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Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
Ezz Steel Strategic Management Project New Design
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Ezz Steel Strategic Management Project New Design

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MBA Graduation Project Strategic Management

MBA Graduation Project Strategic Management

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  • 1.  
  • 2. Company Profile <ul><li>EZZ STEEL Virtually a steel monopolist in Egypt since 1999. </li></ul><ul><li>EZZ STEEL (ES) became the largest player in the domestic market with respective shares of 65% &amp; 60% of rebars &amp; flat steel local sales during 9M08. Currently, ES owns 90.73% of Ezz Steel Mills (ESM); 75.15% of EFS and 53.24% of EDZK. </li></ul><ul><li>EZZ STEEL stands out as lowly rated and growing quickly. The catalyst is the construction volumes as it controls its margins. </li></ul><ul><li>EZZ STEEL cheaper than foreign competition. Benefits from any rally in commodity prices, and more fundamentally from the continued (non-housing) construction investment we think will continue in Egypt. </li></ul>
  • 3. Ezz Steel Success History <ul><li>In the early 70’s of the last decade, </li></ul><ul><li>Haj Abdel Aziz Ezz the father of Ahmed </li></ul><ul><li>Ezz began the steel wholesale business </li></ul><ul><li>and then importing steel rebars </li></ul><ul><li>from Ukraine and former </li></ul><ul><li>Soviet Union. </li></ul>
  • 4. Company Structure 53.24%
  • 5. Market Share
  • 6. Steel Cost Structure <ul><li>Raw materials account for the highest contribution to the total production cost 75%. </li></ul><ul><li>Feedstock mixes is composed of: </li></ul><ul><ul><li>DRI (Direct reduced iron) </li></ul></ul><ul><ul><li>Billet </li></ul></ul><ul><ul><li>Scrap </li></ul></ul><ul><li>local manufacturers fully import their raw materials. </li></ul><ul><li>Steel Industry is an energy intensive industry Energy costs contribution is 7% </li></ul>
  • 7. Ezz Steel Cost Structure <ul><li>EZDK uses a DRI/Scrap mix of 80/20 </li></ul><ul><li>ESR uses a DRI/scrap mix of 15/85 </li></ul><ul><li>EFS uses a DRI/scrap mix of 25/75 </li></ul>
  • 8. Raw Material Prices USD / Ton -16.1 1393.0 1660.6 2266.9 Aluminum -21.3 3825.8 4863.3 6942.1 Copper -33.1 321.7** 481.0 519.0 Iron (billet) Monthly Change Rate (%) Nov. 2008 Oct. 2008 Nov. 2007 Commodity
  • 9. Energy Prices <ul><li>Electricity: </li></ul>Million kwh -1.6 10021 10187 9221 Total Consumption -9.7 10599 11732 10198 Generated Electricity Monthly change rate (%) Oct. 2007 Sept. 2008 Oct. 2007 Item
  • 10. Energy Prices <ul><li>Petroleum: </li></ul>-11.9 424.0 481.0 396.0 Exports of crude oil and petroleum products (USS m.n) 9.1 2650 2430 2465 Domestic consumption of petroleum products (000 tons) -3.8 2891 3006 2707 Production of crude oil, condensates and butane (000 tone) Monthly change rate (%) Sep. 2008 Aug. 2008 Sep. 2007 Item
  • 11. Energy Prices <ul><li>Natural Gas: </li></ul>13.2 368 325 230 Exports of natural gas and its derivatives ( Uss mn) - 0.2 58.1 58.3 5720 Electricity consumption as % of natural gas consumption -1.3 2660 2696 2424 Domestic consumption of natural gas (000 tones) -2.2 3766 3850 3490 Natural gas production (00 tone) Monthly change rate (%) Sep. 2008 Aug. 2008 Sep. 2007 Item
  • 12. Steel Market Demand <ul><li>Per/capita Consumption of Steel </li></ul><ul><ul><ul><li>20 kg. per person per year in Africa </li></ul></ul></ul><ul><ul><ul><li>340 kg in Europe. </li></ul></ul></ul><ul><ul><ul><li>420 kg in North America </li></ul></ul></ul><ul><ul><ul><li>635 kg in Japan. </li></ul></ul></ul><ul><ul><ul><li>Singapore (1,200 kg/capita) </li></ul></ul></ul><ul><ul><ul><li>Taiwan ROC (over 970 kg) </li></ul></ul></ul><ul><ul><ul><li>Rep. of Korea (830 kg). </li></ul></ul></ul>
  • 13. Steel Market in Egypt <ul><li>Market Structure: </li></ul><ul><ul><li>20 steel producers in the local market. </li></ul></ul><ul><ul><li>Total capacity of 9.60 mn tons of steel products. </li></ul></ul><ul><ul><li>Steel rebars 72.9% and flat steel 27.1%. </li></ul></ul>
  • 14. Steel Market in Egypt <ul><li>Steel Market: </li></ul>-10.3 5950 6630 3530 Iron local prices (LE/ton) -20.7 216.6 273.2 239.2 Reinforcement steel sales ( 000 tons) -15.6 239.7 284.1 256.4 Reinforcement steel production (000 tons) Monthly change rate (%) Sep. 2008 Aug. 2008 Sep. 2007 Item
  • 15. EZZ Steel Mission <ul><li>To continually build our capacity and knowledge base to meet the growing and diverse needs of customers across the region. </li></ul><ul><li>To offer a full line of products, grades and qualities that are perceived as equal to – or better than – those of market-leading producers. </li></ul><ul><li>To provide a service that meets or exceeds customer expectations. </li></ul>
  • 16. EZZ Steel Vision <ul><li>To sustain our position as the leading steel producer in the Middle East region and to remain a global player in the international steel trade, with a brand name that is synonymous with quality and reliability. </li></ul>
  • 17. EZZ Steel Objective <ul><li>Increase our profit margins. </li></ul><ul><li>To increase our growth rate through regional expansions. </li></ul><ul><li>To protect our environment. </li></ul><ul><li>Optimizing operations </li></ul>
  • 18. WHY EGYPT ? <ul><ul><li>Political Stability. </li></ul></ul><ul><ul><li>Diverse Economy. </li></ul></ul><ul><ul><li>Available Energy Resources w/competitive prices. </li></ul></ul><ul><ul><li>Large local market, proximity to GCC, MENA, EU </li></ul></ul><ul><ul><li>markets. </li></ul></ul><ul><ul><li>Availability of qualified Labor force at competitive cost. </li></ul></ul><ul><ul><li>Developed infrastructure (telecommunications, roads, </li></ul></ul><ul><ul><li>sea ports, airports) </li></ul></ul>
  • 19. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Political &amp; Legal Forces: </li></ul></ul><ul><ul><ul><li>Egypt has introduced to humanity the oldest political system. Along the banks of the River Nile, there arose the most ancient unified government which built the greatest civilization in the world. Over ages, the bases of the Egyptian political system were deeply entrenched. </li></ul></ul></ul><ul><ul><ul><li>Modifying anti-monopoly law. </li></ul></ul></ul><ul><ul><ul><li>Removal of export duties &amp; export ban. </li></ul></ul></ul><ul><ul><ul><li>Raising energy prices. </li></ul></ul></ul>
  • 20. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Economic Forces: </li></ul></ul><ul><ul><ul><li>Real GDP Growth Rate </li></ul></ul></ul>2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 3.4 3.2 3.1 4.2 5.1 6.8 7.1 7.2
  • 21. Summary Macro Snapshot 14.0% 12.3% 9.0% 10.5% 13.4% 9.1% 5.3% Private Sector Credit Growth 5.3% 5.7% 6.0% 6.5% 6.6% 7.3% 8.0% Fiscal Deficit % GDP 3026 2698 2455 2305 2191 1792 1527 GDP/Capita, Current (US$) 40082 39296 38526 37770 37030 36253 35531 Avg. Population (&gt;15&lt;45 yrs old) 80,486 78,908 77,361 75,844 74,357 72,798 71,347 Population 6.3% 5.7% 4.4% 5.0% 7.2% 7.1% 6.8% Real GDP Growth (%) 2011/12 2010/11 2009/10 2008/9 2007/8 2006/7 2005/6 Forecast Actual
  • 22. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Economic Forces: </li></ul></ul><ul><ul><ul><li>Inflation Rate </li></ul></ul></ul>12.7 20.2 21.5 7.5 Annual -0.4 -0.01 0.3 1.0 Monthly Change Oct. 2008 Sep. 2008 Oct. 2007 Inflation Rate
  • 23. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Socio-Cultural Forces: </li></ul></ul><ul><ul><ul><li>Egypt&apos;s population until May 1, 2008 reached 78.7 million according to final results of this year&apos;s census as announced Thursday by the Central Agency for Public Mobilization and Statistics (CAPMAS). </li></ul></ul></ul><ul><ul><ul><li>Of the population 37.2 million are males, up 22.6 percent from the 30.4 million in 1996, and 35.6 million are females which is 22.9 percent more from their count in 1996 that was estimated at 29 million. </li></ul></ul></ul><ul><ul><ul><li>High rates of population growth has lead to a greater demand for utilities and service </li></ul></ul></ul>
  • 24. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Socio-Cultural Forces: </li></ul></ul><ul><ul><ul><li>Population: </li></ul></ul></ul><ul><ul><ul><li>41% of the population are 58% of the population is part of </li></ul></ul></ul><ul><li> Between the age of (15-39) the work force age (15-64) </li></ul>13% 20% 2000 2006 2000 2006
  • 25. EGYPT land of opportunities <ul><li>PEST Analysis: </li></ul><ul><ul><li>Technological Forces: </li></ul></ul>0.8 2621 2600 2278 Companies in the field of Information and communications Technology (ICT) (company) 10.4 27077 24522 14556 Internet international connection capacity (million bit/second) 5.5 11.69 11.08 10.02 Internet users (million) 1.2 38.00 37.62 26.40 Mobile phones subscribers (millions) 0.2 11.42 11.40 11.03 Land line telephones subscribers (millions) Monthly change rate (%) Sep. 2008 Aug. 2008 Sep. 2007 Item
  • 26. Corporate Value Chain Analysis Supplier Value Chains Firm Value Chain Channel Value Chains Buyer Value Chains Firm Infrastructure Human Resource Management Technology &amp; Product Development Purchasing &amp; Inbound Logistics Production Distribution Marketing &amp; Sales Service MARGIN
  • 27. Ezz Steel Value Chain Analysis <ul><li>With EZZ Steel Components, customers can avoid capital investment and move away from non-value-added primary operations. Instead, they can rely on EZZ to perform the initial operations, and receive components at any value-added level.  </li></ul>
  • 28. Ezz Steel Value Chain Analysis <ul><li>Through EZZ supply chain system, they provide cost-effective raw material for planetary gear sets, manual gears, input/output shafts and other transmission components.  </li></ul><ul><li>They consider the customer’s production capabilities or requirements, our capabilities and those available from our network of manufacturing partners. Then they develop an optimal supply chain solution that provides the component required by the customer, at the lowest possible per-unit price. This enables a lean approach to supply chain management for the customers. </li></ul>
  • 29. Ezz Steel Value Chain Analysis
  • 30. Porter’s 5 Forces
  • 31. Porter’s 5 Forces <ul><li>EZZ steel a monopoly in Egypt. </li></ul><ul><li>Low Fixed Cost. </li></ul><ul><li>High Capacity. </li></ul><ul><li>High Exit Barrier </li></ul>
  • 32. Porter’s 5 Forces <ul><li>It’s very difficult to enter steel market due to : </li></ul><ul><ul><li>Huge Capital requirement . </li></ul></ul><ul><ul><li>Government policy that protect Egyptian market from import. </li></ul></ul><ul><ul><li>Cost Advantage </li></ul></ul>
  • 33. Porter’s 5 Forces <ul><li>Arising of new technique as spar block technology. </li></ul><ul><li>Minor Threat of retaining walls. </li></ul><ul><li>Minor Switching cost. </li></ul>
  • 34. Porter’s 5 Forces <ul><li>Recommended by Engineering Consultants </li></ul><ul><li>As high market demand in Egypt . </li></ul><ul><li>Monopoly status </li></ul>
  • 35. Porter’s 5 Forces <ul><li>Suppliers: </li></ul><ul><li>- Billet suppliers have power </li></ul><ul><li>- Power and Energy Suppliers have power. </li></ul>
  • 36. SWOT Analysis <ul><li>Strengths : </li></ul><ul><ul><li>High market share . </li></ul></ul><ul><ul><li>Political support </li></ul></ul><ul><ul><li>Good working condition : </li></ul></ul><ul><ul><ul><ul><ul><li>Low turnover. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Retain employees . </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Carrier path . </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Loyalty. </li></ul></ul></ul></ul></ul><ul><ul><li>Effective distribution channels. </li></ul></ul><ul><ul><li>High turn over and working capital . </li></ul></ul><ul><ul><li>Strong Strategic team . </li></ul></ul><ul><ul><li>Strong Export market . ( Dekheila sea port ). </li></ul></ul><ul><ul><li>Powerful R&amp;D . </li></ul></ul>
  • 37. SWOT Analysis <ul><li>Weaknesses : </li></ul><ul><ul><li>Working union. </li></ul></ul><ul><ul><li>Working locations </li></ul></ul>
  • 38. SWOT Analysis <ul><li>Opportunities : </li></ul><ul><ul><li>Monopoly. </li></ul></ul><ul><ul><li>New regional market specially Algeria &amp; Libya . </li></ul></ul><ul><ul><li>Market growth </li></ul></ul><ul><ul><ul><ul><ul><li>Middle age growth of population. </li></ul></ul></ul></ul></ul><ul><ul><li>Construction backlog. </li></ul></ul><ul><ul><ul><ul><ul><li>As projects announced TMT ,ORASCOM Hotels and E3mar. </li></ul></ul></ul></ul></ul><ul><ul><li>Preferential among engineering consultant . </li></ul></ul><ul><ul><li>Outstanding Quality Product than other competitors . </li></ul></ul><ul><ul><li>El-Sokhna Plant </li></ul></ul><ul><ul><ul><ul><ul><li>Exempted from Custom Duties and Taxes (Free Zone) . </li></ul></ul></ul></ul></ul>
  • 39. SWOT Analysis <ul><li>Threats : </li></ul><ul><ul><li>Monopoly resistance </li></ul></ul><ul><ul><ul><ul><ul><li>Public opinion . </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Governmental . ( Anti-Monopoly law ). </li></ul></ul></ul></ul></ul><ul><ul><li>New Steel manufacture license for DRI/billet (4 licenses). </li></ul></ul><ul><ul><li>Imports . </li></ul></ul><ul><ul><li>High Energy Prices : </li></ul></ul><ul><ul><ul><ul><ul><li>Electricity . </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Natural Gas. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>MAZOT. </li></ul></ul></ul></ul></ul><ul><ul><li>Low corporate governance in the company. </li></ul></ul><ul><ul><li>Environment regulations (1.9 ton Co2 / Ton steel) </li></ul></ul>
  • 40. Ezz Family wholesale Manufacturing 1995 1- Steel rebars 2-Flat Steel sheets 3-Dekheila factory 4- Private sea port 5- Algeria Factory License for Production of Raw materials (DRI/billet) 1999 1995 1996 70’s - 90’s 2010 2008
  • 41. BCG Matrix
  • 42. Directional Policy Matrix High Low Market Attractiveness High Low Business Strength Divest Harvest Grow Strong Business , Considerably High Market Attractiveness Invest
  • 43. Competitive Analysis High Low Market Attractiveness High Low Business Strength Maintain Cost Advantage Hope for Market Growth Outstanding Success Maintain Specialty
  • 44. Ezz Steel Life Cycle 1994-1999 EZZ started the business in the local market 1999-2008 EZZ acquires DEKHEILA 2008 EZZ take the license to produce bellit (raw material)
  • 45. Marketing Mix <ul><li>Product </li></ul><ul><li>Price </li></ul><ul><li>Place </li></ul><ul><li>Promotion </li></ul><ul><li>Distribution strategies … see next slide </li></ul>
  • 46. Marketing Mix <ul><li>DEMAND-PULL FORCES </li></ul><ul><li>Steel consumption is closely tied to the mushrooming construction activity. Construction activity in Egypt grew by 7.4% over 2004-2007; triggering rebars consumption to grow by 15.9% over the same time span. </li></ul><ul><li>Consumer goods and the locally assembled vehicles (Completely Knock down – CKD) are key consumers of flat steel. Growing production levels in both industries drove up the demand for flat steel which enjoyed a 13.3% over 2004-2007 </li></ul>
  • 47. Financials Key highlights EGP 2006 2007 +/- • Net sales 11.6bn 16.2bn +40% • Gross profit 3.2bn 3.6bn +12% • EBITDA* 3.6bn 3.9bn +8% • Net profit before tax 2.6bn 2.9bn +11% • Tax and deferred tax 611m 653m +7% • Net profit after tax and minority interests 995m 1.1bn +12% • EPS on a weighted average number of shares 5.85 6.26 +7% • Net debt to Equity 1.26x 0.99x -21%
  • 48. &nbsp;
  • 49. &nbsp;
  • 50. &nbsp;
  • 51. &nbsp;
  • 52. <ul><li>1- Introducing New grades of Advanced High Strength Steel AHSS, will </li></ul><ul><li>provide lighter, optimized body designs for car and truck body structure </li></ul><ul><li>industry that enable improved vehicle crashworthiness, improved fuel </li></ul><ul><li>economy and lower total greenhouse gas emissions. </li></ul><ul><li>2- Invest in Renewable Energ y particularly throug h alliance with an </li></ul><ul><li>international developer in win d power generation to produce electricity </li></ul><ul><li>from wind farms and thus benefiting from selling carbon certificates </li></ul><ul><li>traded in the London Stock Exchange(1Ton Co2=$4.0). </li></ul><ul><li>3- Invest in Libya for a steel production line. </li></ul><ul><li>4- Implementing a waste heat recovery in the four production plants and </li></ul><ul><li>benefiting from EU grants and CDMA funds. (production cost efficiency) </li></ul><ul><li>5- Preparing a junk yard equipped with machinery for 30 yrs old car </li></ul><ul><li>recycling proposed new law. </li></ul>Strategic Recommendations ezzsteel حــديـد عـــز
  • 53. <ul><li>Q &amp; A </li></ul><ul><li>Thank You </li></ul>ezzsteel حــديـد عـــز

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