wnuts from Tanzania and
horticultural exports from Zimbabwe and Kenya - or concentrate on one country and diversify
into segments. Other activities include country and market segment concentration - typical of
Coca Cola or Gerber baby foods, and finally country and segment diversification. Another way
of looking at it is by identifying three basic business strategies: stage one - international, stage
two - multinational (strategies correspond to ethnocentric and polycentric orientations
respectively) and stage three - global strategy (corresponds with geocentric orientation). The
basic philosophy behind stage one is extension of programmers and products, behind stage two is
decentralization as far as possible to local operators and behind stage three is an integration
which seeks to synthesize inputs from world and regional headquarters and the country
organization. Whilst most developing countries are hardly in stage one, they have within them
organizations which are in stage three. This has often led to a "rebellion" against the operations
of multinationals, often unfounded.
The recommended Strategy is Ownership to make use of raw material in Chile and to have all
facilities generated by Chilean country.
XI. Recommended Specific Strategy:
1. Business Strategy:
Aim Concentration Growth Directional Corporate Strategy: (Grow in

the same industry):

i. Horizontal Growth: Through Increase Market Share (Market
penetration, market development, product development), Elsewedy is
going to enter a new geographical area”Chile” seeking better results in
market shar, revenue and margins.
ii. Vertical Growth, backward integration by owning one of the
copper mining manufacturing to ensure a high quality of raw
material “mainly copper” .
2. Functional Strategy:
 Firm Infrastructure
- Management team in Chile: Move a head office to Chile to monitor and control
 Human Resources
- introduce a new compensation structure and more flexible work arrangements.
- introduce a reward plan
- Hire expert team leaders and management for support and services in side Chile.
 Technology Development
- Process Improvement: to instill a new culture for employees to solve problems as
they arose, eliminate defects, and reduce health and safety incidents even if these

actions cost money and decreased short-run production output to match with Chilean
culture.
 Procurement
The executive traveled with the regional sales manager to the dealership to
understand any problems being experienced, coach the dealer, and help the dealer
install better management systems
 Dealers
to make official contracts with dealers who have the knowledge about Chilean market
to support in gaining the planned market share and approach the existing customers.
b. Operational Strategy
 Inbound Logistics:
- Strategic branches location
- Manufacture location: to be near to mining factory that they will own
- Support availability to all dealers
 Operations:
- Reducing cost
- Improving quality
The Process objectives stressed developing a more service-oriented culture among
dealers, reducing costs, improving the efficiency, cost, and flexibility of the workforce
and production system.
 Outbound logistics
- Warehousing: manage production volume according to market volatility
- Disuniting the finished products through trained dealers
 Marketing & Sales
- Promotions
- Follow up
 Services

The Process objectives stressed developing a more service-oriented culture among
dealers
- To “Satisfy the Customer’s Expectations,” encompassed dealers, Elsewedy

immediate customer, and consumers, the ultimate purchasers of cables. The second
Customer objective, “Improve Company Image,” signaled the importance of
rebranding Elsewedy as an innovative producer of high-quality cables. The
foundational Potential and Growth Challenge objectives emphasized achieving a
high-performance culture, developing an attractive and innovative mix of products
and a long-term commitment to sustainability. Collectively, the executive team
expected that achieving the objectives in the four challenge areas would enable the
company to regain its #1 market position in Chilly.
- Customer care: focus to satisfy customer by more services and better quality
XII. Recommended Measure

Balance Score Card “BSC “to covers the main four Challenging Dimensions:
Finance, Customer, Internal Process, and Potential and Growth.
Financial
Strength
Customer Organizational
Satisfaction Learning
Business Process
Improvement
To apply BSC, there is must be BSC Committee to develope a strategy map based on
four Challenging Dimensions: Finance, Customer, Internal Process, and Potential and
Growth.

The BSC Management Group included a representative from each area in Elsewedy.
The representatives organized the rollout of the strategy across their business area and
coordinated the initiatives that would be executed within it. This group also led the
communication of the strategy, strategy maps, and scorecards to all employees.
In general they help translating the strategy into objectives, monitor progress and display
the correlations between cause and effect. The Strategy Map for example helped filtering
out four dimensions: Financial Challenges, Customer Challenges, Internal Processes
Challenges and Potential and Growth Challenges and additionally displays “how
intangible assets, such as employees, get converted into tangible financial results”. All
these dimensions have underlying metrics that illustrate what is necessary for conquering
the obstacle. This strategy map organized and separated key factors Elsewedy had to
work on if the wanted to succeed with their overall vision to evolve to #1 cable
manufacturer in North America. In a nutshell it translated high-level objectives into
unambiguous tasks that can be realized and supervised efficiently.
The BSC is a perfect tool to measure, define and monitor outcome. All challenges
inherited an objective, scope and the right metrics to review the current status. This was
extended within the entire company for all objectives and shop-floor employees could
immediately display the actual status of their work. When problems occurred they could
identified in a quickly manner and the responsible project team could work on a solution
with shop-floor workers and the responsible coordinator. This open-door policy of
management will reduce production shutdowns significantly and reduced resulting costs.

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El Sewedy Electric Cables

(International Strategy Planning)

Ahmed Mahmoud Ahmed Hammad

Supervised by: Dr. Saneya El Galaly, PhD

El Sewedy Electric Cables Company’s Timeline of Key Events.................................................................5

II. Current Situation.................................................................................................................................5

III. Corporate Governance.....................................................................................................................7

IV. External Environment: Opportunities and Threats...........................................................................9

Task Environment (Industry).................................................................................................................10

1) Threat of new entrants: Low......................................................................................................11

2) Bargaining power of buyers: Low..............................................................................................11

3) Threat of substitute products or services: Low...........................................................................11

4) Bargaining power of suppliers: Low..........................................................................................12

5) Rivalry among competing firms: Moderate...............................................................................12

V. Internal Environment: Strengths and Weaknesses..............................................................................17

El Sewedy Electric Cables Page 1 of 73

3) Research & Development..........................................................................................................29

4) Operations and Logistics............................................................................................................30

5) Human Resources Management.................................................................................................31

VI. Strategic Audit “External”.............................................................................................................37

1) Review Mission Statement........................................................................................................37

2) Drivers for Globalization:..........................................................................................................38

II. Chile External Environment: Opportunities and Threats...................................................................48

Task Environment (Industry).................................................................................................................50

1) Threat of new entrants: Low......................................................................................................50

2) Bargaining power of buyers: Low..............................................................................................50

3) Threat of substitute products or services: Low...........................................................................50

4) Bargaining power of suppliers: Low..........................................................................................50

5) Rivalry among competing firms: Moderate...............................................................................51

El Sewedy Electric Cables Page 2 of 73

GE-Mckinsey Directional Matrix IE-Matrix (Internal –External Matrix)..............................................58

GRAND STRATEGY MATRIX............................................................................................................61

IV. QSPM (quantitative Strategic Planning Matrix)............................................................................62

V. Defining International Strategis:........................................................................................................64

VI. Recommended Specific Strategy:..................................................................................................66

VII. Recommended Measure.................................................................................................................68

El Sewedy Electric Cables Page 3 of 73

El Sewedy Electric Cables Page 4 of 73

II. Current Situation

1. One of the largest producers of cables (Market leader)

1. Vision: To Be Your First Choice.

El Sewedy Electric Cables Page 5 of 73

El Sewedy Electric Cables Page 6 of 73

III. Corporate Governance

El Sewedy Electric believes that a clear governance structure is essential to

El Sewedy Electric Cables Page 7 of 73

El Sewedy Electric Cables Page 8 of 73

IV. External Environment: Opportunities and Threats

El Sewedy Electric Cables Page 9 of 73

El Sewedy Electric Cables Page 10 of 73

1) Threat of new entrants: Low

4) Bargaining power of buyers: Low

5) Threat of substitute products or services: Low

El Sewedy Electric Cables Page 11 of 73

7) Rivalry among competing firms: Moderate

El Sewedy Electric Cables Page 12 of 73

Opportunities & Threats Strategic Myopia (Filtration)

These factors will be removed as it has no impact on organization:

El Sewedy Electric Cables Page 13 of 73

El Sewedy Electric Cables Page 14 of 73

O5: GDP Growth O19: Huge production O11: Establishing new

*Factors exists in Low Priority (colored) Cells will be excluded.