Strategic management Salova group company Salova group history Product market characteristics Environment Industry environment SOWT analysis Porter’s five model Savola performance review Competition Management / organizational structure of Savola Key strategic issues to be resolved Future outlook

1. SAVOLA GROUP
Balqees Al-Makhmari
Sultan Qaboos University

2. POINTS COVERED
Savola history & background
Product market characteristics
Environment
 Industry environment
 SOWT analysis
 Porter’s five model
Savola performance review
Competition
Management / organizational structure of Savola
Key strategic issues to be resolved
Future outlook

3. COMPANY OVERVIEW
Savola company was founded in 1979 with a strong presence in
MENACA and its headquartered in Jeddah (KSA) with an initial SR 40
million capital . It grows significantly to SR 5 billion in 2015.
Savola
Engagements
manufacture
wholesale
marketing
retail trading
Savola involvements
Real estate , franchising
Commercial trading &trade
agency
Fast food operation ,
development of agricultural
products & provision of
packaging materials

4. CORPORATE STRUCTURE

5. SAVOLA OPERATIONS
 Savola currently has market shares of 62% of the edible oils
market, Savola also has 68% of the sugar industry market in
the Kingdom, and operates 166 retail outlets (supermarkets
or hypermarkets).
 Savola is one of the largest diversified multinationals
company in MENACA

6. VISION , MISSION & CORE OBJECTIVES
Savola Vision
• Give consumers a fair price, while ensuring returns to our investors and all
stakeholders. Create a satisfying work experience for all Savolans. Inspire personal
responsibility and enthusiasm for opportunity.
Savola Mission
• In terms of our culture of “The Balanced Way” we at The Savola Group, are
committed to our Social Responsibility, and we will work relentlessly in achieving
world class standards of openness, transparency and accountability towards all
stakeholders, and build bridges to reach out and serve the communities in which
we operate
Core objectives
• Increase profitability
• empower more qualified people
• focus on creative projects
• Produce the best product with the highest quality
• Increase the expansion

8. 2015 HIGHLIGHTS
Net income SAR 1.79 billion
Year end sales 26,461,053 billion
Earnings per share SAR 3.36
Operation countries 30 countries
operate almost 498 grocery stores and
everyday household staples loved by
consumers in the 30 countries
160,000 shareholders
Ranked number 13 among the top 100
companies
Listed in the top 20 companies in Saudi Arabia
Total number of employees 31,000

9. SAVOLA CORPORATE VALUES
 Savola, values are a blueprint for concrete actions they take as individuals, as a team and as a
company every day. Since the group was founded, this was the way they do business:

10. SAVOLA PRODUCT MARKET
CHARACTERISTICS

11. SAVOLA FOOD
• It has come a long way over its history of almost 4 decades .
• Having initially offered just edible oil and ghee , Savola now manages a
wide range of market leading brands in 30 countries .
• E.g ( al afia , shams and italiano )
Sales volume 4.03 million tons
Consolidated revenue SAR 13.2 billion
Net income SAR 687 million
Gross profit SAR 1.87 billion

12. SAVOLA RETAIL
• It operates “PANDA” a major regional grocery store chain
• In 2016 , there is only one brand panda operates in three different
formats including hypermarkets, supermarkets & convenience stores
with total number of stores of 498.
• The number of Panda outlets increased by 44%
• Own-brand sales increased by 14% year-on-year
Consolidated revenue SAR 13.5 billion
Net income SAR 146 million
Gross profit SAR 3.245 billion
Store openings 152

13. SAVOLA RETAIL SECTOR
• Savola group possesses a 91% stake in Panda Retail Company which
operates a network of hypermarkets, super-markets, and convenience
stores across Saudi Arabia, a hypermarket in Dubai and two
supermarkets in Egypt.

14. SAVOLA REAL ESTATE
• Real estate divisions
Kinan (29.9%
stake)
King Abdullah
economic city
Knowledge
economic city
(11.5% stake)
• SAVOLA PACKAGING (PLASTIC SECTOR)
Savola
packaging
system
Alsharq plastic New Marina
Egypt

15. SAVOLA OTHER INVESTMENTS
• Savola had successful investments with other leading local brands to
support the local economy
36.52% stake
owned
49% stake owned
15% stake in
Swicorp & 49%
stake in Intaj
limited fund

16. GCC FOOD INDUSTRY ENVIRONMENT
 GCC food industry is growing exponentially due to an increase in disposable income in, an
increase in population including an increased number of expatriates especially in the UAE
& Kuwait, as well as gradual changes to food consumption patterns from traditional to
international.
 By 2017, GCC consumer spending on food valued at $106 bn according to A.T. Kearney
 The food industry in Saudi Arabia is highly productive and grows at an annual rate of
between 5 and 8 per cent.

17. GCC RETAIL INDUSTRY
ENVIRONMENT
• Retail industry, which is one of the fastest growing sectors in the GCC,
has thrived over the last several years due to increasing purchasing
power, growing expatriate population, changing lifestyle and an
expanding tourism & hospitality industry
• Saudi Arabia is the largest economy and the biggest retail market in the
GCC region.

18. COMPETITIVE ENVIRONMENT

19. INDUSTRY ENVIRONMENT
• Main drivers of food industry are growing population
• The main share of Saudi dairy market is milk market, accounting for
more than 60% of GCC dairy market.
• Cheese consumption is expected to grow at a CAGR 10.8% for the
period 2012-2016.
• the juice, nectar, and carbonated soft drink (CSD) market in Saudi
Arabia grew in the coming years to CAGRs of 6.6% for juice drinks,
10.1% for nectar, and 3.5% for SCD during 2011-2015.
• Saudi Arabia’s bakery market size is expected to grow to USD 4.7
billion over the next five years.

20. ATTRACTIVENESS OF FOOD AND
RETAIL MARKET
• Saudi Arabia and Kuwait have highest spending in the GCC region on
food at 26% and 19%
• Greater acceptance of modern retail entertainment recreational malls,
supermarkets and hypermarkets have proved to have positive impact
on retail segment
• Rising income, expatriate population, no taxes (until recently beginning
to be implemented) are some other key factors assisting growth.

21. COMPETITION ANALYSIS
• The group is well positioned in geographical diversification, market
leadership, and extensive operations that impacts its growth.
• Lower market penetration of organized grocery retail segment and
lower competitors operating in edible oil and sugar manufacturing
segments further lessen the competition.
Business view Ratings
Sector attractiveness High
Business model attractiveness High
Industry competitiveness Medium

22. COMPETITIVE ENVIRONMENT (FIVE
FORCES MODEL)
• Bargaining power of customers
- the limited number of companies operating in this segments
relative to the high population of KSA and GCC
- nature of the industry is daily consumables, the demand for
which is price inelastic, consumers are more focused on the
brand and quality attributes
- Savola, a gigantic company of global standards with saturating
consumers’ standards through offering high quality products
- Therefore, the bargaining power of buyer is low.

23. COMPETITIVE ENVIRONMENT (FIVE
FORCES MODEL)
• Bargaining power of suppliers
 Determinants of suppliers’ power are the degree of quality in the
products offered and the supplier’s size relative to the market
 Prices of dairy products are subject to the control of government
m authorities.
 Therefore, the bargaining power of suppliers is moderate.

24. COMPETITIVE ENVIRONMENT (FIVE
FORCES MODEL)
• Threat of substitute products
 Major factors are ability to produce high quality and innovative products.
 The threat for fresh dairy products comes from milk powder products but it
is low as consumers prefer the fresh & healthy , alternatives.
 Juices and soft drinks markets are subject to wider threats from competitive
products.
 The Company has established its brand in the market for quality and healthy
products with continuous research and development.
 Therefore, we rate the threat of substitute products at low-moderate.

25. COMPETITIVE ENVIRONMENT (FIVE
FORCES MODEL)
• Threat of new entrants
 high capital requirements
 the lack of natural grazing would be one of the key challenges for any new
entrants in the field of dairy market.
 more investments required to set up an irrigation system in arid regions.
 hot climate is another hurdle which causes damage on certain varieties of
products.
 perishable nature of the product
 strong brands become more dominant in consumer minds and hence
positioning for new products in the market becomes very
challenging
 Hence, the threat of new entrants is low.

26. COMPETITIVE ENVIRONMENT (FIVE
FORCES MODEL)
• Industry rivalry
 assessing the attractiveness of an industry is the competition for
market share.
 industry rivalry would be more evident with increasing bargaining
power of buyers or threat of new entrants which is highly unlikely.
 industry rivalry is low following the absence of new entrant’s threat and
low of bargaining power for customers .

27. • Strengths:
 Strong Financial Performance & constant revenue growth
 Strong brand name
 Leading Market Position specially in the Middle East
 Diversified Business operations in edible oils, sugar, fresh dairy products, and
restaurants serving fast foods
 Responsive and agile in growing market share through our market research,
in-depth analyses and 25 years of experience
 Innovative Culture help to produce unique products
 The total workforce of the group is around 31,000 employees
 Meeting Saudiation ratio of 30% in retail sector and 44.5% in Company’s local
food operations
 Vertical integration
SWOT ANALYSIS

28. SWOT ANALYSIS
• Weaknesses:
 Limited global presence as compared to global leaders in the segment
 Dependence majorly on domestic market is a concern (35%)
 Weak current ratio
 Absence of convenience stores

29. • Opportunities:
 Strategic Acquisitions and global tie-ups to enhance its market presence
 Growing Retail Sector in UAE and Middle East which can be tapped for
growth
 Innovation to produce unique products
 Innovation in technical developments to enhance production processes
 International expansion gives the company new opportunities to expand
the business (GCC, US)
SWOT ANALYSIS

30. SWOT ANALYSIS
• Threats:
 Intense competition from global players
 Substitute products from various companies
 Fluctuating Global Economic Conditions
 Strict Government policies
 Exchange rate variation
 Inflations
 Taxes

31. FINANCIAL ANALYSIS

32. REVENUE AND NET INCOME
• Two core segments food and retail; other investments in publicly listed
companies, investment funds and real-estate businesses. The quarterly
revenue from the segments for 2014-2016 is shown below:

33. NET INCOME AND ROS
• The revenue has fallen in the year 2015 particularly in quarter 3.
• Performing return on sales (ROS) analysis (operating profit over net
sales) portrays how efficiently the profit is being generated.
• For the year 2015, the ROS has been noted to be declining however in
2016 it is picking up again indicating efficient growth in comparison to
previous year.

34. RATIO ANALYSIS
• Revenue was primarily impacted by subdued demand environment in
operating economies, resulting in lower consumption and unfavorable
foreign exchange impact (Egyptian pound and Turkish lira).
• Savola is changing the business model for Sugar (USCE), to an export
oriented operation, comprising of 80% export and 20% domestic sales.

35. SEGMENT ANALYSIS
• The highest revenue is generated from the retail segment of the
Company about 51%
• second highest in the food segment which comprises to 49% (a sum of
edible oil, sugar and pasta).

36. MANAGEMENT ORGANISATION
STRUCTURE

37. BOARD OF DIRECTORS
• The highest authoritative body responsible to shareholders for managing the
Company in accordance with its bylaws, laws, and relevant regulations. The
main role of the Board of Directors includes:
• Set overall corporate strategies, plans, policies, and main objectives of the
Company;
• Establish and review internal control measures, corporate governance, ensuring
proper mechanisms to manage risks;
• Ensure the effectiveness of internal controls across the Group; and
• Approve financial budgets, oversees and monitors the performance of the
Group and executive management’s performance.
• 11 members which complies with the bylaws and Corporate Governance
Regulations issued by the Capital Market Authority.

38. COMPENSATION, NOMINATIONS, AND
CORPORATE GOVERNANCE
COMMITTEE (CNCG):
Committee role:
• The Committee consists of five non-executive and independent members, all
members of the Group Board, with significant experience in committee work.
Committee responsibilities:
• Formulate policies regarding the indemnities, remunerations, and succession plan of
the Board members and top executives;
• Ensure that such policies meet the Group’s performance standards, and follow up the
implementation of these policies;
• Recommend to the Board of Directors the membership appointments for the Board,
Subsidiaries Board, and Committees in accordance with the required Group
standards and to review the skills required for Board membership;
• Prepare a description of the capabilities and qualifications required for such
membership, and ensure Board independence on an annual basis;
• Supervise and monitors corporate governance and compliance matters, thus
ensuring that sound corporate governance systems are in place; and
• Responsible for investigating and settling employee grievances.

39. INVESTMENT COMMITTEE:
Committee role:
• The Investment Committee consists of six members, most of whom are
non-executives.
Committee responsibilities:
• Define, study, and evaluate investment opportunities within the Group
and core sectors in Saudi Arabia and overseas; and
• Recommend findings to the Group’s Board of Directors; and continue
its implementation in light of the authority given to it by the Board.

40. CORPORATE SOCIAL RESPONSIBILITY
COMMITTEE:
Committee role:
• The CSR Committee consists of five members, each with relevant
experience and mostly non-executive.
Committee responsibilities:
• Activate the Group’s role in CSR through adoption of CSR initiatives and
programs; and
• Set criteria and develop plans to develop and serve the community
through developing foundations, standards, and plans for CSR programs;
and continue their implementation.

41. EXECUTIVE MANAGEMENT TEAM:
• The role of Savola Group’s CEO and Managing Director and the
Executive Management team include:
• Implement the strategies, plans, and policies approved by the Board of
Directors and the boards of the Group subsidiaries;
• Monitor the performance of Group sectors and ensure their adherence
to the Group’s plans, policies, regulations, and ethical standards;
• Regularly review and monitor progress; and
• Management, supervision, and control over implementation at
subsidiary level assisted by sub-committees and task forces.

42. SAVOLA BOARD OF DIRECTORS
Chairman
Mr. Sulaiman A. K. Al-
Muhaidib
Board Member
Eng.Abdullah
Mohammed Noor
Rehaimi
Board Member
Mr. Abdulaziz Ib
rahim M. Alissa
Board Member
Mr.Abdulazizzz
Khaled Al-
Ghufaily
Board Member
Dr.Sami Mohsen
Baroum
Board Member
Mr. Essam A.
Al-Muhaidib
Board Memebr
Mr.Omar Hadir
Nasrat Al-Farisi
Board Member
Mr. Fahad
Abdullah ALKass
Board Member Mr.
Mohammad Abdul
gadir Al Fadl
Board Member
Eng. Mutaz Qu
sai AlAzzawi
Board Member
Mr. Bader
Abdullah Alissa

43. SAVOLA EXECUTIVE TEAM
CEO
Eng. Rayan
Mohammed Fayez
CEO, Savola Food
Company (food sector)
Mr. Bader Hamed Al A
CFO
Mr. Nouman Farrukh
Abdulsalam
Chief Investment
Officer
Ms. Huda Al Lawati
Chief Human
Capital Officer
Ms. Rania Al-Turki
Board Secretary Executive
Director, Corporate Affairs &
Sustainability
Mr.Tariq M. Ismail

44. CURRENT PROBLEMS AND DIFFICULTIES (KEY STRATEGIC
ISSUES TO BE RESOLVED
Global expansion of foreign retailers.
Global competition in food sector.
Substitution products.
Inflation rate increase over the years
Exchange rate variation

45. GLOBAL EXPANSION FOR FOREIGN
RETAILERS
Global expansion of foreign retailers.
The company enjoyed previously the privilege to be the the pioneers in the retail business. However, as a
result of globalization foreign companies started entering this sector and therefore changing the company to
keep up the market share they used to have.

47. GLOBAL COMPETITION IN FOOD
SECTOR
 As savola being the first supplier for a number of food items and
having a well connected value chain, it was impacted by the new Food
companies which had the latest technology and new ideas for the
current market needs.

48. SUBSTITUTE PRODUCTS
Substitution products, as the R&D devolves various new companies
came up with products that could simply substitute Savolas products at
a low cost.

49. INFLATION RATE INCREASE
Inflation rate increase over the years, which has made the raw material
expensive and impacted on the purchasing power of consumer and
organizations

51. EXCHANGE RATE VARIATION

52. EXCHANGE RATE VARIATION
As Savola is involved in international product distribution the daily
operations get impacted by the exchange rate fluctuations. It’s might
become fruitful to supply or invest in a few countries and not very
beneficial for others.
Overall cost of product or service increases which might lead to losing
market share to the local competitors.
Impact on the foot print of the company which feeds into the strategy
of the company

53. EXCHANGE RATE VARIATION

54. FUTURE OUTLOOK
 Invest heavily in Research and development
 Adopt E-commerce as it is the next generation tool
 Expansion in the petrochemical industry
 Penetration into the foreign and open more stores
 Enhance product quality to sustain competitive advantage
 Adapt to latest marketing strategies and adapt to the market changes

55. PETROCHEMICALS
• Bought 20% of a petrochemical company “Jusor”. This will basically aid
them with the necessary experience the need in order to understand
this business for any future opportunities
• Savola to be specialized in the petrochemicals

56. E-COMMERCE

58. LESSONS LEARNT
 Enhance the performance of the company by investing in R&D.
 Diversify the company portfolio in order to minimize the risks involved
 Develop packages to attract qualified employees as they increase efficiency and creativity
 Make the business in such a way that is able to adapt with any market changes such as, E-commerce and
entering into new markets

59. THANK YOU