Edita Food Industries

Edita Food Industries
Strategic Management Project
2 External Environment Analysis

2.1 Factors affecting the company (PESTEL ANALYSIS)
2.1.1 Political Factors
Among the boldest moves so far has been the government’s decision to slash wasteful energy subsidies by 30% in
July 2014, signaling its political will to confront even the most difficult issues – including longstanding taboos – in
its quest to reinvigorate the economy. Other decisive steps have included measures to improve tax buoyancy and
widen the tax base, to reform the foreign exchange market dynamics, and to begin the process of liberalizing
generation, transmission and distribution activities in the power sector and eventually restricting the role of the
state to that of regulator and supervisor.
In effect, the government is reengineering the Egyptian economy through a comprehensive set of coherent
policies, programs and projects. The macroeconomic policy framework and structural reform program rest on
three fundamental principles:
• First, prudent macroeconomic policies will progress alongside long-term economically viable
developmental projects with high labor intensity and concrete efforts to improve the quality and
accessibility of services offered to the public.
• Second, the growth model will be based on a constructive partnership between the government and the
private sector. The government is committed to pursuing a prudent macroeconomic policy framework,
reforming its legal apparatus, and investing in basic infrastructure in order to create a stable and
predictable business environment, while the private sector is being increasingly empowered and
encouraged to resume its leading role in driving economic growth. This may take time as confidence
continues to rebuild, but early signs of the return of confidence are promising.
• Third, the approach will strike a balance between fiscal consolidation and social justice objectives. The
government will ensure that growth is inclusive as well as sustainable, with the savings generated by
austerity measures being partially redistributed to fund social protection programs and to invest in
Egypt’s abundant and young human capital.
There are External affairs like:

• Egypt has a challenge with the threat of terrorism parties in the north of Sinai.
• Egypt, KSA, Bahrain & UAE have an issue with Qatar claiming that Qatar supporting terrorism in their
countries.
• Egypt has a debate with Ethiopia over the Ethiopian Dam on the Nile.
2.1.2 Economic Factors

• Economic growth in Egypt, estimated at 5.6% for 2019, is forecast to strengthen to 5.8% in 2020 and 6%
in 2021, supported by broad-based economic reform programs since 2016. Other factors supporting
growth include the recalibration of government’s social inclusion programs away from general subsidies
on energy products to targeted transfers and improvements in the business environment. Tourism,
construction, and oil and gas were driving growth. On the demand side, consumption remained subdued
as exports and investments were more robust.
• A broad-based consolidation plan introduced a new value-added tax and a gradual reduction in energy
subsidies, putting the fiscal deficit on a downward trend from 12.5% of GDP in fiscal 2016 to 8.7% in fiscal
2019. Primary balances registered a surplus over the past two years. Debt growth has been contained as
the debt-to-GDP ratio fell from 103% in 2017 to 89.5% in 2019, partly a result of fast-growing nominal
GDP. The current account deficit narrowed to 2.3% in 2019, and foreign exchange reserves reached an
alltime high at $44.96 billion in August 2019. Inflation pressures are also easing, standing at 8.7% year-
onyear in July 2019, the lowest in the past four years.
• The 2020 fiscal budget assumes an optimistic yet attainable 6% growth rate. In the first quarter of 2019,
the unemployment rate dropped to 8.1%, its lowest in 20 years.
• Egypt’s prospects are favorable. Real GDP growth is projected to maintain momentum driven by high
domestic demand and export growth. Egypt is now a gas exporter, following the discovery of the Zohr
field. With growth becoming increasingly inclusive, unemployment declining, pensions improving, and
civil servant wages increasing, consumer spending should pick up. The government is advancing Egypt’s
integration with the rest of Africa, which should boost exports.
• Egypt climbed six ranks to 114 of 190 countries in the latest edition of the World Bank’s Doing Business.
The improving business environment should boost domestic investment and further attract foreign direct
investment. The decline in inflation is expected to continue. As a result, monetary policy is becoming less
restrictive. Cuts in central bank rates would also ease the repayment burden of the government’s large
short term debt.
• The 2016 currency depreciation triggered a sharp increase in the cost of living. Despite government
social inclusion policies and the positive economic results of the reforms, poverty rose from 27.8% in
2016 to 32.5% in 2019. This increase could further influence government social protection programs. In
particular, the main cash transfer programs, Takaful and Karama (Solidarity and Dignity), have been
significantly expanded since their introduction in 2016, from 200,000 households to 2.3 million
households in 2019. Yet, they only benefit a third of the poor, around 10 million people.
• The agricultural and manufacturing sectors, accounting for around 13% and 15% of GDP, remained flat.
Private investment, concentrated in real estate and energy, still does not exceed 9% of GDP. And private
credit remains subdued, going from 36.2% of total credit in 2011 to 22.7% in 2019. Although net exports
became the largest contributor to GDP growth in 2019, nonoil exports remain modest, showing the weak
pass-through of currency depreciation. And 60% of debt still carries a maturity of one year or less. While
unemployment has been trending down, it is still high among youth (26%) and women (38%).
2.1.3 Social Factors

Cultural aspects,
• Parents are used to give their children’s needs more priority as a part of Care and tenderness
• Children in Egypt consider the candy Cause of happiness
• Candy is considered as a kind of entertainment for youth
• The most preferable products for Egyptians is the cheapest with average level of quality
• Recently, Egypt has seen an increase in health awareness so customers became more selective in
choosing their children food Life Style
• Egyptians’ life is very congested, dynamic, and full of noise specially youth they are not committed to
meals time so they used to take some candies during the day
• They are very sociable and used to exchange different kinds of candies as a way of showing friendship
• Candy is considered the breakfast meal for children during the school day and the dessert after lunch
Age distribution
Years Percentage Male Female

0-14 33.62% 18,112,550 16,889,155
15-24 18.01% 9,684,437 9,071,163
25-54 37.85% 20,032,310 19,376,847
55-64 6.08% 3,160,438 3,172,544
65 and over 4.44% 2,213,539 2,411,457
2.1.4 Technological Factors

• Emerging information and communication technology is setting the pace for a changing, competitive and
dynamic global marketplace and representing an enabling platform for business and socioeconomic
development in the 21st century.
• New technology helps in economizing the scale of production; this means that new technology helps in
increasing the level of production, & reducing the costs of inputs, & maximizing the level of profits
• Also leads to discoveries & innovations & further improvements in technology so as to improve
perfections in the production process.
• Egypt among other nations strived to develop its national information and communication infrastructure
(NICI) plans strategies and policies that articulate long-term policy, infrastructure, content and
application as an integral part of overall national development.
• A number of policies have been implemented to attract foreign investment in IT outsourcing, including
local employment subsidies, lower corporate taxes and deductions for training costs.
2.1.5 Ecological Factors

Edita will get benefits from The world’s largest beet sugar factory is under construction in Egypt, where It aims to
guarantee feedstock of sugar beet at double the current yield of Egyptian agriculture average, and at 2% higher
sugar content (Yields are already achieved in neighboring farms under same conditions). In the Egyptian desert,
southwest of the city of Minya, a truly extraordinary agro-industrial complex is taking shape: a huge area of
about 76,000 ha for the cultivation of sugar beet, wheat and maize is irrigated with ground water from wells as
deep as 200 m.
2.1.6 Legal Factors

• New Investment law to be announced.
• Edita’s identity is heavily intertwined with efficient and ethical corporate governance that guards the
company against irregular practices. Continuous improvements are evident when looking at the
company’s complete compliance with Egypt’s legal and disclosure requirements, and its separation of
ownership and management, with management being handed to Edita’s Board of Directors. Additionally,
an Audit Committee has been established to assist the board in reviewing financial and administrative
procedures, and a Remuneration Committee now develops all company pay and benefits policies.
• As a company incorporated in Egypt, all of Edita’s corporate affairs are governed by the Egyptian
Companies Law, Egyptian Capital Market Law, the Egyptian Stock Exchange’s (EGX) listing rules, and all
other laws applicable to Egyptian companies. Additionally, Edita is subject to Egyptian disclosure
requirements.
• Legal regulation and sound business practices, reviewing operations to ensure they are executed in a way
that is consistent with pre-established objectives. Through its exhaustive reports which are issued to the
Audit Committee, Edita’s CEO, and VPs, the department acts as an advisor to senior management,
recommending improvements across all company departments and sectors. It is also tasked with
investigating any reported instances of fraud, embezzlement, theft, waste, or any wrongdoings.
2.2 Task Environment (Porter's five forces model)

2.3 Strategic Group Map

The following is the Strategic Group Map for EDITA and their Competitor, to display the competitive positions of
the competitors and also EDITA occupy in Food industries. EDITA can identify again the direct competitors,
opportunities and strategic problems.
Croissant
Al Faysal
Company Edita Domty Monginis Ole bakeries Faragello Other
Product Molto Sandwich Branch Monginis Ole Faragello Other
Price (EGP) 3 4 3 4.25 3 2.5 2.5
Distribution 864 722 654 200 150 100 50
So EDITA Can Consider Group A as a Direct Competitor and Group B as a indirect Competitor. Although EDITA has
a great Market Share at Croissant which reach 59% but for the sustainability EDITA should Consider Domty and Al
Faysal as a direct competitor.
Wafer
Company Edita Ocean El Pepsico Nestle Bisco Corona Ulker Loake Faragello
Foods Shamadan Misr r
MILLE Navy
Product Freska Lambada Katakito Samba Kit-Kat Wafers Bimbo FEUILLE cover Nino
Price (EGP) 3 2 6 2.5 8 2.25 3 2 8 2
Market 9 25 12 3 14 13 5 4 12 3
Share (%)
Reference To Wafer, EDITA Direct Competitor are Group B which are Ocean Food, Pepsico, Bisco Misr, Corona,
Ulker and Faragello.
So EDITA Should revise it’s Strategic plan Towards the Wafer ‘Freska’, EDITA need to revise the the Segment and
Target Market, also revise the Geographical Market due to distribution , Quality of choclate may be the taste and
price.
As clarified Lambada (Ocean Food) is the highest market share, so EDITA need to focus and proceed in a strategic
and Marketing plan to Enhance the Wafer product to be able to face the huge competion from all Products at
Group B and specially Lambada.
Rusks/ Salt Snacks
Company Edita Sunbites Egypt NESTLE KemetFoodMr.Pretzels Bakery products

Egypt Foods
Product Bake Sunbites Rusky Fitness Pretzo Pretzels Patisserie
Rolz bakes
Market Share 40 25 9 8 6 6 6
(%)
Price (EGP) 3 2.5 2 5 8 9 4
Reference to Rusks or Salt Snacks EDITA is Rank#1 with Bake Rolz ,EDITA have an excellent position , from the
above mentioned Strategic Map EDITA has a direct Competitor such as SunBites Egypt and Egypt Foods ( Rusky
Bakes ) Group C, and indirect Competitor at Group A as clarified in Pretzo and Pretzels (Kemetfood and
M.Pretzels), and also indirect Competitor at Group B at Fitness from Nestle and Patisseries from Bakeries.
2.4 Strategic Type
Edita Strategic Type

Prospector: identification of new market opportunities through release new products and design a strong Market
campaigns for each product.
Growth Strategy Vertical integration

Forward – Organization becomes its own distributor through establishing a trade company to sell its product and
distribute it into market where it opens outlets in different areas in Egypt, Middle East and North Africa.
Horizontal integration
Growth achieved by expanding product lines into other geographic location by opening outlets in different places
to cover a wide areas in Egypt like Cairo, Giza , Damiat .. etc and in Middle East like Palestine, Libya and in north
Africa, and by building new factories in different areas .
Expanding product range into existing markets through releasing different flavors from the same product or
different products in the same category like TODO, HOHOS, Freska etc.
By buying the rights of the brands from the own company and selling it in different places and that's what
happened Edita owns the Hohos, twinkies and tiger tail brands in Egypt , Libya , Jordan and Palestine after buying
the rights.
Related Diversification (Concentric)

Refers to diversification into a related industry to achieve strategic fit through establishing a sister company with
different products to gain a market share.
2.5 Value discipline Triad

EDITA Value Discipline Triad will Show the competitive Position at three different area which are Operating
Excellence; Product Leadership; and Customer Intimacy.
EDITA should be at a front Position from these different pillars, we will discuss Value Discipline triad for EDITA at
Croissant, Wafer and Rusks.
Regarding the Croissant, EDITA has an excellent position at Product leadership and Operational Excellence and
Customer Intimacy, and from the above mentioned Strategic Map it is cleared that EDITA has a very strong
Competitive advantage at Croissant.
Regarding the Wafer, EDITA has a good position at Operational Excellence, but not good position at Product
leadership and Customer Intimacy, and from the above mentioned Strategic Map it is cleared that EDITA need to
work more and more in the strategic and marketing plan Towards the Wafer.
Regarding the Rusks, EDITA has an excellent position at Product leadership and Customer Intimacy but has a
good (Not excellent) position at Operational Excellence, and from the above mentioned Strategic Map it is
cleared that EDITA has a very strong Competitive advantage at Rusks.
2.6 BCG Matrix

BCG matrix is a tool used in corporate strategy to analyze product lines based on two variables: relative market
share and the market growth rate.
The main purpose of the BCG Matrix is therefore to make investment decisions on a corporate level.
Instructions
• Define the market to better understand firm’s portfolio position.
• Calculate relative market share by dividing our product’s market share or (revenues) by the market share
(or revenues) of the largest competitor and the cut-off point here is 1.0.
• Find out market growth rate and the cut-off point in general is usually chosen around 10 percent per
annum.
• Distribution of products to each box in the matrix according to the following :
o Question Marks Products with low market share in a high growth market. They have the potential
to gain market share and become Stars (market leaders) eventually. If managed well, or they
might degenerate into Dogs when market growth declines after years of cash consumption (Rusks
- Wafer).
o Stars Products with a high market share in a fast-growing industry. Stars generate large amounts
of cash due to their high relative market share but also require large investments to fight
competitors (Cake – Croissants). o Cash cow Products with a large relative market share in a low
market growth rate, profits and cash flows are expected to be high.
o Dogs Products in a slow-growth and declining market with a small relative market share are
considered Dogs. These products are therefore not so interesting for investors (Candy).
Edita’s Product Portfolio

College Revenues Edita market Largest Relative Market Market
share share competitor market growth rate position
M share share
2.7 Industry Attractiveness

Instructions
• Identifying factors to measuring industry attractiveness.
• Assign weights. Weights indicate how important a factor is to industry’s attractiveness. A number from
0.01 (not important) to 1.0 (very important) should be assigned to each factor. The sum of all weights
should equal to 1.
• Rating the factors for each product. Choosing the values between ‘1-5’, where ‘1’ indicates the low
industry attractiveness and ‘5’ high industry attractiveness.
• Calculating the total scores which is the sum of all weighted scores for each business unit. Weighted
scores are calculated by multiplying weights and ratings. Total scores allow comparing industry
attractiveness for each business unit.
Industry Attractiveness (1/2)
Factor Weight Cake Molto Freska

Rating Weighted Rating Weighted Rating Weighted
Score Score Score
Industry growth rate 0.25 4 1 4 1 4 1
Industry size 0.22 4 0.88 3 0.66 3 0.66
Industry profitability 0.18 5 0.9 3 0.54 3 0.54
Industry structure 0.17 4 0.68 4 0.68 3 0.51
Trend of prices 0.09 4 0.36 3 0.27 2 0.18
Market segmentation 0.09 3 0.27 3 0.27 3 0.27
Total score 1 4.09 3.42 3.16
Industry Attractiveness (2/2)
Factor Weight Rusks Candy

Rating Weighted Score Rating Weighted Score
Industry growth rate 0.25 3 0.75 4 1
Industry size 0.22 4 0.88 2 0.44
Industry profitability 0.18 3 0.54 3 0.54
Industry structure 0.17 3 0.51 4 0.68
Trend of prices 0.09 3 0.27 3 0.27
Market segmentation 0.09 3 0.27 3 0.27
Total score 1 3.22 3.20

2.8 Industry Matrix

Instructions
• Identifying factors that collectively define the competition level.
• Assign weights. The sum of all weights should equal to 1.
• Rating the factors for each product. Choosing the values between ‘1-5’.
• Calculating the total scores which is the sum of all weighted scores for each product. Weighted scores are
calculated by multiplying weights and ratings.
• Calculating the total scores for Edita and their competitors.
• Weighted score below 3 indicate week performance and close to 3 is acceptable situation and
close to 4 or 5 is merit situation.
Competitive Strength (1/2)
Factor Weight Cake Molto Freska

Rating Weighted Rating Weighted Rating Weighted
Score Score Score
Relative Market share 0.25 5 1.25 5 1.25 3 0.75
Market growth rate 0.25 4 1 4 1 3 0.75
Company’s profitability 0.20 5 1 5 1 3 0.60
New technologies 0.16 2 0.32 2 0.32 2 0.32

Brand value 0.14 4 0.56 4 0.56 4 0..68
Total score 1 4.13 4.13 3.10
Competitive Strength (2/2)

Factor Weight Rusks Candy
Rating Weighted Score Rating Weighted Score
Relative Market share 0.25 3 0.75 2 0.50
Market growth rate 0.25 3 0.75 2 0.50
Company’s profitability 0.23 3 0.60 2 0.46
New technologies 0.16 2 0.32 2 0.32

Brand value 0.14 4 0.68 3 0.42
Total score 1 3.10 2.20
2.9 Issue Priority Matrix

A priority matrix is a tool used to prioritize work categorically and inform decision-making & time management.
It’s a useful tool because the simple framework can be applied to all types of work, whether it be business
processes, project-based or operational. Priority matrices start in a simple format but can be customized
depending on your needs. Most organizations prioritize by impact (low, medium, high), level of effort, and
urgency.
A priority matrix is a management tool for people who need a little more than a basic to-do list, and it can be
valuable for project management and project prioritization. The 2x2 matrix is designed to help you determine
what tasks are critical so you can first focus on the most urgent needs.
A variety of factors might influence the urgency or importance of a task on your list. For example, if you must
complete a task that directly affects customer satisfaction, that task is probably high urgency and high priority.
However, if you must complete a task that could make your customers happier in the future, that task is probably
low urgency but high priority.
Issue Priority Matrix Probability impact on

corporation
Opportunity High Medium Low
1 High demand on our product in both urban and rural areas.
Probability of occurrence
High 1 2 5
2 Large target segment in middle east (kids & youth).
Egyptian current population growth combined with extensive
3
distribution Medium 3 4
4 New technology helps economising the scale of production
5 High spending on consumer goods.
6 Lower price and smaller packs are also likely to drive.
Low 6
Threats High Medium Low
1 Increase in labor costs

Probability of occurrence
High 1 2 5
2 Tax and regulatory structure
3 The emergence of competitors with the same quality and price
Medium 3 4 7
4 Competition from unbranded and local products
5 Technological problems
Removal of import restrictions resulting in replacing of domestic
6
brands.
Low 6
7 Increasing rates of interest
2.10 Industry Matrix

2.10.1 Opportunities
1. High demand on our product in both urban and rural areas.

2. Large target segment in Middle East (kids & youth).
3. Egyptian current population growth combined with extensive distribution & low unit price will lead to
remaining popular.
4. New technology helps economizing the scale of production
5. High spending on consumer goods.
6. Lower price and smaller packs are also likely to drive.
2.10.2 Threats
1- Increase in labor costs.

2- Taxes and regulatory structure.
3- The emergence of competitors with the same quality and price.
4- Competition from unbranded and local products.
5- Technological problems.
6- Removal of import restrictions resulting in replacing of domestic brands.
7- Increasing rates of interest.
2.11 EFAS Matrix

Instructions
• List opportunities and threats that your firm faces (5 for each one) in the external factors columns.
• Assign weights. The sum of all weights should equal to 1.
• Rating the factors for each product. Choosing the values between ‘1-5’.
• Calculating the total scores which is the sum of all weighted scores for each product. Weighted scores are
calculated by multiplying weights and ratings.
• Calculating the total scores for Edita and their competitors.
• Evaluation as following:
o If the total weighted score are less than 3, it means that the organization is unable to take advantage
of opportunities or overcome threats.
o If the total is 3, it indicates an acceptable situation.
o The more the total is 3 and close to 5, it indicates that the system is able to exploit opportunities or
effectively overcome threats.
Weighted
EFAS Factors Weight Rating
score
Opportunities
1 High demand on our product in both urban and rural areas. 0.1 5 0.5
2 Large target segment in middle east (kids & youth). 0.1 4 0.4
3 High spending on consumer goods. 0.09 3 0.27
4 Lower price and smaller packs are also likely to drive. 0.07 3 0.21
5 New technology helps economising the scale of production 0.08 4 0.32
6 Egyptian current population growth combined with extensive distribution 0.08 5 0.4
Sub Total 0.52 2.1
Threats
1 Tax and regulatory structure 0.08 3 0.24
2 The emergence of competitors with the same quality and price 0.07 3 0.21
3 Competition from unbranded and local products 0.07 3 0.21
4 Removal of import restrictions resulting in replacing of domestic brands . 0.05 2 0.1
5 Increase in labor costs 0.06 2 0.12
6 Technological problems 0.07 3 0.21
7 Increasing rates of interest 0.08 4 0.32
Sub Total 0.48 1.41
Total 1 3.51
3 Internal Environment Analysis
3.1 Value Chain Analysis
Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which
activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which
ones could be improved to provide competitive advantage. In other words, by looking into internal activities, the
analysis reveals where a firm’s competitive advantages or disadvantages are. The firm that competes through
differentiation advantage will try to perform its activities better than competitors would do. If it competes
through cost advantage, it will try to perform internal activities at lower costs than competitors would do. When a
company is capable of producing goods at lower costs than the market price or to provide superior products, it
earns profits.
3.1.1 Primary Activities

The primary value chain activities of Edita are directly involved in producing and selling the product to targeted
customers. Analysis of primary value chain activities can improve the performance of Edita as explained below.
Inbound Logistics
It is important to develop strong relationships with suppliers as their support is necessary to receive, store and
distribute the product. Without analyzing the in-bound logistics, Edita can face various challenges in product
development phases. Analysis of in-bound logistics requires a company to focus on every aspect of transformation
from raw material to finished product. Some examples of inbound logistics are retrieving raw material, storing the
inputs and internally distributing the raw material and components to start production.
Operations
The importance of analysing operational activities raises when raw material arrives, and Edita is ready to process
the raw material into the end product and launch it in the market. Some examples of operational activities are
machining, packing, assembling and testing. Equipment repair and maintenance also falls into this category. It
includes both- manufacturing and service operations. Analysis of operational activities is important for improving
productivity, maximizing the efficiency and ensuring the competitive success of Edita. The increased productivity
can help Edita to achieve consistent economic growth, increase profitability and set a powerful basis for
competitive advantage.
Outbound Logistics
Outbound logistics include the activities that deliver the product to the customer by passing through different
intermediaries. Some outbound logistics activities are material handling, warehousing, scheduling, and order
processing, transporting and delivering to the destination. Edita can analyze and optimize the outbound logistics
to explore competitive advantage sources and achieve its business growth objectives.
Because, when outbound activities are timely managed with optimal costs and product delivery processes put a
minimum negative effect on the quality, it maximizes the customer satisfaction and increases growth
opportunities for the firm. Edita should pay specific importance to its outbound value chain activities when it’s
offered products are perishable and require quick delivery to the end customer.
Marketing and Sales

At this stage, Edita will highlight the benefits and differentiation points of offered products to persuade the
customers that its offering is better than competitors. Only producing a high quality product at affordable costs
and distinctive features cannot create value until Edita invests on the marketing and sales activities. The sales
agents and marketers play an important role here.
Some examples of Edita’s marketing and sales activities are- sales force, advertising, promotional activities,
pricing, channel selection, quoting and building relations with channel members. The company can use the
marketing funnel approach to structure its marketing and sales activities. The marketing strategies can either be
push or pull in nature, depending on the Edita’s business objectives, brand image, competitive dynamics and
current standing in the market.
Effective and wisely integrated marketing activities can develop the brand equity of Edita and help it stand out
from the competition. However, Edita must avoid making false commitments about product features that cannot
be fulfilled by the production department. It indicates the need to ensure coordination between different value
chain activities.
Services
The pre-sale and post-sale services offered by the Edita will play an important role in developing customer loyalty.
The modern customers consider post-sale services as important as marketing and promotional activities. The
power of negative e-WOM due to poor support service cannot be undermined in the current technologically
advanced era. The company must analyze its support activities to avoid damaging brand reputation, and instead
use it as a tool to spread positive word of mouth due to quick, timely and efficient support services.
3.1.2 Secondary Activities

The support activities play an important role in coordinating and facilitating the primary value chain activities.
Edita can also benefit from analysis of its support activities as explained below.
Firm infrastructure
The firm infrastructure denotes a range of activities, such as- quality management, legal matters handling,
accounting, financing, planning and strategic management. Effective infrastructure management can allow Edita
to optimize the value of the whole value chain. Edita can control the infrastructure activities (or commonly called
overhead costs) to strengthen the competitive positioning in the market.
Human resource management

Edita can analyze human resource management by evaluating different HR aspects, including- recruiting, selecting,
training, rewarding, performance management and other personnel management activities. The effective HR
management can allow Edita to reduce competitive pressure based on motivation, commitment and skills of its
workforce. The company can also achieve its cost minimization objectives by analysing hiring and training costs
with their relative return. The heavy dependence of Edita on employees' talent will increase the importance of
this value chain support activity.
Technology development
In a modern, technological advanced era, almost all value chain activities depend on technological support. The
technological integration in production, distribution, marketing and human resource activities requires Edita to
realize the importance of technology development. It can be divided into product and process technological
development activities. Some examples are- automation software, technology-supported customer service,
product design research and data analytics. The research and development department of Edita is classified in this
category.
Procurement
The procurement in value chain denotes the processes involved in purchasing the inputs that may range from
equipment, machinery, raw material, supplies, raw material and other items necessary for producing the finished
product. Due to its linkage with multiple value chain activities, Edita should carefully consider its procurement
activities to optimize the inbound, operational and outbound value chain.
As mentioned above, the application of Porter Value Chain model depends on understanding the importance of all
activities. After understanding the relative importance of identified value chain activities, Edita should highlight
areas where value can be added, cost efficiency can be achieved, differentiation basis can be set, or processes can
be optimized.
Cost Advantage of Edita

Cost advantage through Value Chain Analysis of Edita
Edita can avail the cost advantages by reducing the costs associated with the value chain activities. However, it
requires the company to firstly map the activities and then associate costs to make necessary adjustments. The
connection between the value chain and cost leadership strategy reflects a parallel focus on the low cost
operational activities. If Edita aims to obtain cost advantage, it needs to identify each element within the value
chain can be optimized to get the whole effect
A Value Chain Analysis Example for Edita is that it can use the analysis as a tool to negotiate the best prices and
maximize the in-bound and out-bound transportation processes.
Another Value Chain Analysis Example is using the value chain information to make modest advertising budget
that can reduce marketing costs and offer the product at an affordable cost.
If Edita aims for the low-cost, the Value Chain Analysis can optimize the profitability. If product differentiation is
the aim of Edita, Value Chain Analysis will help the company in maximizing the efficiency and enhancing the
product quality by improving processes.
3.2 Value Rareness Imitability Organization Matrix (VRIO)
VRIO Analysis is an analytical technique briliant for the evaluation of company’s resources and thus the
competitive advantage. VRIO is an acronym from the initials of the names of the evaluation dimensions: Value,
Rareness, Imitability, Organization.
Is perfect for evaluation of the company’s resources. One you know your resources you can better understand
your competitive advantages or weaknesses. The VRIO considers for each type of the resource the following
questions (called evaluation dimension) both for your company and for your competitors. The dimensions of VRIO
are:
• Value - How expensive is the resource and how easy is it to obtain on the market (purchase, lease, rent..)?
• Rareness - How rare or limited is the resource?
• Imitability - How difficult is it to imitate the resource?
• Organization - respectively arrangement - Is the resource supported by any existing arrangements and can
the organisation use it properly?
VRIO analysis is a complement to a PESTLE analysis (which assesses macro-environment). VRIO is used to assess
the situation inside the organization (enterprise) - its resources, their competitive implication and possible
potential for improvement in the given area or for a given resource. Such an assessment is then used for example
in the strategic management of development in various areas or for decision making about the advantage of an
external or internal process and the securing service (e.g. outsourcing decision).
• If the resource is not valuable it should be outsourced because it brings no value to us

• If the resource is valuable but not rare the company is in competitive conformity. It means we are not
worse than our competition,
• If the resource is valuable and rare but it is not expensive to imitate it, we have a temporary competitive
advantage. Other companies will try to imitate it in the near future, then we lost our competitive
advantage.
• If the resource is valuable, rare and is expensive to imitate it but we are not able to organizate our
company, the resource become expensive for us (unused incurred costs)
• if we can manage the advantage and we are able to organize our company and temporary competitive
advantage, it becomes as permanent competitive advantage
VRIO
Activities
Value Rareness Imitability Organization
Inbound Logistics
Relationships with suppliers ✔ ✘ ✘ ✔

Raw Materials ✔ ✘ ✘ ✔
Quality Reception ✔ ✘ ✔ ✔
Operations
Manufacturing and service operations ✔ ✘ ✘ ✔

Increase productivity ✔ ✘ ✘ ✔
Taste and product quality ✔ ✔ ✔ ✔
Process the raw material ✔ ✘ ✔ ✔
Outbound Logistics
Order Processing ✔ ✘ ✘ ✔
Full delivery trucks ✔ ✘ ✘ ✔
FG Warehousing ✔ ✘ ✘ ✔
Distribution ✔ ✘ ✘ ✔
Marketing & Sales
Pricing ✔ ✘ ✘ ✔
Communication ✔ ✘ ✘ ✔
Promotion ✔ ✔ ✔ ✔
channel selection ✔ ✘ ✘ ✔
Services
Pre-sale service ✔ ✘ ✘ ✔
Post sale services ✘ ✘ ✘ ✘
Customer service ✔ ✘ ✘ ✘
Firm infrastructure
Quality management ✔ ✘ ✔ ✔
Legal matters handling ✔ ✘ ✘ ✔
Accounting ✔ ✘ ✘ ✔
Financing ✔ ✘ ✘ ✔
Planning and strategic management ✔ ✔ ✘ ✔
Human resource management
Recruiting ✔ ✘ ✘ ✔
Selecting ✔ ✘ ✘ ✔
Training ✔ ✘ ✘ ✔
Rewarding ✔ ✘ ✘ ✔
Performance Management ✔ ✘ ✘ ✔
Technology development
The technological integration ✔ ✘ ✔ ✔

ERP System ✔ ✘ ✘ ✔
Procurement
Purchasing the inputs ✔ ✔ ✘ ✔

Supplier audit & development ✔ ✔ ✔ ✔
No. Description Comment Strength/Weakness

Edita has a privilege of product taste and
1 Taste and product quality Strength
ingredients quality.
Through an efficient marketing team creating a high
2 Strength
Marketing Promotion perceived value.
Strong supplier assignment module and weekly
3 Strength
Supplier audit & development follow up of the development plan.
Edita didn’t invest to acquire the right tools that
4 Weakness
Post sale services facilitate providing this service.
3.2 Situational Analysis

Situation analysis is defined as an analysis of the internal and external factors of a business. It clearly identifies a
business's capabilities, customers, potential customers and business environment, and their impact on the
company.
3.2.1 Strengths
1. Low operational costs
2. Can control the production volume
3. High ROE
4. Large Market Share
5. Low prices that satisfy customer needs.
6. Long distribution coverage among Egypt and the Middle East
7. Presence in more than 17 countries in Middle East & North Africa
8. Launching new products adding to the company and increasing brand awareness.
9. Strong Marketing companies
10. High Inventory turnover ratio
3.2.2 Weaknesses
1. Low exports levels due to the nature of product
2. Future debt rating (due to the large number of shareholders)
3. Inability to invest in research and development (Due to the exist of large number of competitors)
4. Low salary for labors
5. Highly turnover rate
6. Lack of competitive salary structure
7. Working conditions
8. Technological problems due to old software & old servers
3.3 Financial Ratios

Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful
information about a company. These numbers are used to perform quantitative analysis and assess a company’s
liquidity, leverage, growth, margins, profitability, rates of return, valuation, and more.
Financial ratios can be broken into six key areas of analysis: liquidity, profitability, debt, operating performance,
cash flow and investment valuation.
Analysis of financial ratios serves two main purposes:

1. Track company performance
2. Make comparative judgments regarding company performance
Companies large and small use ratios to evaluate internal trends in the company and define growth over time.
While a publicly traded company may have much larger numbers, every business owner can use the same data
to strategically plan for the next company fiscal cycle.
Financial ratios are grouped into the following categories:

 Liquidity Ratios
Liquidity ratios are financial ratios that measure a company’s ability to repay both short- and long-term
obligations. They measure the amount of liquidity (cash and easily converted assets) that you have to
cover your debts, and provide a broad overview of your financial health. Common liquidity ratios
include:
 Leverage / Debt Financial Ratios
Leverage ratios measure the amount of capital that comes from debt. In other words, leverage financial
ratios are used to evaluate a company’s debt levels. These ratios provide an indication of the long-term
solvency of a company and to what extent it is using long-term debt to support its business. Common
leverage ratios include:
 Efficiency / Activity Ratios
Efficiency ratios, also known as activity financial ratios, are used to measure how well a company is
utilizing its assets and resources. Often measured over a 3- to 5-year period, they give additional insight
into areas of your business such as collections, cash flow and operational results. Common efficiency
ratios include
 Profitability Ratios
Profitability ratios measure a company’s ability to generate income relative to revenue, balance sheet
assets, operating costs, and equity. These ratios are used not only to evaluate the financial viability of a
business, but are essential in comparing a business to others in the same industry.
 Market Value Ratios
Market value ratios are used to evaluate the share price of a company’s stock.
Analysing Financial Ratios of

EDITA FOOD INDUSTRIES S.A.E. 2017
- 2018 - 2019
1- Liquidity Ratios
 Current ratio = Current assets / Current liabilities
2017 = 609.45 / 666 = 0.92 %
2018 = 770.77 / 693.58 = 1.11 %
2019 = 1201.42 / 892.71 = 1.34 %
 Quick / Acid-test ratio = Current assets – Inventories / Current liabilities

2017 = 0.47 %
2018 = 0.69 %
2019 = 1.01 %
 Cash ratio = Cash and Cash equivalents / Current Liabilities

2017 = 0.054 %
2018 = 0.091 %
2019 = 0.172 %
Comment on Liquidity Ratios:

Liquidity ratios increased from 2017 & 2018 to 2019 which indicates an increase in the company’s ability to
pay its short-term debts when they become due.
2- Leverage / Debt Financial Ratios  Debt ratio = Total liabilities / Total assets
2017 = 0.54 %
2018 = 0.49 %
2019 = 0.51 %
 Time Interest Earned ratio = Operating income (EBIT) / Interest expenses

2017 = 5.2
2018 = 6.3
2019 = 6.07
Comment: This high increase in the number of times interest earned can be explained by the very high
amount of interest expenses paid in 2018 (84.02 M) and 2017 (72.7) compared to the low amount of
interest expenses paid in 2019 (8.99 M).
3- Efficiency / Activity Ratios
 Total Asset turnover ratio = Net sales / Total assets

2017 = 1.12
2018 = 1.33
2019 = 1.2
 Inventory turnover ratio = Cost of goods sold / Average inventory

2017 = 7.04 times
2018 = 8.74 times
2019 = 8.84 times
Comment: the increase in inventory turnover can be explained by the tendency of the firm for more credit
sales which can explained by the increasing figure of the trade A/R among the 3 years from (15.84 m to
45.42 m and to 52.23 m) which seems to have an impact on the inventory turnover.
 Days sales in inventory ratio = 365 days / Inventory turnover ratio

2017 = 50.8 days
2018 = 41.7 days
2019 = 42 days
Comment: the increase of days sales in inventory ratio can be explained by the increase in inventory
turnover in the previous step.
 Average Collection Period ACP = Accounts Receivable / (Sales/365)

2017 = 1.9 times
2018 = 4.4 times
2019 = 4.7 times
Comment: Average collection period has increased slightly from 2018 to 2019 which means a decrease in
the efficiency of the collection staff, while the low figure of the average collection period in 2017 can be
explained by the small amount of A/R in 2017 which is amounted to (15.84 m) compared to the bigger
figures in 2018 and 2019 (45.42 & 52.23 millions) and that indicates less credit sales on 2017 than 2018 &
2019.
4- Profitability Ratios  Gross Profit Margin ratio = Gross profit / Net sales
2017 = 0.31 %
2018 = 0.32 %
2019 = 0.36 %
 Operating Profit Margin ratio = Operating income / Net sales

2017 = 0.123 %
2018 = 0.139 %
2019 = 0.136 %
Comment: the increase in Gross Profit ratio while the Operating profit margin ratio has decreased shows
an increase in the operating expenses in 2019.
 Net Profit Margin ratio = Net Profit / Net Sales

2017 = 0.080 %
2018 = 0.117 %
2019 = 0.134 %
Comment: Net profit margin ratio has increased in 2019 as a result from the high interest expenses that
was paid in 2018 and 2017.
 Return on Assets ratio = Net income / Total assets

2017 = 0.11
2018 = 0.15
2019 = 0.16
 Return on Equity ratio = Net income / Total Shareholder’s equity

2017 = 0.24
2018 = 0.30
2019 = 0.33
5- Market Value Ratios

• Price-earnings ratio P/R = Share price / Earnings per share
2017 = 51.27
2018 = 30.25
2019 = 26.42
Comment: A decrease in the P/R ratio can be explained by the increase in the market price per share and
a stability in earnings per share.
 Market Book ratio M/B = Price per share / Book Value per share
2017 = 70
2018 = 70
2019 = 75
 Book value per share ratio = Shareholder’s equity / Total shares outstanding
2017 = 0.2
2018 = 0.2
2019 = 0.2
Comment: Book value per share has not changed as the company hasn’t issued any new shares or
performed a share split between 2017, 2018 & 2019.
• Earnings per share ratio EPS = Net earnings / Total shares outstanding
2017 = 0.326
2018 = 0.463
2019 = 0.567
Comment: it has increased in 2019 as a result of the increase in net profit with unchanged number of
outstanding shares.
3.4 IFAS Matrix

Weighted
IFAS Factors Weight Rating
score
Strengths
1 Low operational costs 0.06 3 0.18
2 Can control the production volume 0.03 3 0.09
3 High ROE 0.08 5 0.4
4 Large market share 0.10 5 0.5
5 Low prices that satisfy customer needs 0.09 4 0.36

6 Distribution Coverage all over Egypt governorates 0.10 4 0.4
7 Presence in more than 17 countries in Middle East & North Africa 0.03 4 0.12
Launching new products adding to the company and increasing brand
8 0.05 4 0.2
awareness
9 Strong marketing campaigns 0.08 5 0.4
10 High Inventory turnover ratio 0.10 5 0.5
Sub Total 0.72 3.15
Weaknesses
1 Low exports due to product nature 0.02 3 0.06
2 Seen as unhealthy Product. 0.03 2 0.06
3 Low spent on R & D 0.05 2 0.1
4 High turnover rate 0.03 2 0.06
5 Lack of competitive salary structure 0.02 1 0.02
6 Low labour salary 0.04 1 0.04
7 Labor Working conditions 0.04 3 0.12
8 Technological problems due to old SW & old servers 0.05 3 0.15
Sub Total 0.28 0.61
Total 1 3.76
4 Strategic Factor Analysis

4.1 SFAS Matrix
SPACE Matrix stands for Strategic Position & Action Evaluation matrix. The SPACE matrix is a strategic tool that
can be used to analyze organizations. The aim is to identify most appropriate strategy that should be undertaken.
SPACE matrix consists of four quadrants namely; Aggressive, Conservative, Defensive and Competitive. The
SPACE matrix is based mainly on two parts of analysis namely Internal strategic dimensions (Financial strength
(FS),
Competitive advantage (CA)); and External strategic dimensions (Environmental stability (ES), Industry strength
(IS)).
The number of the weighted rate is higher than 3, which mean that the business is doing well.
4.2 TOWS Analysis

A TOWS Analysis is an extension of the SWOT Analysis framework that identifies your Strengths, Weaknesses,
Opportunities and Threats but then goes further in looking to match up the Strengths with Opportunities and the
Threats with Weaknesses. It’s a great next step after completing your SWOT and allows for you to take action
from the analysis.
Adding the relationship between the internal and external factors makes TOWS a much more useful matrix
than a standalone SWOT and an obvious next step. The main purpose of a TOWS Analysis is to:  Reduce
threats
• Take advantage of opportunities
• Exploit strengths
• Remove weaknesses
A well thought out TOWS can not only provide you with detail of your SWOT, but also some data to make a
decision about your overall direction.
Strengths Weaknesses
1 Large market share 1 Technological problems due to old
SW & old servers
2 High Inventory turnover ratio 2 Labor Working conditions
Edita TOWS Matrix
3 High ROE 3 Low spent on R & D
4 Distribution Coverage all over Egypt 4 Low exports due to product nature
governorates
5 Strong marketing campaigns 5 Seen as unhealthy Product.
Opportunities SO Strategies 1 WO Strategies
1 High demand on our product Offering healthy products Due to the
increasing demand of healthier
in both urban and rural
products in the market, Edita has
areas.
the capability to penetrate a new
segment as it is a market
2 Large target segment in Increase marketing activities and leader.(W5,O2)
middle east (kids & youth). offering discounts to attract consumers 2
to spend and increase sales volumes Penetrate the export market will
3 Egyptian current population (O5, S1,S5) increase Edita revenues due to the
growth combined with
large target segment in middle east.
extensive distribution
(W4,O1)
4 New technology helps
economising the scale of
production
5 High spending on consumer
goods.
Threats ST Strategies 1 WT Strategies
1 Increasing rates of interest Increase spending on research and
development to enable Nestle to
better compete with competition
2 Tax and regulatory structure (W3, T3).
Use a strong distribution network to 2
reach out to customers and fight off new
Producing healthy products will
3 The emergence of entrants into the market (S4, T3).
create a new competitive advantage
competitors with the same
for Edita that will help to penetrate
quality and price
a new market. (W5,T3,T4)
4 Competition from unbranded
and local products
5 Technological problems
4.3 SPACE Matrix

SPACE Matrix
Rate Competitive advantage Rate Industry strength
The emergence of competitors with the
-5 Large market share 3 same quality and price
Competition from unbranded and local
-4 Distribution Coverage all over Egypt governorates 3 products
High demand on our product in both
-5 Strong marketing campaigns 5 urban and rural areas.
Large target segment in middle east (kids
-3 Technological problems due to old SW & old servers 4 & youth).
New technology helps economising the
-3 Labor Working conditions 4 scale of production
-2 Low spent on R & D 3 High spending on consumer goods.
-2 Low exports due to product nature
-2 Seen as unhealthy Product.
Average = -3.25 Average = 3.67

Total X Score 0.42
Rate Environmental stability Rate Financial strength
-4 Increasing rates of interest 5 High Inventory turnover ratio
-3 Tax and regulatory structure 5 High ROE
-3 Technological problems
Egyptian current population growth combined with

-5 extensive distribution
Average = -3.75 Average = 5
Total Y Score 1.25
Financial Strength
Aggressive
Conservative ✔✔
Competitive Industry
Strategy Strength
Defensive Competitive
Environmental Stability
4.4 Grand Strategies
Market Penetration
Market penetration is the process of increasing its customer base in the existing market by winning over the
customer base of its competitors for further growth by means of achievements, promotion, price cutting, and
differentiation and seeking new segments. Edita will apply the market penetration strategy through penetrating
the African market in 6 countries.
Product Development
Product development involves the development of new product ranges for an already existing market for further
growth .one way of product development is replacing the old product with a newer version. Another means of
achieving this is to expand its product line thereby providing more choices to the customers. Edita will apply the
product development to add new production lines for producing healthy snacks.
5- Quantitative Strategic Planning

5.1 QSPM Matrix
Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating
possible strategies. Quantitative Strategic Planning Matrix or a QSPM provides an analytical method for comparing
feasible alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation analytical
framework.
According to the QSPM Matrix, the strategic objectives priority will be as following:
1- Penetrate the Export Market (3.8)

2- Increase Marketing Activities (3.62)
3- Offering Healthy Products (3.37)
4- Increase Spending on R&D (2.41)
5- Fight off new entrants (1.74)
6- Implementation & Control

6.1- Balanced Score Card
Penetrate the export market in Africa
Target: Increase Export volume from 14% from total revenue to 20% in 3 years.
Knowing that Edita already exist in North Africa and Middle East countries. It is more profitable to penetrate the
African market rather than increase the sales volume in countries which already exist.
Offering healthy products

Target: Achieve 25% of healthy snacks market share in 3 years.

Edita Food Industries

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What are the main factors affecting Edita Food Industries according to the PESTEL analysis?

What are the main factors affecting Edita Food Industries according to the PESTEL analysis?

What are Egypt's economic growth prospects and what factors are supporting this growth?

What are Egypt's economic growth prospects and what factors are supporting this growth?

Edita Food Industries

Strategic Management Project

2 External Environment Analysis

There are External affairs like:

2.1.2 Economic Factors

2.1.3 Social Factors

Years Percentage Male Female

2.1.4 Technological Factors

2.1.5 Ecological Factors

2.1.6 Legal Factors

2.2 Task Environment (Porter's five forces model)

2.3 Strategic Group Map

Rusks/ Salt Snacks

Company Edita Sunbites Egypt NESTLE KemetFoodMr.Pretzels Bakery products

Edita Strategic Type

Growth Strategy Vertical integration

Related Diversification (Concentric)

2.5 Value discipline Triad

2.6 BCG Matrix

Edita’s Product Portfolio

2.7 Industry Attractiveness

Industry Attractiveness (1/2)

Factor Weight Cake Molto Freska

Total score 1 4.09 3.42 3.16

Industry Attractiveness (2/2)

Factor Weight Rusks Candy

Total score 1 3.22 3.20

2.8 Industry Matrix

Competitive Strength (1/2)

Factor Weight Cake Molto Freska

Market growth rate 0.25 4 1 4 1 3 0.75

Company’s profitability 0.20 5 1 5 1 3 0.60

New technologies 0.16 2 0.32 2 0.32 2 0.32

Total score 1 4.13 4.13 3.10

Competitive Strength (2/2)

Relative Market share 0.25 3 0.75 2 0.50

Market growth rate 0.25 3 0.75 2 0.50

Company’s profitability 0.23 3 0.60 2 0.46

New technologies 0.16 2 0.32 2 0.32

Total score 1 3.10 2.20

2.9 Issue Priority Matrix

Issue Priority Matrix Probability impact on

Opportunity High Medium Low

1 High demand on our product in both urban and rural areas.

Threats High Medium Low

1 Increase in labor costs

2.10 Industry Matrix

1. High demand on our product in both urban and rural areas.

1- Increase in labor costs.

2.11 EFAS Matrix

3.1.1 Primary Activities

Marketing and Sales

3.1.2 Secondary Activities

Human resource management

Cost Advantage of Edita

3.2 Value Rareness Imitability Organization Matrix (VRIO)