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Telecom Egypt Project 2020-Final-pdf

Strategic Analysis Management (ESLSCA Business School Paris (Egypt))

Studocu is not sponsored or endorsed by any college or university

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Strategic Management
Submitted to: Dr. Ashraf Labib

Prepared by

• Ahmed Salah Nagy

• Aya Alaa El Deen
• Ghada Sayed Gomaa
• Mena Allah Yahia
• Radwa Nagy
• Reham Saber

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List of contents:

Section One

- 1.1 About Telecom Egypt …………….………………….………………………………………………… 2

- 1.2 Telecom Egypt Mission……………………………………………………………………………….. 3
- 1.3 Telecom Egypt Vision & Generic Strategy ………………..…………………………………. 4

Section Two

- 2.1 PESTEL Analysis …………………………………………….. …………………………...… 5-16

- 2.2 Porter five forces analysis…………………………………………………………….…. 17-22
- 2.3 Strategic Group map …………………………………………………………………….….23-24
- 2.4 Strategic Type ………………………………………………………………………………….25
- 2.5 Value Discipline Triade …………………………………………………………….……...26-27
- 2.6 BCG Matrix …………………………………………………………………………………...…28-29
- 2.7 Industry Matrix …………………………………………………………………………..……30-31
- 2.8 External Factor Analysis Summary (EFAS)…… ……………………………..…… 32-33
- 2.9 Internal Industry ……………………… ……………………………………………..………34
- 2.10 VRIO Analysis ……………………… ……….………………………………………….……35-39
- 2.11 Internal Factor Analysis Summary (IFAS)………………… ………………..……50
- 2.12 SFAS………………………………………………………………..………………………………51-52
- 2.13 TWOS Analysis……………………………………………………………………….……….53-54
- 2.14 Strategic Position and Action Evaluation (SPACE Matrix) ………….……54-55
- 2.15 Quantitative Strategic planning Matrix (QSPM)………..……………….…… 56-57
- 2.16 Balance Score Card for Market Penetration Strategic Objective………58-59
- 2.17 Balance Score Card for Product Development Strategic Objective..…60

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About Telecom Egypt

➢ Since its establishment in 1854, Telecom Egypt has played a pivotal role in driving growth
within the local ICT market capitalizing on its vast infrastructure, which is one of the
largest in the region. Its vast domestic and international infrastructure has helped it serve
various customer groups including consumers, enterprises, domestic and international
carriers. Through its five business units Telecom Egypt boasts a consolidated top-line of
EGP 22.8bn.

➢ In September 2017, Telecom Egypt introduced its new retail brand “WE” with the launch
of its mobile services. In a year from launch, “WE” offered the market’s first fully
integrated bundle combining all of its consumer services fixed and mobile, voice and data
in one bill taking its first step towards full convergence and demonstrating its agility as a
key player in the telecommunications industry. By end of 2018, Telecom Egypt fixed
voice customers grew to 7.9mn of which 5.2mn enjoyed fixed broadband connectivity,
while mobile customers reached 3.9mn.

➢ Telecom Egypt’s wholesale unit provides infrastructure, transmission and international

voice services to local mobile operators and internet service providers. In addition, it
provides international carries capacities on one of the largest submarine cable networks in
the world.

➢ Telecom Egypt Company S.A.E, together with its subsidiaries, provides

telecommunication services in Egypt. It also provides fixed-line services in the Middle
East.

➢ The company offers a range of fixed line and retail telecommunications services; and
wholesale telecommunications services. Its retail telecommunication services include
access, local, long distance an international voice, Internet and data, prepaid cards, and
other services; and wholesale services comprising broadband capacity leasing to Internet
service providers, and national and international interconnection services. In addition, the
company, through its interest in Vodafone Egypt, provides mobile interconnectivity
services. Further, it offers Internet and data services, including Internet broadband access,
data transmission services, and leased lines; information technology solutions; and various
models of local brand platform of personal computers, notebooks, and servers.

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➢ The company was formerly known as Arab Republic of Egypt National

Telecommunication Organization and changed its name to Telecom Egypt Company S.A.E
in March 1998. Telecom Egypt Company S.A.E was founded in 1854 and is based in
Cairo, Egypt.

Section One:

*Telecom Egypt Mission, Vision & Generic Strategy

OUR MISSION
 Telecom Egypt is committed to being the best source of total communication solutions,
while dedicating its resources to build a better tomorrow for its employees and
community through responsive services and honest business practices.

Analysis for the Mission:

Organization's mission shall include the below 8 components:

Product Yes
Market No
Technology NO
Self-Concept "Distinctive Yes
Competitive Advantage”
Philosophy Yes
Stakeholders Satisfaction No
Impact Society Yes
Sustainability & Profitability NO

The proposed mission

Telecom Egypt as Egypt’s first integrated telecommunication operator (4) is committed

to being the best source of total communication solutions (1) in Africa and the Middle East
(2), while dedicating its resources to build a better tomorrow for its employees and shareholders
(5) (6), as well as helps the community through its responsive services with latest technology
(3) (7) and strives for healthy financial rewards to investors (8).

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OUR VISION
 To shape the future of telecommunication services in the region through world-class
customer centricity, attraction and retention of highly talented people while maximizing
shareholder value.

The proposed Vision

 To be the leading telecommunication operator in Africa and the Middle East which
provide superior telecommunication services through world-class customer centricity,
attraction and retention of highly talented people while maximizing shareholder value.

Telecom Egypt Generic Strategy

TE generic strategy is Differentiation

TE is the only full service provider in Egypt, as TE provides wide range of products & services
that satisfies many segments of the market with the best price and quality. Also, TE achieves
operation profits while minimizing the COGS.
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Section Two:

*External Environment Analysis

PESTEL Analysis "Remote Environment"

Probability of Impact on
Political Factors Current Situation current Organization
situation lasts
for 5 years

Political Policy The political policy in Egypt is High affects only the
relatively stable all over the ability of WE to do
country, which decrease its more investment in
risk except in north Sinai. North Sinai
Stability of In recent 5 years, the High WE CEO changed 4
Government government has changed 3 times in short period
times and every time it is which has a high
associated with change of impact on its policy
minister of and directions.
telecommunication and
information technology.
Government The government to High Affect the execution
attitude towards facilitate of projects signed
foreign firms and procedures for with some
Foreign Policy joint cooperation international
and investment companies (Huawei -
with foreign ZTE).
companies.
Economic Factors
Inflation Rate Inflation surged in Egypt since Medium Increase the fixed cost
the floatation of the Egyptian which impacts the
pound in November 2016, pricing of services and
reaching a high record level in products.
July due to energy subsidy cuts,
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and gradually easing since July.

Egypt targets an inflation rate of
13 percent in its fiscal year
2018/2019 budget.
Interest Rate Focus Economics Consensus Medium Affect the payment of
Forecast panelists expect the loans that TE
overnight deposit rate to be cut
further ahead, projecting the
rate to end calendar year 2019
at 14.75% and calendar year
2020 at 12.75%.

Wages & Salaries Living Wage Family in Egypt

increased to 2710 EGP/Month
in 2018 from 2460
EGP/Month in 2017. Living Medium Increase purchasing
Wage Family in Egypt averaged power and increase the
2575 EGP/Month usage level of our
from 2015 until 2018, reaching services.
an all-time high of 2710
EGP/Month in 2018 .
Social Factors
Growth Rate of Is increasing in Egypt at an High Makes the usage of the
Population alarming rate specially the mobile social media is
sector of youth and teenagers very high
Life style Changing in life style towards High Makes the usage of the
more connectivity &networking online apps &games is
especially trend of the youth to very high
use digital technology for
shopping &playing online.
Values & beliefs People are attracted to the High Offering discounts &
offers & promotions all the promotions will attract
time, they are able to buy any as much customers as
service or anything they don't possible
need just because there's an
offer or discount applied on it.
Technological
Factors
New products and The continuous and great High The positive impact
services development in telecom after being a mobile
fields by the telecom vendors operator & with the
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provides Telecom Egypt more technology

opportunities to provide development
more services and achieve Telecom Egypt was
more revenues. the first to enter the
market with the 5G
technology in
addition to digital
transformation
provided to the smart
cities projects.
Improving High Telecom Egypt has
existing products great chance to
and services provide more services
and achieve more
revenues by replacing
Up to date with the latest existing products
technology & services has (legacy SDH - legacy
Positive impact on the PDH - Fixed switches)
organization as it led to that provide low
become one of the best service capacities
operators in the market & with low prices and
brings high sales & high exhaust large spaces
revenues. in its premises.
Possibilities for Marketing techniques vary High Telecom Egypt
improving for each sector, the aim is to succeeded in selling
marketing generate the highest level of very attractive bundle
techniques revenue from the network deals for customers
and strengthen customer by a package includes
loyalty. In consumer markets, home internet, Mob
focus on selling bundles of internet & extra calls/
products to customers, minutes.
while in business sectors aim
to build strong relationships
as a channel for marketing
additional services.
Ecological Factors
Go Green Going green means medium Our Company has
embracing a way of life that gone with this trend “
helps preserve the Go green “

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environment by reducing, By using electronic

reusing, and recycling items. way on the website
Going green concept is to get payroll through
learning and practicing an mails instead of
environmentally-mindful printed papers to try
lifestyle that contributes to reduce using
towards protecting the papers and keep
environment and environment safe.
preservation and
conservation of the natural
resources
The severe High Egypt had faced a
Climate change very severe storm
called “ Dragon
Storm” and Due to
heavy rainfall,
destructive winds,
and dust storms ,The
Climate change isn't just an
service was
environmental problem, but
interrupted in few
it started to have an impact
segments located in
on businesses around the
Egypt as a result of
world.
terrestrial cable cuts
Extreme weather events
resulting from the
including storms, floods,
unusually powerful
droughts and heat waves
storm
disrupt the operations of
Telecom Egypt
businesses and cause them
successfully and
extreme financial and
promptly has
physical damage. Severe
recovered the service
weather is a primary reason
on a number of
that climate change increases
subsea cable systems
risk for businesses. Because
in the aftermath of
of this increased risk,
the “dragon” storm.
insurance costs for many
companies will rise as well
Legal Factors

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Legal Tradition The telecommunication

and Effectiveness industry is often impacted by Medium
of legal system legislation issues. Particularly
issues with the government,
monopolies and customers.
Taxes Egypt applies Taxes High High taxes affect
on 4 main types of business negatively;
taxes: Cost is increased &
-Corporate income tax service/product price
22.5% -Personal income tax. increased accordingly
-Property tax. (like, prepaid cards and
-Tax in interests, dividends SIM cards) due to the
and Sales Tax, which is value added tax.
similar to Value Added Tax
(VAT) 14%

Laws affecting High TE officially launched

business firms its mobile network,
branded “We”, the
country’s long-
awaited fourth
mobile network and
became an integrated
telecom operator
after receiving a
license to build,
operate and manage
NTRA granted the Fourth 4G networks and
Generation (4G) mobile provide mobile
service license during the last services as a fourth
quarter of 2016 and launched mobile operator in
officially in September 2017 the Egyptian market.
Treating with The current agreement High It will support TE to
foreign nations between MCIT and Chinese grow in fiber optics
companies (Yangtze Optical also Huawei team
Fiber and Cable (YOFC) helps in building new
and Huawei Egypt) to tech system
establish a high-tech factory supporting in selling
for the company in Egypt, mobile bundles

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aiming to serve the

increasing domestic demands
and export services in the
region for
fiber optical cables and
mobile networks.
Patent trademark Medium Intellectual property
laws laws and other data
protection laws are,
in place to protect
the ideas and patents
of companies who
are only profiting
because of that
information. If there
is likelihood that the
data is stolen, then
Law No. 82 of 2002 on the Telecom Egypt will
Protection of Intellectual lose its competitive
Property Rights edge and have a7
Law No. 82 of 2002 is the high chance of
main IP law in Egypt; failure.
Discrimination Low
laws In Telecom Egypt
everyone is treated
Are placed by the fairly and given the
government to protect the same opportunities,
employees and ensure that regardless of gender,
everyone in Egypt is treated age, disability,
fairly and given the same ethnicity, religion or
opportunities. sexual orientation.
Health and safety Were created after Medium Telecom Egypt has to
laws witnessing the horrible be engaging in this
conditions that employees law, not only due to
were forced to work in the law but also out of
during and directly after the Telecom Egypt's
industrial revolution. personal feeling of
Implementing the proper ethical and social
regulations may be expensive
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Another point nowadays responsibility to other

during corona time, the human beings.
government give orders to Telecom Egypt
limit the capacity of supported the
employees to protect them government and give
from the virus . all the possibilities to
their employee to
Work from home so
TE was ready to
handle this situation.

Issue Priority matrix for remote environment:

1. Political

Political Policy Probability of impact on corporation

High Medium Low
Probability of High 5
occurrence
Medium
Low

• Political Policy is Opportunity for Telecom Egypt.

Stability of Government Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

• Stability of Government is Threat on Telecom Egypt.

Government attitude Probability of impact on corporation

High Medium Low
Probability of High 2
occurrence
Medium

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Low
• Government attitude is Opportunity for Telecom Egypt.
2. Economic

Inflation Rate Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 3
Low

• Inflation Rate is Threat on Telecom Egypt.

Interest Rate Probability of impact on corporation

High Medium Low
Probability of High 5
occurrence
Medium
Low

• Interest Rate is Threat on Telecom Egypt.

Wages& salaries Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 3
Low

• Wages& salaries is Opportunity for Telecom Egypt.

3. Social

Population Growth Rate Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium

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Low

• Population Growth Rate is Opportunity for Telecom Egypt.

Life style Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

• Life style is Opportunity for Telecom Egypt.

Values & beliefs Probability of impact on corporation

High Medium Low
Probability of High 2
occurrence
Medium
Low

• Values & beliefs is Opportunity for Telecom Egypt.

3. Technological

New products & services Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

• New products and services is Opportunity for Telecom Egypt.

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Improving Probability of impact on corporation

existing products &services High Medium Low
Probability of High 2
occurrence
Medium
Low

• Improving existing products and services is Opportunity for Telecom Egypt.

Improving Probability of impact on corporation

marketing techniques High Medium Low
Probability of High 2
occurrence
Medium
Low

• Improving marketing techniques is Opportunity for Telecom Egypt.

4. Ecological

Go Green Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 4
Low

• Go Green is Opportunity for Telecom Egypt.

The severe Climate change Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 3
Low
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• The severe Climate change is Threat for Telecom Egypt.

5. Legal

Legal Tradition and Probability of impact on corporation

Effectiveness High Medium Low
of legal system
Probability of High
occurrence
Medium
Low 6

• Legal Tradition and Effectiveness of legal system is Threat on Telecom Egypt

Taxes Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 2
Low

• Taxes is Threat on Telecom Egypt

Laws affecting business firms Probability of impact on corporation

High Medium Low
Probability of High 3
occurrence
Medium
Low

• Laws affecting business firms is an opportunity to Telecom Egypt

Treaties with foreign nations Probability of impact on corporation

High Medium Low
Probability of High 3
occurrence
Medium
Low

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• Treaties with foreign nations is an opportunity to Telecom Egypt

Patent trademark laws Probability of impact on corporation
High Medium Low
Probability of High 5
occurrence
Medium
Low

• The patent trademark laws is Threat on Telecom Egypt

Discrimination laws Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium
Low 9

• Discrimination laws is Threat on Telecom Egypt ,but can be neglected

Health and safety laws Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 4
Low

• Health and safety laws is Threat on Telecom Egypt

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Industry Environment / Microenvironment Analysis (Porter’s five forces analysis):

1. Bargaining power of supplier:

Telecom Egypt suppliers can be divided into:

1- Transmission equipment suppliers:

❖ These are the companies that provide the equipment that built the core of transmission for
telecom Egypt that gives it a competitive advantage. For example (Nokia - Huawei - ZTE -
Ciena - Ericsson- Cisco).
❖ Now Huawei and Nokia have great market share due to the technology and price they
provide than other companies.
❖ Since there are many companies in this filed so it does not pose a threat to Telecom
Egypt.

2- Switching equipment suppliers:

❖ These are the companies that provide the equipment that provide the voice and data
service to telecom Egypt customers over its PSTN that gives it the competitive advantage.
For example (Nokia - Huawei - ZTE).
❖ Since there are many companies in this filed so it does not pose a threat to Telecom
Egypt.

3- Submarine Equipment/service suppliers:

❖ These are the companies and consortium that provide the internet and international
communication to telecom Egypt that gives it a competitive advantage. For example of
service suppliers (MENA - HAWK - TE North - IMEWE - SEMWE), Equipment Suppliers
(Infinera - TYCO - Nokia- Huawei).
❖ Since there are many companies in this filed so it does not pose a threat to Telecom
Egypt.

4- IP Core Equipment suppliers:

❖ These are the companies that provide the equipment that built the IP-core of internet
service for telecomegypt. For example (Cisco - Huawei - Juniper - ZTE).
❖ Since there are many companies in this filed so it does not pose a threat to Telecom
Egypt.

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Bargaining power of Probability of impact on corporation

supplier High Medium Low
Probability of High
occurrence
Medium 7
Low

• Bargaining power of supplier is threat on Telecom Egypt, but can be neglected.

2. Bargaining power of buyers/Customers:

Telecom Egypt buyers can be divided into:

1- Transmission services buyers:

❖ Telecom Egypt is the market leader of transmission services because of its strong
infrastructure throughout the country but the other operators are trying to compete in this
aggressively.

Transmission services Probability of impact on corporation

buyers High Medium Low
Probability of High
occurrence
Medium 4
Low

• Transmission services buyers are threat on Telecom Egypt.

2- Fixed telephone services buyers:

❖ Telecom Egypt is the market leader of fixed telephone services, but according to the rapid
development in mobile market and changing customer needs and interests they prefer
mobile services rather than fixed telephone services, also the other operator are working
on providing the fixed line based on TE infrastructure.

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Fixed telephone services Probability of impact on corporation

buyers High Medium Low
Probability of High 1
occurrence
Medium
Low

• Fixed telephone services buyers are threat on Telecom Egypt.

3- Internet services buyers:

❖ Telecom Egypt is the market leader with the largest market share (more than 70%) over
its network.
❖ According to reputation damage due to some problems in customer services, customers
go to get internet services from other ISPs.
❖ According to rapid development in Smart phones, customers go to get internet services
through mobile networks.

Internet services buyers Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

• Internet services buyers are threat on Telecom Egypt.

4- Mobile services buyers:

Telecom Egypt started its 4G mobile network in September 2018 in market has already 3 mobile
operators that provide voice and data services through a lot of offers, but Telecom Egypt has a
great competitive advantage through data services it offers.
❖ For this service, there is a fierce competition between operators due to similar offering and
competitive marketing campaigns.

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Mobile services buyers Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

• Mobile services buyers are threat on Telecom Egypt.

3. Threat of Substitutes:

Telecom Egypt is the monopoly of transmission services, but recently, there is a great threat
because other telecommunication operators are going to get the license to build their own
network.

As a global trend the fixed telephone services are decaying according to the rapid
development in mobile market and changing customer needs and interests.

Emerging of alternatives means of communication as a result of technological innovation

based on the internet like such as online chatting using a lot of applications such as (Facebook
messenger - WhatsApp - IMO - viper - etc.) is a huge threat for all telecom operators, these
threats are going to affect the company strategy in a way that the company is left with no
choice of either to form strategic alliances with above companies or to commit to considerable
amount of R&D in order to introduce innovative services to the market.

Free online calls/online Probability of impact on corporation

chatting High Medium Low
Probability of High 1
occurrence
Medium
Low

• Free online calls/online chatting is threat on Telecom Egypt.

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4. Threat of new Entrants

❖ It is less likely to get new entrants in the (Transmission - Submarine cables) because it
needs a lot of cost, permits and time to be able to build a competitive network to what
Telecom Egypt already has.

❖ It is less likely to get new entrants in the fixed telephone service field because the less
demand for it form the customers need and lots of permits and time it needs.

❖ For the mobile network the market has already 4 operators currently working, it’s less
likely to have a new license from the government and a new rival.

❖ The usage of mobile network is increasing due to increasing in population, changing

culture for adapting new ways of communication, and the increase in smart phone usage
which causes market segments to constantly increase that there are always opportunities
for new market players.

New operator /Service Probability of impact on corporation

provider High Medium Low
Probability of High
occurrence
Medium
Low 6

• New operator /Service provider is threat on Telecom Egypt.

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5. Rivals Analysis:

✓ Importance of rivals analysis lay on studying many aspects such as

• Industry attractiveness.
• The aggressive competitors in market.
• Inflation rate.
• Market Growth.
• Customer perception to that product
• Impotence of brand to customers.
• Cost and customer sensitivity.
• Customer perception.
• Number of competitors.
• Barriers of entry/exist.
• Suppliers /Distributers.
• ROI.

✓ To collect rivals information there are many tests and tools.

Rivals “competitive intelligence”:

1) Strategic group map.
2) Strategic type.
3) Four corner analysis.
4) Value discipline triad.
5) BCG matrix.
6) Industry matrix.
7) EFAS

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1) Strategic group map:

Strategic group map helps organizations to define the scope of firm`s and its competitive
advantage by determining customer’s list of requirements then choose the first two priorities for
customer.
Telecommunication services in Egypt are provided by four operators: TE, Vodafone,
Orange and Etisalat.

1st step: Identify competitive characteristics

Competitive characteristics of telecommunication industry in Egypt are

Competitive
TE Vodafone Orange Etisalat
characteristics
Price Medium High High Medium
Quality Range Medium High Medium Medium
Geographic
National Global Global Regional
Coverage
Extent of
Strong Strong Strong Strong
branding
Product Line
Wide Wide Wide Wide
Breadth
Distribution
Some Some Some All
Channels
Product
Full Limited Limited Limited
Differentiation

Price and quality range are the most important competitive advantages.

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2nd step: Plot the firms on a two variable map

3rd step: Draw a circle for each group

Conclusion:

The two priorities competitive Price & quality range

advantages
Direct competitors Etisalat &Orange
The biggest market share company Vodafone

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2) Strategic Type:

It is a kind competitive intelligence that help organizations to choose its strategic direction to
maintains stable growth, keeps its current markets and current customer satisfaction with
moderate emphasis on innovation there are four of Strategic Type which are prospectors,
defenders, Analyzer, and reactors.

After applying strategic group map analysis we found that direct competitors follow the same
strategic type which is Analyzer.

Strategic Direct
Definition
Type Competitors
Protects current markets, maintains stable growth, serves current
customers, and Maintains current markets and current customer Orange
Analyzer satisfaction with moderate emphasis on innovation. &Etisalat

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3) Value Discipline Tirade:

Main objective is to define the corporate position in the generic strategies comparing with all
competitors.
It consists of three main variables:
1- Product Leadership.
2- Operational Excellence.
3- Customer Intimacy.

Product Leader Ship

TE

Vodafone

Orange

Etisalat

Vodafone Vodafone

Etisalat Etisalat

TE Orange

Orange TE
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Operational Excellence Customer Intimacy

Product Leadership Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

Operational Excellence Probability of impact on corporation

High Medium Low
Probability of High
occurrence
Medium 4
Low

Customer Intimacy Probability of impact on corporation

High Medium Low
Probability of High 1
occurrence
Medium
Low

Conclusion:

• TE position is perfect in the differentiation "product leadership" which is the main generic
strategy of TE.
• TE position in the cost leadership "operation excellence" generic strategy is accepted
• TE position in the focus "customer intimacy" generic strategy isn't accepted and issue
priority matrix indicates that TE need to set objective strategy to enhance that position.

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4) BCG Matrix:

The BCG matrix is a strategic management tool which helps in analyzing the position of a
strategic business unit and the potential it has to offer. The matrix consists of 4 classifications that
are based on two dimensions. The first dimension is the industry or market growth rate. The
second dimension is the relative market share of the strategic business unit. Strategic business
units are placed in one of these 4 classifications.

TE provides an integrated telecom services (Home & Consumer, Enterprise Solutions, Fixed
Lines & Domestic Wholesale, International Carriers, International Customers & Networks). TE as
an organization is in the maturity stage of their product life cycle.
To understand clearly let’s list all the products &services that TE offer as their strategic business
units with their revenues ,define the market share for each product then calculate the relative
market share and identify the market growth rate depending on the secondary data.

Largest
%of Firm Relative
competitors Market
Revenues corporate market market
market Growth Rate
Revenues share share
share
We Mobile 176,400,502 8% 30% 10% 0.33 42%
ADSL 250,040,935 20% 15% 75% 5 19%
Enterprise
112,825,470 12% 9% 85% 9.4 27%
solutions
Fixed lines 82,605,430 5% 8% 88% 11 10%
Telegram 2,605,430 .5% 10% 8% 1.25 4%
International
and
Wholesale
Domestic
190,087,193 12% 12% 70% 5.8 26%
wholesale
International
108,947,821 12% 5% 92% 18.4 28%
Carriers
International
380,285,690 32% 4% 90% 22.5 22%
Business unit
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(Submarine
Cables)

WE
International
Mobile
& Wholesale –
Enterprise
Solutions

ADSL & Telegram

Fixed Line

Conclusion:
• TE will concentrate its investment towards International &Wholesale and Enterprise
Solutions products due to high market growth and market share "Star Products".
• TE would invest in a limited way in ADSL and fixed line products to sustain its high
market share and profits for the current market "Cash Cow Products".
• TE should also invest in a limited way in telegram product to increase its market share and
move that product into cash cow position "Dog Product".
• TE must predict and solve issue of WE mobile product to enhance its market share and
move that product into star position "Question Mark Product".

BCG Matrix "International Probability of impact on corporation

&wholesale and Enterprise High Medium Low
Solutions"
Probability of High 1
occurrence
Medium

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Low

• BCG Matrix is Opportunity for Telecom Egypt due to star products like the
International &Wholesale and the Enterprise Solutions.
5) Industry Matrix:
Telecommunication TE Vodafone Etisalat Orange
Industry Key success Weight
factors Rate W.S Rate W.S Rate W.S Rate W.S

Network coverage .28 3 .84 4 1.12 3 .84 4 1.12

Price .26 3 .78 4 1.04 3 .78 3 .78
Infrastructure .15 5 .75 3 .45 3 .45 3 .45

Product .09 5 .45 3 .27 4 .36 3 .27

Differentiation
Sufficient customer .07 2 .14 4 .28 4 .28 3 .21
care
Distribution channels .1 3 .3 3 .3 4 .4 3 .3
Improving MKT .05 3 .15 3 .15 5 .25 2 .1
techniques
Sum Weight 1 3.41 3.61 3.36 3.23

• The main objective of industry Matrix is to help organizations knowing its position in the
industry compared to other competitors according to the main key success factors in that
market.
• Each industry has different key success factors.

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COMPETETIVE MATRIX CHART

WE Weighted score Voda W.score Etisalat W.score Orange W.score
1.12

1.12

1.04

1
0.84
0.84

0.78

0.78
0.78

0.75

0.75
0.75

0.75
0.45
0.45
0.45

0.45

0.28
0.28
0.27
0.27
0.27

0.25
0.21

0.15
0.15
0.14

0.1
Conclusion:

TE position in the telecommunication industry is good compared to competitors and has

competitive advantages in both infrastructure and product differentiation key success factors,
but need more investment to improve the customer care services and Network coverage factors,
TE has no issue in Distribution channels and can invest less in this factor.
Industry Matrix Probability of impact on corporation
High Medium Low
Probability of High 1
occurrence
Medium
Low

• Industry Matrix is Opportunity for Telecom Egypt.

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External Factor Analysis Summary (EFAS)

EFAS is a technique aimed at evaluating the external environment of the company, and the
performance of the company in these environments.

EFAS model includes a set of opportunities and threats for the company, which allows the
company prioritizing between factors.

The weighted score used to evaluate optimal strategic objectives for the company beside the
internal environment analysis.

Opportunities Weight Rating Weighted

Score
1 Telecommunication Industry Matrix 0.08 4 0.32
2 BCG Matrix "International &wholesale and 0.08 4 0.32
Enterprise Solutions"
3 Population Growth Rate 0.06 5 0.30
4 Life Style 0.05 4 0.20

5 New products and services 0.05 4 0.20

6 Government attitude 0.03 3 0.09

7 Values & beliefs 0.02 3 0.06

8 Improving existing products 0.04 4 0.16

9 Improving marketing techniques 0.05 3 0.15

10 Wages &Salaries 0.03 3 0.09
11 Treaties with foreign nations 0.03 3 0.09
12 Laws affecting business firms 0.05 3 0.15
Subtotal 0.56 2.13

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Threats Weight Rating Weighted

Score
1 Stability of government 0.04 2 0.08
2 Fixed telephone services buyers 0.09 5 0.45
3 Internet services buyers 0.04 5 0.2
4 Mobile services buyers 0.05 3 0.15
5 Free online calls/online chatting 0.05 3 0.15
6 Taxes 0.04 2 0.08
7 Inflation Rate 0.08 2 0.16
8 The severe Climate change 0.05 3 0.15
Subtotal 0.44 1.42
Total 3.55

Conclusion:
Since the total weighted score is higher than 3, this means that TE position is accepted and
business is doing well.

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Internal Industry

* Value Chain Analysis

4 Management & Administrative Services

3 Human Resource Management
Competitive 2 Technology Development Support
Advantage 1 Procurement Activities
5 4 3 2 1
Service Marketing Outbound Operations Inbound
& Sales Logistics Logistics

Primary Activities

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*VRIO Analysis

Activity VRIO
Value Rareness Imitability Organization
*Inbound Logistics
"Purchasing
Department"
   
Cost I/P

Quality I/P    

Time I/P    

Quantity I/P    

*Operations
"Production
Department"

Waiting time    

Availability    

Durability

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   

Multifunction
   

*Outbound
Logistics
"Distribution Unit"

Geographical    
Coverage
Distribution time
   
Distribution Cost
   
Relation with
distributers    
Sales
Representatives    
productivity

*Marketing & Sales

Activities

Corporate Brand    

Corporate    
Reputation
   
Marketing Mix
Customer &    
Partners
Relationship

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* Service
"After Sale
services"

Quality    
Price    

Time    

Quantity    

*Procurement

Strategic relation
with    
suppliers/vendors
   
Reduce inventory
cost
   
Agility

*Technology
Development
"R&D"

Improve existing
products &    
services
Develop new    
products &
services

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Develop existing    
/new technology

*HRM

organization
structure    
Job description    
Selection criteria    
Training &improve    
employees skills
salaries &    
incentives

*Management &
Administrative
Services

Financial Dept.

1-Net Profit Margin

   
2-Gross Profit
Margin    

3-Debt ratio
   
4-Debt Equity
ratios    
5-Liquidity ratios
   
6-Return on equity
   
IT Dept.
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1-Operational    
Excellence
2-Continous    
Improvement
3-Customer    
&supplier intimacy
4-Response time    

Financial Analysis:

Income Statement:
Condensed Consolidated
2014 2015 2016 2017 2018
Statement of income
(In EGP mn) FY FY FY FY FY

Operating revenues 11,138 12,158 12,184 13,950 18,567

Operating costs (COGS) (6,467) (6,787) (7,120) (7,920) (11,215)

Gross profit 4,671 5,371 5,064 6,030 7,353

Operating profit 1,906 2,024 1,537 1,991 2,122

Net finance (cost) /income 878 231 300 693 (646)

Net profit for the period 2,960 1,420 2,999 2,673 3,154

Total Equity 28,316 26,774 28,974 29,745 30,588

Total Assets 32,675 32,293 34,929 41,488 52,383

Gross profit 4,671 5,371 5,064 6,030 7,353

Balance Sheet:

Condensed consolidated statement

of financial position 2014 2015 2016 2017 2018
(In EGP mn) FY FY FY FY FY

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Assets
Non-current assets
Total non-current assets 21,608 22,800 25,761 33,000 43,826
Current assets
Inventories 459 438 557 662 1,184
Total current assets 11,067 9,494 9,167 8,488 8,558
I Total assets 32,675 32,293 34,929 41,488 52,383
Equity and long-term liabilities
Equity
Total Equity 28,316 26,774 28,974 29,745 30,588
Non current liabilities
Total long term liabilities 487 938 685 1,379 2,680
Current liabilities
Total current liabilities 3,871 4,582 5,269 10,364 19,115
Total Liabilities 4,359 5,519 5,954 11,743 21,795
Total equity and liabilities 32,675 32,293 34,929 41,488 52,383

Liquidity Ratios:

Liquidity /
Financial Industry
Health Avg. 2014 2015 2016 2017 2018 Comments
Low values for the current ratio (values less than 1) indicate that
Current Ratio 0.92 2.86 2.07 1.74 0.82 0.45 a firm may have difficulty meeting current obligations
Quick ratio is viewed as a sign of a company's financial strength
or weakness A company with a quick ratio of less than 1 cannot
currently pay back its current liabilities; it's the bad sign for
Quick Ratio 0.45 2.74 1.98 1.63 0.76 0.39 investors and partners.

How much the company relies on debt to finance assets The

higher the ratio, the greater the risk associated with the firm's
operation. A low debt ratio indicates conservative financing with
Debt 0.6-0.7 0.13 0.17 0.17 0.28 0.42 an opportunity to borrow in the future at no significant risk.

high debt-to-equity ratio indicates that a company may not be

Debt/Equity 0.12 0.15 0.21 0.21 .0.39 0.71 able to generate enough cash to satisfy its debt obligations

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Profitability Ratios:

Profit 2014 2015 2016 2017 2018 Comments

ability
Net Profit 26.58 11.68 24.62 19.16 16.99 higher net profit margin means that a company is more efficient
Margin [ at converting sales into actual profit
%]
Gross 41.93 44.18 41.56 43.23 39.60 Gross margins reveal how much a company earns taking into
Profit consideration the costs that it incurs for producing its products or
Margin % services.
it is a measure of how well a company controls its costs.

Return on 10.45 5.30 10.35 8.98 10.31 The higher the ROE, the better. But a higher ROE does not
Equity % necessarily mean better financial performance of the company.
As shown above, in the DuPont formula, the higher ROE can be
the result of high financial leverage, but too high financial
leverage is dangerous for a company's solvency.

Return on 9.06 4.40 8.59 6.44 6.02 ROA gives an idea as to how efficiently management use
Total company assets to generate profit,
Assets
%

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Revenue Breakdown Analysis:

REVENUE
BREAKDOWN 2014 2015 2016 2017 2018

(In EGP 000's) (AVG) FY I (AVG)FY I (AVG)FY I (AVG) FY I (AVG)FY

Home Services (HS) 746,058 782,138 891,895 1,056,884 1,415,568
Enterprise Solutions
(ES) 411,035 469,864 476,367 597,132 697,811
Domestic Wholesale
(DW) 564,584 675,706 731,644 751,113 825,958
International Carriers
Affairs (ICA) 785,619 766,666 744,345 800,844 1,217,044
International Customers
& Networks (IC&N) 277,249 345,008 201,800 281,531 485,439

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Internal Factor Analysis Summary (IFAS)

IFAS is an analysis of evaluating internal factors "Company strengths & weaknesses" that affect
the sustainability of a company. IFAS helps management formulates and implements the
company's strategy.

Weight (effect Rating

No. Strengths Weighted Score
to firm) (advantage)
1 Operations /Multifunction 0.08 4 0.32
2 Outbound Logistics /Geographical Coverage 0.07 4 0.28
Management & Administrative Services 0.06 4 0.24
3
/Financial Dept. /Net Profit Margin
Technology Development / Improve existing
4 0.06 4 0.24
products & services
Technology Development / Develop new
5 0.05 3 0.15
products & services
6 Outbound Logistics /Distribution cost 0.05 3 0.15
Outbound Logistics / Sales Representatives
7 0.05 3 0.15
productivity
8 Marketing & Sales /Corporate Brand 0.05 3 0.15
Procurement /Strategic relation with
9 0.04 3 0.12
suppliers/vendors
Management & Administrative Services/
0.03 3 0.09
10 Financial Dept. /Dept. ratio

11 Management & Administrative Services/IT

Dep. /Continuous Improvement 0.03 0.09
3

Sub Total 0.57 1.98

Weight (effect Rating
No. Weakness Weighted Score
to firm) (defect)
1 Marketing & Sales /Corporate Reputation 0.06 4 0.24
Management & Administrative Services 0.06 4 0.24
2
/Financial Dept. /Debt Equity ratios
3 Marketing & Sales /Marketing Mix 0.05 3 0.15
Technology Development /Develop existing
4 0.05 3 0.15
/new technology
5 Services /After Sale services /Quality 0.05 3 0.15
6 Outbound Logistics /Distribution time 0.05 2 0.1
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7 Operations /Availability 0.04 3 0.12

Management & Administrative Services
8 0.04 3 0.12
/Financial Dept. /Liquidity ratios
Management & Administrative Services/IT
9 0.03 4 0.12
Dep. /Customer &supplier intimacy
Sub total 0.43 1.39
Total 1 3.37

Conclusion:

Telecom Egypt business is doing well & has strength factors that can be used efficiently to
overcome most of its weakness’s factors.

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SFAS
No Weig Ratin Weighted
Factors
. ht g Score
Strengths
1 Operations /Multifunction 0.07 4 0.28
2 Outbound Logistics /Geographical Coverage 0.06 4 0.24
Management & Administrative Services /Financial Dept. /Net 0.05 3 0.15
3
Profit Margin
Technology Development / Improve existing products &
4 0.04 3 0.12
services
5 Technology Development / Develop new products & services 0.04 4 0.16
Weaknesses
1 Marketing & Sales /Corporate Reputation 0.06 4 0.24
Management & Administrative Services /Financial Dept. /Debt 0.05 4
2 0.2
Equity ratios
3 Marketing & Sales /Marketing Mix 0.05 3 0.15
4 Technology Development /Develop existing /new technology 0.04 3 0.12
5 Services /After Sale services /Quality 0.03 3 0.09
Opportunities
1 Telecommunication Industry Matrix 0.07 4 0.28

BCG Matrix "International &wholesale and Enterprise 0.07 4 0.28

2
Solutions"
3 Population Growth Rate 0.06 5 0.30
4 Life Style 0.05 4 0.20
5 New products and services 0.04 3 0.12
Threats
1 Inflation Rate 0.05 2 0.1
2 Fixed telephone services buyers 0.06 5 0.3
3 Internet services buyers 0.04 5 0.2
4 Mobile services buyers 0.04 3 0.12
5 Free online calls/online chatting 0.03 3 0.09
Total 1 3.74

Conclusion:
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Indication of SFAS for Telecom Egypt objective strategy can be through expansion or stability
strategies, but we need more analysis to define the final decision that TE will go through.
Tows Analysis:

Strengths Weakness
Opportunities S1- Outbound Logistics W1- Marketing & Sales
O1- Telecommunication /Geographical Coverage. /Corporate Reputation.
Industry Matrix. S2- Operations /Multifunction. W2- Management &
O2- BCG Matrix "International S3- Management & Administrative Services.
&wholesale and Enterprise Administrative Services /Financial Dept. /Debt Equity
Solutions". /Financial Dept. /Net Profit ratios.
O3- Population Growth Rate Margin. W3- Marketing & Sales
"Demographic changes" S4- Technology /Marketing Mix.
O4- Life Style. Development/Improve existing W4- Technology
O5- New products and services. products& services. Development /Develop
S5- Technology Development / existing /new technology.
Develop new products & W5- After Sale services
services. /Quality.
O3 O4 O5 S1 S4 S5 W3 W1 W2 O1 O2 O5 T4
W4 T3 T4 T5

SO Strategies WO Strategy
Product Development and Market Penetration
Market Penetration
Threats T1 T2 S2 S3 W2 W5 T1
T1- Inflation Rate.
T2- Fixed telephone services
buyers. ST Strategies WT Strategy
T3- Internet services buyers. Joint venture and Related No need here for grand
T4- Mobile services buyers. Diversification strategy "retrenchment" as
T5- Free online calls/online TE has a good position in
chatting. the market and industry
also TE has accepted net
profit at most of provided
products and services.

Conclusion:
After applying TOWS analysis, TE has 4 grand strategic alternatives to depend on:
1- Product Development
2- Market Penetration.
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3- Joint Venture.
4- Related Diversification.
Note:
TOWS analysis result can't be enough for TE to confirm final decision of the grand strategy and
still need more analysis like SPACE Matrix and QSPM.

Strategic Position and Action Evaluation (SPACE Matrix):

SPACE matrix tool helps to identify the organization strategic direction, so TE can identify which
appropriate strategy direction will apply (Aggressive, Competitive, Conservative or Defensive).

Items Rate Financial Strengths (FS) Rate Environmental Stability (ES)

Management & Administrative
Services /Financial Dept. /Net Population Growth Rate
1 +3 Profit Margin -3 "Demographic changes"
2 +2 Low liquidity Ratios -3 Life Style
3 -3 New products and services
Total +5 -9

Average +5/2= +2.50 -9/3= -3.00

Total Y
score +2.50-3.00= - 0.50
Competitive Advantages
Items Rate Industry Strength (IS) Rate (CA)
Telecommunication Industry
1 +4 -2 Operations /Multifunction
Matrix
BCG Matrix Outbound Logistics
2 +4 -2 /Geographical Coverage
Technology Development /
Improve existing products &
3 -2 services
Technology Development /
Develop new products &
4 -2 services
Total +8 -8

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Average +8/2= +4.00 -8/4= -2.00

Total X
score +4.00-2.00= +2.00

Conclusion:
TE will apply the competitive strategic direction, which eliminate the strategic alternatives into
market penetration and product development only and TE still need more analysis for the final
grand strategic objective.

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Quantitative Strategic planning Matrix (QSPM)

Product Development Market Penetration

Strengths
Weig Attra Total Attract Total
Key Factors ht ctive Attract iveness Attractive
ness iveness ness
1 Operations /Multifunction 0.07 3 .21 3 .21
Outbound Logistics /Geographical
2
Coverage 0.06 3 .18 4 .24
Management & Administrative
3 Services /Financial Dept. /Net Profit
Margin 0.05 3 .15 3 .15
Technology Development / Improve
4 0.04 4 4 .16
existing products & services
.16
Technology Development / Develop
5 0.04 5 4 .16
new products & services
.20
Weaknesses
1 Marketing & Sales /Corporate Reputation 0.06 3 4 .24
.18
Management & Administrative Services
2 .15
/Financial Dept. /Debt Equity ratios
0.05 3 .15 3

3 Marketing & Sales /Marketing Mix 0.05 3 4 .20

.15

Technology Development /Develop

0.04 4 4 .16
existing /new technology
4 .16
Services /After Sale services /Quality 0.03 3 3 .09
5 .09

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Opportunities
1 Telecommunication Industry Matrix
0.07 4 .28 4 .28
2 BCG Matrix 0.07 4 .28 5 .35
3 Population Growth Rate 0.06 4 .24 4 .24
4 Life Style 0.05 4 .20 4 .20
5 New products and services 0.04 5 .20 5 .20
Threats
1 Inflation Rate 0.05 2 .10 2 .10
2 Fixed telephone services buyers 0.06 3 .18 4 .24
3 Internet services buyers 0.04 3 .12 4 .16
4 Mobile services buyers 0.04 3 .12 3 .12
5 Free online calls/online chatting 0.03 3 .09 3 .09
Total 1 3.44 3.74

Conclusion:
TE will apply market penetration strategic objective as higher total attractiveness score, but TE
should put in consideration the product development strategy as its total attractiveness score is
more than 3 and TE resources with good position in market can deal with more than one
alternative strategy.
 Market penetration Strategic Objective:
 Increase market share for WE mobile services in Egypt market by 6% in the next 5 years.

 Product Development Strategic Objective:

 Leading Telecommunication market by implementing new services like digital transformation in
the New Administrative Capital and smart cities and enhance efficiency of the Internet services to
increase revenue by 15% in the next 5 years.

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Balance Score Card for Market Penetration Strategic Objective:

Strate
gic Tar Object
KPI Time Frame KPI Target Time Frame
Objec get ives
tive
6% Actual Increase
Finan 1 1 1 1.5 1.5
market MS/Target MS by
ce % % % % %
share MS 6%

Penetrat
e new Actual Mrket
15 15 10
demogra MS/Target Share 5% 5%
% % %
phic MS 50 %
market

Increase
Increase custome
Actual/Term
custome r 40 50 60 70 80
Increas inated
r retentio % % % % %
e customers
retention n to
market 80%
share
Incre
for WE Actual Custo
ase
mobile market mer
mark Improve
services share/T 1 1 1 1.5 1.5
et TE
in arget % % % % %
share service
Egypt market Increase
by approac Actual
market share service 75 80 85 90 95
6% h for Qos/target
by 6% quality % % % % %
in the new and Qos
to 95%
next 5 existing
years custome
rs

New New 50
Actual/Targ
care care 15 15 10 5 5
et
centers centers

Adding
New new 30
Proces distributi Actual/Targ distribut
10 10 10
s on et ion
channels channel
s

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Improve
Improve
after
after Actual/Targ 15 10 10
sales 5%
sales et % % %
services
services
40%

Hiring
expert 400
Actual/Targ 10 10 10
fron employ 50 50
et 0 0 0
office ee
staff
Training
Learn
custome
ing 4
r and Actual/Targ 30 20 10 10
and program
sales et 0 0 0 0
Growt s
existing
h
staff
Update
Improve
the
Actual/Targ perform 20 10 10
sofware
et ance by % % %
core
40%
system

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Balance Score Card for Product Development Strategic Objective:

Strategi
c Targ Action Targe
KPI Time Frame KPI Time Frame
Objectiv et s t
e
15% Actual Increase
Financ
revenue sales/Tar revenue 3% 3% 3% 3% 3%
e
growth get sales by 15%
Increase
Achieve
custome
outstand
Actual/Ta r 60 65 70 75 80
ing
rget satisfact % % % % %
Leading custome
ion to
Telecomm r service
80%
u-
Custo Existing
nication Adding
mer New features
market by new 5 1 1 1 1 1
implement features /New
features
ing new features
services
like digital No. of Adding
superior
transforma new new 10 3 3 2 2
services
tion in the services services
Actu
New Increa Reduce
al
Administr se service Reduce
sales 3 3 3 3 3
ative reven delivery Actual service
/Tar % % % % % 72 48h 36h 24h 12h
Capital ue by time time/Targ delivery
get hrs rs rs rs rs
and smart 15% and wait et time time 12
sales
cities and Proces to hrs
enhance s restore
efficiency Reduce
of the Develop
Actual purchas
Internet efficient
time/Targ ing time 3M 2M 1M
services to supply
et time into 1
increase chain
month
revenue by
Head
15% in the
hunting No. of
next 5 25
for new new
years employ 8 6 6 5
technol expert/Ta
Learni ee
ogy rget
ng and
expert
Growt
h Trainin
g 5
Actual/Ta
existing progra 400 350 350 300 300
rget
technica ms
l staff

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