1.
Lecico
Strategy
Analysis
Strategic
Management
Course
Presented
to:
Dr
Sherif
Delawar
Presented
by
1. Ahmed Ali Attia Ibrahim Taha
2. Mohamed Saad El Yamany
3. Mohamed Wasel
Students
of
Group
A

2. Table
of
Contents
Background
.........................................................................................................................
3
Introduction
.................................................................................................................................
3
History
..........................................................................................................................................................
3
Lecico
Egypt
...............................................................................................................................................
3
Company
profile
.......................................................................................................................................
3
Corporate
governance
..............................................................................................................
6
Social
responsibility
..................................................................................................................
6
Employees
..................................................................................................................................................
6
Training
and
Development
..................................................................................................................
7
Employee
Communications
................................................................................................................
7
Employment
Policy
.................................................................................................................................
7
Holidays
and
Pilgrimages
.....................................................................................................................
8
Community
.................................................................................................................................................
8
Environment
and
Health
&
Safety
....................................................................................................
8
Environmental
Policy
............................................................................................................................
9
Packaging
and
Waste
Reduction
Policy
.........................................................................................
9
Environmental
scanning
..............................................................................................
10
External
environment
............................................................................................................
10
Natural
Environment
..........................................................................................................................
10
Society
Environment
...........................................................................................................................
12
Task
(Industry)
Environment
.........................................................................................................
18
Internal
Environment
............................................................................................................
29
Organization
culture
...........................................................................................................................
29
Organization
structure
.......................................................................................................................
31
Organizations
resources
(Assets
/
human
skills)
...................................................................
31
Strategy
formulation
.....................................................................................................
46
SFAS
..............................................................................................................................................
46
TWOS
...........................................................................................................................................
47
BCG
(Boston
Consulting
Group)
.........................................................................................
49
Space
Matrix
..............................................................................................................................
50
Grand
strategy
matrix
...........................................................................................................
52
Strategic
Alternatives
and
recommended
strategy
(QSPM)
.....................................
53
Recommended
Strategy
........................................................................................................
55
Strategy
Implementation
.............................................................................................
56
Action
Plan
.................................................................................................................................
56
Evaluation
and
control
.................................................................................................
58
Lecico
balance
scorecard
......................................................................................................
58
References
........................................................................................................................
62

3. Background
Introduction
History
Lecico
has
come
a
long
way
since
its
modest
early
beginning
of
manufacturing
1000
pieces
of
sanitary
ware
per
day.
The
company
was
the
pioneer
in
the
ceramics
business
in
the
Middle
East
and
its
origin
goes
back
to
1959
when
it
started
its
first
manufacturing
facility
in
Lebanon.
Lecico
Egypt
Lecico
Egypt
is
an
Egypt-­‐based
public
shareholding
company
engaged
in
the
manufacture
of
tiles
and
sanitary
ware
products.
The
Company
operates
three
factories
in
Egypt,
one
in
Lebanon
and
one
in
France,
which
produce
over
6
million
pieces
of
sanitary
ware
and
22
million
square
meters
of
tiles
annually.
Lecico
Founded
in
1975
in
Alexandria,
Egypt,
Lecico
Egypt
S.A.E.
Group
(Lecico
Group)
is
one
of
the
leading
sanitary
ware
and
ceramic
tiles
companies
in
Egypt.
In
1997,
the
Gargour
family
entered
into
a
50/50
joint
venture
with
Sanitec
Ltd
OY
(“Sanitec”),
a
prominent
manufacturer
of
sanitary
ware
in
Europe.
Subsequently,
in
November
2004,
Lecico
Group
executed
Egypt’s
first
dual
local
and
GDR
offering
and
is
now
traded
in
both
the
“London
Stock
Exchange”
and
“Cairo
&
Alexandria
Stock
Exchange”.
As
a
result,
the
shareholders
structure
of
the
group
is
now
as
follows:
Gargour
family
continues
to
retain
control
through
a
32%
stake,
while
Sanitec's
share
has
been
diluted
to
reach
15%,
down
from
39%;
in
addition
to
the
free
float
that
accounts
for
the
remaining
balance.
Company
profile

4. The
Lecico
Group
of
Companies
Lecico
Egypt
S.A.E.
is
the
principal
operating
company
in
Egypt
and
acts
as
the
holding
company
for
the
Lecico
group
of
companies.
The
following
chart
sets
out
the
corporate
structure
of
Lecico
and
its
principal
subsidiaries
Lecico
for
Ceramic
Industries
S.A.E.
Lecico
for
Ceramic
Industries
S.A.E.
was
established
in
Egypt
in
1997
as
a
joint
stock
company.
Lecico
for
Ceramic
Industries
directly
owns
the
Company
exist
Borg
El-­‐Arab
sanitary
ware
plant
(the
new
Borg
El-­‐Arab
factory
currently
under
construction
is
owned
separately
by
European
Ceramics
S.A.E.,
as
to
which
see
below)
and
its
operations
focus
on
the
production
of
sanitary
ware
for
domestic
and
export
customers.
European
Ceramics
S.A.E.
(‘‘European
Ceramics’’)
European
Ceramics
was
established
in
Egypt
in
2004
as
a
joint
stock
company.
European
Ceramics
owns
the
new
factory
currently
under
construction
at
Borg
El-­‐
Arab
which
will
produce
additional
sanitary
ware.
International
Ceramics
S.A.E.
International
Ceramics
was
established
in
Egypt
in
2004
as
a
joint
stock
company.
Lecico
Egypt
currently
holds
99.9%
of
International
Ceramics
S.A.E.
Sarrdesign
S.A.E.
Sarrdesign
was
established
in
Egypt
in
2009
as
a
joint
stock
company.
Sarrdesign
is
a
brassware
manufacturing
joint
venture
between
Lecico
and
the
Shaarawi
family
with
a
design
capacity
of
300,000
units
per
year.
The
Lebanese
Ceramic
Industries
Co.
S.A.L.
(‘‘Lecico
Lebanon’’)
Lecico
Lebanon
was
established
in
Lebanon
in
1959
as
a
joint
stock
company
and
was
one
of
the
founders
of
Lecico.
Lecico
Lebanon
is
the
Lebanese
operating
company
which
produces
and
markets
sanitary
ware
and
tile
in
Lebanon
for
export
and
domestic
sales.
Web
site:
www.lecico.com.lb
Lecico
(UK)
Limited
(‘‘Lecico
(UK)’’)
Lecico
(UK)
was
established
in
1987
in
England
and
is
a
wholly-­‐owned
subsidiary
of
Lecico.
It
is
a
holding
company
for
the
European
subsidiaries
Lecico
plc
and
Lecico
France.
Web
site:
www.lecico.co.uk
Lecico
Algeria
The
Company
was
established
in
2006,
the
company’s
purpose
is
trading
and
manufacturing
of
ceramics
and
related
products,
Lecico
Lebanon
currently
hold
60%
of
its
share
capital.
Lecico
Saudi
Arabia
Lecico
Saudi
Arabia
began
operations
in
2006.
Lecico
Saudi
Arabia
is
focused
on
the
marketing
and
distribution
of
the
sanitary
ware
and
tile
products
of
the
Group
in
the
Kingdom
of
Saudi
Arabia.

5. Lecico
Plus
For
Trading
S.A.E
The
company
was
established
in
2007,
the
company’s
purpose
is
trading
and
marketing
of
sanitary
ware,
ceramic
tiles,
and
trading
in
modern
building
material.
Lecico
for
Trading
and
Distribution
of
Ceramics
S.A.E.
The
company
was
established
in
2006
as
a
joint
stock
company
where
Lecico
Egypt
holds
70%
of
it’s
shares,
the
company’s
purpose
is
distribution
of
ceramics,
sanitary
ware,
tiles,
kitchen
and
bathroom
accessories.
Stile
Stile
was
incorporated
in
2009
in
Italy.
Stile
is
a
joint
venture
between
Lecico
and
the
SFA
Group.
The
JV
is
responsible
for
the
marketing
and
distribution
of
“Stile”
as
a
new
sanitary
brand
in
the
Italian
market
with
a
full,
exclusive
range
of
Italian-­‐
designed
products
manufactured
in
Lecico
Egypt.
Lecico
Poland
Lecico
Poland
was
incorporated
in
2009
in
Poland.
Lecico
Poland
is
focused
on
the
marketing
and
distribution
of
the
sanitary
ware
and
related
products
of
the
Group
in
Poland
and
the
markets
of
the
CEE.
Lecico
South
Africa
Lecico
South
Africa
began
operations
in
2009
when
Lecico
acquired
a
controlling
stake
in
its
South
African
distributor.
Lecico
South
Africa
is
focused
on
the
marketing
and
distribution
of
the
sanitary
ware
products
of
the
Group
in
South-­‐
Africa.
Lecico
France
Lecico
France
SARL
was
established
in
France
in
1994
and
is
a
wholly-­‐owned
subsidiary
of
Lecico
(UK).
The
operations
of
Lecico
France
focus
on
the
marketing
and
distribution
of
the
sanitary
ware
products
of
the
Group
in
France.
Lecico
plc
Lecico
plc
was
established
in
England
in
1987
and
is
a
wholly-­‐owned
subsidiary
of
Lecico
(UK).
The
operations
of
Lecico
plc
focus
on
the
marketing
and
distribution
of
the
sanitary
ware
products
of
the
Group
in
the
United
Kingdom
and
Northern
Ireland.

6. Corporate
governance
Board
of
directors
Name
Mr.
Gilbert
Gargour
Mr.
Taher
Gargour
Mr.
Elie
Baroudi
Mr.
Alain
Gargour
Mr.
Toufick
Gargour
Mr.
Georges
Ghorayeb
Eng.
Aref
Hakki
Mr.
Pertti
Lehti
Dr.
Hani
Sarie-­‐Eldin
Dr.
Rainer
Simon
Mr.
Mohamed
Younes
Age
67
42
65
59
70
61
77
53
46
61
73
Position
Chairman
and
CEO
Managing
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Year
Initially
Appointed
to
Board
1981
2008
2003
1997
1974
2003
1998
2002
2010
2011
2004
Social
responsibility
As
one
of
Egypt’s
leading
manufacturers,
Lecico
considers
Corporate
Social
Responsibility
(CSR)
to
be
an
integral
part
of
the
way
it
operates
and
an
important
contributor
to
its
reputation.
The
Board
takes
regular
account
of
the
significance
of
social,
environmental
and
ethical
matters
and
the
measures
covered
in
this
report
are
monitored
and
reviewed
with
the
aim
of
continually
improving
performance.
Employees
Lecico
recognizes
it
is
dependent
on
the
quality
and
effectiveness
of
its
employees.
The
Company
has
a
good
track
record
in
recruitment
and
retention.
In
a
labor
settlement
reached
following
the
worker’s
strike
in
February
2011,
Lecico
offered
a
number
of
additional
benefits
that
added
27%
to
the
company’s
wage
bill.
Aside
from
salary
increases,
the
benefits
introduced
included.
• 5% of any profit distributed as a dividend will be distributed to all
workers
• A meal allowance extended to all workers in the company’s Borg El
Arab plants
• 1.5 extra months of salary per annum bonus to workers in the
company’s Khorshid plants

7. Training
and
Development
854
members
of
staff
from
all
areas
of
the
Group
have
attended
internal
development
courses
in
2011
and
40
members
of
staff
have
received
external
training.
Language
training
remains
a
key
focus,
as
well
as
courses
in
IT,
Finance,
Marketing
and
Time
Management
and
safety
and
environmental
compliance
to
the
international
ISO
18001
and
ISO
14001
standards.
Employee
Communications
Lecico
recognizes
that
comprehensive,
two-­‐way
communications
are
essential
to
the
retention
of
skilled
employees.
A
number
of
communication
channels
are
in
place
including
briefing
meetings,
worker
boards
and
notice
boards.
To
further
improve
two-­‐way
communication,
the
Company
has
a
Worker's
Follow-­‐Up
Committee
representing
staff
from
all
departments
and
factories
that
meets
regularly
with
the
Executive
Board.
In
February
2011,
following
the
strike
in
our
factories,
workers
representatives
from
each
factory
were
added
to
ensure
it
was
more
representative
of
the
different
departments
and
employees
in
the
company.
The
key
initiatives
of
the
Worker's
Follow-­‐Up
Committee
included
improving
the
personal
support
for
any
employee
in
hospital;
ensuring
monthly
incentives
were
paid
to
service
departments;
increasing
the
Company's
contribution
to
employee's
Hajj
pilgrimages;
increasing
the
benefit
paid
for
marriages
or
deaths
in
the
families
of
its
employees;
increasing
disability
support
for
employees;
and
implementing
a
“Creative
Worker
of
the
Month”
program.
Employment
Policy
Lecico’s
policy
is
to
provide
equal
opportunities
to
all
existing
employees
and
anyone
seeking
to
join.
The
Company
is
committed
to
the
fair
and
equitable
treatment
of
all
its
employees
and
specifically
to
prohibit
discrimination
on
the
grounds
of
race,
religion,
sex,
nationality
or
ethnic
origin.
Employment
opportunities
are
available
to
disabled
persons
in
accordance
with
their
abilities
and
aptitudes
on
equal
terms
with
other
employees.
If
an
employee
becomes
disabled
during
employment
the
Company
makes
every
effort
to
enable
them
to
continue
employment,
with
re-­‐training
for
alternative
work
where
necessary.
The
Company
operates
a
number
of
employee
pension
schemes
across
its
business
including
a
retirement
fund
and
has
recently
offered
a
tailored
partial
contribution
private
health
insurance
plan
to
its
administrative
staff.
Lecico
contributed
over
LE
3.1
million
in
pension
contributions,
accident
and
medical
insurance
support
for
its
staff
in
2011.
The
Company
also
paid
out
LE
1.5
million
in
2011
to
400
laborers
who
had
left
the
company
between
2001
and
2006
to
offset
lower
retirement
packages
in
those
years.

8.
Holidays
and
Pilgrimages
Lecico
recognizes
the
importance
of
a
good
work/life
balance
for
its
staff
and
offers
several
programs
to
help
staff
make
the
most
of
their
time
outside
of
work.
These
programs
include
organizing
and
subsidizing
day
trip
and
week-­‐long
holidays
for
its
staff
and
their
families
in
the
summer;
partially
funding
its
staff’s
Haj
and
Omra
pilgrimages
and
giving
salary
bonuses
to
the
staff
in
Ramadan
and
around
other
key
holidays.
In
2011,
these
programs
included
a
total
of
over
2,531
subsidized
holiday
days
enjoyed
by
staff
and
a
total
expense
in
holiday
and
pilgrimage
support
of
over
LE
150,000.
Community
Lecico
believes
it
has
a
responsibility
to
contribute
to
the
community
through
donations
of
goods,
funds
and
time
to
charitable
organizations
as
well
as
investing
in
the
neighborhoods
around
its
factories.
The
total
value
of
the
Company's
donations
during
2011
was
LE
420,903
with
the
majority
of
this
being
donations
of
goods.
It
is
the
Company’s
policy
not
to
make
political
donations
and
no
political
donations
were
made
in
the
year
2011.
Lecico
also
trained
circa
100
plumbers
in
a
new
internal
local
training
programs
designed
to
support
local
businesses
and
promote
water
saving
products.
The
Company
also
funded
local
sporting
facility
rental
and
equipment
for
its
workers
to
play
football
twice
a
week.
Environment
and
Health
&
Safety
Lecico
is
committed
to
developing
its
business
in
a
responsible
manner,
protecting
the
health
and
safety
of
its
employees
and
addressing
evolving
environmental
issues
and
ensuring
compliance
with
applicable
legal
requirements.
Lecico
has
well
developed
environmental,
packaging
and
waste
reduction
policies
that
are
communicated
to
all
employees
who
are
encouraged
to
participate
in
achieving
the
Company’s
goals.
All
Lecico’s
factories
in
Egypt
are
certified
for
ISO
9001
(quality
management
systems),
ISO
14001
(environmental)
and
ISO
18001
(Health
and
Safety).
ISO
14001
is
an
internationally
accepted
certification
for
effective
Environmental
Management
System
(EMS).
The
standard
is
designed
to
address
the
delicate
balance
between
maintaining
profitability
and
reducing
environmental
impact.
ISO
18001
is
the
internationally
recognized
certification
for
occupational
health

9. and
safety
management
systems.
It
was
developed
by
a
selection
of
trade
bodies,
international
standards
and
certification
bodies
to
be
compatible
with
ISO
9001
and
ISO
14001,
and
help
any
company
meet
their
health
and
safety
obligations
in
an
efficient
manner.
In
2011
the
company
our
external
auditors
TUV
recorded
zero
audit
failures
or
breaches
of
compliance
against
the
IS0
9001,
14001
and
18001
standards
in
which
we
are
certified.
In
2011
Lecico’s
factories
received
new
certifications
from
AENOR
from
Spain,
WATERMARK
from
Australia
and
NORDTEST
from
Sweden.
Environmental
Policy
All
Lecico
companies
seek
to:
• Minimize the use of all materials, supplies and energy – and wherever
possible use renewable or recyclable materials.
• Minimize the quantity of waste produced in all aspects of our business.
• Adopt an environmentally sound transport policy.
• Communicate our environmental policy to all staff and encourage them
to participate in the achievement of our goals.
• Supply and promote, wherever possible, those products, which
contribute to energy conservation and do not damage the environment.
• Ensure that the Company continues to meet present and future
environmental standards and legislation.
Packaging
and
Waste
Reduction
Policy
All
Lecico
companies
seek
to:
• Purchase recycled and recyclable packaging where practicable,
including pallets and cartons.
• Return reusable pallets to suppliers and similarly recovering used
pallets from customers.
• Reuse packaging opened at branch level for internal transfers and
deliveries.
• Actively take part in recycling and reclamation schemes.
• Within its businesses embrace electronic communication aimed at
significant reduction in internal paperwork throughout the Company.
• Ensure that the Company continues to meet present and future
environmental standards and legislation.

10. Environmental
scanning
External
environment
Natural
Environment
Geography:
Egypt
lies
in
the
northern
corner
of
Africa.
It
is
bounded
by
the
international
frontiers
of
the
Mediterranean
Sea
in
the
North,
the
Red
Sea
in
the
East,
Libya
in
the
west
and
Sudan
in
the
south.
Area: Total
area
of
Egypt
is
approximately
1
million
Km2
Capital: Cairo
Population:
Population:
83,688,164
(July
2012
est.)
Age
Structure:
32.5%
(male
13,917,469/female
13,298,009)
15-­‐24
years:
18.2%
(male
7,833,062/female
7,427,571)
25-­‐54
years:
38.1%
(male
16,166,968/female
15,723,340)
55-­‐64
years:
6.5%
(male
2,710,567/female
2,718,105)
65
years
and
over:
4.7%
(male
1,750,195/female
2,142,878)
(2012
est.)
Median
age
Male:
24.3
years
Female:
24.9
years
(2012
est.)
Population
growth
rate:
1.922%
(2012
est.)
Birth
rate:
24.22
births/1,000
population
(2012
est.)
Death
rate:
4.8
deaths/1,000
population
(July
2012
est.)
Net
migration
rate:
-­‐0.2
migrant(s)/1,000
population
(2012
est.)
Urbanization
Urban
population:
43.4%
of
total
population
(2010)
Rate
of
urbanization:
2.1%
annual
rate
of
change
(2010-­‐15
est.)
Major
cities
-­‐
population
CAIRO
(capital)
10.902
million;
Alexandria
4.387
million
(2009)
Ethnic
groups:
Egyptian
99.6%,
other
0.4%
(2006
census)
Religions:
Muslim
(mostly
Sunni)
90%,
Coptic
9%,
other
Christian
1%
Literacy:
Definition:
age
10
and
over
can
read
and
write
Total
population:
70.3%
Male:
77.6%
Female:
62.7%
(2006
EST.)
Topography:
Egypt
is
geographically
divided
into
four
main
divisions:
1- The Nile Valley and Delta (approx. 33,000 Km2)
It extends from the North Valley to the Mediterranean Sea and is

11. divided into Upper Egypt and Lower Egypt, extending from Wadi Halfa
to the south of Cairo and from North Cairo to the Mediterranean Sea.
The River Nile in the north is divided into two branches, Damietta and
Rachid embracing the highly fertile agricultural lands of the Delta.
2- The Western Desert (approx. 680,000 Km2)
Extends from the Nile Valley in the East to the Libyan borders in the
west, and from the Mediterranean in the north to the Egyptian southern
boarders.
It is divided into:
- The Northern Section: it includes the coastal plain, the northern
plateau and the Great Depression, the Natroun Valley and Baharia
Oasis.
- The Southern Section: it includes Farafra, Kharga, Dakhla, and ElOwainat in the far south.
3- The Eastern Desert (approx. 325,000 Km2)
It extends from the Nile Valley in the West to the Red Sea, Suez gulf,
and Suez Canal in the East, and from Lake Manzala on the
Mediterranean in the North to Egypt's southern borders with Sudan in
the south. The Eastern Desert is marked with the Eastern Mountains
that range along the Red Sea with peaks that rise to about 3000 feet
above the sea level. This desert is a store of Egyptian natural
resources including various ores such as gold, coal, and oil.
4- Sinai Peninsula (approx. 61,000 Km2)
Sinai has a triangular shape having its base at the Mediterranean in the
North and its apex in the South at Ras Mohammed, the Gulf of Aqaba
to the East and the Gulf of Suez and Suez Canal to the west. It is
topographically divided into three main sections:
- The southern section: it involves extremely tough terrain that is
composed of high-rise granite mountains. Mount Catherine rises about
2640 meters above sea level, thus making it the highest mountaintop in
Egypt.
- The Central section: it comprises the area bounded by the
Mediterranean to the North.
- At-Teeh plateau to the south: it is a plain area having abundant water
resources derived from rainwater flowing from southern heights to the
central plateau.
Climate:
The
Egyptian
climate
is
influenced
by
the
factors
of
location,
topography,
and
general
system
for
pressure
and
water
surfaces.
These
aspects
affect
Egypt's
climate
dividing
it
into
several
regions.
Egypt
lies
in
the
dry
equatorial
region
except
its
northern
areas
located
within
the
moderate
warm
region
with
a
climate
similar
to
that
of
the
Mediterranean
region.
It
is
warm
and
dry
in
the
summer
and
moderate
with
limited
rainfall
increasing
at
the
coast
in
winter.
The
annual
average
day
and
nighttime
temperatures
in
Lower
and
Upper
Egypt
is
20
and
25,
and
7
and
17
respectively.
Water
Resources:
Egypt
depends
on
three
main
sources;
the
River
Nile
water,
rain
fall
and
floods
in
addition
to
ground
water.

12.
Mineral
&
Oil
Resources:
Egypt
is
endowed
with
a
fortune
of
important
metals
such
as
phosphates,
raw
iron
and
oil.
Development
and
the
Environment:
Sustainable
development
entails
a
pattern
of
growth
in
which
economic,
social,
as
well
as
environmental
conditions
are
equally
considered
and
carefully
balanced,
leading
to
living
standards
for
future
generations
which
are
no
worse
off,
if
not
better,
than
present
ones.
In
this
respect,
environmental
protection
and
a
balanced
use
of
natural
resources
must
constitute
an
integral
part
of
the
development
process.
In
Egypt,
as
the
available
natural
resources
must
support
a
rapidly
increasing
population,
sound
management
of
such
resources,
together
with
a
continuous
improvement
of
the
protection
of
the
environment
are
an
evident
necessity.
The
Ministry
of
State
for
Environmental
Affairs
(MSEA)
with
its
executive
agency,
the
Egyptian
Environmental
Affairs
Agency
(EEAA),
meet
this
challenge
by
continuously
striving
for
the
integration
of
the
environmental
dimension
into
national
policies,
plans
and
lines
of
action.
This
is
carried
out
with
an
immediate
focus
on
the
reduction
of
pollution
and
the
conservation
of
Egypt's
natural
resources
through
effective
environmental
management.
Environmental
Authority:
In
June
1997,
the
responsibility
of
Egypt's
first
full
time
Minister
of
State
for
Environmental
Affairs
was
assigned
as
stated
in
the
Presidential
Decree
no.275/1997.
From
thereon,
the
new
Ministry
of
Sate
for
Environmental
Affairs
(MSEA)
has
focused,
in
close
collaboration
with
the
national
and
international
development
partners,
on
defining
environmental
policies,
setting
priorities
and
implementing
initiatives
within
a
context
of
sustainable
development.
According
to
the
Law
4/1994
for
the
Protection
of
the
Environment,
the
Egyptian
Environmental
Affairs
Agency
(EEAA)
was
restructured
with
the
new
mandate
to
substitute
the
institution
initially
established
by
Presidential
Decree
No.
631
of
the
year
1982.
EEAA
represents
the
executive
arm
of
the
Ministry.
MSEA
and
EEAA
are
the
highest
authority
in
Egypt
responsible
for
promoting
and
protecting
the
environment,
and
coordinating
adequate
responses
to
these
issues.
Society
Environment
The
PESTLE
analysis
of
Egypt
identifies
issues
that
affect
the
country's
performance
using
the
strengths,
weaknesses,
opportunities,
and
threats
(SWOT)
framework.
The
political
landscape
section
discusses
the
evolution
of
the
political
scenario
in
Egypt,
as
well
as
the
country's
economic,
social,
foreign,
and
defense
policies.
The
section
also
discusses
the
country's
performance
according
to
World
Bank

13. Governance
Indicators.
The
economic
landscape
section
outlines
the
evolution
of
Egypt's
economy,
as
well
as
the
country's
performance
in
terms
of
GDP
growth,
composition
by
sector
(agriculture,
industry,
and
services),
fiscal
situation,
international
investment
position,
monetary
situation,
credit
disbursement,
banking
sector,
and
employment.
Political
Egypt
continues
a
process
of
political
transition.
The
country
has
undergone
dramatic
political
changes
since
the
2011
revolution
that
toppled
the
regime
of
former
President
Hosni
Mubarak.
In
June
2012,
elections
were
held
and
Mohamed
Morsi
won
51.7
percent
of
the
vote.
He
took
office
on
June
30,
2012,
and
a
new
constitution
was
passed
in
a
referendum
in
December
2012.
After
mass
demonstrations
and
the
removal
of
President
Morsi
on
July
2,
2013,
an
interim
president
was
sworn
in
on
July
4
and
a
Constitutional
Declaration
was
issued
on
July
9.
An
interim
government
was
formed
on
July
16,
2013.
A
body
appointed
by
Egypt's
interim
government
to
rewrite
the
country's
constitution
met
for
the
first
time
on
September
8,
2013.
After
a
referendum
on
a
new
constitution,
the
country
is
scheduled
to
head
to
presidential
and
parliamentary
elections
in
early
2014.
Economical
Egypt’s
economy
is
still
suffering
from
a
severe
downturn
and
the
government
faces
numerous
challenges
as
to
how
to
restore
growth,
market
and
investor
confidence.
Political
and
institutional
uncertainty,
a
perception
of
rising
insecurity
and
sporadic
unrest
continue
to
negatively
affect
economic
growth.
Real
GDP
growth
slowed
to
just
2.2
percent
year
on
year
in
October-­‐December
2012/13
and
investments
declined
to
13
percent
of
GDP
in
July-­‐December
2012.
The
economic
slowdown
contributed
to
a
rise
in
unemployment,
which
stood
at

14. 13
percent
at
end-­‐December
2012,
with
3.5
million
people
out
of
work.
Foreign
exchange
reserves
have
continued
to
decline
and
are
now
less
than
3
months
of
imports.
The
government
also
needs
to
reconcile
the
need
for
more
public
spending
with
the
objective
of
reducing
the
deficit,
which
rose
to
11
percent
of
the
GDP
in
FY11/12.
A
major
challenge
the
government
faces
is
managing
the
state
budget,
which
includes
salaries
for
public
sector
and
subsidies,
items
that
account
for
more
than
half
of
all
public
expenditures.
Measures
to
further
reduce
fuel
subsidies
planned
for
April
2013
have
now
been
postponed
to
later
this
year.
Ongoing
political
tensions
have
prolonged
Egypt’s
bid
to
secure
a
$4.8
billion
loan
from
the
International
Monetary
Fund
(IMF).
The
IMF
has
been
discussing
a
program
of
support
with
the
government
and
calling
for
stronger
fiscal
adjustment,
full
disclosure
of
underlying
measures,
and
broader
political
support.
Economic
growth
remains
weak,
with
a
high
fiscal
deficit
and
gross
public
debt
(domestic
and
external)
rising
to
nearly
100
percent
of
GDP
at
end-­‐June
2013.
Low
growth
rates
pose
a
danger
to
mounting
social
frustrations,
as
they
will
not
suffice
to
deliver
the
needed
jobs
and
opportunities.
Unemployment
rate
reached
over
13
percent
in
June
2013.
Most
critically,
however,
more
than
three-­‐quarters
of
the
unemployed
are
between
15
and
29
years
of
age.
Socio-­‐cultural
Over
the
past
two
decades,
Egypt
showed
marked
improvements
in
a
number
of
social
indices:
infant
mortality
and
malnutrition
among
children
under
five
both
decreased
by
half
and
life
expectancy
rose
from
64
to
71
years.
The
economy
and
the
living
standards
for
the
vast
majority
of
the
population
improved
although
in
an
uneven
manner.
The
Household
Income,
Expenditure
and
Consumption
Survey
(HIECS)
for
2010/2011
showed
that
the
poverty
rate
increased
from
21.6
percent
in
2008/09
to
25.2
percent
in
2010/11.
Conversely,
the
extreme
poverty
rate
declined
from
6.1
percent
in
2008/09
to
4.8
percent.
Inequality
remained
constant
over
the
last
2
years,
according
to
the
Gini
coefficient
recorded
with
31
percent
in
both
2008/09
and
2010/11.
Although
only
a
little
over
half
of
the
population
lives
in
rural
areas,
more
than
78
percent
of
the
poor
and
80
percent
of
the
extreme
poor
live
there.
These
income
disparities
are
reinforced
by
the
gaps
in
social
indicators,
where
virtually
all
health
indicators
and
literacy
rates
are
worse
in
Upper
Egypt
than
in
Lower
Egypt
and
worse
in
rural
areas
than
in
urban
areas.
Illiteracy
rates
among
young
women
in
Upper
Egypt
are
24
percent,
twice
the
rates
of
their
male
counterparts.
The
new
government
also
faces
the
challenge
of
addressing
social
inequality.
This
will
involve
developing
an
education
system
that
equips
students
with
the
skills
to
compete
in
the
global
economy,
and
a
private
sector
governed
by
transparent
rules
that
allow
for
equal
access
to
both
entry
and
opportunities.
A
better-­‐targeted
system
of
social
benefits
would
ensure
that
the
needs
of
the
most
vulnerable
are
being
met
while
reducing
the
pressure
on
the
national
budget.
The
previous
government
had
made
efforts
to
modernize
the
economy
with
a
program
of
privatizations.
While
there
had
been
periods
of
sustained
growth,
averaging
seven
percent
before
the
economic
slowdown
in
2008,
the
opportunities
it
created
were
not
shared
equally.
The
uprising
was

15. motivated
by
the
perception
that
both
the
political
and
economic
systems
were
rigged
in
favor
of
a
privileged
minority.
This
was
equally
true
of
the
expansion
of
the
private
sector,
which
was
seen
as
yet
another
way
of
benefitting
the
elite.
Investment
will
be
needed
to
stimulate
business
activity
as
the
only
source
for
the
scale
of
jobs
and
opportunities
needed.
The
education
system
will
need
reforms
that
gear
it
more
toward
a
market
economy,
as
enterprise
surveys
have
shown
that
workers’
skills
do
no
match
the
needs
of
private
businesses.
Technological
Governmental
spending
in
R&D,
Egypt
is
from
the
lowest
country
that
spend
on
R&
D
in
comparison
with
other
countries
which
adversely
affects
their
development
in
the
areas
of
agricultural,
industrial
and
other
industries
Internet
users
growth
rate
Due
to
the
successful
implementation
of
a
free
Internet
strategy
in
2002,
Egypt
now
has
the
largest
Internet
market
in
Africa
with
more
than
five
million
users
in
early
2006.
However,
Internet
penetration
is
still
relatively
low
and
the
vast
majority
of
users
are
located
in
urban
area
Legal
According
to
the
Law
4/1994
for
the
Protection
of
the
Environment,
the
Egyptian
Environmental
Affairs
Agency
(EEAA)
was
restructured
with
the
new
mandate
to
substitute
the
institution
initially
established
in
1982.
At
the
central
level,
EEAA
represents
the
executive
arm
of
the
Ministry.
The Principal Functions of the Agency Include:
• Formulating environmental policies.
• Preparing the necessary plans for Environmental protection and
Environmental development projects, following up their implementation,
and undertaking Pilot Projects.
• The Agency is the National Authority in charge of promoting
environmental relations between Egypt and other States, as well as
Regional and International Organizations.
Foreign trade
The
Egyptian
market
is
gradually
opening
up,
especially
after
signing
an
agreement
with
the
European
Free
Trade
Association
(EFTA)
in
2006,
and
a
free
trade
treaty
with
the
United
States.
Its
three
primary
export
partners
are
the
European
Union,
which
represents
more
than
a
third
of
the
trade,
United
States
and
Syria.
Its
three
primary
import
partners
are
the
European
Union,
the
United
States
and
China.
Egypt
mainly
exports
mineral
fuels
and
oil,
cotton,
iron
and
steel.
It
imports
mainly
consumer
electronic
goods
and
capital
goods,
nuclear
reactors
and
nuclear-­‐powered
boilers,
cereals,
food
products
and
chemical
products.
Import
volume
has
doubled
and
is
twice
the
export
volume,
a
fact
that
contributed
to
the
deterioration
of
the
country's
trade
balance.

16. Tax Rate
The
standard
rate
of
corporate
income
tax
is
40%.
The
rate
is
32%
on
profits
arising
from
export
operations
and
on
profits
of
an
industrial
company
as
long
as
they
arise
from
its
industrial
activities.
Withholding Tax
Any
business
operating
in
Egypt
must
withhold
against
any
payments-­‐-­‐
made
to
any
contractor
or
supplier
of
goods
or
services-­‐-­‐
the
following
basic
percentages:
Contracting
and
supplying:
1%
Services:
3%
Commissions:
10%
Professional
fees
(under
LE
500):
10%
Professional
fees
(over
LE
500):
15%
Leasing
of
property
or
selling
of
goods
for
trading
or
manufacturing:
1%
-­‐
5%
(to
be
added
on
the
payee's
tax
liability
account.
Corporate Tax Exemptions and Deductions
• Almost all business expenses are deductible including depreciation,
interest, royalties, rent, profit sharing payments to employees, legal
expenses, pension and Egyptian state social insurance contributions.
• Profits of companies located in the free zones.
• Capital gains are applicable in some cases of asset replacement.
• All tax holidays granted under Investment Law No.8/1997.
• Joint stock companies employing more than 50 employees and
maintaining proper books of accounts are granted a tax holiday for a
five-year period. Also, hotels and tourist projects are granted a tax
holiday for a five-year period which can be extended to ten years if the
project is located in a remote area.
• For joint stock companies listed in the stock market, a deductible
allowance is made that is equal to interest income, which can be
earned on a bank deposit (currently 10.5 percent).
• Ninety percent of income generated by companies from their movable
capitals which have been subject to the new tax imposed by Law 187
of 1993.
Personal Income Tax
•
•
Taxable Income
Tax Law No. 187 of 1993 distinguishes among the following categories
of income of individuals (as well as partners in partnerships):
• Salaries and wages.
• Commercial and industrial profits
• Income from immovable property
• Income from movable capital
• Noncommercial profits.
Taxation of Foreigners

17. Foreigners
that
have
been
working
in
the
country
for
more
than
183
days
with
their
annual
salaries
varying
from
LE
1.00
to
LE
50,000
are
subject
to
paying
a
20
percent
income
tax.
However,
if
the
employee's
annual
income
exceeds
LE
50,000
then
they
will
be
liable
to
pay
32
percent
income
tax.
•
Social Insurance Contribution Rates
On basic monthly salary up to L.E.
500 / month
On variable pay (such as
production incentive bonuses)-up
to L.E. 500/month
Employer(%)
26
24
Employee(%)
14
11
Labor force and laws
Labor force
Government,
armed
forces
&
public
sector:
36%
Agriculture:
34%
Private
sector:
30%
The
new
unified
Labor
Law
No.
12
for
2003
regulates
the
Egyptian
labor
market.
The
new
Law
comprises
257
articles
that
address
all
the
legal
aspects
regulating
the
Egyptian
labor
market.
The
new
law
aims
at
increasing
the
private
sector
involvement
and
at
the
same
time
achieving
a
balance
between
employees
and
employers'
rights.
Amongst
the
most
important
issues
that
the
new
law
addresses
is
the
right
of
an
employer
to
fire
an
employee
and
the
conditions
pertaining
to
this
as
well
as
granting
employees
the
right
to
carry
out
a
peaceful
strike
according
to
controls
and
procedures
prescribed
in
the
new
law.
Environmental
legislation
Law
4/1994:
has
a
greater
role
with
respect
to
all
governmental
sectors
as
a
whole.
The
law
has
been
designated
as
the
highest
coordinating
body
in
the
field
of
the
environment
that
will
formulate
the
general
policy
and
prepare
the
necessary
plans
for
the
protection
and
promotion
of
the
environment.
It
wills
also,
follow-­‐up
the
implementation
of
such
plans
with
competent
Administrative
authorities.
The
laws
and
regulations
covering
the
governmental22
sector
that
can
be
grouped
according
to
the
pollutant
emissions
from
various
activities:
The
Environmental
Protection
Law
has
defined
the
responsibilities
of
the
agency
in
terms
of
the
following
• Preparation of draft legislation and decrees pertinent to environmental
management.
• Collection of data both nationally and internationally on the state of the
environment.

18. •
•
•
Preparation of periodical reports and studies on the state of the
environment. Formulation of the national plan and its projects.
Preparation of environmental profiles for new and urban areas, and
setting of standards to be used in planning for their development.
Preparation of an annual report on the state of the environment to be
prepared to the President.
Global
Warming
Legislation
Over
a
decade
ago,
most
countries
joined
an
international
treaty
-­‐-­‐
the
United
Nations
Framework
Convention
on
Climate
Change
(UNFCCC)
-­‐-­‐
to
begin
to
consider
what
can
be
done
to
reduce
global
warming
and
to
cope
with
whatever
temperature
increases
are
inevitable.
More
recently,
a
number
of
nations
approved
an
addition
to
the
treaty:
the
Kyoto
Protocol,
which
has
more
powerful
(and
legally
binding)
measures.
The
UNFCCC
secretariat
supports
all
institutions
involved
in
the
climate
change
process,
particularly
the
COP,
the
subsidiary
bodies
and
their
Bureau.
Task
(Industry)
Environment
Fives
Forces
of
porter
In
a
competitive
framework
characterized
by
declining
barriers
to
entry,
the
distinction
between
foreign
competitors
on
the
Egyptian
market
and
foreign
competitors
on
the
other
markets
(that
are
the
market
where
Egypt
could
export)
is
losing
importance.
In
other
words,
Egyptian
manufacturers
have
to

19. face
competitors
that
will
try
to
expand
their
shares
in
the
Egyptian
market
as
well
as
in
the
European,
Mediterranean
and
African
areas.
We
should
rather
differentiate
between
“present”
and
“future”
competitors,
taking
into
account
that
other
countries
in
the
region
are
building
a
strong
productive
capacity
and
that
the
export
might
become
their
first
way
of
sectorial
development.
Therefore,
among
the
main
present
competitors
for
the
local
industry
we
can
consider
Turkey,
China
and
UAE:
they
can
export
in
the
Mediterranean
area
(included
Egypt)
via
shipping.
In
fact,
imports
from
the
Mediterranean
and
Middle
East
area
are
still
limited,
with
the
growing
presence
of
China.
On
the
other
hand,
Egyptian
exports
are
mainly
directed
to
UAE.
In
the
near
future
(from
two
to
five
years)
Iran,
Morocco
and
Saudi
Arabia
can
become
important
regional
players,
because
they
are
building
huge
production
capacities
and
the
export
will
be
the
obvious
channel
to
allocate
their
production
surplus.
Their
productions
could
reach
part
of
the
region
by
truck.
Threats
of
New
Entrants
The tile and sanitary industry in Egypt is on a growth stage, which makes it an
attractive investment. The demand for tiles and sanitary is persistently increasing due
to the booming construction sector. However the initial startup cost for a
manufacturing plant is massive especially on plant and machinery and distribution
channels (732,162,639 L.E). The typical payback period of setting up a plant is about
4 to 5 years also the industry requires economies of scale to produce a product with a
significant cost advantage; hence this makes a barrier for potential players to enter the
industry. The consolidated balance sheet for the year ended 31/12/2012 gave a total
assets figure of 2,030,485,287 L.E (Opportunities).
Total investment in the sector stood at EGP5bn. The country has about 25 tiles plants
with a total annual capacity of 225mn sqm p.a, while consumption is around only
140-160mn sqm p.a, leaving Egypt with room for an enormous export capacity. In
FY08/09, Egypt’s Ceramics industry was ranked 8th in the world in terms of total
production output.
Rivalry
among
Existing
Firms
Since the industry has a significant growth rate in Egypt and globally as well, so the
rivals will not do much impact on the industry since the demand is growing and the
market is not saturated.
Since the product is highly differentiated in colors, dimensions and design, this leads
to products differentiation in the industry and hence it decreases the force of rivals
(Opportunities).
Threats
of
Substitute
product
The closest substitutes for tiles are marbles, wooden (parquet) flooring and grout &
mortar however for the sanitary ware the ceramic is the dominant choice up to now
due to the ease cleaning and temperature resistance. Even the price of ceramic tiles
may elevate due to heavy production cost (increasing energy and raw material prices),
still its price remains competitive to the substitutes. On the other hand there is no
current alternative for the sanitary ware. On the whole, households prefer to use
ceramic tiles to get their desired fit and finish and also many of wooden parquet
installed on the ceramic tiles to improve the flatness of the floor (Opportunities).

20. Bargaining
Power
of
Buyers
There is heavy influx of cheaper tiles from China, India and Indonesia, which is
preferred by income elastic customers. Nevertheless despite of premium prices
possessed by locally manufactured tiles, due to high quality and durability, the local
demand still exists and also the domestic buyers are not limited in numbers. Overall
customers possess a moderate bargaining power due to the availability of cheap
imports (Threat).
Bargaining
Power
of
Suppliers
Tile and sanitary industry consumes large quantities of clay and consumes a lot of
energy as well. Around 31% of the production costs accounts for the raw material and
16% of the cost accounts for energy. Since the government subsidiary was removed
from the energy supplied to the industry plus the gas production shortfall, which
might affect negatively on the industry, the suppliers’ posses a higher bargaining
power (Threat).

21. Issue
priority
matrix
After
the
analysis
of
such
factors
we
will
distribute
them
according
to
issues
priority
matrix.
The
items,
which
have
been
categorized,
as
high-­‐high,
medium-­‐
high
or
high
medium
will
be
our
focus
in
selecting
the
opportunities
or
threats,
which
can
be,
categorized
as
strategic
factors.
Issue
Priority
Matrix
Probability
of
occurrence
High
High
Probable
Impact
on
Organization
Medium
Low
• Raw Material (clay,ball
clay,feldspar )are
available locally from
Aswan and Sukhna
(Opportunity)
• Low foreign reserve
might negatively affect
the business activities
(Threat)
• Shortfall in gas supply
and delay in gas wells
development along
Egypt and consequently
lead to a higher energy
price. (Threat)
• High inflation rate will
impact the product price
and lose low price
competitiveness
(Threat)
• Higher exchange rate
will impacted negatively
on the industry since
the raw material for the
glaze is not available on
local market (Threat)
• Downturn in European
markets may negatively
affect export sales
(Threat)
• Deployment of
advanced technology in
the firing equipment
leads to energy
conservation (Threat)
• Frequent strikes might
affect the company
supply chain (Threat)
• Labour union becomes
more robust and the
labour asking for their
rights (Threat)
• The country will go for
more construction
projects especially for
the youth housing which
will give a significant
growth to the industry
(Opportunity)
• Egypt current
instable political
situation (Threat)
• World directions
toward the ecodesign products
(Threat)
• World direction
towards new
application in the
ceramics products
like in the medical
and electrical
industry
(Opportunity)
• Open new market in
Libya especially in
after their revolution
and more
development
projects will be in
place (Opportunity)
• Moderate ambient
temperature and
region out of
earthquakes
zones
(Opportunity)

22.
Medium
• High rate of
unemployment might
put stress of over
employment on industry
manufacturer (Threat)
• The increased
awareness with hazards
caused by such ceramic
factories for its
neighborhoods may
cause serious problem
in the near future
especially after this
socio-cultural changes
occurred after revolution
(Threat)
• Lake of trained or
skilled workers and
managers (Threat)
• No support from
universities and other
research institutes in
the field of R&D
(Threat)
• Nanotechnology
science will contribute in
the change of the
industry know how
(Threat)
• Low Fresh water supply
along Egypt might be
arises due to the
building of new dams on
the Nile Basin countries
(Threat)
• New strict
environmental
regulations might be
arise which impact
significantly on the
industry capital cost
(Threat)
• Rivalry among
Existing Firms
(Thread)
• Evolving of new
economic countries
might negatively
affect the global
market share
(Threat)
• More restricted
environmental
regulations after the
revolution (Threat)
• The perspective of
new political system
to taxation laws;
import/export
regulations and the
extent of
government
bureaucracy in
business regulation
(Threat)
• Bargaining power of
buyer (Threat)
• Threats of New
Entrants (Threat)
• Ending the
monopoly politics
which was
undertaken by the
previous authorized
party by assigning
the major country
projects to a specific
manufacture
(Opportunity)
• Newly joint trade
with China will
adversely affect the
industry (Threat)
• Threat of
substitute product

23. • Political disturbance in
the whole region due to
the struggle between
Iran and Israel about
the nuclear arms race
issue. (Threat)
• Imported tiles and
sanitary could be
significantly
decreased due to
stringent
protectionist policies
could enacted by the
government in the
future (Opportunity)
• Disturbance in
relations between
Israel and Egypt
about Sinai security
issue; modification of
peace agreement
and Palestine issue.
(Threat)
• Bargaining power of
suppliers (Threat)
• Revolution of the
pigments industry
(Threat)
Low
Strategic
Groups

24. Strategic
Types
Lecico
use
defender
strategy
because
it
focus
in
improving
efficiency
to
make
expansion
growth
Lecico’s
strategy
is
to
leverage
its
large
production
base
in
Egypt
to
build
a
significant
presence
across
the
Middle
East
and
Europe
by
providing
innovative,
modern
design
and
world-­‐class
quality
ware
at
competitive
prices.
Expand
regional
and
International
Exports.
Lecico’s
strategy
is
to
continue
developing
its
presence
and
footprint
in
regional
and
European
export
markets
under
its
own
brands
and
as
an
OEM
producer
for
leading
global
manufacturers.
In
2008,
we
are
seeing
a
strong
increase
in
enquiries
from
existing
and
new
customers
across
all
categories.
Lecico’s
exports
to
Europe
account
for
over
80%
of
exports
and
over
35%
of
the
company’s
sales.
The
Lecico
brand
has
a
10%
market
share
in
the
UK,
France
and
Ireland
combined.
Lecico
plans
to
increase
it’s
market
share
in
Europe
by
targeting
new
markets
and
OEM
customers
while
also
widening
its
offering
in
existing
markets.
Lecico
will
also
continue
to
selectively
explore
any
opportunities
to
make
value-­‐enhancing
acquisitions.
As
a
result
of
Lecico’s
focus
on
growing
its
presence
in
regional
markets,
the
company’s
sanitary
ware
and
tile
exports
to
the
Middle
East
have
grown
50%
annually
over
the
last
five
years.
Lecico
sees
strong
opportunities
for
continued
growth
in
regional
markets,
particularly
in
those
countries
with
large
populations
and
underdeveloped
or
rapidly
growing
economies.
Lecico
has
established
small
trading
subsidiaries
in
Saudi
Arabia
and
Algeria
to
better
access
these
markets.
Lower
production
costs.
Lecico’s
production
base
in
Egypt
provides
it
with
relative
cost
savings
in
energy
and
labor
that
allow
it
to
be
a
competitive
producer
of
world-­‐class
quality
products
for
European
and
regional
markets.
The
company
is
dedicated
to
constantly
improving
efficiency,
cost
control
and
vertical
integration
in
an
effort
to
remain
competitive.

25. Competitive
Analysis
Al
Omaraa
co.
(
La
Beaut’e
)
Production
capacity
11
production
lines
produce
80,000
square
meter
daily
means
26,900,000
annually
Aim
to
Obtain
Maximum
Level
of
quality
for
the
final
product
That
is
begin
from
Raw
material
necessary
to
be
from
pure
&
highest
level
of
Material
Omeraa
use
a
logo
well
known
to
Christian
religion
to
accomplish
Lecico
Group
Production
Capacity
in
Egypt
14
production
lines
produce
88,000
square
meter
daily
means
29,500,000
Plus
8,000,000
for
Lecico
Lebanon
Aim
to
satisfy
its
customer
satisfaction
through
producing
larger
number
of
product
ranges
Lecico
is
a
well
known
brand
since
50
years

26. market
share
fast
Distribution
channels
depend
mostly
on
customers
in
upper
region
due
to
lack
of
Cleopatra
market
share
Distribution
channels
are
bounded
well
by
sharing
the
company
in
empowering
distributer’s
assets
like
purchasing
warehouses
for
each
region
Same
percentage
yearly
for
work
lab
to
Lecico
invest
on
complementary
items
research,
development
&
training
used
in
the
industry:
factor
whether
it
is
for
• Purchasing
moulds
for
its
industrialization
and
quality
technical
sanitary
seat
cover
used
by
the
or
for
humanity
trouble
with
different
supplier
Rubex
company
departments
• Improve
the
idea
of
flushing
system
by
importing
most
efficient
samples
for
Local
suppliers
Average
Market
selling
Price
per
meter
Average
Market
selling
Price
per
meter
square
25
L.E
24
L.E
They
begin
to
produce
this
year
with
2
Lecico
use
98%
of
its
needs
of
frites
kins
of
frites
to
use
in
their
production
locally
from
its
internal
factory
of
8
beside
importing
other
70%
of
their
kins
beside
exporting
exceeded
needs
from
Spain
production
for
Lecico
Lebanon
factory
needs
By
using
a
team
of
professional
Lecico
import
designs
from
China
due
designers,
the
product
is
highly
to
high
machinery
used
in
graphic
developed
beyond
local
customer
designs
available
in
Chinese
ceramic
expectation
industry
Industry
Matrix
Key Success
Factors
Relative
Weight
Lecico
Rating
Lecico
Weighted
Score
Distribution
Channels
Product varieties
Economy of
scale
Technology
Managing
volatility
Summation
0.3
4
1.2
0.25
0.2
3
4
0.75
0.80
2.5
3.5
0.625
0.7
0.15
0.1
2
1.5
0.3
0.15
3.5
2.5
0.525
0.25
1
3.2
Al
Al
Omaraa Omaraa
Rating Weighted
Score
3
0.9
3

27.
Comments
on
Industry
Matrix
Distribution
Channels:
Without
efficient
distribution
channels
manufacturing
companies
cannot
distribute
nor
sell
their
products,
Lecico
dominates
local
and
foreign
distribution
networks
by
offering
them
attractive
sales
incentives
and
discounts.
Product
varieties:
Product
varieties
range
from
different
designs
of
the
same
product
to
a
whole
package
of
the
sanitary
products
(sanitary
ware,
tiles
&
brass).
Lecico
produces
all
three
product
ranges,
although
Lecico
has
little
product
designs
compared
to
the
competitors
but
the
acquisition
with
Sarreguemines
plant
in
France
will
provide
Lecico
with
the
updated
product
design
and
TQM
system
in
the
sanitary
ware
product.
Economy
of
scale:
The
economy
of
scale
is
very
important,
in
addition
to
its
entry
barrier
effect
for
the
industry,
it
is
essential
for
providing
low
cost
with
high
quality
products.
Technology:
Technology:
Old
operated
design
kilns
in
Lecico
are
heavily
consumers
of
energy
(only
4
kilns
out
of
17
had
been
replaced
by
newly
fuel
gas
saving
technique).
Managing
volatility:
Managing
volatility
is
important
due
to
extreme
changes
in
energy
prices
with
unstable
supplies.
Also
frequent
strikes
affect
the
company’s
supply
chain.

28. EFAS
Opportunities
Weight
Raw
Material
(clay,ball
clay,feldspar
)
local
availability
from
Aswan
and
Sukhna
Open
new
market
in
Libya
especially
in
after
their
revolution
and
more
development
projects
will
be
in
place
Closeness
to
European
markets,
Demographic
location
when
compared
to
Chinese
and
Indian
competitors
in
the
European
market.
Opening
Retailer
in
more
European
countries
(European
Unions)
The
country
will
go
for
more
construction
projects
especially
for
the
youth
housing
which
will
give
a
significant
growth
to
the
industry
Summation
Threads
Rating
Weighted
Comments
score
0.2
5
1
0.10
3
0.3
0.10
4
0.4
Advantage
when
compared
to
Chinese
and
Indian
competitors
0.05
2
0.1
Takes
time
to
establish
a
good
position
in
market
0.05
1
0.05
Political
disturbance
in
country
0.5
Weight
Rating
1.85
Weighted
Comments
score
Shortfall
in
gas
supply
and
delay
in
gas
wells
development
along
Egypt
and
consequently
lead
to
a
higher
energy
price
Frequent
strikes
might
affect
the
company
supply
chain
Lake
of
trained
or
skilled
workers
and
managers
0.15
1
0.15
0.1
4
0.4
0.1
3
0.3
World
directions
toward
the
eco-­‐
design
products
0.1
2
0.2
Low
Fresh
water
supply
along
Egypt
might
be
arises
due
to
the
building
of
new
dams
on
the
Nile
Basin
countries
Summation
0.05
2
0.1
0.5
Availability
of
Raw
material
with
cheap
prices
Might
face
new
competitors
from
Chinese
manufacturers
1.15
Industry
highly
depends
on
energy
supply
prices
and
can’t
oppose
government
rules.
Political
disturbance
in
country
Low
quality
and
quantity
training
for
workers
in
Egypt
Direction
of
Environmental
satiability
Water
supply
dilemma

29. Internal
Environment
Organization
culture
Lecico
Egypt
culture
is
the
values
and
behaviors
that
contribute
to
the
unique
social
and
psychological
environment
of
an
organization.
Organizational
culture
includes
an
organization's
expectations,
experiences,
philosophy,
and
values
that
hold
it
together,
and
is
expressed
in
its
self-­‐image,
inner
workings,
interactions
with
the
outside
world,
and
future
expectations.
It
is
based
on
shared
attitudes,
beliefs,
customs,
and
written
and
unwritten
rules
that
have
been
developed
over
time
and
are
considered
valid.
Also
called
corporate
culture
Lecico
Egypt
Conducts
its
business
with
relative
cost
savings
in
energy
and
labor
that
allow
it
to
be
a
competitive
producer
of
world-­‐class
quality
products
for
European
and
regional
markets.
The
company
is
dedicated
to
constantly
improving
efficiency,
cost
control
and
vertical
integration
in
an
effort
to
remain
competitive.
It
also
maintains
world-­‐class
quality,
service,
manufacturing
and
design.
Lecico
Egypt
recognizes
it
is
dependent
on
the
quality
and
effectiveness
of
its
employees.
The
Company
has
a
good
track
record
in
recruitment
and
retention
and
has
increased
its
investment
in
training,
development
and
employee
communications.
Lecico
Egypt
believes
it
has
a
responsibility
to
contribute
to
the
community
through
donations
of
goods,
funds
and
time
to
charitable
organizations
as
well
as
investing
in
the
neighborhoods
around
its
factories.
As
mentioned
before,
lecico
Egypt’s
main
marketing
strategy
is
cost
leadership
so
it
counts
mainly
in
the
reduction
of
production
costs
while
maintaining
high
quality
levels
and
so
decision
making
is
typically
centralized,
developing
of
new
ideas
is
a
must
but
still
innovation
is
not
the
main
force
driving
the
company.
Geert
Hofstede
dimensions
Located
in
Egypt,
Lecico
Egypt
Staff
follow
the
same
society
behavior
in
terms
of
Geert
Hofstede
dimensions.
Power
distance
Egypt
scores
high
on
this
dimension
(score
of
70)
which
means
that
people
accept
a
hierarchical
order
in
which
everybody
has
a
place
and
which
needs
no
further
justification.
Hierarchy
in
an
organization
is
seen
as
reflecting
inherent
inequalities,
centralization
is
popular,
subordinates
expect
to
be
told
what
to
do
and
the
ideal
boss
is
a
benevolent
autocrat.

30. Individualism
Egypt,
with
a
score
of
25
is
considered
a
collectivistic
society.
This
is
manifest
in
a
close
long-­‐term
commitment
to
the
member
'group',
be
that
a
family,
extended
family,
or
extended
relationships.
Loyalty
in
a
collectivist
culture
is
paramount,
and
over-­‐rides
most
other
societal
rules
and
regulations.
The
society
fosters
strong
relationships
where
everyone
takes
responsibility
for
fellow
members
of
their
group.
In
collectivist
societies
offence
leads
to
shame
and
loss
of
face,
employer/employee
relationships
are
perceived
in
moral
terms
(like
a
family
link),
hiring
and
promotion
decisions
take
account
of
the
employee’s
in-­‐group,
management
is
the
management
of
groups.
Masculinity
/
Femininity
Egypt
scores
45
on
this
dimension
and
is
thus
considered
a
relatively
feminine
society.
In
feminine
countries
the
focus
is
on
“working
in
order
to
live”,
managers
strive
for
consensus,
people
value
equality,
solidarity
and
quality
in
their
working
lives.
Conflicts
are
resolved
by
compromise
and
negotiation.
Incentives
such
as
free
time
and
flexibility
are
favored.
Focus
is
on
well-­‐being.
An
effective
manager
is
a
supportive
one,
and
decision-­‐making
is
achieved
through
involvement.
Uncertainty
avoidance
Egypt
scores
80
on
this
dimension
and
thus
has
a
high
preference
for
avoiding
uncertainty.
Countries
exhibiting
high
uncertainty
avoidance
maintain
rigid
codes
of
belief
and
behavior
and
are
intolerant
of
unorthodox
behavior
and
ideas.
In
these
cultures
there
is
an
emotional
need
for
rules
(even
if
the
rules
never
seem
to
work)
time
is
money,
people
have
an
inner
urge
to
be
busy
and
work
hard,
precision
and
punctuality
are
the
norm,
innovation
may
be
resisted,
security
is
an
important
element
in
individual
motivation.

31. Organization
structure
Executive
Officers
Name
Mr.
Gilbert
Gargour
Mr.
Taher
Gargour
Mr.
Georges
Ghorayeb
Mr.
Mats
Bergdahl
Mr.
Mohamed
Hassan
Mr.
David
Gater
Eng.
Elie
Youssef
Mr.
Alessandro
Raimondi
Mr.
Pertti
Lehti
Position
Chairman
and
CEO
Managing
Director
Group
Technical
Director
and
Managing
Director
Lebanon
Executive
Director
–
Export
Financial
Manager
Total
Quality
and
New
Product
Development
Director
Production
Director,
Sanitary
Ware
Khorshid
Plant
Manager,
Tiles
Supply
Chain
Director
Year
Initially
Appointed
to
Board
1981
2008
2003
1997
1974
2003
1998
2002
2010
Organizations
resources
(Assets
/
human
skills)
Lecico
distribution
channels
are
very
robust
locally
and
globally
since
it
has
distribution
channels
in
18
countries
and
25
channels
locally.
Lecico
Distribution
channels
are
bounded
well
by
sharing
the
company
in
empowering
distributer’s
assets
like
purchasing
warehouses
for
each
region.
Lecico
recognizes
that
comprehensive,
two-­‐way
communications
are
essential
to
the
retention
of
skilled
employees.
A
number
of
communication
channels
are
in
place
including
briefing
meetings,
worker
boards
and
notice
boards.
To
further
improve
two-­‐way
communication,
the
Company
has
a
Worker’s
Follow-­‐Up
Committee
representing
staff
from
all
departments
and
factories
that
meets
regularly
with
the
Executive
Board.
Value
chain
analysis
The
value
chain
analysis
initiative
calls
for
energy
cost
management,
planning
for
joint
purchasing
and
management
of
the
internal
supply
chain,
and
process
control
and
productivity
improvement.

32. Primary Activities:
Raw Material:
The
consumption
of
the
natural
raw
materials
is
around
2,000,000
tons.
This
quantity
will
be
increased
proportionally
with
the
expansion
of
the
sector
production
capacity
the
industrial
cost
of
ceramic
tiles
is
divided
into
60%
raw
materials,
15%
Labor
cost,
15%
fixed
asset
depreciation,
3%
energy
and
the
rest
is
miscellaneous.
For
sanitary
wares
the
industrial
cost
is
divided
into
30%
raw
materials,
50%
labor
cost,
5%
energy,
5%
fixed
asset
depreciation
and
the
rest
is
miscellaneous.
The
imported
raw
materials
cost
presents
74%
of
total
raw
materials
cost
for
ceramic
tiles
and
82%
for
sanitary
wares.
Operation:
Ceramic
tiles
production
starts
by
blending
the
dust
constituents
to
obtain
a
certain
mixture.
Then,
the
mixture
is
placed
in
the
Mix-­‐Muller
to
adhere
the
particles
of
the
dust
in
a
solid
state.
Next,
the
dust
is
transported
to
a
pul
verizer,
which
breaks
down
the
dust
globules
created
by
the
muller
into
a
fine,
dusty
form.
This
dusty
form
is
transformed
in
the
pressroom
into
a
solid
body
of
specific
size,
shape
and
tensile
strength.
Next,
the
body
is
stacked
on
metal
racks
and
entered
the
drying
rooms
to
void
off
the
moisture
from
the
body
and
to
attain
the
required
tensile
strength.
The
body
is
then
placed
on
a
moving
spray
booth
chain,
where
the
ceramic
tile
glaze
is
applied
to
the
face
of
the
tile.
The
glazing
process
enables
the
best
possible
results
in
color,
weight
and
density
of
the
ceramic
tile.
There
are
many
other
methods
of
applying
glazes
to
the
ceramic
tile,
including
silkscreen
patterns,
waterfall
glazes,
brushes,
and
roto
screens,
and
others.
Tiles
can
be
produced
as
glazed
and
unglazed
tiles.
Glazed
tiles
may
be
plain
or
decorated
and
generally
used
as
both
wall
and
floor
tiles.
Meanwhile,
unglazed
tiles
are
more
suited
to
commercial
and
industrial
settings
and
commonly
used
for
areas
of
heavy
foot
traffic.

33. After
glazing,
the
tile
must
be
heated
intensively
to
provide
it
with
the
required
strength
and
the
desired
features.
The
glazed
tiles
are
put
through
the
firing
zone
of
the
kiln
(furnace),
at
high
pressure
and
temperature
(around
2100
degree
Fahrenheit
for
45-­‐minutes),
where
the
glaze
becomes
fluid
and
attacks
the
body
of
the
tile,
absorbing
some
of
the
chemical
properties
of
the
body
and
creating
a
bond
between
the
glaze
and
the
body.
Dust
Blender
Mix-­‐Muller
Drying
Rooms
Press
Room
pluverizer
Glazing
Firing
Sorting
and
Packaging
Packaging:
Packaging
seems
to
be
an
important
issue.
The
modern
pallet
packaging
system
is
not
used
for
the
local
sales,
while
it
is
used
for
the
exports
but
with
a
low
level
of
automation.
The
packaging
does
not
fit
the
international
standards
(the
cardboard
is
poor
and
the
boxes
are
manually
prepared).
During
the
company
survey,
a
trader
highlighted
that
the
sub-­‐standard
in
packaging
affects
the
overall
Egyptian
industry
(special
pieces
breakage
can
reach
5%).
All
these
elements
influence
the
export
capability,
because
the
developed
markets
are
particularly
sensitive
to
the
effectiveness
in
deliveries,
breakages,
homogeneity
inside
boxes,
etc.
For
example,
considering
that
the
general
market
trend
shows
to
appreciate
special
pieces
and
associated
décor
pieces,
high
percentages
of
breakage
for
this
product
types
can
destroy
an
opportunity
for
the
Egyptian
industry
and
compromise
the
image
of
the
local
manufacturers
as
producers
able
to
control
the
entire
value
chain
in
the
richest
segments.
On
the
other
hand,
the
problem
is
common
to
many
developing
industries
because
an
automated
packaging
system
generally
requires
investments
in
training,
more
skilled
people,
continuous
technical
assistance
for
software
and
hardware,
so
that
the
packaging
phase
can
easily
become
a
bottleneck
within
the
entire
cycle.
Customer Satisfaction:
Interviews
with
professional
operators,
such
as
dealers
and
contractors,
provided
the
most
detailed
information
about
the
level
of
satisfaction
offered
by

34. the
local
output.
In
fact,
these
channels
are
aware
about
alternative
productions
from
a
number
of
countries
and
manufacturers
and
are
in
strong
competition
to
reach
the
best
procurement
conditions.
More
than
final
consumers,
dealers
and
contractors
are
particularly
interested
in
the
overall
quality
of
the
service
provided
by
the
companies
and
constantly
include
them
in
a
sort
of
global
comparison.
Concerning
the
tiles
market,
the
main
issues
highlighted
during
the
company
survey
can
be
summarized
as
follows:
1- No regular stock for some product typologies;
2- An excessive interval time between the order and the delivery;
3- Production problems cause sometimes delays in the delivery schedule;
4- Lack of conformity for the same product type (inconstancy of the final
product, mainly concerning colors); this problem is particularly frequent
in case of tiles supplied in different deliveries, i.e. at end of a project;
5- Gap between designs of imported and Egyptian tiles;
6- Differences between the producer catalogue and the actual range and
also between approved samples and delivered tiles.
Supporting Activities:
Firm Infrastructure:
A
sound
management
team
with
extensive
experience
in
the
global
ceramics
and
sanitary
ware
industries
is
one
of
Lecico
Egypt’s
primary
assets.
This
affords
it
strong
credentials
and
a
well-­‐established
business
network.
The
Gargour
family
currently
retains
control
of
Lecico
through
a
39%
stake
by
Intage
Holdings
and
Lecico
board
members.
This
consists
of
the
13%
stake
of
local
shares,
in
addition
to
a
26%
stake
held
in
GDRs.
Corporations
and
institutions
hold
a
further
18%
stake,
with
GDR
free
float
and
local
free
float
currently
standing
at
12%
and
30%,
respectively.
Lecico's
corporate
management
strategy
recently
garnered
international
attention
within
the
global
financial
arena.
In
FY10
it
was
listed
as
one
of
the
top
ten
constituents
of
Standard
&
Poor’s
newly
launched
S&P/EGX
ESG
Index,
the
first
index
designed
to
track
the
performance
of
companies
listed
on
the
Egyptian
Exchange
(EGX)
that
have
demonstrated
strong
leadership
on
environmental,
social
and
corporate
governance
(ESG)
issues.
Human Resources:
Due
to
its
strong
development,
Egyptian
industry
seems
to
face
a
certain
pressure
on
some
specific
categories
of
labor
force.
Technicians
with
3
to
5
years
of
experience
are
very
required
and
the
competition
to
hire
them
is
increasing
among
the
companies,
especially
in
industrial
sites
with
high
level
of
concentration
(for
example,
10th
of
Ramadan).
Losing
such
a
kind
of
workers,
for
the
company
which
sustained
the
costs
of
training
them,
means
to
loose
important
investments
in
human
resources
and
a
delay
in
building
an
important
layer
of
middle
level
technicians.
The
scarcity
seems
to
concern
the
young
workers
that
come
from
the
secondary
school
(a
specialized
secondary
school
in
ceramics
does
not
exists
in
Egypt)
rather
than
engineers
with
a
long
university
curriculum.