Qalaa Holdings and the Egyptian Refining Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Qalaa Holdings and the Egyptian Refining Company
This case follows Qalaa Holdings, a successful Egypt-based private equity firm, and gives insight into the types of investments it pursued, its growth over time, and the limited partner base it had at hand. It also allows students to consider and debate whether the traditional private equity fund structure can be applied in Africa. In particular, the case focuses on one of Qalaa's largest and most difficult greenfield infrastructure projects: Egyptian Refining Company. It tracks the project from its structuring stage in 2007, through the adverse periods of the global financial crisis and Arab Spring, until 2012. At this time, Hisham El-Khazindar, co-founder and managing director, had to decide on the fate of the project. While passionate about contributing to Africa's development, he could not ignore the challenges: the sheer size and complexity of the project, the high financial stakes, and the region's on-going unstable political environment.
Swot Analysis of "Qalaa Holdings and the Egyptian Refining Company" written by Victoria Ivashina, Marc Homsy includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Qalaa Egyptian facing as an external strategic factors. Some of the topics covered in Qalaa Holdings and the Egyptian Refining Company case study are - Strategic Management Strategies, Entrepreneurial finance, Financial management, Government, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Qalaa Holdings and the Egyptian Refining Company casestudy better are - – geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing energy prices,
increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Qalaa Holdings and the Egyptian Refining Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Qalaa Holdings and the Egyptian Refining Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Qalaa Egyptian, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Qalaa Egyptian operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Qalaa Holdings and the Egyptian Refining Company can be done for the following purposes –
1. Strategic planning using facts provided in Qalaa Holdings and the Egyptian Refining Company case study
2. Improving business portfolio management of Qalaa Egyptian
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Qalaa Egyptian
Strengths Qalaa Holdings and the Egyptian Refining Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Qalaa Egyptian in Qalaa Holdings and the Egyptian Refining Company Harvard Business Review case study are -
High brand equity
– Qalaa Egyptian has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Qalaa Egyptian to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Qalaa Egyptian is present in almost all the verticals within the industry. This has provided firm in Qalaa Holdings and the Egyptian Refining Company case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Qalaa Egyptian has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Qalaa Holdings and the Egyptian Refining Company Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Qalaa Egyptian is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Victoria Ivashina, Marc Homsy can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Qalaa Egyptian has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Innovation driven organization
– Qalaa Egyptian is one of the most innovative firm in sector. Manager in Qalaa Holdings and the Egyptian Refining Company Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Qalaa Egyptian has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Qalaa Holdings and the Egyptian Refining Company - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Qalaa Egyptian digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Qalaa Egyptian has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Qalaa Egyptian in the sector have low bargaining power. Qalaa Holdings and the Egyptian Refining Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Qalaa Egyptian to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Qalaa Egyptian
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Qalaa Egyptian does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Qalaa Egyptian has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Qalaa Egyptian has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Learning organization
- Qalaa Egyptian is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Qalaa Egyptian is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Qalaa Holdings and the Egyptian Refining Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Qalaa Holdings and the Egyptian Refining Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Qalaa Holdings and the Egyptian Refining Company are -
Slow decision making process
– As mentioned earlier in the report, Qalaa Egyptian has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Qalaa Egyptian even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Qalaa Egyptian supply chain. Even after few cautionary changes mentioned in the HBR case study - Qalaa Holdings and the Egyptian Refining Company, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Qalaa Egyptian vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Qalaa Egyptian has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Interest costs
– Compare to the competition, Qalaa Egyptian has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Victoria Ivashina, Marc Homsy suggests that, Qalaa Egyptian is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Qalaa Egyptian is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Qalaa Holdings and the Egyptian Refining Company can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Qalaa Holdings and the Egyptian Refining Company HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Qalaa Egyptian has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Qalaa Holdings and the Egyptian Refining Company, it seems that the employees of Qalaa Egyptian don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Qalaa Egyptian has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Qalaa Holdings and the Egyptian Refining Company, is just above the industry average. Qalaa Egyptian needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Qalaa Holdings and the Egyptian Refining Company has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Qalaa Egyptian 's lucrative customers.
Opportunities Qalaa Holdings and the Egyptian Refining Company | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Qalaa Holdings and the Egyptian Refining Company are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Qalaa Egyptian to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Qalaa Egyptian can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Qalaa Egyptian has opened avenues for new revenue streams for the organization in the industry. This can help Qalaa Egyptian to build a more holistic ecosystem as suggested in the Qalaa Holdings and the Egyptian Refining Company case study. Qalaa Egyptian can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Qalaa Egyptian can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Qalaa Holdings and the Egyptian Refining Company suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Qalaa Egyptian to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Qalaa Egyptian to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Qalaa Egyptian can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Qalaa Egyptian can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Qalaa Egyptian in the consumer business. Now Qalaa Egyptian can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Qalaa Egyptian can use these opportunities to build new business models that can help the communities that Qalaa Egyptian operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Qalaa Egyptian in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Qalaa Egyptian to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Qalaa Egyptian can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Qalaa Egyptian can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Qalaa Holdings and the Egyptian Refining Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Qalaa Holdings and the Egyptian Refining Company are -
Environmental challenges
– Qalaa Egyptian needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Qalaa Egyptian can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Qalaa Holdings and the Egyptian Refining Company, Qalaa Egyptian may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Regulatory challenges
– Qalaa Egyptian needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Technology acceleration in Forth Industrial Revolution
– Qalaa Egyptian has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Qalaa Egyptian needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Qalaa Egyptian can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Qalaa Holdings and the Egyptian Refining Company .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Qalaa Egyptian needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Qalaa Egyptian can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Qalaa Egyptian demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Qalaa Egyptian will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Qalaa Egyptian business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Qalaa Egyptian.
Shortening product life cycle
– it is one of the major threat that Qalaa Egyptian is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Qalaa Holdings and the Egyptian Refining Company Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Qalaa Holdings and the Egyptian Refining Company needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Qalaa Holdings and the Egyptian Refining Company is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Qalaa Holdings and the Egyptian Refining Company is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Qalaa Holdings and the Egyptian Refining Company is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Qalaa Egyptian needs to make to build a sustainable competitive advantage.