Business environment report


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Business environment report

  1. 1. Rennes International School of Business ESC RENNESExecutive Master of Business Administration EMBA COHORT 1 (2003 - 2004) Business Environment Conductor by : Dr. Serge Oreal Business Environment By Magdy A. Sattar January, 2003 Cairo, Egypt
  2. 2. Table of ContentsIntroduction & Objective IIChapter 1. Presentation of Menatel 1 1-1 About Menatel 2Chapter 2. Menatel Situation 3 2-1 Environment 4 2-2 Results 4Chapter 3. Macro-Environment 7 3-1 Factors 8 3-2 Actors 10Chapter 4. Micro-Environment 11 4-1 Industry and Competitive analysis 12 4-2 Market Analysis 15Chapter 5. SWOT Analysis 18 5-1 External Environment Analysis 19 5-2 Internal Environment Analysis 20Chapter 6. Internal analysis 21 6-1 Strategic profile 22 6-2 Organizational profile 23 6-3 Resource & Competencies 24 6-4 Competitors Analysis 26Chapter 7. Menatel Responding for Identified Trends 28Refrences 30EMBA Cairo IRennes International School of Business
  3. 3. INTRODUCTION & OPJECTIVEFirst I would like to thank Dr. Serge Oreal whose help led my steps in the fieldof Business Environment and Modern Management. Also, I would like to thankall Menatel executives for their strong support in providing all the necessarydata needed for this report.Few years ago and as a result of the Egyptian Government policy towardsstimulating the efficient roll of Privet sector in the economical growth of thecountry and its trend towards an effective partnership between the privetsector and the public sector, The Egyptian Government encouraged the privetsector to invest in some of the fields which were confined to the public sectoronly aiming to improve the quality of these services to be able to compete onan international scales.One of these fields is the pre paid telephone card business (Home cards,Public phone cards G.S.M. cards) .Through the 7 chapters of this report we shall explain and analyze thecircumstances affecting (positively or negatively) on this business. TakingMenatel, one of the leader firms in this business as our module in a try tomeasure how much its existence and success has been affected by thesurrounding business atmosphere.EMBA Cairo IIRennes International School of Business
  4. 4. EMBA Cairo 1Rennes International School of Business
  5. 5. 1. FIRM PRESENTATIONEgypt ‘s emerging market has been a major motivation for France Telecom(FCR) to establish a shareholding company with powerful partners to offer theEgyptian citizen their public pay-phone service at top international quality. Managing Director Statement (Dec.1999)1-1. About MenatelMenatel is a joint stock company under Investment low # 8/1997 registered in1998 under # 314030, Menatel is granted a ten years renewable license, toinstall, operate and manage a telecommunication network of at least 20,000public pay-phones.Menatel is determined to achieve this target in less than three years. Egyptianshares are 51 % and foreign shares are 49 % the company’s shareholdersare: 1-France Telecom (FCR) 44 % 2-National Bank Of Egypt 18 % 3-Egytel 18 % 4-Orascom Telecom 10 % 5-Ascom Monetel 5% 6-Adcom 3% 7-Telecom Egypt 2% companys shareholders T/E ADCOM ASCOM ORASCOM FCR EGYTEL NBEEMBA Cairo 2Rennes International School of Business
  6. 6. EMBA Cairo 3Rennes International School of Business
  7. 7. 2. MENATEL SITUATION2-1. Menatel Environment  Egypt has 67,273,906 inhabitant (July 1999 official estimates) distributed over 27 Governorates.  GDP per capital = $ US 1200.  Inflation rate (consumer prices): 4.3 % (2002).  Two multinational public pay-phone companies licensed in 1998.  Telecom Egypt maintains its actual network of 5000 pay-phone cabins, out of which 3300 one coin pay-phones and 1700 magnetic card pay- phones.  Two multinational mobile companies, which provide prepaid, mobile cards.  Prepaid scratched cards for International (MCI, Global one and AGIT Telecom) and for long-distance (Telecom Egypt).2-2. ResultsCommercial Results: Results Indicator Dec.9 Dec.0 Dec.0 Dec.0 9 0 1 2 Number Of locations (Thousand). 15.3 22.1 37.8 43.3 Sales points (Thousand). 12 20 35 45 Lines Return (Million). 7.1 17.3 25.6 30.6 Cards Sales (Million). 80.3 191.4 361.66 425.75 Total Revenue (Million). 76.9 184.5 338.74 402.57 Average Revenue/Pay-phone (LE). 31 38 40 38 50 50 No. Of Location Sales Points 40 40 30 30 20 20 10 10 0 0 Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02 40 500 Lines Returen Cards Sales 30 400 300 20 200 10 100 0 0 Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02 50 500 Average Revenue / pp Total Revenue 40 400 30 300 20 200 10 100 0 0 Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02EMBA Cairo 4Rennes International School of Business
  8. 8. Operative Results: Results Indicator Dec.99 Dec.00 Dec.01 Dec.02 Civil Work 9295 18203 28706 31865 Booth Installed 8292 16238 24911 29334 Pay-Phone IO 6793 13302 23202 29025 # Of Calls(million) 54.7 107.11 186.83 233.72 # Of Minutes (million) 123.7 242.2 422.2 528.54 Quality Services 95 % 96 % 95 % 97 % Civil W ork Quality Service 35000 97% 30000 97% 25000 96% 20000 96% 15000 95% 10000 5000 95% 0 94% Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02 Booth Installed Number Of Calls (Million) 30000 250 25000 200 20000 150 15000 100 10000 5000 50 0 0 Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02 Pay-Phones IO Number Of Minutes (Million) 30000 600 25000 500 20000 400 15000 300 10000 200 5000 100 0 0 Dec.99 Dec.00 Dec.01 Dec.02 Dec.99 Dec.00 Dec.01 Dec.02EMBA Cairo 5Rennes International School of Business
  9. 9. Financial and Administration Results. Human Resources Staff Overlook. Human Resources Dec.99 Dec.00 Dec.01 Dec.02 Managers 21 27 28 28 Employees 102 203 307 363 Total 123 230 335 391 400 350 300 250 200 150 100 50 0 Dec.99 Dec.00 Dec.01 Dec.02 Managers Employees Total Key Financial Ratios: Dec. 99 Earning before interest, tax, depreciation & 2,925,510 L.E.EBITDA amortizationP/L Net profit or loss - 3,074,112 L.E. Liquidity RatiosCurrent Ratio Current Assets/Current Liabilities 137 %Quick Ratio (Current Assets-Inventory)/Current Liabilities 114 % Activity RatiosGross Profit Margin Sales-Cost of goods Sold)/Net sales) 26.7 %Return on Equity Net profit/Stock holder’s equity - 6.2 %Return on Investments Net profit after taxes/Total Assets - 3.8 % Leverage RatiosDebt to Assets Total debt/Assets 65.6 %Leverage Assets/Stock holder’s equity 161.7 %Debt to Equity Total debt/Stock holder’s equity 73.7 % Profitability RatiosEBITDA / net income 7.4 %Net Profit / net income - 7.7 % Dec. 2002EBITDA % 21 %Return on Equity ROE % 57 %Return on Investments ROI % - 15 %Net Profit % 12 % EMBA Cairo 6 Rennes International School of Business
  10. 10. EMBA Cairo 7Rennes International School of Business
  11. 11. 3. MACRO ENVIRONMENT3-1. FactorsDemographic factorsThe first force which we monitor is population characteristics, the size andgrowth rate of population (in cities , regions, and nations), age distribution &ethnic mix, educational levels, household patterns and regional characteristics& movements. The Egyptian population characteristics is highly attractive forthe prepaid telephone cards business as the core of Egyptian population isclass “ C “ , with it’s attractive characteristics, big size, high growth ratedistributed all over Egypt, and includes all educational level.Economic factorsThe available purchasing power in an economy depends on current incomeand consumer - spending patterns. Egypt has accelerated it’s ambitiousstructural reforms, In 1991, the Egyptian Government launched acomprehensive economic stabilization and reform program.The primary objective of the program was to achieve sustainable economicgrowth in order to boost employment opportunities for Egypt’s ever growingpopulation, successful implementation will reduce income disparity andultimately improve the welfare of all Egyptians, In 2000 the inflation rate inEgypt was 3.1 % and it is close to inflation levels of Egypt’ s EU tradingpartners. Egypt has made great strides in privatization, in this respect Egypthas been ranked among the top four countries privatizing approximately 1.2 %of GDP per year.Natural factorsThe availability of raw materials, cost of energy, pollution levels, and thechanging role of governments are the main trends in the natural environment.They may have no direct force that shape opportunities or pose threats for theprepaid telephone cards business ,but they have indirect force on thebusiness by shaping opportunities and posing threats to suppliers, assuppliers contribution to prepaid telephone cards business quality is high.Technological factorsOne of the most dramatic forces shaping people’s lives is technology.Technology has released wonders, horrors, and mixed blessings. Every newtechnology is a force for creative destruction. Smart cards hurt the coinpayphone business forcing the payphone companies to move into the newtechnologies, which is the price of progress.Smart cards or the prepaid cards shaping payment style, today many peoplemake their payment with credit or debit cards, the consumers of payphonehave no need for coins any more when making a phone call and thepayphone companies can invest the prepaid money into earning assets.Political-legal factorsThe political and legal environment is composed of laws, governmentagencies, and pressure groups that influence and limit various organizationsand individuals. The Government of Egypt has it’ s first step in the last tenEMBA Cairo 8Rennes International School of Business
  12. 12. years to improve the business environment by establishing a road map for it s long - term development through deregulation, capital market reforms, and it’ s attempts to give special concessions to both domestic and foreign business. Such as prepaid telephone cards business that was motivated Social-Cultural factors For prepaid telephone cards business we need to understand people’s views of themselves, others, organizations, society, nature, and the universe also the business services or products must be corresponding to society’s core and secondary values, and address the needs of different subcultures within the society, as the core of success in prepaid telephone cards business is customer satisfaction and trust. Mildly unattractive Highly attractive Mildly attractive FORCES unattractive Neutral Highly Demographic forces Production Growth   Population age mix   Ethnic and other markets   Educational Group   Household patterns   Geographical effects on population   From amass market to a micro market   Economic   forces Income distribution Savings, Debt and Credit availability  Naturalforces Changing role of governments  Technological Accelerating pace of change   forces Unlimited for innovation   Varying R&D Budgets Increased regulation of technological change   Political & forces Legal Legislation regulation of business   Growth of special interest groupsCultural forces Social High persistence of core cultural values  Existence of sub-cultures Effects of secondary cultural values through times   C ______________ F ______________ EMBA Cairo 9 Rennes International School of Business
  13. 13. CURRENT FUTURE Low Medium High Low Medium High Attractivene Attractivene Attractivene Attractivene Attractivene Attractivene ss ss ss ss ss ssDemographic factors * * Economic factors * * Natural factors * *Technological factors * * Political & Legal factors * *Social Cultural factors * * Overall * * assessment 3-2. Actors Consumers Consumers are one of the important forces affecting business in general. Also it affects the Demographic, Social, Culture and Technological force. The nature and the qualities of the consumer affect almost any aspect of any business being the core for all businesses. As for prepaid telephone cards business the qualities of the consumer such as his ability to use this technology, his financial state, his culture, trends, needs and believes are all factors which determine whether he will be able to use and benefit from this technology or not. Suppliers Usually imposed a clear effect in the quality and efficiency of the business they supply. Whether the suppliers supply services, raw materials, or accessories the higher the efficiency and expertise allowing them to understand the nature of the final product the more they participate effectively in improving the quality of this product. Also his response to the needs of this business shall be faster, accurate and better. By which he is a factor in the success and profitability of this business. On the other hand suppliers can be an inactive force or even an obstacle if not functioning properly. Competitors Competitors and competition are one of the actors which determine the general framework of the business and its market. Strong and experienced competitors push the business forward. That is other competitors are impelled to reach up to his level or even imitates his example. The strong experience competitors can be an accelerating actor in the business. On the other hand the weak competitors can harm the quality of the business or even form a threat to its existence. Governments Governments are a direct effective force in any business as the orientation of the Government affects the profitability of different business. It even affects the competitive atmosphere in which they operate. The Government trends towards business determine the laws needed to be legislated. For example Governments which imposes excessive taxes has no appealing to sum businesses but to some local businesses it might have an appealing factor. EMBA Cairo 10 Rennes International School of Business
  14. 14. EMBA Cairo 11Rennes International School of Business
  15. 15. 4. Micro Environment 4-1. Industry and competitive Analysis Porter’s Framework Porter’s framework identified five forces that determine the intrinsic long - term profile attractiveness of market segment, applying this module for prepaid telephone cards business as follows: Threat of intense segment rivalry: (Attractive) Prepaid telephone cards business face no threat in current situation of intense segment rivalry ,as it is the market leader and no strong competitions ,low fixed cost , and also it is not expensive to compete. Threat of new entrants: (Attractive) Prepaid telephone cards business in a position that have high exit barriers and high entry barriers which put prepaid telephone cards business in high, risky returns. Threat of substitute products: (Unattractive) For the prepaid telephone cards business the threat of substitute product is high knowing that technology in this field of business is dramatically changing fast . Threat of buyers growing bargaining power: (Attractive) It is highly attractive segment for prepaid telephone cards business as the buyers posses weak bargaining power as they are not concentrated or organized. Threat of supplier’s growing bargaining power: (Unattractive) It is unattractive segment for the prepaid telephone cards business as the suppliers are concentrated and organized ,there are few substitutes and the supplied product is important input to business. Highly unattractive Mildly unattractive Highly attractive Mildly attractive FORCES Neutral Economic of scale Small  Large  Barriers to Entry Service differentiation Little Big Brand identification Low  High Switching cost Low  High Access to distribution channels Ample.   Restricted Capital requirements Low High Access to latest technology Ample. Restricted Government protection Low   High Experience effect Unimpo.  V.impor. Barriers to Asset specialization High Low One-time cost of exit High  Low Exit Strategic interrelationship High  Low Emotional barriers High  Low Government and social restriction High  Low EMBA Cairo 12 Rennes International School of Business
  16. 16. Number of equally balanced competitors Large  Small Rivalry among  competitors Industry growth relative to metals industry Slow Fast Fixed or storage cost High  Low Service features Commodity  Specialty Capacity increases Little  Big Diversity of competitors High  Low Strategic stakes High  Low  Power of Buyers Number of important buyers Few Many Availability of substitutes for industry service Many  Few Buyer switching costs Low  High Buyers threat of backward integration High  Low Industry threat of forward integration Low   High Contribution to quality or service of buyers products Large Small Total buyers cost contributed by the industry Large fraction  Small fraction Buyers profitability Low High   Power of Suppliers Number of important suppliers Few Many Availability of substitutes for the suppliers products Low  High Differentiation or switching cost of suppliers products High   Low Suppliers threat of backward integration High Low Industry threat of backward integration Suppliers contribution to quality or service of the industry Low   High High Small product Large fraction Small fraction Total industry cost contributed by suppliers Importance of the industry to suppliers profit Small   LargesubstitutesAvailability Availability of close substitute Large   Small User’s switching costs Low   High of Substitute service profitability and aggressiveness High Small   Substitute price/value High   Small   Government Action Industry protection Unfavorable Favorable Industry regulation Unfavorable   Favorable Consistency of policies Low   High Capital movements among countries Restricted     Unrestricted Custom duties Restricted Unrestricted Foreign exchange Restricted   Unrestricted Foreign ownership Limited  Unlimited Assistance provided to competitors Substantial   None  C ______________ F ______________ CURRENT FUTURE Low Medium High Low Medium High Attractivenes Attractivenes Attractivenes Attractivenes Attractivenes Attractivenes s s s s s s Barriers to entry * * Barriers to exit * * Rivalry among competitor * * Power of buyers * * Power of suppliers * * Availability of substitutes * * Government actions * * Overall assessment * * EMBA Cairo 13 Rennes International School of Business
  17. 17. Environmental scan: With the current situation, the telecommunication market will be effected, people will no longer afford what they used to before ,the withdrawal of commodity will create frustration in Egypt, with the increase in prices and the unemployment rates. Payphone companies on the other hand is safe from this perception. Highly unattractive Mildly unattractive Highly attractive Mildly attractive Neutral FORCES   Market size   Market factors Market growth rates Product differentiation   Price sensitivity   Cyclicality     Seasonality Captive markets   Industry profitability   Competitive factors Competitive intensity   Degree of concentration   Barriers of entry Barriers of exit     Share volatility Degree of integration     Availability of substitutes Capacity utilization     Inflation  governmental factors Foreign exchange impact     Economic and Currency transfers Wage level   Raw materials supply   Manpower supply   Legislation   Regulation   Taxation Government support      Technological Maturity and volatility   factors Complexity Patents   Product R&D requirements   Process R&D requirements     Social factors Ecological impacts Work ethic   Consumer protection   Demographic change   Degree of unionization   Personnel adaptability to international markets   C ______________ F ______________ EMBA Cairo 14 Rennes International School of Business
  18. 18. CURRENT FUTURE Low Medium High Low Medium High Attractivenes Attractivenes Attractivenes Attractivenes Attractivenes Attractivenes s s s s s sMarket factors * *Competitive factors * *Economic andgovernmental * *factorsTechnologicalfactors * *Social factors * *Overallassessment * * 4-2. Market Analysis For prepaid telephone cards market we have three groups: 1. Home scratch cards Egypt telecards Telecom Egypt cards 2. Public phone cards Menatel Nile telecom. Ringo 3. GSM. Cards Click super Mobinil ALO Brand Shares on Volume base : Total prepaid telephone cards 100 % 1. Total home scratch cards 28.8 % Egypt Telecards 98.8 % Telecom Egypt cards 1.2 % 2. Total public phone cards 68 % Menatel 77.5 % Nile Telecom 20.3 % Ringo 2.2 % 3. Total GSM cards 2.8 % Click Super 47.6 % Mobinil ALO 52.4 % Brand Shares on Value base: Total prepaid telephone cards 100 % 1. Total home scratch cards 29.6 % Egypt Telecards 98.2 % Telecom Egypt 1.8 % EMBA Cairo 15 Rennes International School of Business
  19. 19. 2. Total public phone cards 54.3 % Menatel 86.8 % Nile Telecom 10.9 % Ringo 2.4 % 3. Total GSM Cards 16.1 % Click super 46.6 % Mobinil ALO 53.4 % The Growth-Share Matrix: This simple model through the knowledge of the Market growth rate and relative market share we can divide the business market into four regions. Questions Marks:- Business that operate in high growth market but leave low relative market shares. Stars:- The market leaders in a high growth market. Cash Cows:- Stars with a falling growth rate. Doges:- Business that leave weak markets shares in low growth markets. Firm’s Position10 % Stars Question Mark  Prepaid PP9% Cards8% 1. MENATEL 2. NILE TELECOM7% 3. RINGO6%  Scratch Cards 1. TELECARD5% Cash Cow Dogs 2. TELECOM EGYPT4%  GSM Cards 1. MOBINIL ALO3% 2. CLICK SUPER2%1% 10 8 6 4 2 1 0.5 0.4 0.3 0.2 0 EMBA Cairo 16 Rennes International School of Business
  20. 20. S.B.U. StrategiesThe next step for Firms is to determine S.B.U. strategies that are appropriateto their position in the market.Building Strategy:- For Firms in the question marks position, they need to spend money on business to keep up with the fast growing market.Holding Strategy:- For the Firms in strong cash cows position if they are to continue yielding large position cash flows.Harvesting Strategy:- For the Firms in weak cash cows position if the firm has a dim future and more cash flow. In general this strategy is to increase short-term cash flow regardless of long-term effect.Divest Strategy:- Is to sell or liquidate the business because resources can be better used elsewhere, and it is appropriate for dogs and question marks.EMBA Cairo 17Rennes International School of Business
  21. 21. EMBA Cairo 18Rennes International School of Business
  22. 22. 5. SWOT ANALYSIS In general, a business unit has to monitor key Microenvironment forces and significant Microenvironment actors which affect the ability to earn prophet. Also each business needs to monitor its internal strengths and weaknesses. 5-1. External Environment Analysis Attractiveness Success Probability Opportunistes Low High Low High1. Barriers to entry  2. Rivalry among competitor  3. Power of buyers  4. Political & legal factors  5. Demographic factors   Seriousness Probability of Occurrence Threats Low High Low High1. Power of suppliers  2. Barriers to exit  3. Availability of Substitutes   The above tables show a notable interaction affects among all the actors. As the available opportunities could turn to business threat if not seized properly, and vise versa. For example, The Lake of strong competitors can form an opportunity to gain more market shares and consequently more profits to those in business. On the other hand it might lead to a state of malfunction on the business, as there will be no incentive factor. So it is very important for any business to study how to identify and seize opportunities and face market threats. EMBA Cairo 19 Rennes International School of Business
  23. 23. 5-2. Internal Environment Analysis PERFORMANCE IMPORTANCE Strength Weakness High Med LowMARKETING 1- Company reputation   2- Market share   3- Customer satisfaction   4- Customer retention   5- Product quality   6- Pricing effectiveness   7- Distribution effectiveness   8- Promotion effectiveness   9- Sales force effectiveness   10- Innovation effectiveness   11- Geographical coverage  FINANCE 1- Cost or availability of capital   2- Cash flow   3- Financial stability  TECHNICAL 1- Service quality   2- Booth shape maintenance   3- Payphone technology   4- Card technology  ORGANIZATION 1- Visionary, capable leadership   2- Dedicated employees   3- Entrepreneurial orientation   4- Flexible or responsive   In the same manner firms should identify its internal strength points to optimize it, its weak points to neutralize it. It is this way or method of identifying and analyzing the strength or weak points that determine the firm’s chances of operation and success. EMBA Cairo 20 Rennes International School of Business
  24. 24. EMBA Cairo 21Rennes International School of Business
  25. 25. 6. INTERNAL ANALYSIS6-1. Strategic ProfileMenatel Vision.To be the leaders in Egypt in the field of public pay-phone service as well asthe leader as smart card issuer.Menatel Goals. Exceptional customer satisfaction. Inspired, Innovative and Empowered Employees. Superior Financial Results.Menatel Values. Customer First: In order to achieve total customer satisfaction, we anticipate, perceive, fulfilland exceed our customer’ s needs and expectations. Integrity In All We Do: Our actions and decisions aspire the highest professional standards. Excellence Through Quality: We individually and collectively use Menatel quality in our daily activities toachieve excellence as a company. Respect For Others:We care for our company, our work, and our customers as well as we care foreach other. This caring is the unique source of our company’s energy,strength and excellence. Respect For Our Environment:We do not pollute. We maintain perfect cleanliness for our equipment and useenergy saving technology. Growth through change:We will grow as a company, as individuals and as professionals by aspiringtowards change, and responding to it creatively.Menatel Commercial StrategyPayphones: Everywhere neededPoint of Sales: Around each payphone and in main public areas elsewhere.Top Customer Service.Top Technical Service Quality.Brand Loyalty through Major Advantages To The End Customer: Discounted rates and tariffs Charging per ten seconds for international calls. Special tariff plan for promotional events.EMBA Cairo 22Rennes International School of Business
  26. 26. 6-2. Organizational profile Head Quarters Logistics offices Distributions offices Branches: - 1. Alexandria Branch 2. Canal Branch. 3. Delta Branch. 4. MUE Branch 5. SUE Branch Managing Director (FCR) Office Manager Technical Director Commercial & Administrative & Logistic Director (FCR Executive) Marketing Director Financial Director Payphone Management  External Communication.  General Reporting &  Security Management. system.  Advertising. Payments.  Premises Management. Payphone installation.  Payphone Location  Accountings & Balance  Purchases. Laboratory & technical help determination. sheet.  Custom Clearance. desk.  Payphone Location  Business Plan & Budgets.  General Procurement. Maintenance supervision. Authorization.  Billing Invoices & Suppliers.  Warehouse. Payphones maintenance.  Sites owner management.  Cash & Contract  Card Distribution. Value added services  Cards Direct Distribution Management.  Transportation. development. management.  Internal Network  Vehicles Management. Subcontractors coordination.  Cards Indirect Distribution Management. Branches Management. management.  Recruitment & Training.  Telecom Egypt relationship.  Payroll & Salary Policy.  Customers hot-line.  Social & Legal matters. 1. Logistic Manager 1. Production Manager  Commercial reporting.  Legal affairs & Legal 2. Security Manager 2. PMS Manager matters. 3. Poseur & Delivery 3. Maintenance Manger Manager 4. SI Manager 4. Warehouse 5. PR Manager 1. PP Distribution Manager Manager 1. Accounting Manger 6. Alex B. Manager 2. Card Distribution 2. IT Manager 7. Canal B. Manager Manager 3. Personal Manager 8. Delta B. Manager 3. Advertising & 4. Recruitment & 9. MUE B. Manager Marketing Training Manager 10. SUE B. Manger Manager 5. Eternal Audit Manager 164 144 28 27 EMBA Cairo 23 Rennes International School of Business
  27. 27. 6-3. Internal Resource & CompetencesResourcesThe key success of Menatel is that Menatel manage all its resources tangibleand intangible in a way that optimize maximum use of all the resources to gainmaximum efficient use of them. Tangible ResourcesFinancial AssetsMenatel managed to maximize the use of its negative working capital situationby conducting a very aggressive approach that lead to breaking even 8months ahead of plans. This in turn yielded in a remarkable high ROE of 57%, as the source of investment was the mere recycle of excess cash flow.Physical Assets As Menatel successfully managed to optimize the use of its physicalassets (LAN, Payphones Network, Branches) to achieve effectivecommunication between all employees which facilitate running the project in aproductive and efficient way. Also, Menatel managed to optimize to use of itsdatabase (Menaprod) achieving full management of the business, whichmeans conducting and analyzing its results. Intangible ResourcesHuman ResourcesMenatel recruitment policy is to recruit self-motivated and business orientedstuff to ensure quality and productivity in the workflow. Also, Menatel conductsa semi - annual employee’s objective - appraisal by which Menatel aims to: 1. Measure employee’s skills and performance in coherent with Menatel objective. 2. Determine whether new or different tasks are needed to be added or adjusted. 3. Nominate the needed courses, training or workshops in coherent with the new tasks added or modified.Technology 1. Menatel System TechnologyMenatel use on-line payphone management system (Centralize ManagementNetwork) unlike the off-line system provides a remote monitoring ofequipment, which allows on site maintenance in real time by Menatelemployees. 2. Smart Card TechnologyMenatel use smart cards, which are the heist existing technology for cards notonly for Payphones but also, for Banks and Mobiles.EMBA Cairo 24Rennes International School of Business
  28. 28. ReputationThrough its lifetime in the Egyptian market Menatel to have and obtain a goodreputation through a very distinctive services to its customer: 1. Using the most advanced technology in the market. 2. Dedicating 6- customer service-centers targeted to achieve total customer satisfaction. 3. Guaranteed high quality service to its payphones in field by Menatel highly- trained team of technicians. 4. Safeguard environment by a high quality of cleaning and maintenance to Menatel booths in field on daily basis by a sub- contractor. 5. Adhered to its financial commitments towards Governmental Institutions , subcontractors and suppliers.CompetencesSales & Distribution PolicyMenatel Policy for sales & distribution based on main three trends:- 1. Card distributed through Main Distributors (7 Main Dis.) 2. Card distributed through Sub Distributors (12 Sub Dis.) 3. Card distributed through Menatel Sales Force (130 Sales Rep.)This allows Menatel to cover 26 Governorates and 4500 sales point to insureavailability of Menatel Card everywhere.Customer ServiceMenatel ensures a customer service hot line, only dedicated for receivingcustomer’s calls in order to help the users and receive their comments oncommercial or technical aspects through 6 Customers Centers cover all ofEgypt.MaintenanceMaintenance is ensured by highly trained groups of Egyptians Engineerssupported by French Experts.Booth & PedestalMenatel Booth and pedestals are in stainless steel, specially designed toprevent shocks and rust. Mantel’s Booth & Pedestals are locallymanufactured.Menatel is not required to further dig in order to connect to the light post instreets, for telephone use. The power needed by the payphones line itself atlow energy thanks to the chip memory used by Menatel. This provides 100 %safety to our customers since they face no risk of electric shock.EMBA Cairo 25Rennes International School of Business
  29. 29. 6-4. Competitors Analysis Menatel & Prepaid Telephones Cards 1. Menatel VolumeMenatel NTC Ringo E. Telecard T/E Card Click S. Mobinil ALO51.7 % 13.6 % 1.5 % 27.1 % 3.4 % 1.3 % 1.4 % 2. Menatel ValueMenatel NTC Ringo E. Telecard T/E Card Click S. Mobinil ALO45.1 % 5.1 % 1.3 % 28 % 5.3 % 7.1 % 8.1 % EMBA Cairo 26 Rennes International School of Business
  30. 30. Menatel & Prepaid Public Payphones Cards 1. Menatel VolumeMenatel NTC Ringo77.5 % 20.3 % 2.2 % 2. Menatel ValueMenatel NTC Ringo86.8 % 10.8 % 2.4 %Menatel Coverage (PP Network) Menatel NTC Ringo 67.4 % 25.5 % 7.1 %EMBA Cairo 27Rennes International School of Business
  31. 31. EMBA Cairo 28Rennes International School of Business
  32. 32. 7. MENATEL RESPONDING FOR IDENTIFIED TRENDSBelieving that new and creative ideas are important to develop and support itsleadership in the market Menatel embraces The Best Idea project in whichany employee can forward his ideas to develop the business.Believing that monitoring and analyzing the opportunities and threats of themarket, Also identifying the firm internal strength and weak points are theway for a successful business , Anew post has been imported in Menatel thatis The Business Development its main focus is to study and analyze Mantel’schances of operation and success.In order to optimize the use of its resources Menatel is adapting a policy ofcost control. Also it re-evaluates the cost of payphones installation amongother costs taking in consideration that the quality and efficiency of thebusiness is intact.Achieving a high level of accuracy and efficiency in the decision makingprocess is obtained by maintaining a strong link with all the actors affectingthe business (T R A, Police, Local Authorities etc.) Menatel being in the heartof events is able to trace changes or decision taken by the actors thus be onestep ahead. Menatel is revising monthly its marketing strategy. Tracing and analyzingmarket changes and trends in order to decide the most efficient strategy forcard procurement and marketing campaigns needed to support its product(pre paid phone card ).In the current state of events which take place in the Middle East Region,Menatel maintains a good relations with customer, sub contractors, suppliersand local authorities. Embracing the image of Menatel as a middle-classproduct which offers a very distinctive services to this class which isdemonstrated in the visuals of Menatel cards with more native language(Arabic) less foreign language. And in avoiding the wrongly propagate imageof Menatel being a foreign or a French company.EMBA Cairo 29Rennes International School of Business
  33. 33. References …  Annual Report, Menatel, 1999.  Annual Report, Telecom Egypt, 1999.  The Statistical Year Book 1994 - 2001, Central Agency for Public. Mobilization & Statistics – June 2002.  Retail Audit Report 2002, MEMRB.  Marketing Management, Philip Kotler, PHIPE Prentice Hall, Eleventh Edition, 2003.EMBA Cairo 30Rennes International School of Business