MASTER OF BUSINESS ADMINISTRATION (MBA)

Strategic Management Plan of an Engineering, Procurement & Construction

(EPC) “Company X” in Oil & Gas Industry

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Table of Contents

I. Introduction ............................................................................................................................................... 4
1.1. Executive Summary ..................................................................................................................... 4
1.2. Case Studies ................................................................................................................................. 5
1.3. Role of top management in formulating the organization’s strategy ...................................... 7
II. Current Situation........................................................................................................................................ 9
2.1. Company Overview ..................................................................................................................... 9
2.2. Current Vision, Mission, Values and Strategy .......................................................................... 10
2.2.1. Current Vision ............................................................................................................................ 10
2.2.2. Current Mission.......................................................................................................................... 10
2.2.3. Current Values ........................................................................................................................... 11
2.2.4. Current Internal Processes......................................................................................................... 12
2.2.5. Current Business Model ............................................................................................................. 14
III. Problems & Its Negative Impacts ............................................................................................................ 15
IV. Recommended Solution – Strategic Plan Road Map .............................................................................. 16
4.1. Recommended Vision & Mission .............................................................................................. 17
4.2. External Audit ............................................................................................................................ 17
4.2.1. PESTEL Analysis .......................................................................................................................... 17
4.2.2. Porter’s Priority Matrix .............................................................................................................. 18
4.2.3. Porter’s Five Forces Matrix ........................................................................................................ 19
4.2.4. Competitive Profile Matrix......................................................................................................... 21
4.2.5. External Factors Analysis Summary (EFAS) ................................................................................ 23
4.3. Internal Audit ............................................................................................................................ 24
4.3.1. Capabilities, Competency, Core Competency, Distinctive Competency ................................... 24
4.3.2. Value Chain Analysis .................................................................................................................. 24
4.3.3. Internal Factor Analysis Summary (IFAS) ................................................................................... 29
4.4. SWOT Analysis ........................................................................................................................... 30
4.5. Corporate Objectives ................................................................................................................ 31
4.6. TOWS Analysis ........................................................................................................................... 33
4.7. Business Strategy ...................................................................................................................... 35
4.8. Corporate Strategy .................................................................................................................... 36
V. Implementation Phase............................................................................................................................. 41
VI. Evaluation Phase ...................................................................................................................................... 47
6.1. Evaluation and Control .............................................................................................................. 47
6.2. Measuring Performance ............................................................................................................ 47
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 6.2.1. Financial Performance Measures .............................................................................................. 48
6.2.2. Customer Measures ................................................................................................................... 48
6.2.3. Internal Processes Measures ..................................................................................................... 49
6.2.4. Employee Performance Measures ............................................................................................. 49
VII. Conclusion ................................................................................................................................................ 50
VIII. References ................................................................................................................................................ 51

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List of Figures

Figure 1: Porter’s five forces. ........................................................................................................................... 19

Figure 2: A model of competitive advantage (Vijayan et al., 2016). ............................................................... 24
Figure 3: Analyzing value chain (Vijayan et al., 2016). .................................................................................... 25
Figure 4: Porter's Generic Competitive Strategies .......................................................................................... 35
Figure 5: The Ansoff Matrix ............................................................................................................................. 37
Figure 6: Evaluation and Control Process ........................................................................................................ 47

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I. Introduction

1.1. Executive Summary

Strategic management is mandatory in any type of business especially with the rapid changes
and high competition locally or internationally. Developing a solid business strategy will help the
organizations not only to stay in the market but also to grow and expand.
Strategic management's goal is to assist the organization in becoming more competitive.
Applying solid business strategy has several benefits to the organization and can be categorized
into three main categories of benefits as follows:

1.1.1. General Benefits

Organizations become more proactive than reactive in shaping their own future. It means
that the organization must initiate, and influence activities rather than just respond to it,
hence it exerts its utmost efforts to control over its own destiny by acting before a situation
becomes a source of confrontation or crisis and capturing opportunities available before
other competitors. In addition to formulate better strategies using a more systematic,
logical, and rational approach It means that process of making strategy in rational approach
requires Systematic analysis of the external environment, assessment of internal strengths
and weaknesses, setting clear goals, Evaluation of alternative actions, and development of a
logical plan to attain determined goals & objectives. Better communication and
empowerment support employee’s confidence to gain loyalty and let the employees operate
their work in their own way. Finally, Ownership of strategies by the people who must execute
them is a key to success to build team accountability to help achieving the strategic plans.

1.1.2. Financial Benefits

Top Management seeks revenue-generating ideas that stick by creating an occupational

environment in which department heads can take a fresh look at operating processes and
not be afraid to make the necessary changes to do better profitability than its competitors.
Significant improvement in sales, profitability, and productivity. Knowing the business
opportunities spent on information search and communication on relevant topics to
improve sales, and profitability. margin and achieve higher sales targets for them. Superior
long-term financial performance by measure a company’s financial performance, set targets,
having clear picture re about the requirements that can by efficiently applied using
technology. Finally, better systematic planning to be prepared for future fluctuations in their
external and internal environments by using the technology to have strong reporting
mechanism.

1.1.3. Non-Financial Benefits

Strategic prioritization helps to identify the most promising markets to allocate resources
for the best utilization of resources. Thus, objectives will be defined according to real
opportunity identification, prioritization, and exploitation of opportunities. Which must be

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 Defined and prioritize according to its relative weight and exploitation after selecting the
highest weight.
Building and implement strategy encourage forward thinking reach objectives to minimize
the negative impact of changes. Provides a cooperative, integrated, and enthusiastic
approach to tackling problems, allows fewer resources and less time to be devoted to
correcting decisions by using tools, information, and work in integrated system to achieve
the objective Creating framework for internal communication among personnel through the
availability of strong communication system and internal processes that will help to
increase employee’s loyalty and commitment.
1.2. Case Studies

Sample Case Studies for business strategy either failures or success and outline how it can be
avoided or followed while prepare business strategy as follows:
Kodak – Necessary for Transform
Kodak is a brand that relates to photography. Their print processing processes were global, and
their technology was cutting-edge. The corporation, however, eventually came crashing down
because it did not adjust its approach in response to the market. In 1975, Kodak invented the
digital camera. Even though they created a study predicting future market trends, management
felt that the technology would not disrupt the market and that strategy change was not required.
They had ten years to act, yet they chose not to. Before declaring bankruptcy in 2012, the
company had lost 75% of its worth.
Iridium – Gambling on Technology
Iridium was a firm that made satellite phones all around the world. It spent $5 billion to expand
and launch its wireless satellite phone range, which was backed by Motorola. The system needed
66 satellites to work, which were not yet in place. To achieve this, the corporation went into debt
for $1.5 billion. Furthermore, each handset cost $3000 and each call cost $5 per minute, on top
of other costs. The system needed 66 satellites to work, which were not yet in place. To achieve
this, the corporation went into debt for $1.5 billion. In addition, each device cost $3000 and each
call cost $5 per minute, on top of other considerable monthly expenditures. Customers were not
pleased, and the company filed for bankruptcy in 1999, less than a year after its start.
Nokia's Failure Was Caused by Strategic Decisions
Nokia Mobile Phones (NMP) expanded its headcount by 150 percent to 27,353 people between
1996 and 2000, while revenues increased by 503 percent. This quick expansion comes at a price.
Managers at Nokia's main development centers felt themselves under increasing short-term
performance pressure and unable to devote time and resources to innovation because of this
expense. Nokia's relatively tiny data section picked up the innovation mantle as the core business
focused on incremental improvements. It was responsible for the world's first smartphone, the
Communicator, in 1996, as well as Nokia's first camera phone in 2001 and its breakthrough
second-generation smartphone, the 7650. By 2010, Symbian's software flaws had become
painfully apparent, and it was clear that Nokia had missed Apple's pivot toward apps. Google
developed Android software as an open source which was widely used by most of mobile phone
manufacturers worldwide such as Samsung, LG, HTC while Nokia CEO decided to develop the
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Symbian software for Nokia phones. Nokia's strategic options appeared to be limited, and none
of them were particularly appealing. Nokia had become a sitting duck for expanding competition
forces and fast market shifts in the mobile phone sector. The game was lost, and it was handed
over to a new player. Nokia had become a sitting duck for expanding competition forces and fast
market shifts in the mobile phone sector. The game had been lost, and it was up to new CEO to
learn from the mistakes and successfully detach Nokia from mobile phones, allowing it to refocus
on its other major business, network infrastructure equipment.
H&M connects virtual shopping with the physical conveniences.
H&M the Swedish clothing and accessory company require little introduction throughout the
world. The development of digital-focused competitors, on the other hand, forced H&M to step
outside of its comfort zone and drastically alter its strategy and to focus on digital transformation
as a global trend and one of the key success factors when doing business.
They began experimenting with mobile technologies, and their pursuit to better the virtual
experience of searching, putting on, and purchasing clothes led them to the image search
function and smart product recommendations. The first allows users to, for example, follow the
clothing of their favorite influencers by uploading and searching by image. If the product we're
looking at is sold out, a comparable recommendation engine shall provide users with
alternatives. Another noteworthy endeavor is the Perfect Fit app, which allows users to design
their own personalized digital avatar using selfies and information provided by them. Because
the avatar will have roughly the same body proportions as the owner, it can be utilized to test
on items when shopping online. And the shift in strategy has paid off: H&M recorded a 30 percent
increase in online sales in October 2019 as a result of merging online and in-store. H&M recorded
a 30 percent increase in online sales in October 2019 as a result of merging online and in-store.
In the oil and gas market the following case studies shows the importance of building solid and
applicable corporate strategy
Wood group Horizontal Growth:
Foster Wheeler established in 1929 It began in New York City. AMEC Foster Wheeler was formed
when Foster Wheeler was purchased by AMEC PLC in the second half of 2014. The transaction
occurred with a drop in crude oil prices, and the company strategy was focusing mainly on oil
and gas projects. In October 2017, WOOD Group acquired AMEC Foster Wheeler and integrated
it with the company. One of the motivations for the purchase was to minimize Wood Group's
experience to the upstream oil and gas business, which has dropped by 25% in both 2015 and
2016. In order to anticipate generating considerable cost savings in a less returning industry. The
agreement would allow WOOD for horizontal growth to expand in regions that are best placed
to gain from a rise in commodity prices, such as the onshore shale oil and gas industry in the
United States.
Hassan Allam Holding – Successful growth strategy:
Hassan Allam Contractor started 1936 for general contracting for domestic projects. By adjusting
to political change over the years and after the high competition in the market the company
growth strategy established to expand vertically by providing new products and services in Egypt
by working for steel structure procurement and fabrication, electrical power projects by
acquiring BGESCO, in addition to provide water desalination services to cover the new demand
of desalinated water in red sea resorts and industrial areas. The horizontal expansion in Algeria,

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Saudi Arabia to work as an EPC contractor. Furthermore, Hassan Allam strategy for business
diversification to work for Domestic, oil gas, Fertilizers, infrastructure, water treatment and
desalination, Electrical and rail projects such as Cairo Metro 3rd stage. Now it is Hassan Allam
Holding, and this led by over 34,000 employees the current construction backlog exceeds EGP 55
billion.
The above case studies proof that having proper vision and mission, perform internal and
external scanning for the organization, setting SMART goals and objectives, use of technology,
implement, and evaluate the strategy in a flat organization structure are the key success factor
for organizational growth otherwise eventually the result will be a retrenchment or bankruptcy.
The following strategy is prepared for and Egyptian oil, gas, and petrochemical EPC contractor
work in Egypt and MENA region. Such strategy will help the contractor to grow and expand within
the current region by diversifying the products and services maximizing the utilization of
experienced resources.
1.3. Role of top management in formulating the organization’s strategy
CEO is the person, amongst the top management, responsible for formulation and
implementation of the strategy, he is the link between the top management and board of
directors from one end, and the middle management and employees from the other end. He
cascades his task on the middle management level and he may delegate a part of this role
however, the end product is his responsibility.
CEO is responsible for the following activities during the formulation of the strategy:
• The CEO is responsible for the initiation of the change process. His experience with the
organization’s functionality, his deep participation into execution role with the middle
management, and his linkage with the external environmental factors and knowledge with
their impact on the business, all these elements make him detect the right time to start
change process. we would highlight that this initiation might begin at the middle
management level and be sold to the CEO.
• The CEO is responsible for selling the new strategy to the board of directors, and he is
responsible for reporting the results of the strategic management process to them.
• The CEO is responsible for selecting the strategy formulation team. He needs to make sure it
includes representatives from all respective departments. He may lead the team himself or
assign a team leader. But assigning a team leader does not absolve him of his
responsibilities.
• The CEO is responsible for setting the details of the 10 elements of change management
together with the strategy formulation team. These elements are crucial for strategy
management and without them it will be impossible to formulate and implement it.
• He is responsible for empowering the strategy formulation team, enabling them to do their
job. For example, they will need to capture information from and conduct interviews with
the organization’s different departments, and without facilitating this task the strategy
formulation will be a failure.

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• The CEO is the guardian for the organization’s culture. His job is to make sure that the new
strategy does not collide with the organizational culture.
• In the same context, he is also responsible for aligning the strategy with the unique
characteristics of the organization. He is also responsible for aligning the new strategy with
the objectives of the owners.
• He must make sure that he and the formulation team together discuss the upcoming
changes and objectives of the strategy with employees. This should be done in meetings, in
events, during outings, etc. Participation of employees is the most important element of
success.
• He should give all the time needed to meet and brainstorm with the strategy formulation
team on regular bases and whenever they need to, in order to take the decisions on timely
manner.
• He should ensure compliance of the strategy with measures of health & safety.
• He should also ensure compliance of the strategy with consideration of diversity &
inclusion.
• While the strategy formulation team is responsible for making the decisions, the CEO is
responsible for taking them.
• Before granting the approval of the board of directors, it is his job together with the
formulation team to ensure that the final strategy is well introduced to and approved by the
organization’s employees.
• The CEO gets the approval of the board of directors on the final strategy and the
implementation budget.

In this project, we shall apply the strategic management model on “Company X” as one of
the major Oil & Gas EPC contractors in Egypt.

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II. Current Situation

2.1. Company Overview

“Company X” had been established in the past 40 years on the solid basis and has grown and
expanded since that to become the trusted name of choice in the oil and gas industry across the
entire region. “Company X” Headquarters is in Cairo, Egypt, with branches and offices that are
spread across more than 15 countries around the world. Avid expansion plans are being
implemented with every passing year.
“Company X” represents a long history of engineering expertise and proficiency gained through
decades of hands-on experience and learning. The organization is well-known as a global leader
in fully integrated engineering, procurement, construction supervision, and project management
services for the petroleum, petrochemicals, electricity, and other industries.
“Company X” is globally recognized as a major engineering, EPC main contractor, and
management contractor, with decades of experience in onshore and offshore projects in the oil
and gas, refining and petrochemical industries. “Company X” Authorized Capital $800Million Paid
Capital $420 Million
Engineers are the “Company X” 's most valuable and vital asset. Engineers are famous for their
invaluable experience, know-how, and professional work ethic, which has earned the
organization an international reputation. We are committed to retaining our engineering
expertise and talents at “Company X” by providing them with the work environment and support
they require to succeed.
The “Company X” has a long and illustrious track record of engineering project success that can
be traced all around the world. Our global presence is built on our collected engineering solutions
knowledge, and the “Company X” name is now recognized around the world as a professional,
efficient, and trustworthy partner.
The “Company X” Work as an EPC contractor to execute oil and gas projects in Egypt, Saudi
Arabia, Sudan, Yemen, Syria, Venezuela, Jordon, Libya, and UAE. Meanwhile, the cumulative
projects revenue out of which 30% achieved from international market.

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 2.2. Current Vision, Mission, Values and Strategy
2.2.1. Current Vision

To attain a leading position among the international engineering and EPC / Lump-sum turnkey
contractors, executing projects in the field of oil & gas, petrochemicals, and process industries.
No Criteria Clarification
1 Purpose driven leading position among the international engineering and EPC
/ Lump-sum turnkey contractors

2 Inspiring and challenging To attain a leading position

3 Short enough 1 sentence – 2 lines (could be shorter)

4 Achievable Can be achieved on the long run.

5 Time Bounded Time frame not included

2.2.2. Current Mission

To execute projects in the field of the oil and gas, petrochemicals, and process industries in the
Middle East & Africa. Also, to support the national economy, primarily through providing state
of the art technologies, leadership, and standards of excellence. On the other hand, we strive to
exceed our customers’ expectations. This is achieved through “Company X” ’s employees which
is our most asset. They are confident, competent, and caring.
No Criteria Clarification

1 Purpose of existence? To execute projects

2 Who is the customer? Oil and gas, petrochemicals, and process industries

3 Where is the marketplace? Middle East & Africa

4 What is the product and services? Execution of Oil and gas, petrochemicals projects
5 What is the deal Philosophy? strive to exceed our customers’ expectations

6 Technology used in the Through providing state of the art technologies

organization?
7 Values Customer Satisfaction, Agility, Commitment and
Employees development as they are the most
valuable asset. (4 values which is good)

8 Employees Moral Confident, Competent, and Caring.

9 Image of organization strive to exceed our customers’ expectations by

providing the standards of excellence.

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 2.2.3. Current Values

Commitment
We are committed to use the highest quality, safety, and cutting-edge technology standards at
“Company X”. We are dedicated to meeting the needs of our clients, suppliers, partners, and
stakeholders always. Environmental best practices are also important to the “Company X”, as is the
successful transfer of information to clients, sister companies, and the general public.
People
The heart of our business is our team, clients, partners, and stakeholders. Our employees are our
most asset at “Company X”, and we invest consistently in their growth, retention, proficiency, and
well-being. Our clients are our success partners, and we work hard to rebuild long-term, beneficial
partnerships that can thrive over time.

Agility
The “Company X” is committed to meeting new challenges and adapting to market dynamics in
order to meet the various industry evolution characteristics. Our agility enables our world-class
experts to provide optimal and innovative solutions while meeting the needs of our clients and
projects quickly.

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 2.2.4. Current Internal Processes

Present Situation Change Management Element

IT Tools/ Using It is partially implemented in the company; Since the Implementing IT tools face different challenges as follow:
Technological tools company is globally recognized as a major engineering, - Difficulties in the integration "Smart Plant foundation
EPC main contractor, and management contractor in between different disciplines to obtain the full benefit
the oil and gas, it decides to implement the technology from this solution.
tools on different phases: - Unification and standardization of the data required by
- Phase 1: Using "Smart Plant Foundation" as each discipline and its output data to complete the design
engineering solution that can help you efficiently create of the ERP and start implementing it.
and improve plant configurations.
- Phase 2: Start building and implementing ERP system
in the organization.
Information This step is implemented while implementing the The challenge that had been faced were the time taken in
Management organization's strategy 2026 as proper information had the process of validating the data gathered via conducting
been done by the following: brainstorming sessions that included top/middle
- Participation of the organization's three layers (i.e., management participants from all Engineering / non-
Strategic Management, Middle management & Engineering divisions.
Functional Management) via one-to-one interviews.
- Employee survey was sent to all employees on an
individual basis via the general email, to collect the
primary data needed for diagnostic purposes.
Make / Take Decisions The strategy's objective decisions were taken by the The challenge that had been faced in this step is the
organization's strategy committee team members after organizational structure which affect in the strategic
performing several analytical approach methodologies objectives and taking decisions
as: SWOT/TOWS Matrix, Space Matrix, Internal-
External Matrix…etc.

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Operating in Flat The organizational structure in the concerned company Increased bureaucracy often hinders an organization's
Structure is balanced Matrix which balance the power and speed to change. So, the organizational structure affects
authority between the project manager and the the determination of strategic objectives and taking
functional manager. decisions which affect the commitment and loyalty of all
employees in implementing the strategic objectives.
Training Training is performed from the technical point of view The challenge of training is the employee's reluctance
on the smart plant engineering solution and will start against change to more technological methods rather than
training on the ERP their previous experience in the traditional way of working.
Flow of Information ERP system still under Preparation and implementation Employee's reluctance against change to more
technological methods rather than their previous
experience in the traditional way of working
Empowerment on Empowerment had been partially applied for the Empowerment requires more training on business-focused
different levels to take participants in the organization’s strategy temporarily skills such as quality management, collaboration and
decisions according to till finalizing the preparation of the strategy. adaptability that are considered key for first line workers.
your level Technology supports the development of such skills.
Dividing the main The main objectives of the strategy had been divided Implementing the IT tools and the technology foundation
objective to small into small objectives and distributed on the disciplines required for the follow up on daily basis.
objectives with assigning the prime responsible person for each
objective in addition to the follow up by the strategy
committee.
Monitoring Results The strategy's small objectives still under distribution Implementing the IT tools and the technology foundation
required for the follow up on daily basis.
Evaluation The strategy's small objectives still under distribution Implementing the IT tools and the technology foundation
required for the follow up on daily basis.

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 2.2.5. Current Business Model

Customer solution model is the Company’s business model as the main service that company
provides as engineering, Procurement, and construction contractor. Thus, applying design
optimization and value engineering to minimize the capital and running cost achieving best
efficiency in addition to the impact on the material and equipment that is purchased for the
customers. Furthermore, applying the international codes and standards with the best practice
during the construction and commissioning phases is one of the company specialties on behalf
of the customer until handing over the project for operation.
The success of the company's customer relationships is a direct result of the company's devotion
to its corporate values, as well as continual proficiency, respect, professionalism, and
responsiveness. Company uses the knowledge of its engineers to fulfil customer goals and
aspirations by becoming a member of each client's team, Client engagement models at the firm.

The following main areas of company engagement:

Main Contractor
Company assumes complete project responsibilities for engineering, procurement,
construction, and project management as a main contractor. As a result, conducting all essential
duties, from initial planning studies to full facility commissioning.

Subcontractor
The company works as a subcontractor on multibillion-dollar projects. This is where the
company's skilled engineers and significant experience can be used to provide any of the
company's services.

Partnership
The company forms relationships with national and/or international companies in the form of
joint ventures or consortiums. Company's job in these collaborations is to ensure that all of the
company's services are delivered. On a turnkey basis, this comprises engineering and project
implementation.

Corporate Governance
The company is run by a Board of Directors, which decides on the strategic direction of the
company's activities and ensures that they are carried out. It performs certain functions and has
authority over specific areas of the decision-making process, such as assessing and setting the
company's yearly results and targets, authorizing agreements, and approving transaction
exclusions that are not within the company’s announced strategy.

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III. Problems & Its Negative Impacts

The oil and gas industry is facing a risk of market saturation due to the global trend to use renewable
energy and most of international companies are investing in the development of renewable energy
such as Shell, BP. In addition to the new trend of encouraging employees to work from home and
the awareness to reduce the Hydrocarbon emissions which will lead to decrease the demand on the
oil and gas products by 2030. The lack of experienced engineers will also affect the “Company X”
growth which may hinder the “Company X” growth.
Furthermore, the low-price competitors for oil and gas projects either local or foreign companies
especially Chinese is negatively affecting the market share locally or in MENA area.
Finally, after covid-19 pandemic, the projects outside Egypt depending on the “Company X”
Egyptian resources or imported material from the highly infected population countries is facing a
risk of declining or slow down because of travel restrictions worldwide which may affect the
“Company X” of fulfilling the contractual obligations either locally or in MENA area.
Based on the above, keeping the same service market strategy without diversification as the oil
and gas market may decline by 2030 with high competition will lead to decrease of the market
share as and EPC service contractor in Egypt or in MENA area.

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IV. Recommended Solution – Strategic Plan Road Map

The "Company X"’s top management decided to formulate, implement, and evaluate a strategic plan utilizing the organization’s strengths and
developing weaknesses to take the advantage of the maximum availed opportunities and mitigate or avoid the risks of the maximum threats,
where the road map of the strategy will be as follow:

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4.1. Recommended Vision & Mission

4.1.1. Vision
To attain a leading position as an EPC contractor in the field of oil & gas, petrochemicals, Mining,
Renewable energy, and process industries by 2026.

4.1.2. Mission
To execute projects in the field of the oil and gas, petrochemicals, mining, renewable energy,
and process industries in MENA region. Also, to support the national economy, primarily through
providing state of the art technologies, leadership, and standards of excellence. On the other
hand, we strive to exceed our customers’ expectations. This is achieved through “Company X” ’s
employees which is our most asset. They are confident, competent, and caring.
4.2. External Audit
4.2.1. PESTEL Analysis
• Governmental strategic direction for transforming Egypt to energy hub (O)
P Political • Good political relations with the Gulf countries (O).

• Emerging investments in various Egyptian business sectors, e.g.,

Renewable Energy, nuclear and subsea projects (O).
• Mega projects opportunities in GULF area (KSA, UAE, Oman, and Kuwait)
and MENA region generally in O&G sector (O)
E Economic • Reputative international EPC contractors entered the Egyptian market
during the last few years which leads to tough competition in national and
international market (T).
• Volatility of the demand on oil & gas EPC projects as it depends on crude
prices which affect the sustainability of resources allocation (T).
• Lack of qualified Engineering candidates specialized in Oil, Gas, and
petrochemicals industry in the local market (Educational) (T).
S Social
• New Oil & Gas and mining projects may not get Social License to Operate
(SLO) from local communities (T).
• Digital transformation for Egyptian Government in all sectors, e.g.,
T Technological application of ERP "Enterprise Resources Planning" program (O).
• Continual updating of software would cost the organization big budget (T).
• Construction projects are facing high environmental constrains that
E Environmental
requires high budget to fulfill (T).
• Expected new mining projects in the pipeline due to the new licenses
L Legal
awarded Q4 2020 in Egypt (O).

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 4.2.2. Porter’s Priority Matrix
The opportunities from the PESTEL analysis were preliminary weighted as follows:

SR Opportunities Weight
Digital transformation for Egyptian Government in all sectors, e.g., application of ERP "Enterprise
O1 20%
Resources Planning" program
Emerging investments in various Egyptian business sectors, e.g., Renewable Energy, nuclear and
O2 30%
subsea projects
Expected new mining projects in the pipeline due to the new licenses awarded Q4 2020 in Egypt;
O3 15%
meanwhile, no local mining EPC contractors exist in Egypt.
O4 Governmental strategic direction for transforming Egypt to energy hub. 15%
Mega projects opportunities in GULF area (KSA, UAE, Oman, and Kuwait) and MENA region
O5 10%
generally in O&G sector.
O6 Good political relations with the Gulf countries. 10%
And the threats:
SR Threats Weight
Reputative international EPC contractors entered the Egyptian market during the last few years
T1 25%
which leads to tough competition in national and international market.
Lack of qualified Engineering candidates specialized in Oil, Gas, and petrochemicals industry in the
T2 local market in addition to quitting the company’s qualified expertise moving to the international 20%
EPC contractors with competitive salaries and benefits.
Volatility of the demand on oil & gas EPC projects as it depends on crude prices which affect the
T3 30%
sustainability of resources allocation.
New Oil & Gas and mining projects may not get Social License to Operate (SLO) from local
T4 5%
communities.
T5 Continual updating of software would cost the organization big budget. 10%

T6 Construction projects are facing high environmental constrains that requires high budget to fulfill. 10%

Next step is to locate opportunities and threats in the priority matrix. The green cells have low priority, the
orange have medium priority, the red have top priority:
Probable Impact on Organization

Low Medium High

Probability of Occurrence

Low T4 O1, O4

Medium O6, T5, T6 O5

O2, O3
High T1, T3
T2

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Now weights are reallocated to each O/T according to priority, meanwhile, low priority (green) O/T were not
considered in the final O/T tables hereinafter:

SR Opportunities Weight
Digital transformation for Egyptian Government in all sectors, e.g., application of ERP "Enterprise
O1 Resources Planning" program. 20%

Emerging investments in various Egyptian business sectors, e.g., Renewable Energy, nuclear and
O2 25%
subsea projects.
Expected new mining projects in the pipeline due to the new licenses awarded Q4 2020 in Egypt;
O3 meanwhile, no local mining EPC contractors exist in Egypt. 25%

O4 Governmental strategic direction for transforming Egypt to energy hub. 20%

Mega projects opportunities in GULF area (KSA, UAE, Oman, and Kuwait) and MENA region
O5 generally in O&G sector. 10%

SR Threats Weight
Reputative international EPC contractors entered the Egyptian market during the last few years
T1 35%
which leads to tough competition in national and international market.
Lack of qualified Engineering candidates specialized in Oil, Gas, and petrochemicals industry in the
T2 local market in addition to quitting the company’s qualified expertise moving to the international 30%
EPC contractors with competitive salaries and benefits.
Volatility of the demand on oil & gas EPC projects as it depends on crude prices which affect the
T3 35%
sustainability of resources allocation.

4.2.3. Porter’s Five Forces Matrix

Porter discussed the importance of the five forces
on industry profitability on medium and long terms
(Porter, 2008). As stated by Porter, ‘The
configuration of the five forces differs by industry.
The strongest competitive force or forces
determine the profitability of an industry and
become the most important to strategy
formulation. The most salient force, however, is
not always obvious.’
The five forces are (fig. 1):
Figure 1:Porter’s five forces.
a. Rivalry among existing competitors
This was the focus of any company until Porter came out with the four other forces.
Therefore, it is in the center of the model as shown in the figure above.
b. Bargaining power of suppliers
Powerful suppliers can manipulate prices and get most of the value, they are also able to limit
quality.

Page | 19
 c. Bargaining power of buyers
Big-size buyers are powerful and can manipulate the industry, also if number of buyers is few
this is a threat to the industry.
d. Threat of new entrants to the industry
and this depends mainly on barriers to entry defined by Porter in seven items:
➢ Supply-side economies of scale: existing companies with economy of scale would have better
terms and prices from suppliers.
➢ Demand-side benefits of scale: buyers may trust larger companies more.
➢ Customer switching costs: costs may arise because a buyer who switches vendors must, for
example, alter product specifications, retrain employees to use a new product, or modify
processes or information systems.
➢ Capital requirements: to extend customer credit, build inventories, and fund start-up losses,
and so on.
➢ Incumbency advantages independent of size: such as (proprietary technology, preferential
access to the best raw material sources, etc.).
➢ Unequal access to distribution channels: such as supermarkets for food producers.
➢ Restrictive government policy: governmental policies may hinder new entries.
e. Threat of substitute
A substitute performs the same or a similar function as an industry’s product by a different
means.
The following matrix is used as a tool to assess each of these five forces in terms of its important
to the Company (“Company X”) and threats/opportunities on the industry:

Force Importance Threat to Industry Weighted

(1 to 5) (1 to 5) Score
1 = Not Important - 5 = Very Important 1 = Low - 3 = Medium - 5 = High
Weight Score
Justification Justification WxS
(W) (S)
Rivalry among There are significant number of Since the number of rivals is
companies rivals, several are of big size quite significant and there
competing in the (strong rivals). hence the are some big players. Hence
5 1 5
industry importance is high. the market is competitive
(no oligopoly) which
represents a very low threat.
Bargaining power There exist many suppliers of Proprietary equipment
of suppliers in equipment necessary for EPC suppliers highly manipulate
the industry companies to establish oil & gas the industry. This is a high
projects (pumps, turbines, etc.). threat on the industry.
This is not of big importance to
4 “Company X”. However, for 4 16
proprietary equipment, there
exists monopolies (single
suppliers) with long order waiting
lists that would negatively affect
cost and schedule.

Page | 20
 Force Importance Threat to Industry Weighted
(1 to 5) (1 to 5) Score
1 = Not Important - 5 = Very Important 1 = Low - 3 = Medium - 5 = High
Weight Score
Justification Justification WxS
(W) (S)
Bargaining power This is a B2B business. The target High bargaining power of the
of buyers segment of “Company X” is buyers represents quite high
MENA region. There are big sized threat on the industry. They
and limited number of buyers influence the demand level
5 4 20
(i.e., Aramco, ADNOC, etc.) hence based on their cash flows
they have high bargaining power and this demand fluctuation
on the EPC industry. causes instability of the
industry.
Threat of new Relatively high entry barriers due Market is competitive, hence
entrants to the to the fact that big buyers look does not represent a threat
industry for well referenced EPC even with high entry
companies and a high-quality barriers.
2 product. To have both is not an 1 2
easy job for new entrants. But
anyways, you need to be alerted
all the time for possible new
players.
Threat of Substitutes to EPC services is null. Substitutes to EPC services is
substitute Clients are enforced to carry out null. Hence there is no threat
1 1 1
products or EPC services. Hence, it is not on the industry.
services important to “Company X”.
Total 44
Remarks:
Minimum Score = 5 (Very attractive) - Maximum Score = 125 (Very unattractive)
Conclusion:
High to moderate attractiveness – Diversification is recommended but not urgent.
Further actions: Refer to available market research and to our business development department
to define possible new industries (i.e., EPC services for mining, EPC services for renewables, etc.).
Analyze attractiveness of such industries using the same matrix above. Time span for such action is
not tight (no urgency).
4.2.4. Competitive Profile Matrix
The competitive profile matrix is a tool that is used to assess any company’s competitiveness (in
this case “Company X”) compared to its competitors using industry’s key success factors.
Literature have been reviewed in order to detect the key success factors suitable for “Company
X”’s industry (i.e., EPC oil & gas). There are six main key factors that affect the success of
engineering projects in general (Gepp et al., 2014). These factors are Schedule, customer
satisfaction, satisfaction of the stakeholders, costs, flexibility, and managed risk.
On the other hand, when it comes to projects in the petroleum industry, the following factors are
of influence (Tsiga et al., 2017): External Challenge, Client knowledge and experience, Top
management Support, Institutional factors, Project characteristics, Project manager competence,
Project organization, Contractual aspects, Project team competence, Project Risk Management
and Requirements Management.

Page | 21
 We have used the six factors of Gepp et al. (2014) except for satisfaction of stakeholders which
received lowest score in the survey, adding to them two important factors from Tsiga et al. (2017),
namely, project team competence and requirement managements. Meanwhile, weight of each
factor has been estimated by us based on Gepp et al. (2014) and on our experience on the
industry.
The following table includes definitions of key success factors and weight allocated for each, in
addition to ratings for “Company X” and the most important competitors:

Key Success Factors “Company X” Competitor 1 Competitor 2

Weighted Weighted Weighted
Title Weight Definition Rating Rating Rating
Score Score Score
Capability to
accomplish
Schedule 0.20 4 0.80 3 0.60 4 0.80
projects according
to schedule.
Projects are
executed without
Costs 0.18 4 0.72 4 0.72 3 0.54
exceeding planned
cost.
Quality of projects
Customer
0.15 is up to client 3 0.45 3 0.45 4 0.60
satisfaction
satisfaction.
Company’s ability
to comply to
Flexibility 0.15 2 0.30 3 0.45 2 0.30
requests and
changes of clients.
Identifying and
evaluating risks
Managed and set strategies
0.12 4 0.48 3 0.36 3 0.36
risk to deal with those
risks (minimize
surprises).
Team experience,
Project team technical and non-
0.10 3 0.30 3 0.30 3 0.30
competence technical skills,
commitment, etc.
Problems’
identification,
analysis and
Requirement negotiation,
0.10 3 0.30 4 0.40 2 0.20
managements modelling,
validation and
scope
management.

Total 1.00 3.35 3.28 3.1

Note: Rating is given score 1, 2, 3, or 4 (1 very weak to 4 very strong)

Conclusion: The total weighted score shows that “Company X”’s competitiveness exceeds its
competitors, however, when it comes to each key success factor, there are areas of improvement
specially in the “flexibility” factor.
Page | 22
 4.2.5. External Factors Analysis Summary (EFAS)

External Factor Analysis System (EFAS) is a tools/matrix used to summarize the information
gathered from company’s external environment analyses through interviews, brainstorming,
expert judgments…etc. (Jurevicius, 2014). Then each factor is evaluated using weighted score
then we start to build SWOT analysis.
Each factor should be evaluated using a weight ranging from 0 (low importance) to 1 (high
importance). The weight will indicate the importance of the factor to a company which wants
to achieve success in a certain industry.
Ratings in external matrix refer to the effective response and readiness of company to catch
opportunities and to face threats. The numbers range from 5 to 1, where 5 means a superior
response, 4 - above average response, 3 - average response, 2 - below average and 1- poor
response.
Weighted
SR External Factors Weight Rating
Score
Opportunities:
Digital transformation for Egyptian Government in all
O1 sectors, e.g., application of ERP "Enterprise Resources 0.1 4 0.4
Planning" program
Emerging investments in various Egyptian business sectors,
O2 0.12 3 0.36
e.g., Renewable Energy, nuclear and subsea projects
Expected new mining projects in the pipeline due to the new
O3 licenses awarded Q4 2020 in Egypt; meanwhile, no local 0.13 3 0.39
mining EPC contractors exist in Egypt.
Governmental strategic direction for transforming Egypt to
O4 energy hub. 0.1 5 0.5

Mega projects opportunities in GULF area (KSA, UAE, Oman,

O5 and Kuwait) and MENA region generally in O&G sector. 0.05 5 0.25

Threats:
Reputative international EPC contractors entered the
T1 Egyptian market during the last few years which leads to 0.17 3 0.51
tough competition in national and international market
Lack of qualified Engineering candidates specialized in Oil,
Gas, and petrochemicals industry in the local market in
T2 addition to quitting the company’s qualified expertise 0.15 3 0.45
moving to the international EPC contractors with
competitive salaries and benefits
Volatility of the demand on oil & gas EPC projects as it
T3 depends on crude prices which affect the sustainability of 0.18 2 0.36
resources allocation
Total EFAS Score 1 0 3.22
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4.3. Internal Audit
4.3.1. Capabilities, Competency, Core Competency, Distinctive Competency

Capabilities are defined as collective competencies, skills, knowledge the organization has, while
resources are all valuable things under organization’s control. Core competency is the
combination of collective capabilities and resources within the organization. This competency is
crucial for the organization to carry out its core activities. If this core competency is distinctive
enough to give the organization an advantage by having lower cost or higher value at the same
cost of competitors, in this case the organization has a distinctive competency. The advantage
of having a lower cost or having a better value (differentiation), or both together are the possible
methodologies for any organization to have a competitive advantage over its competitors. Fig:2
show the model of competitive advantage.

Figure 2:A model of competitive advantage (Vijayan et al., 2016).

4.3.2. Value Chain Analysis

Value chain analysis (VCA) is a process where a firm identifies and analyses its primary (core) and
secondary (support) activities to create sustainable competitive advantage and increase its profit
and ROI. This is done as organization reduce its costs, differentiate its products (and increase the
ability to command higher prices) or both. The term activities means the economic processes or
functions carried out within the organization, each activity represents ‘a mix of people,
technology, fixed assets, sometimes working capital, and various types of information’
(Magretta, 2012).
It is important to highlight that the organization’s range value chain is a part of a wider range
needed to deliver the product to the customer. This wider range starts from producing the raw
materials and ends at the shelf of the retailer. The value chain within the organization depends
on how vertically its management decided to integrate, and when analyzing value chain, this is
the scope that will be focused upon. It is also important to highlight that the competitive
Page | 24
 advantage of any organization is measured in comparison with its competitors in the same
industry, and hence, the norm of the industry must be in the analysis.
Vijayan et al. (2016) discussed the steps of value chain analysis as follows:
1. Define the value chain within the organization and categorize them into primary (core)
activities and secondary (support) activities. Porter has defined specific functions within
each category.
2. For each function, the involved departments are listed based on the norms of the industry,
and activities of each to perform the required function are described for the organization
under study (“Company X”’s functionality).
3. Analyze how these functions participate in providing a differentiation advantage to the
product and analyze their cost drivers to find if they give cost advantage (fig. 3). This analysis
will emphasize the organization’s competitive advantage and will also show points where
this advantage can be enhanced.
4. Put recommendations to enhancement.

a. Analyzing differentiation b. Analyzing cost advantage.

advantage.

Figure 3:Analyzing value chain (Vijayan et al., 2016).

Limitations:
It is important to define the final product of the company prior to performing the value chain
analysis. EPC contractors usually develop projects up to client’s request. The product might be
Engineering or procurement service only, engineering and procurement together or an integrated
turn-key EPC project including engineering, procurement and, in case of “Company X”, construction
(supervision) activities.
The definition of functions changes dramatically depending on whether the final product is a
physical good (a plant or a refinery established as an EPC turn-key project) or a service (engineering
procurement or construction supervision). For this reason, and for the limitations of this project, we
have analyzed “Company X”’s main product, i.e., Turn-key EPC projects.
Also, the project team focused on differentiation analysis (fig 3.a) following a descriptive
(qualitative) methodology since it was not possible to avail cost/price data.

Page | 25
 Function Involved Depts. Activities Cost/Value Analysis Competitive
Advantage
Inbound  Procurement Contracting supplier, purchasing, expediting, inspecting,  The focus of these departments is to select the best quality Sustained
logistics  Expediting receiving, warehousing, and inventory management of material and equipment via following the international codes Competitive
 Inspection source materials needed for projects completion including and standards and via selecting the best suppliers and advantage.
 Logistics bulk materials (pipes, steel beams, etc.) and equipment inspecting these materials before leaving supplier’s shop. This
 Engineering (pumps, compressors, etc.). “Company X”, as an EPC contributes to creating a differentiated final product.
 Material control contractor, does not have a workshop. Source materials are  Material is controlled using software to ensure maximum
received and warehoused on project’s site were construction control.
occur.
Operations  Engineering (all Activities related to turning raw materials and components  Value engineering is followed as a technique to ensure Sustained
disciplines) into a finished product (in this case, a plant). These activities optimum value (best quality for a specific cost). Competitive
 Construction include engineering, construction, and commissioning of  HAZOP and HAZID sessions are performed to ensure advantage.
supervision projects. “Company X” does not have a construction team operability and safety.
 Commissioning & (this activity is subcontracted), it only has a construction  Quality assurance by applying several engineering review
start-up supervision team their job is to ensure compliance of actions.
construction to design. Commissioning department is  Construction under maximum HSE measures to ensure zero
Primary (Core) Activities

responsible for testing installed equipment an starting them incidents per project.
up.  All the above leads to differentiation.
Outbound  Commissioning & The process of delivering final products or services to the Highly qualified commissioning personnel to ensure Sustained
logistics start-up end consumer. In the case of EPC contractor, the product is commissioning activities are done smoothly. Competitive
built on the site of the client, however, delivering the Participating suppliers in the activities to prevent any advantage.
product to the client is done via commissioning the plant, problems.
testing all systems and starting-up production. Engineering expertise are mobilized to site during
commissioning to confront any issues.
All the above activities lead to a differentiated product.
Marketing and  Proposals The processes an organization uses to influence customers The activity is not differentiated and needs a lot of No competitive
sales  Business development to purchase its product instead of competitor’s. In “Company enhancement. Building bridges with clients is not done advantage. Enhance
X” this is done by directly contacting clients or participate in sufficiently bearing in mind that strong customer relations is an customer relations
bids they solicitate (proposals department). Also, by building essential pillar of a differentiated product. Also cost estimation and enhance cost
relations with current and new clients (Business of projects needs more optimization that will also enhance estimation activities.
Development department). customer relations (customers always look for lower price and
we can do it).
After-sales  Commissioning & After-sales services of EPC contracts are limited to training of The service is not differentiated. The respective departments Work on delivering
services start-up client’s personnel on operating and maintaining the plant. just do their job. more value to the
 Construction customer (for
supervision example, additional 3
months of training)
even if it is not
contracted.

Page | 26
 Function Involved Depts. Activities Cost/Value Analysis Competitive
Advantage
Procurement  Procurement The sourcing of furniture, devices, computers, This function is carried out with procedure to get the right commodity Sustained
 Administrative software, and equipment necessary for personnel with good quality in order for the personnel to do their job in a good Competitive
to do their jobs in main office or on site. This is environment and with the best tools available in the market. This advantage.
done by procurement and administrative supports creating a differentiated product
departments
Technological  Process technology Technology development activities can be No new technologies are introduced in the past decade in order to No competitive
development  R&D grouped into efforts to improve the product and participate in new types of projects (new products). The R&D function advantage. Process
the process. That means mainly the process and in “Company X” is not sufficiently contributing to achieve the technology and R&D
R&D departments responsible for enhancing differentiation objective. It is required to introduce new know-how to needs to be
processes and entering new technologies to the the company specially those relevant to green fuel technologies. This strengthened by
scope of the company (new products). will give the company an edge in the oil & gas EPC industry. hiring local expertise
or expats in order to
Secondary (Support) Activities

capture know-how of
new technologies.
Human  HR Activities involved in the recruiting, hiring (and These activities are don sufficiently good except for training. The There is an area of
resources  Personnel firing), training, development, and compensation company does not link training needs with promotion gaps and hence enhancement. A
management of all types of personnel. HR and Personnel not every employee is totally equipped with the necessary skills to do competency model
departments jointly do these activities. his job optimally. This is reflected to the deficiency in some areas for each position
specially those relevant to customer satisfaction. In addition, technical would certainly direct
competency is not raised to the needed extent in some departments training in the right
specially those relevant to technological development. These two way and hence raise
training aspects (skills and technicality) reflect on core competence of core competency and
the company. hence competitive
advantage.
Infrastructure  Top management Activities including general (strategic)  Loss prevention is an important element of success in oil & gas Sustained
 Project management management, planning, finance, accounting, legal, industry. Know-how of preventing catastrophic events by performing Competitive
 Project control quality management, IT, business development, safe-to-operate engineering is a differentiation aspect that is only advantage.
 QC etc. available at few of competitors’ firms.
 Loss prevention  QC department has role to ensure that total quality, HSE and
 Finance environmental systems (ISO 9000, OSHA, ISO 14001, etc.) are strictly
 Accounting followed. This is another differentiation edge.
 IT IT department has the role not only to avail necessary production
 Business development software (Smart plant, PDS, PDMS, etc.) and keep it working, but also
to oversight ERP system that interconnects all disciplines. Another
differentiation aspect.

Page | 27
Page | 28
 4.3.3. Internal Factor Analysis Summary (IFAS)
Internal Factor Analysis System (IFAS) is a tool/matrix used to summarize the information
gathered from “Company X”’s internal environment analyses through interviews, brainstorming,
expert judgments…etc. (Jurevicius, 2014). Then each factor is evaluated using weighted score
then we start to build SWOT analysis.
Each factor should be evaluated using a weight ranging from 0 (low importance) to 1 (high
importance). The weight will indicate the importance of the factor to a company which wants to
achieve success in a certain industry.
▪ Ratings in internal matrix refer to the strength or weakness of each factor is in a firm. The
numbers range from 5 to 1, where 5 means a major strength, 4 - average strength, 3 - minor
strength, 2 - minor weakness and 1 - major weakness. Strengths should receive ratings 3, 4 &
5 only while weaknesses should receive ratings 2 & 1.
Weighted
SR Internal Factors Weight Rating
Score
Strength
Availability of competent technical expertise with different
S1 0.15 5 0.75
specialties
Extended Relationships with international companies and
S2 0.05 5 0.25
EPC full awareness with various customers standards
Long reference list with various EPC projects in oil & gas,
S3 and petrochemical fields accomplished through several 0.1 5 0.5
decades.
Familiarity of Laws and legislations for other countries due
S4 0.05 4 0.2
to pervious work experience in KSA and UAE
Excellent technological infrastructure (hardware &
S5 0.05 5 0.25
software) that sufficiently supports company’s activities
S6 Priority to win projects at governmental entities 0.1 5 0.5
Weakness
No reference list in other fields rather than oil & gas, and
W1 petrochemical such as mining, subsea, and renewable 0.2 1 0.2
energy despite the similar technicalities and processes
High cost when competing nationally with inaccurate
W2 estimation for projects Man-hours due to high fixed costs 0.2 1 0.2
of company's overheads
Lack of suppliers’ agreements as well as an undeveloped
W3 0.1 2 0.2
interrelation with global and local subcontractors
Total IFAS Score 1 0 3.05

Page | 29
4.4. SWOT Analysis

Strengths Weaknesses

1) Availability of competent technical expertise with different specialties. 1) No reference list in other fields rather than oil & gas, and
2) Extended Relationships with international companies and EPC full petrochemical such as mining, subsea, and renewable energy
awareness with various customers standards. despite the similar technicalities and processes.
3) Long reference list with various EPC projects in oil & gas, and
2) High cost when competing nationally with inaccurate estimation
petrochemical fields accomplished through several decades.
for projects Man-hours due to high fixed costs of company's
4) Familiarity of Laws and legislations for other countries due to pervious
overheads.
work experience in KSA and UAE.
5) Excellent technological infrastructure (hardware & software) that 3) Lack of suppliers’ agreements as well as an undeveloped
sufficiently supports company’s activities. interrelation with global and local subcontractors.
6) Priority to win projects at governmental entities.

SWOT
Opportunities
Analysis
Threats

1) Digital transformation for Egyptian Government in all sectors, e.g., 1) Reputative international EPC contractors entered the Egyptian market
application of ERP "Enterprise Resources Planning" program. during the last few years which leads to tough competition in national
2) Emerging investments in various Egyptian business sectors, e.g., and international market.
Renewable Energy, nuclear and subsea projects. 2) Lack of qualified Engineering candidates specialized in Oil, Gas, and
3) Expected new mining projects in the pipeline due to the new licenses petrochemicals industry in the local market in addition to quitting the
awarded Q4 2020 in Egypt; meanwhile, no local mining EPC contractors company’s qualified expertise moving to the international EPC
exist in Egypt. contractors with competitive salaries and benefits.
4) Governmental strategic direction for transforming Egypt to energy hub. 3) Volatility of the demand on oil & gas EPC projects as it depends on
5) Mega projects opportunities in GULF area (KSA, UAE, Oman, and crude prices which affect the sustainability of resources allocation.
Kuwait) and MENA region generally in O&G sector.

Page | 30
4.5. Corporate Objectives

Once we finished defining the mission and vision, then performing external analysis of the
opportunities, threats and analyzing the competitors and marketplace, followed by the internal
analysis of the “Company X” to define the strengths and weaknesses. The next step in strategy
building process is determining the long-term strategic objectives of the “Company X” which will
be considered as the ultimate goals for the strategy which should be consistent with “Company
X”’s vision and mission.
These corporate objectives will be broken down into small functional objectives that will be the
tactics resulted from TOWS matrix.
Consequently, either corporate objectives or functional objectives have to be S.M.A.R.T where
SMART objective means:

▪ Specific: targeting a specific area for improvement.

▪ Measurable, quantifiable, or suggesting an indicator for progress.
▪ Attainable/Action Oriented: specifying how and who will do what.
▪ Realistic: stating what results can realistically be achieved, given available resources.
▪ Time-bound: specifying when the results can be achieved.
Setting the Corporate Objectives is an important step in building the “Company X”’s strategy as it
always tends to concentrate on the whole business's targeted performance and outcomes. In
addition, the corporate objective should have a clear benefit that will be returned on the
organization after achieving it.
Accordingly, if we refer to Peter Drucker’s suggestion concerning what should be covered in
determining any corporate objectives, we will find that the eight key areas are as follow:

Area Examples
Increase market share locally and internationally, customer satisfaction
Market Standing
and product range
New products, better processes, using technology, Improving Quality of
Innovation
executing activities
Productivity Optimum use of resources, focus on core activities
Physical & Financial
Factories, business locations, finance, supplies, cost reduction
resources
Profitability Level of profit, rates of return on investment
Management Management structure; promotion & development
Organizational structure, gain employee’s satisfaction, and improve their
Employees
skills
Public responsibility Compliance with laws; social and ethical behavior

Page | 31
So, if we have deep insight in the internal and external scanning performed for our “Company X”,
we will find that the most appropriate corporate objectives that will have effective positive impact
on the “Company X” as follow:
a. Market Standing:
Increasing the “Company X”’s market share by 25% by the end 2026, is one of the long
objectives that can be performed using the “Company X”’s core competencies, technological
infrastructure, and the long reference list for the “Company X” in oil & gas industry in addition
to the availed opportunities as priority in gaining the governmental projects and the potential
for building mega projects in MENA region.

b. Innovation:
Implementing and developing the IT and technological tools the end of 2025 will lead to
better workflow and better resources management. As example, the ERP system, the process
of the integration "Smart Plant foundation between different disciplines to ensure consistent
and high-quality design services in addition to Building Dashboard system using "Microsoft
Business Intelligence software" to monitor the status of whole projects in the company.

c. Profitability:
The “Company X” strategy ultimate objective is to achieve profitability increase 5X the current
profit by the end of year 2026, and this objective will be achieved gradually through close
monitoring of whole business performance which will result in gradual yearly growth till
reaching our target.

d. Employees:
Employees is one of the “Company X”’s core competence due to their qualifications and
experience, so their satisfaction is one of the essential objectives that should be achieved to
maintain and develop the “Company X”’s core competence and help in building its distinctive
competence in the market.

Page | 32
4.6. TOWS Analysis

Strength: Weakness:
S1: Availability of competent technical expertise with different W1: No reference list in other fields rather than oil & gas, and
specialties petrochemical such as mining, subsea, and renewable energy
S2: Extended Relationships with international companies and EPC full despite the similar technicalities and processes
awareness with various customers standards W2: High cost when competing nationally with inaccurate
S3: Long reference list with various EPC projects in oil & gas, and estimation for projects Man-hours due to high fixed costs of
. IFAS=3.05
petrochemical fields accomplished through several decades. company's overheads
EFAS = 3.22
S4: Familiarity of Laws and legislations for other countries due to W3: Lack of suppliers’ agreements as well as an undeveloped
pervious work experience in KSA and UAE interrelation with global and local subcontractors
S5: Excellent technological infrastructure (hardware & software) that
sufficiently supports company’s activities.
S6: Priority to win projects at governmental entities.
Opportunities: S/O Strategies “Offensive Strategy”: W/O Strategies “Defensive Strategy”:
O1: Digital transformation for Egyptian * S1&S5 -O2: * W2 – O2 & O3:
Government in all sectors, e.g., - Utilizing high- quality engineers and technological infrastructure to - Build independent business units to separate EPC services of
application of ERP "Enterprise Resources the new markets (e.g., mining, Renewable Energy, nuclear and
offer consistent professional services in the new markets (e.g., mining,
Planning" program subsea fields) to reduce overheads and have competitive price.
O2: Emerging investments in various Renewable Energy, nuclear and subsea fields) and to be delivered with
Egyptian business sectors, e.g., time bound and within budget.
* W2- O1:
Renewable Energy, nuclear and subsea - Training staff and building relations with customers to support the
- Implement ERP system in the “Company X” to optimize the
projects “Company X”’s entry in the mentioned new markets.
company's overheads and hence reach to optimum man-hour
O3: Expected new mining projects in the
pipeline due to the new licenses awarded * S1, S2, S3&S4 -O5: unit rate.
Q4 2020 in Egypt; meanwhile, no local - Company growth through market penetration by increasing market
mining EPC contractors exist in Egypt. share in engineering field externally in Gulf and KSA area. * W1-O3:
O4: Governmental strategic direction for - Signing of Memorandum of Understanding with the governments or - Start building reference list using company’s priority to win
transforming Egypt to energy hub. major clients in these countries to execute their EPC project or projects at Governmental entities.
O5: Mega projects opportunities in GULF monopolize certain part of all their upcoming projects.
area (KSA, UAE, Oman, and Kuwait) and * W3-O5:
MENA region generally in O&G sector. * S1&S6 -O4: - Proceed with partnership agreements with suppliers to achieve
- Offering comprehensive competitive price EPCM services by making win-win deals either in local or global markets hence it will
partnership agreements with suppliers and subcontractors. enhance the interrelations.

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 Strength: Weakness:
S1: Availability of competent technical expertise with different W1: No reference list in other fields rather than oil & gas, and
specialties petrochemical such as mining, subsea, and renewable energy
S2: Extended Relationships with international companies and EPC full despite the similar technicalities and processes
awareness with various customers standards W2: High cost when competing nationally with inaccurate
S3: Long reference list with various EPC projects in oil & gas, and estimation for projects Man-hours due to high fixed costs of
petrochemical fields accomplished through several decades. company's overheads
. IFAS=3.05 S4: Familiarity of Laws and legislations for other countries due to W3: Lack of suppliers’ agreements as well as an undeveloped
EFAS = 3.22 pervious work experience in KSA and UAE interrelation with global and local subcontractors
S5: Excellent technological infrastructure (hardware & software) that
sufficiently supports company’s activities.
S6: Priority to win projects at governmental entities.

Threats: S/T Strategies “Adjust Strategy”: W/T Strategies “Survive Strategy”:

T1: Reputative international EPC * S1, S2, S3&S6 -T1: * W2-T2:
contractors entered the Egyptian market - Being an Egyptian reputative experienced national “Company X” with - Performing cost-benefit analysis of outsourcing small firms and
during the last few years which leads to long reference list in EPC projects in oil & gas, and petrochemical fields consultants to overcome resources lack and high manhour cost of
tough competition in national and will give the “Company X” the preference among the competitors company.
international market. among this tough market.
T2: Lack of qualified Engineering - Signing “Not to hire” agreement with these international EPC
candidates specialized in Oil, Gas, and - Utilizing the position of being strong domestic company and start contractors and to be a part of the MOU or partnership
petrochemicals industry in the local negotiating with these international EPC contractors to sign win-win agreement.
market in addition to quitting the MOU or making consortiums or partnership agreements with these to
company’s qualified expertise moving to be their gate to enter the Egyptian market and our gate to penetrate the - Study modifying the salaries and benefits package to be
the international EPC contractors with international markets. competitive with respect to other competitors.
competitive salaries and benefits
T3: Volatility of the demand on oil & gas
EPC projects as it depends on crude
prices which affect the sustainability of
resources allocation

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4.7. Business Strategy

There are four strategies that are used to help “Company X” to establish a competitive
advantage to compete across a broad market or a focused market.

Figure 4: Porter's Generic Competitive Strategies

a. Cost Leadership Strategy
Cost leadership strategy is a company’s plan to become a leader for low pricing in its category
or market. To achieve a cost Leadership strategy through increasing profits by reducing costs,
or Increasing market share by charging lower prices, while still making a reasonable profit on
each sale.
b. Differentiation Strategy
Differentiation strategy involves making products or services different more attractive than
products or services for other competitors based on features, functionality, durability, support,
and brand image that the customers value. To achieve a Differentiation strategy through good
research, development, innovation, deliver high-quality products or services, and effective
marketing.
c. Focused Low-Cost Strategy
Focused low-cost strategy focuses on a narrow customer segment and provides low-cost
services and products. To achieve a focused low-cost strategy through improving products or
services cost, focusing on a narrow market, leveraging experience, and predictability to be able
to offer low costs.
d. Focused Differentiation Strategy
Focused Differentiation strategy requires providing goods and services with a unique feature
that fulfill the demands of a narrow market.
To achieve a focused differentiation strategy through leveraging core competencies across
business units which should enable the firm to produce differentiated features, learn new skills
and technologies, and adaptability to environmental changes.
The competitive strategy adopted by the “Company X” is “Differentiation Strategy”.
The “Company X” is offering fully integrated engineering, procurement, construction
supervision and project management services in oil & gas industry in MENA region which is
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 emphasizing on service, quality, and customer satisfaction and their link to the business
performance. Hence, the “Company X” is striving to create superior services, focusing on
producing a unique and highly specialized service, and dedicating time and resources for
innovation, research, and development to gain a competitive advantage. Therefore, they will
typically require a higher price point (i.e., Set a premium price) due to the amount of time and
money that will need to be invested into creating it.
As a result, the “Company X” will pursue the “Differentiation Strategy” to improve its
competitive position in the market.
Competitive scope (MENA): Broad target.
Competitive Advantage: Differentiation.
Hence, Business strategy is Differentiation.

4.8. Corporate Strategy

Corporate strategy is a long-term plan which defines the corporate overall corporates’ SMART
objectives and define the way of achieving it by providing the strategic directions, allocation
of resources and constraints definition. The three major types of corporate directional
strategies:
▪ Growth: It means that the organization will follow Intensive direction strategy (market
penetration, market development, product development, and diversification) or
integrative direction strategy (backward integration, forward integration, and horizontal
integration).
▪ Stability: It means that it is not recommended for the organization to enter new markets,
so it can maintain with no change or strength its position with caution in its existing market
by market penetration or product development.
▪ Retrenchment: It means to cut costs that affect the organization’s revenue by contraction,
reduction or elimination of malfunctioning departments and resolve negative issues.
Since the corporate’s main objective is increasing its market share by 25% by the end 2026,
so this means that the “Company X” is going towards expansion. This expansion will be
achieved by focusing on implementing “Growth Strategy.”
Growth strategy is important for overcoming current and future challenges to realize the
“Company X”’s goals for expansion and increase its profitability. Corporate growth is also
crucial due to it criticality in managing revenue & costs, developing talent, attracting capital,
and breaking the mature-industry mindset.
Corporate growth strategy is built on two main pillars, Intensive growth strategies that
defines the product/market strategy, and integrative growth strategies which represent the
vertical/horizontal integration alternatives to support growth:
▪ Intensive “Organic” Growth: It refers to the growth of a business through internal processes,
relying on its own resources including optimization of processes, reallocation of resources,

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 and new product offerings. Also, it has many advantages as: it is less risky; capabilities could
be well developed. However, organic growth takes time to see its revenue (J. Chen, n.d.).
▪ Integrative “Inorganic” Growth: It refers to the growth of business and sales expansion by
increasing output and business reach by acquiring new businesses by way of mergers,
acquisitions, and take-overs. Also, this strategy will have its advantages as: much faster
growth due to immediate boost a company’s earnings and increase market share and
additional skills and expertise from the new staff. However, its disadvantage may be potential
risk and additional debt due to quick growth of the company and upfront costs that may
require additional funding (Chen, n.d.)
Intensive growth strategies:
Intensive growth strategies are those relevant to the two variables: product growth and
market growth. A matrix was defined by H. Igor Ansoff in 1957 that defines four probabilities
of the above-mentioned variables as follows (Meldrum & McDonald, 1995):
➢ Product growth depends on whether the company intends to introduce new products
or not.
➢ Market growth depends on whether the company intends to enter new markets or
will focus on existing ones.
The four combinations from these two variables are as follows:

Figure 5: The Ansoff Matrix

a. Market Penetration: The firm uses its current products in the existing market. the firm in this
case is aiming to increase its market share. This may be done by decreasing price, increasing
promotion.

b. Product Development: The firm develops a new product and introduce it to the existing market.
It is suitable when the firms have a strong understanding of their existing market and can
provide innovative solutions to bridge demand gaps. This can be done via Investing in R&D to
develop new products, or by forming strategic partnerships with other firms to gain access to
their distribution channels and know-how.

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c. Market Development: The firm enters a new market (geographic, customer segments, etc.)
with its existing product(s). This suitable when the firm owns proprietary technology and/or if
the new market has profit potential. This can be done by strategic partnership or independently.

d. Diversification: The firm enters a new market with a new product. This strategy is the riskiest,
as both market and product development are required. There are two types of diversification a
firm can employ: Related diversification where there are potential synergies between old and
new market/product, and unrelated diversification where there are no synergies.
Integrative growth strategy
It is the strategy of growth by merger or acquisition or any other combination between two or
more firms. This is done via Horizontal Integration by merging units engaged in manufacturing
similar products or providing similar service, vertical integration (backward and forward) by
acquiring new activities in the value chain, or conglomerative merger when a firm acquires
another firm which is engaged is altogether different line of business.
Regarding Intensive “Organic” growth pillar: Our “Company X”’s top management decided that
this strategy will be the most appropriate strategy for the time being as this will lead to hit the
aforementioned corporate objectives so they will apply the market penetration approach via
Innovation through optimized workflow and better resources management by implementing
the ERP system, Smart Plant foundation between different disciplines to ensure consistent and
high-quality design services and building dashboard system using "Microsoft Business
Intelligence software" to monitor the status of whole projects in the company, its costs and
revenues hence continuous monitoring and controlling to reach the Profitability target by the
end of 2026.
Accordingly, our “Company X”’s top management decided to apply the product development
approach via building “Know-How” of new product in house by supporting the research and
development (R&D) department and involving partner EPC contractors having the concerned
know-how of the new products in form of JVs or partnership agreements for the first few
projects in Egypt and MEA region.
Regarding Integrative “Inorganic” Growth pillar: Our “Company X” decided not to make any
type of combination either merger or acquisition as this will not serve the current set objectives.
The “Company X”’s top management will move towards establishing independent business
units for the new EPC products/services (Diversification Approach) as: EPC of mining,
renewable energy, and subsea projects to reduce overheads in these projects and have
competitive price meanwhile, dedicated core team will be selected from the existing
departments to be the basis of the new business units.

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Factors that will enable our “Company X” to achieve growth strategies:

Function Involved Depts. Factors that will enable my company to achieve growth strategies

Inbound  Procurement  All involved departments need to learn how to source equipment and
logistics  Expediting bulk materials relevant to the NEW PRODUCT and this includes
 Inspection locating best suppliers, open channels with them, and starting
 Logistics negotiations on long-term partnerships as needed specially for long
 Engineering lead and proprietary equipment.
 Material control
Operations  Engineering (all disciplines)  It is agreed to involve partner EPC firms having know-how of the new
 Construction supervision products in form of JV for the first few projects. This will avail on-job
Primary (Core) Activities

 Commissioning & start-up training for all involved departments. This is an exceedingly difficult
task. It is important for operational department heads to coach and
support their staff while absorbing the new experience.
Outbound  Commissioning & start-up  On-job training (see operations above)
logistics

Marketing &  Proposals  Even though the strategy does not require entry to new geographic
sales  Business development markets, it is important to establish links with customers having
potential projects in mining, green fuel and renewables in the existing
market.
 A new pricing scheme should be studied by proposals department in
order to lower costs for these new business units.
After-sales  Commissioning & start-up  On-job training (see operations above)
services  Construction supervision

Procurement  Procurement  Do their supportive role in establishment of the new business units.
 Administrative
Technological  Process technology  The biggest role in transferring the know-how of the NEW PRODUCT
development  R&D lied on the shoulders of these two departments. They are responsible
to participate in the on-job training, and they are also responsible to
study the theoretical aspects of design and the past applications and
case studies. They will be responsible to conduct internal training
sessions and orientations.
Secondary (Support) Activities

Human  HR  The HR is responsible to organize orientations to all departments

resources  Personnel regarding the NEW PRODUCT.
management  Conduct technical courses locally and internationally for relevant
technical department and enhance their know-how to design the NEW
PRODUCT via specialized courses.
 Scan the market for candidate with experience in the NEW PRODUCT
and avail them to respective departments to hire them if they need to.
Infrastructure  Top management  Top management support is needed in several issues specially the
 Project management establishment of the new business units, the establishment of
 Project control partnerships (project JVs) with other EPS firms, and to encourage new
 QC teams and give positive energy.
 Loss prevention  IT to scan the market for new software packages to support the
 Finance engineering activities of the NEW PRODUCT.
 Accounting
 IT
 Business development

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In addition to the above, the following factors also will help in achieving the “Company X”’s growth
strategy:
1) Clear vision and mission for the “Company X”: This is the role of top management to define and
convey the “Company X”’s vision and mission to all the employees clearly, so this needs well
planning, explanation for the sake of participation and hence becomes motivation and loyalty
building tool.

2) Involvement via flat “Company X”: Flat “Company X” elevates the employees' level of
responsibility in the “Company X” as it removes excess layers of management and improves the
coordination and speed of communication between employees. Employee decision-making is
made easier when there are fewer tiers of management. Accordingly, this will lead to appropriate
involvement among all parties in the “Company X” which will lead to more empowered,
productive employees who able to make and take decisions.

3) Assigning or hiring the right leaders in the right positions: Getting the right people in the right
spots with a clear and defined understanding of their priorities is vital. If a company has the right
people who can align their people to execute the business’s growth plan, they will move faster
and accomplish more in the same amount of time. However, hiring wants to make sure these
employees fit the culture of the business and are looking to grow with.

4) Wise utilizing of the technological tools: Technology is considered a dynamic capability that is
embedded in firm’s practices and is essential in determining the competitiveness and
performance of a firm in a dynamic environment through gathering and periodically analyzing
vital information about the business. So, there is a positive and significant relationship exists
between attention to technological requirements during strategy implementation and
performance of “Company X”, it can be concluded that the top management who are keen to
ensure that their new strategies are matched to the technological requirements and
environmental changes enable their “Company X” to perform better and to maintain a superior
competitive edge. Technology is defined as "Company X's" expertise, tools, equipment, and work
processes in supplying its goods and services. To be successful, the technology used must be
compatible with the chosen approach. Companies planning to differentiate their product based
on quality must take steps to assure that the technology is in place to produce superior quality
products or services. Firms pursuing a low-cost strategy may take steps to automate as a means
of reducing labor costs. Accordingly, managers should always stay focused on the technological
requirements and challenges posed by the new strategy.

5) Secure the capital they needed to fund growth: It is important to determine the funds required
for the concerned “Company X” growth and specify the budget for each phase then determine
the way of securing this budget before starting each phase. Fund security can be done by many
forms as: taking loans, or offering stocks and bonds or via investment portfolio
management…etc.

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V. Implementation Phase

Once getting approval from “Company X” CEO on the proposed strategies, this is the time for the
implementation phase. Implementation phase of the strategy is the process that
turns strategies and into actions in order to accomplish strategic objectives and goals. Implementing
strategic plan is important to provide a business with the roadmap it needs to pursue a specific
strategic direction and set of performance goals, deliver customer value, and be successful.

Top management has an important role in implementing the strategies. Top management is in
charged to formulate and implement effective transformation strategies; provides a strategic
framework by designing the organization policy, mission, vision, goals and objectives and aligning
them with the business to run a successful organization; provides strategic direction by giving a
proper direction to the operations of the business and keep in mind all the strategies aligned with
mission and vision of the business; developing strategies by developing proper strategies for all
functional areas of a business with utmost care by the top-level management which must consider
all the dynamics of the market related to the business before developing a strategy; provides
strategic staffing by analyzing Knowledge, Skills and Attitude for employees and analyzing whether
the Key result area of the given position matches the Knowledge, Skills and Attitude for employees;
provides strategic decision making by advising that the decisions must be taken strategically to
effectively utilize the available resources and bring the desired outcome.

In the strategic management process, the strategy team must have analytical skills, leadership skills
and special motivation. After formulating the strategy with the top management and therefore the
managerial level, all other employees within the organization should be involved in the strategy
implementation

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The next step is to break down the strategies as shown below:
Tactic
Utilizing high-quality engineers and technological infrastructure to offer consistent professional services in the new markets (e.g., mining,
Renewable Energy, nuclear and subsea fields) and to be delivered with time bound and within budget.

Implementation Duration Prime

Responsibility

• Providing technical engineering specialized courses in area of mining, renewable energy, nuclear and subsea 120 Days
fields for relevant technical departments. HR

• Improving technological infrastructure to attract new markets and operate more efficiently and effectively. 120 Days IT

• Financing trainings and technological infrastructure and ensuring that they are within the budget by getting 120 Days Finance
best offers.

Tactic
Training staff and building relations with customers to support the organization’s entry in the mentioned new markets.

Implementation Duration Prime

Responsibility

• Developing potential client’s database in area of mining, renewable energy, nuclear and subsea fields, and 85 Days
conduct meetings with them. Business
Development

• Studying training requirements and perform training for the staff. 60 Days

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Tactic
“Company X” growth through market penetration by increasing market share in engineering field externally in Gulf and KSA area.

Implementation Duration Prime

Responsibility
• Conducting international market research in Gulf and KSA area. 120 Days
Business
• Communicating with clients through Meetings / Presentations to introduce the organization. 60 Days
Development
• Studying and analyzing opening new organization branches in Gulf and KSA area. 75 Days

Tactic
Signing of Memorandum of Understanding with the governments or major clients in these countries to execute their EPC project or monopolize
certain part of all their upcoming projects.

Implementation Duration Prime

Responsibility
• Studying and analyzing potential projects enrollment plan, conducting meetings with clients, and signing 100 Days Proposals and
agreements / partnerships to participate in new projects. Contracts

Tactic
Offering comprehensive competitive price EPCM services by making partnership agreements with suppliers and subcontractors.

Implementation Duration Prime

Responsibility
• Learning how to source equipment and bulk materials by locating best suppliers, open channels with them, 100 Days
communicating and negotiating long partnership agreements with suppliers and sub-contractors.
Procurement
• Maintaining the supplier list, adding new qualified suppliers after assessing their quality and commitment to 125 Days
the organization.

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Tactic
Implement ERP system in the organization to optimize the “Company X” 's overheads and hence reach to optimum man-hour unit rate.

Implementation Duration Prime

Responsibility
• Defining the project team members, forecasting implementation costs, ensuring implementation going smoothly 150 Days Project
across all departments, tracking activities day-to-day, monitoring and evaluation the project results. Management
• Building the efficient infrastructure to fit the requirements of SAP ERP, migrating data to the new ERP system, 150 Days IT
testing ERP, and going live.
• Training employees on the new ERP system and getting best offers for ERP training programs. 60 Days HR

Tactic
Build independent business units to separate EPC services of the new markets (e.g., mining, Renewable Energy, nuclear and subsea fields) to
reduce overheads and have competitive price.

Implementation Duration Prime

Responsibility
• Constructing new business units for Mining, Renewable Energy, Green Fuel. 30 Days
Top
• Establishing of partnerships (project JVs) with other EPC firms having know-how of the new products 30 Days Management

• Learning know-how and absorbing the new experience from EPC firms. 50 Days Engineering

• Studying the theoretical aspects of design and the past applications and case studies and conducting internal 100 Days Process
training sessions and orientations. Technology
• Scanning the market for new software packages to support the engineering activities for the new business unit. 50 Days IT

• Studying the pricing strategy for this new business unit to lower the cost of this department. Proposal

• Scanning the market for candidates with experience in these fields to build applicant list to hire them if they 50 Days
need to and conduct preliminary technical assessment for the applicants whether there are internal applicants
or external applicants. HR
• Organizing orientations to all departments regarding introducing this new business unit. 50 Days
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Tactic
Start building reference list using company’s priority to win projects at Governmental entities.

Implementation Duration Prime

Responsibility
• Gathering all details for the previous top projects for the organization to build reference list and maintain it 100 Days Project
regularly and ensuring the reference list is accurate and simple to be presented. Management

• Studying the reference list and adding it to the company profile to be able to win more projects. 30 Days Business
Development
Tactic
Proceed with partnership agreements with suppliers to achieve win-win deals either in local or global markets hence it will enhance the
interrelations.

Implementation Duration Prime

Responsibilit
y
• Learning how to source equipment and bulk materials by locating best suppliers, open channels with them, 100 Days
communicating and negotiating long partnership agreements with suppliers and sub-contractors.
Procurement
• Maintaining the supplier list, adding new qualified suppliers after assessing their quality and commitment to the 80 Days
organization.

Tactic
• Utilizing the position of being strong domestic company and start negotiating with these international EPC contractors to sign win-win MOU
or making consortiums or partnership agreements with these to be their gate to enter the Egyptian market and our gate to penetrate the
international markets.
Implementation Duration Prime
Responsibility
• Communicating and building a good relationship with the international EPC contractors through meetings, or 90 Days Business
presentations, or EGYPS conference. Development
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Tactic
Performing cost-benefit analysis of outsourcing small firms and consultants to overcome resources lack and high manhour cost of company.

Implementation Duration Prime

Responsibility
• Defining the business process of the small firms, comparing between in-house costs that could be avoided and 200 Days Top
outsourcing costs, analyzing, and taking decision for outsourcing. Management

Tactic
Signing “Not to hire” agreement with the international EPC contractors and to be a part of the MOU or partnership agreement.
Implementation Duration Prime
Responsibility
• Revising all contracts with the international EPC contractors and ensuring that ‘No hire agreement’ is included in 50 Days Proposal and
the partnership agreement. Contracts
Tactic
Study modifying the salaries and benefits package to be competitive with respect to other competitors.

Implementation Duration Prime

Responsibility
• Reconstructing the salary strategy by gather information about the labor marketplace in the industry, 100 Days
benchmarking jobs against the market, and determining the fair market value for the position.
HR
• Revising Compensation and benefits packages and making attractive offers for employees. 50 days

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 VI. Evaluation Phase

The evaluation phase helps in ensuring that the implementation of the strategy will help
“Company X” achieving its objectives; assessing whether the decisions had made during the
strategy implementation stage will meet the intended strategy requirements; providing
insights and experience into the strategists that can be used in reformulating or planning new
strategies; and highlighting on issues caused by changes in the internal and external
environment to take precautions and avoid making wrong decisions.

6.1. Evaluation and Control

The evaluation and control process ensures that “Company X” is achieving its strategy,
compares performance with desired results, provides the feedback necessary for
management to evaluate results and take corrective action.

Figure 6: Evaluation and Control Process

a. Determine what to measure: Specifying what implementation processes will be monitored,

evaluated, and focused on the most significant elements in a process for all important areas.
b. Establish standards of performance: Setting standards that used to measure performance
are detailed expressions of strategic objectives that measures of acceptable performance
results.
c. Measure actual performance: Measurements must be made at predetermined times.
d. Compare actual performance with the standard: when actual performance results are match
the standard, the measurement process stops here.
e. Take corrective action: when actual performance results are not match the standard, action
must be taken to correct the deviation.

6.2. Measuring Performance

Measuring performance is done by selecting measures to assess performance based on the

objectives to be achieved. The objectives that were established earlier in the strategy

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 formulation of the strategic management process should certainly be used to measure
corporate performance once the strategies have been implemented.

There are different approaches to measure performance like the balanced scorecard using
Key Performance Measures.

The balanced scorecard combines financial performance measures that tell the results of
actions already taken with operational measures on customer satisfaction, internal
processes, and employee performance.

6.2.1. Financial Performance Measures

The metrics below are typically found in the financial statements listed above and among the
most important for managers and other key stakeholders within an organization to
understand.

• Gross profit margin is a measure of profitability, specifically for a product or item line,
without accounting for overheads.
• Net profit margin is a measure of profitability for the business in general, considering not
only the cost of goods sold, but all other related expenses.
• Working capital is a measure of the business’s available operating liquidity, which can be
used to fund day-to-day operations.
• Current ratio is a liquidity ratio that helps you understand whether the business can pay
its short-term obligations within one year.
• Return on equity is a profitability measure indicates how well the business can utilize
equity investments to earn profit for investors.
• Return on assets is a profitability ratio measure indicates how well the company is
managing its available resources and assets to net higher profits.
• Operating cash flow is a measure of how much cash the business has as a result of its
operations.
• Return On Investment (ROI) is a financial measure of gaining or losing from an
investment.

6.2.2. Customer Measures

• Customer Satisfaction is a customer experience measure to understand how customers

feel about the organization services by gathering real-time insights through online surveys
and deliver excellent experiences.
• Sales Growth is a critical measure that empowers companies to make data-informed
decisions by calculating net sales value of the initial period and the net sales value of the
current period.
• Market Share is a measure for the size of a company in relation to its market and its
competitors. it represents the percentage of an industry, or a market's total sales.

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6.2.3. Internal Processes Measures

• Task’s completion is an efficiency measure represents the percentage of users who

successfully completed a task to shows how effectively users are able to complete a
certain task.
• Overdue project task is a measure for the percentage of overdue tasks out of the total
number of current project tasks.
• Schedule performance index measures how efficiently of executing the project schedule.
• Cost performance index measures how efficiently of executing the project budget.

6.2.4. Employee Performance Measures

• Salary Competitiveness Ratio is a measure to indicate the competitiveness of compensation

options calculating by average company salary divided by average salary offered from
competitors.
• Employee Productivity Rate is a measure of workforce efficiency over time calculating by
total company revenue divided by total number of employees.
• Turnover Rate for Highest Performers is a measure for the percentage of employees who
leave an organization during a certain period of time.
• Internal Promotion Rate is a measure for the number of employees promoted during a
certain period of time / total number of employees in the company during the same period.

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VII. Conclusion

Strategy is crucial to ensure that an organization is proactively addressing its objectives. But
the strategy will not see the light unless both employees and top management are aligned.
As mentioned before, CEO is the person, amongst the top management, responsible for
formulation and implementation of the strategy. Hence, the CEO of “Company X” is the key
person to ensure that the above strategy is implemented and, Moreover, that it will be
updated on a sustainable manner. The following are the roles of the CEO in formulating and
implementing the strategy:

• The CEO selects the members of the strategy implementation team (if different from the
formulation team). In this phase, he should assign a project manager that leads the team
of implementation. He should not lead himself since this is an exhausting process needs
dedication.
• The CEO is responsible for facilitating the implementation of the 10 elements of change
management. This is the step of getting the organizational environment ready for the
implementation of the strategy hence these changes should be implemented prior to
strategy implementation.
• The CEO follows-up the implementation progress on regular bases, provides continual
support, and takes the necessary measures to ensure that the implementation process is
compatible with the plan.
• He should make sure that the implementation of the strategy is not in conflict with the
execution of organization’s daily works otherwise, correction is needed.
• It is his duty to talk with employees all the time about execution activities and detect any
justified dissatisfaction. These issues should be dealt with immediately and publicly
(announce them) by either convincing the employees with the issues they dislike or
modifying the plan as needed.
• He should monitor budget and time closely and make any adjustments as needed.
• He is responsible, together with the implementation team, to resolve unplanned issues
confronting the implementation process.
• Once the implementation is accomplished, he should ensure sustainability. He should take
the necessary actions to ensure that a dedicated department is responsible for the
continual monitoring of changes in the internal and external environments and hence
continual improvement of the strategy.
• After implementation is completed, he is responsible to monitor the KPIs dashboard to
make sure the result of implementation is compatible with the plan. Corrective actions
should be taken immediately if any unpleasant outcome happens. It is always possible to
modify or update the plan to fine tune it with actual situations.

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VIII. References

Chen, J. (n.d.). Inorganic Growth. Investopedia. Retrieved July 12, 2021, from

https://www.investopedia.com/terms/i/inorganicgrowth.asp

Chen, J. (n.d.). Organic Growth. Investopedia. Retrieved July 12, 2021, from

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