Prepared by

Mohamed Aly ElRehawy 20222050

Nestle strategic plan Ahmed Abdelrahman Abbas 20222051

Sherif Fahmy Ahmed El sawah 20221297

Under the supervision of Hanaa Ahmed Abd ElKereem 20221209

Prof. Hanady Ragaii Mirolla Mumdouh Maurice 20220930

Shahenda Emad 20222133

 Nestle: Problems and Challenges

INDEX

1. Introduction 1
2. Vision Statement 2
3. Mission Statement 3
4. PESTLE Analysis 4
5. Porter’s Five forces Analysis 10
6. External Factor Evaluation EFAS & CPM 14
7. Value Chain analysis 16
8. Resource Based-View (VRIO) 21
9. Internal Factor Evaluation IFAS 22
10. SWOT Matrix 24
11. TOWS Analysis 25
12. QSPM 27
13. SPACE 31
14. BCG 32
15. IE Matrix 33
16. Most Important Strategies 34
17. Hierarchy of Objectives 35
18. Requirements of Implementation 36
19. Strategic Implementation Matrix 38
20. Strategic Control Matrix 39
21. Strategic Evaluation Matrix 40
22. Business Plan: Marketing, finance and operational plan 41
23. Recomendations 47
24. References 48
 1.Introduction

Since Nestle's first baby food product was introduced in Alexandria more than 150 years ago, the
company has had a significant presence in the Middle East and North Africa (MENA) region,
particularly in the Egyptian market.

Egypt is currently a significant contributor to growth in the Europe, Middle East, and North Africa
(EMENA) Region, and the company has recognized the nation as one of its expanding markets.

With three factories currently operating in Egypt, Nestle employs over 3,000 people directly and
offers 8,000 indirect job opportunities—mostly to young people—who are all committed to
Nestle's mission of improving quality of life and fostering a healthy future.

With a wide range of products, Nestle has a diverse product portfolio in Egypt, which enables to
dominate a number of product categories by appealing to a wide audience.

Nestle has made significant investments in Egypt to grow and explore additional manufacturing
opportunities because Nestle have a clear vision for it to become the region's export hub.

Since Nestle began doing business in Egypt 150 years ago, and because it has remained an
investor there through good and bad times, Nestle will continue to do so.

Nestle views Egypt as one of its strategic markets because of the country's diverse workforce,
alluring investment opportunities, sizeable population, high sales, and many other factors. The
company’s total investment in Egypt 3.5 billion EGP.

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 2.Vision Statement

Current Vision:

To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved

shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier
selling preferred products.

Vision is the “Dream” and should follow Triple CCC’s principle which is Clear, Concise and
Common understanding using honorable words, where Vision statement is a statement of an
organization’s overarching aspirations of what it hopes to achieve or to become.

Proposed Vision:

To be the leading company that best facilitates and satisfies global luxuries and needs.

3.Mission Statement

Current Mission:

Nestlé is the world's leading nutrition, health and wellness company. Our mission of "Good Food,
Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range
of food and beverage categories and eating occasions, from morning to night.

Mission is the “Realistic” and should include the nine components referred below of mission
statement, where Mission statement is the reason of existence in present not in the future and not
to be in specific.

Mission statement components:

1. Customers Included in current Mission

2. Products or services Included in current Mission
3. Markets Included in current Mission
4. Technology Not included in current Mission

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 5. Concern of survival Not included in current Mission
6. Philosophy Not included in current Mission
7. Self-concept Included in current Mission
8. Concern for public image Not included in current Mission
9. Concern for employees Not included in current Mission

Proposed Mission:

The leading provider of nutrition, health, and wellness products worldwide is Nestlé. In a
variety of food and beverage categories around the world, it is our mission to offer consumers
the best tasting, healthiest options possible under the slogan "Good Food, Good Life”, Nestle
will achieve financial stability by exceeding customers' expectations for the best products,
services, creative solutions, and cutting-edge technology. Along with giving our employees
constant development opportunities across the board, we positively contribute to the
development of our society and environment, our goal is to conduct ourselves in a morally
and ethically upright manner.

4.PESTLE Analysis

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Political:
Political Stability: Egyptian political stability is largely stable, especially with the wise policy of
President Abdel Fattah El-Sisi, who saved Egypt from a path that had dire consequences.
Undoubtedly, this stability will last until 2030, as it is expected that the president will be elected
by Egyptian people in 2024 elections. (O)
According to Political stability index chart shown below, its clearly representing that political
stability in Egypt on right track and yea by year the index level enhanced comparing 2021 Vs
2014.
Egypt Political stability index (Sources: The Global Economy)

Egypt has very good relations with most countries and has an effective and clear role in foreign
relations and issues raised globally, and this considered as an evidence of the strength and stability
of Egyptian policies.
Due to the high demand for natural gas and its strategic alliance with its neighbors in the
Mediterranean, Greece and Egypt, the country is now regarded as a regional energy hub. Along
with the agreement with the EIN company to increase the exportation of natural gas to Italy and
Europe, Cyprus, Israel, and other countries were also involved.
Egypt's relationship with the Gulf region will remain solid. For financial assistance, Egypt will
rely on the Gulf Arab. and have the Bahrain, Saudi Arabia, the United Arab Emirates, and Egypt
are members of the quadruple alliance, which was formed to counter any regional threats. And
now Qatar has entered the picture and started by investing in Egypt during COP27.
Over access to the Nile's water, Egypt and Ethiopia situation related to Grand Ethiopian
Renaissance Dam is not yet clear and considered to be as threat for Egypt. But still Egypt will
favor a compromise and avoid military conflict. (T)
Tax Policy:
Value-added tax (VAT) is 14%
Corporate tax rate is 22.5% , and the government is keeping this rate without any raise to encourage
investments.
Customs duty rates on imported goods range from 5 percent to 40 percent, with the exception of
vehicles, non-essential and luxury consumer goods, and alcoholic beverages, which can have rates
as high as 135%. Machines and equipment may be subject to a reduced 2 percent customs duty
when they are imported by entities as capital assets to establish the company's project.

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Trade Restrictions: due to political situation there are trading restrictions with countries as an
example SYRIA were its not eligible to have any deal with Syria at the current situation while now
the situation is going to be facilitated with LIBYA.
Egypt is a member of several international and regional organizations and forums, such as the
GATT and WTO. Additionally, Egypt has signed numerous trade agreements with nations in
Europe, Africa, the Middle East, and Latin America, including QIZ, COMESA, GAFTA, Aghadir,
Euro1, and RORO. (O)
Due Pandemic Covid-19 and Russian-Ukraine war, Presence of difficulties in Global logistics that
affect supply chain tremendously in providing all resources needed. (T)
Economics:
Economic Growth: The International Monetary Fund (IMF) has revised its projections for Egypt's
real GDP growth in 2022 to reach 5.9 percent, up from 5.6 percent expected in January.
The IMF also expected Egypt's GDP to register 5 percent in 2023, it announced on Tuesday
19/4/2022.
In January, the IMF expected Egypt's real GDP growth to reach 5.6 percent, compared to growth
projections of 5.2 percent in its previous report in October.
Commenting on the January report, Gita Gopinath, IMF's Chief Economist, said Egypt was the
only country among the oil importing nations to record a positive growth rate thanks to its good
management of the Covid-19 pandemic’s fallout.
Egypt GDP growth currently have average growth 5% coming for average 3.5% in 2020-2021,
which considered to be healthy economy according to the current global political situation, while
GNP for 2021 was $365.80B, a 18.98% increase from 2020 considering that Egypt GDP for 2021
was $404.14B, a 10.65% increase from 2020. (O)
Egypt GDP – GDP Growth 1965-2021

Egypt GDP – GNP Growth 1965-2021

5
Interest rates: The Central Bank of Egypt lifted its key overnight deposit rate by 200 bps to
13.25% during an exceptional meeting on October 27th, 2022, in order to anchor inflation
expectations and, thus, ensure price stability over the medium term. Meanwhile, the bank said it
was moving to a more flexible currency regime as the country gets closer to an agreement with the
International Monetary Fund for a new loan. The central bank set the overnight lending rate at
14.25% and the overnight deposit rate at 13.25%. The discount rate was also raised by 200 basis
points to 13.75%. source: Central Bank of Egypt.
Exchange rates: The Central Bank of Egypt (CBE) issued a statement, on October 27th, 2022,
announcing reform measures to ensure macroeconomic stability and achieve sustainable and
comprehensive economic growth, floating the Egyptian pound.
Shed light on the reasons for floating Egyptian pound in the following points:
 Trying to reduce the budget deficit of the state as the deficit is constantly increasing, and
also aims to reduce the public debt.
 Rationalizing and reducing government spending, while strengthening and reforming the
subsidy system, This is to gain the confidence of the International Monetary Fund to
approve the recently announced loan.
 Work to increase exports and encourage the domestic production process and domestic and
foreign investments. (O)
 Reveal the true and correct amount of the supply and demand forces of the dollar, not what
appeared from the imaginary amount during speculation on the dollar through currency
traders.
 Inflation rates fall in the long run, after the currency market understands the decision to
liberalize the exchange rate of the currency.
 Activating the growth rates of the stock exchange, which has seen the loss of a large part
of its liquidity during the past period.
Inflation rates: The increase in global and local prices as a result of the increase in the exchange
rate will lead to a higher general inflation rate than the target by the Central Bank of 7 percent (+2
percentage points) on average during the fourth quarter of 2022. The annual urban inflation rate in
Egypt accelerated to a near four-year high of 15% in September from 14.6% in August, above
market expectations of 14.7%. (T)

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 Egypt inflation rate 1965-2021

Unemployment rates: 7.20% in Jun 2022. The data is reported by Central Agency for Public
Mobilization and Statistics.
Disposable Income: Egypt’s disposable income decreased (T) but still expected to witness faster
disposable income growth than the regional average, driven by private sector development,
expanding business activities and new employment opportunities. Consequently, the lower middle
class is set to prevail in the country, driving demand for discretionary goods and services.
However, poverty and income inequality are anticipated to remain among key concerns for the
country, limiting growth of expenditure on non-essential items.
Social:
Population growth rate: Egypt Population growth rate in average 1.9% , and currently the
Country population is 110.990 million, Egypt population increasing year by year increasing food
demand (O).

Lifestyle attitude: Due to Covid-19 the lifestyle of consumers tends to buy the demand through
online webstore and applications. (O)
As the trend toward longer workdays continues, more people are becoming accustomed to drinking
tea and coffee while considering the growing trend among young consumers to prioritize
sustainability in their purchasing decisions.
Egyptian lack in knowledge for many resources and commodities that considered healthier than
alternatives used.

7
Age distribution: Below is Egyptian age population breakdown in 2021 , where Age below 20
years old 45% of population, below 50 Years old 42% while above 50 years old 13%. Presenting
that the average age of the population considered to be low age that affecting the consumer demand
behavior.
Total population of Egypt as of 2021, by age group

Technological:
Automation: According to UNIDO, Egypt has a significantly lower industrial robot density than
other MENA nations like Tunisia, where there are less than 0.2 robots per 1,000 manufacturing
workers, and Turkey, where there are more than 10x as many.
Level of innovation: Industrial automation relies heavily on research and development in this
area, and Egypt's private sector is lagging in its investments. According to a 2021 OECD report,
private firms only represent 3.9% of total R&D. This is a modest contribution when compared to
other African economies like Morocco 29.9%, Tunisia 18.9%, and South Africa 41.5%. It also
falls far short of emerging Asian economies like Malaysia 38.2% and Vietnam 80.8% as well as
the OECD, where the average private sector contribution to R&D is 80.8%.
Legal:
Discrimination Law: Providing equal opportunity to everyone, regardless of the project's size or
location, The Egyptian government has made an effort to increase transparency in government
policy and support a free-market economy, Allow Egyptians to own and run companies that want
to register in the Import Registry up to a maximum of 51 percent.
Consumer Law: Law 67, which was passed in 2006, gave the Consumer Protection Agency of
Egypt (CPA) both civil and judicial mandates. Its capacity to monitor trade activities, promote a
culture of consumer protection using a variety of tools, and pursue legal action against violations
are all examples of the civil obligation.
Competition protection Law: In order to ensure a favorable economic climate that does not
impede, prevent, or harm the freedom of competition, the Arab Republic of Egypt issued Law To
protect competition and stop monopolistic practices, legislation was passed in 2005 under Act No.

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3 regarding the issuance of the Competition Law. The Law guarantees an environment of fair and
open competition in which everyone engaged in the market abides by the Law, benefiting the
Consumer and achieving Economic Efficiency.
Environmental:
Climate Change: A major weather disaster and climate change significantly increased the cost of
agricultural products, including coffee beans. (T)
Environmental Policies: The goal of the Egyptian government's environmental policy is to
protect the environment by creating appropriate institutional, economic, legal, and technical
frameworks at the local, regional, national, and international levels.
Four main principles underpin the environmental management and protection initiatives used in
the Government of Egypt's implementation of its environmental policies:
 Improving the ability of the central and local governments to work together.
 Intensification of public-private partnerships.
 Cooperation with environmental nonprofit organizations.
 The inclusion of gender issues in environmental policies and programs.

5.Porter’s Five Forces Analysis

Porter’s Five Forces Analysis is to analyze the micro external factors that affect the
business of an entity in its industry.

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Nestle Egypt, Porter’s five forces analysis

1. Competitive Rivalries High:

Nestle works in a highly competitive sector of food and beverage industry. Kraft Foods,
P&G and Group Danone are Nestle’s rivals. There are specific competitors of those
products, like Kellogg's, in some categories of goods, like Breakfast Cereal. Despite
having more than 150 years of experience and being one of the biggest players in the
market, Nestle still faces competition from these companies. They have a particular
market share. All these businesses invest a lot of money in marketing and advertising,
especially when new products are introduced. The competition includes price as well as
product variety, originality, promotional offers, and other factors. To keep their market
share, all industry participants must work hard. Thus, Competitive rivalry for Nestle is
High (T)
2. Threat of new entry Low:
It is difficult for new entrants because the consumer food industry is diverse. Several
obstacles prevent entry.
 Market share is heavily favored by the current competitors.
 They have a wealth of knowledge and comprehend customer requirements.
 Over time, they've grown their customer base.
 Several new entrants enter the industry each year in an effort to gain market share even
locally, few are successful.
 The currently operating businesses have established robust distribution networks and
economies of scale that enable them to produce and deliver goods at a low cost.
Thus, New entry for Nestle is Low
3. Bargaining power of the supplier Low:
The largest market share in the sector is held by Nestle. It necessitates enormous amounts
of supplies as a result. Because of this, suppliers can sell to it with confidence.
Consequently, once a supplier begins doing business with Nestle, they never try to
haggle, or pressure Nestle over prices. In exchange, Nestle respects and looks out for its
suppliers. In order to ensure the quality of the raw materials, Nestle prefers long-term
relationships with its suppliers. Nestle will incur a modest switching cost if it decides to

10
 switch suppliers because it will need to sign new contracts and work to ensure the new
supplier's quality. Thus, Bargaining power of the supplier for Nestle is Low
4. Bargaining power of the Buyer High: Due to the intense competition, consumers
can quickly switch between brands, making it difficult for Nestle or other brands to
control the market or raise prices. For consumers, there is a low switching cost. Many
businesses offer comparable goods for sale. Nestle works to maintain the satisfaction of
its customers by acknowledging the purchasing public's power. For many of its
customers, these characteristics have aided Nestle in fostering brand loyalty.
Thus, Bargaining power of the buyer for Nestle is High (T)
5. Threat of substitution High:
There are also alternatives for many Nestle products, including pasteurized milk and
bottled water. Baby food is just one of the many products that have homemade
alternatives. There are also claims that some of Nestle's products are unhealthy. This has
caused the sale of substitutes to rise among those who care about their health. In order to
compete with the alternatives, Nestle works to emphasize the healthy features of its
products. Thus, Threat of substitution for Nestle is High (T)

6.External Factor Analysis EFAS & CPM

Weighted
Opportunities Weight Rate
Score
Economic Growth increasing demand enabling
1
increasing sales volume 5% 0.12 4.00 0.48
Exchange rates change of USD, increasing Sales volume by 10%
2
(Enabling Export) 0.10 4.00 0.40
Presence of Egyptian trade agreements, increasing Sales volume
3
by 10% (Enabling Export) 0.10 4.00 0.40
4
Political stability may increase profit by 5% 0.06 3.00 0.18
5
Population growth rate, increasing volume by 2% 0.05 2.00 0.10
6
Lifestyle digitalization trend, increasing Sales volume by 3% 0.04 3.00 0.12
Trend toward longer workdays continues, more people are
7 becoming accustomed to drinking tea and coffee, increasing
sales volume 2% 0.02 2.00 0.04
Young consumer trend for sustainable products, increasing sales
8
volume 3% 0.02 2.00 0.04

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 Weighted
Threats Weight Rate
Score
Exchange rates change of USD, Decreasing Sales profit by 5%
1
(Increase cost of imported raw material) 0.07 4.00 0.28
2
Increase of Egypt inflation rate, Decreasing Sales volume by 3% 0.10 3.00 0.30
High Bargaining buyer power switching to competitors,
3
Decreasing Sales volume by 5% 0.07 4.00 0.28
Over access to the Nile's water, Egypt and Ethiopia situation
4
Grand Ethiopian Renaissance Dam, Decrease profit by 5% 0.05 3.00 0.15
5
Very Highly Competitive Rivalries, decrease sales volume by 4% 0.05 4.00 0.20
6
High presence of substitutions, Decrease sales volume by 5% 0.05 3.00 0.15
Pandemic and Russian-Ukraine war affect badly supply chain,
7
Decrease sales volume 10% 0.06 2.00 0.12
Climate change significantly increased the cost of agricultural
8
products, decrease profit by 3% 0.01 2.00 0.02
9 Egypt Disposable income decreased, Decrease Sales 2% 0.02 3.00 0.06
Egyptian lack in knowledge for commodities that considered
10 healthier, Decrease sales volume 2%
0.01 2.00 0.02

Total
1.00 3.34
External Factor Analysis External Factor Analysis summary

According to Fred R. David the total weight score is 3.34 which is on a 1-4
scale is above average so Nestle business is doing well, taking advantage of
external opportunity and avoid the threat facing the firm.

Opportunities

 Economic Growth increasing demand enabling as Egypt applied 2030 development plan and established
future projects that will increase demand enabling increasing sales volume 5%
 Exchange rates change of USD as normally our cost will have an increase in cost by a portion of imported
items, but our selling price will be more competitive in export markets enabling increasing Sales volume by
10% (Enabling Export)
 Presence of Egyptian trade agreements enabling increasing Sales volume by 10% (Enabling Export)
 Political stability that enhances the agreements enabling increase profit by 5%

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 Population growth rate increase will increase the demand enabling increasing volume by 2%
 Lifestyle digitalization trend so demand will increase by another online channels enabling increasing Sales
volume by 3%
 Trend toward longer workdays continues, more people are becoming accustomed to drinking tea and coffee,
increasing sales volume 2%
 Young consumer trend for sustainable products enabling increasing sales volume 3% via including healthy
sustainable to portfolio.

Threats

 Exchange rates change of USD increase cost of raw material that will impact profit for local market,
Decreasing Sales profit by 5%
 Increase of Egypt inflation rate as demand may decrease, Decreasing Sales volume by 3%
 High Bargaining buyer power switching to competitors, Decreasing Sales volume by 5%
 Over access to the Nile's water, Egypt and Ethiopia situation Grand Ethiopian Renaissance Dam, Decrease
profit by 5%
 Very Highly Competitive Rivalries, decrease sales volume by 4%
 High presence of substitutions, Decrease sales volume by 5%
 Pandemic and Russian-Ukraine war affect badly supply chain, Decrease sales volume 10%
 Climate change significantly increased the cost of agricultural products, decrease profit by 3%
 Egypt Disposable income decreased may decrease demand, Decrease Sales 2%

 Egyptian lack in knowledge for commodities that considered healthier, Decrease sales volume 2%

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 Competitive Profile Matrix CPM

CPM for Dairy Industry

Nestle Juhayna Americana Danone
CSF Critical Success Factor Weight Rating Score Rating Score Rating Score Rating Score
Market Share 0.13 3 0.39 4 0.52 2 0.26 2 0.26
Product Quality 0.15 4 0.6 3 0.45 2 0.3 4 0.6
Price Competitiveness 0.125 3 0.375 3 0.375 4 0.5 4 0.5
Customer Loyalty 0.13 4 0.52 4 0.52 2 0.26 1 0.13
Advertising 0.11 3 0.33 3 0.33 2 0.22 2 0.22
Global Expansion 0.09 4 0.36 2 0.18 2 0.18 3 0.27
R&D 0.14 4 0.56 3 0.42 2 0.28 4 0.56
Productive Capacity 0.125 3 0.375 4 0.5 3 0.375 2 0.25
Total 1.00 3.51 3.295 2.375 2.79

Data Collection For CPM

Market Share

36%
27%

15%
10% 9%
Nestle Juhayna Americana Danone Others
Market Share 15% 27% 10% 9% 36%

Market Share

Average Selling Price EGP

103.00 97.00
79.00 83.00

Nestle Juhayna Americana Danone

Average Selling Price EGP 103.00 97.00 79.00 83.00

Average Selling Price EGP

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 2021 Advertizing events number
2021 Advertizing events number

42.00
36.00
28.00
24.00

Nestle Juhayna Americana Danone

2021 Advertizing events number 36.00 42.00 28.00 24.00

2021 Launched New Poducts

9.00
8.00

5.00
2.00
Nestle Juhayna Americana Danone
2021 Launched New Poducts 8.00 5.00 2.00 9.00

2021 Launched New Poducts

Number of Egypt Factories

7.00

3.00
2.00 1.00
Nestle Juhayna Americana Danone
Number of Egypt Factories 3.00 7.00 2.00 1.00

Number of Egypt Factories

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 7.Value chain analysis

A value chain is a series of consecutive steps that go into the creation of a

finished product, from its initial design to its arrival at a customer's door. The
chain identifies each step in the process at which value is added, including the
sourcing, manufacturing, and marketing stages of its production.

A company conducts a value-chain analysis by evaluating the detailed

procedures involved in each step of its business. The purpose of a value-chain
analysis is to increase production efficiency so that a company can deliver
maximum value for the least possible cost.

o Primary activities

Producing and selling the product to targeted customers constitutes the primary value chain
activities for Nestle. As will be explained below, analysis of primary value chain activities can
help Nestle perform better.

 Inbound logistics

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 Since suppliers' assistance is required to receive, store, and distribute the product, it is crucial
to forge strong relationships with them, where Nestle well established relationships with
suppliers through supply chain operation that considered as an effective area in Nestle. (S)
 An organization must concentrate on all stages of transformation, from raw materials to
finished goods, when handling inbound logistics. Retrieving raw materials, storing the inputs,
and internally distributing the raw materials and components to begin production are some
examples of inbound logistics, Nestle concentrated to develop in each stage and considered as
one of its power arms. (S)
 Operations
 When raw materials are delivered and Nestle is prepared to turn them into finished goods and
put them on the market, it becomes more crucial to analyze operational activities. Operational
activities include things like testing, machining, packing, and assembling. This includes
servicing and maintaining equipment as well, according to the analysis the resources attrition
rate considered to be high. (W)
 It includes both production and service activities. To increase productivity, maximize
efficiency, and ensure Nestle's competitive success, operational activity analysis is crucial.
Nestle may be able to achieve steady economic growth, increase profitability, and create a
strong competitive advantage with the help of the increased productivity, along with extensive
and highly-diversified product portfolio enabling operating in different markets. (S)
 Operations required enhancement in quality control due to the recalls applied of contaminated
food. (W)
 Outbound logistics
 Nestle applied great network and control system on Material handling, warehousing, planning,
order processing, transportation, and delivery to the destination, to find sources of competitive
advantage and accomplish its business growth goals.
 Management had particular attention that activities are timely managed with optimal costs and
minimal negative effects on product quality, As well know that customers are more satisfied
When offering perishable goods delivered quickly accordingly there are more opportunities
for the company to grow.
 Marketing and Sales

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  To persuade the customers that its offering is superior to rivals, Nestle emphasize the
advantages and differentiating features of the products offered. Only producing a high-quality
product with competitive prices and unique features won't generate value until Nestle makes
an investment in marketing and sales efforts applied digital transformation and online shopping
as a competitive edge (S), considering that launching of new brands had an impact of high cost
(W).
 Marketing and Sales well established relationships with retailers for distributer segment. (S)
 Marketing team established events as an environmental sustainability effort that well
recognized and appreciated by the government and people. (S)
 Marketing and Sales teams over dependance on some products not all the range of the product
portfolio. (W)
 In some cases, marketing applied social criticism by wrong product marketing. (W)
 According to marketing consumer behavior analysis report, some Nestle products considered
to be an old fashion product and till now no actions applied (W)
 Highly reliance on advertising with excessive costs to increase sales revenues (W).
 In 2022 Export sales was just 50MEGP that should be another figure considering that the target
market is MENA region (W).
 Services
 Nestle pre- and post-sale services is crucial in fostering a sense of loyalty among customers.
Post-sale services are just as important to today's consumers as marketing and promotional
initiatives
o Secondary activities
 Firm infrastructure
 Management
o Qualified leadership
o Risk assessment mind set approach.
o Encouraging and empowering employees for effectiveness
o Leaders delegate tasks to secondary level to build up successors
 Finance
- Bases on the media intervention of Nestle-Egypt CEO, Moataz Al-Hout, on MBC
channel with the journalist Amr Adeeb in JAN,2022 referred that 2020 was with minor

18
 growth and 2021 was rebound year while expected at that moment 2022 an acceleration
growth year (S), link https://www.youtube.com/watch?v=JR9Uajpy4vk
- Considering the excellent Global Nestle capital that can support Nestle-Egypt in
investments (S).
- Additional to above financial analysis in page 21 applied to Nestle-Egypt financial
statement.

Financial analysis showed that Business Growth by 13% is a healthy financial position (S)
along with stable Liquidity, efficiency and leverage ratios but with decline in profitability
ratios due to high attrition rate of resources in operation (W) and high expenses of sales
and distribution, considering the high reliance on Advertising with significant costs (W).

 Human Resource management

 Human resource management excellence evaluating different HR aspects, including-
recruiting, selecting, training, rewarding, performance management and other personnel
management activities, that has a great impact on employees Efficiency along with
decentralization (S)
 HR should amend Nestle-Egypt organization structure as it considered to be tall organization
structure with low Span of control (W) that causes delay in decisions in some occasions.
 Technology development
 Nearly all value chain activities rely on technological support in today's modern,
technologically advanced era. Nestle had significance of technology development given the
technological integration in the company's operations related to production, distribution,
marketing, and human resources (S)
 Procurement
 Nestle carefully considered its procurement practices to optimize the inbound, operational, and
outbound value chains. as procurement is the process involved in acquiring the inputs, which
can include machinery, supplies, raw materials, equipment, and other items required for
producing the finished product along with long term agreements with supplier

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8-Resource Based-View (VRIO)

■ VRIO framework is the tool used to analyze firm’s internal resources

and capabilities to find out if they can be a source of sustained
competitive advantage. Term VRIO comes from the words value, rarity,
imitability and organization.
■ The resources and assets that are valuable, rare and inimitable, and
that you are organized to use effectively, will likely contribute most to
delivering your organization's mission. Therefore, you need to make
sure that you make the fullest use of such resources, and take care to
protect them.

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 Resource or Capability Valuable? Rare? Inimitable? Organized? Impact of Resource
Human Resources Temporary Competitive
YES NO NO YES
Management Advantage
Export Sales Performance NO NO NO NO Weakness
Launching Cost Efficiency NO NO NO NO Weakness
Stable Competitive
Customer Relationships YES YES NO YES
Advantage
Permanent Competitive
Innovative product/patents YES YES YES YES
Advantage
Nestle Brand in Network Permanent Competitive
YES YES YES YES
Field Advantage
Permanent Competitive
Research & Development YES YES YES NO
Advantage
Temporary Competitive
Supply chain YES NO NO YES
Advantage
Organization structure NO NO NO NO Weakness
Complete Product family Stable Competitive
YES YES NO YES
portfolio Advantage
Permanent Competitive
Worldwide Presence YES YES YES YES
Advantage

21
 9.Internal Factor Analysis Summary IFAS

Weighted
Strengths Weight Rate
Score
Financial position with growing Revenue, Expected increasing sales
1
volume by 5% 0.12 4.00 0.48
Excellent financial Global-Nestle capital, Expected increasing sales
2
volume by 10% 0.10 4.00 0.40
Well established relationships with Customers and other brands,
3
increasing sales volume by 5% 0.05 4.00 0.20
4 Extensive/Diverse portfolio, increase sales volume by 3% 0.02 4.00 0.08
5
Worldwide presence, Expected increasing sales volume by 10% 0.10 4.00 0.40
6 Strong supply chain operations, may increase profit by 5% 0.06 4.00 0.24
Efficient employees along with decentralization, increasing Profit
7
by 5% 0.05 3.00 0.15
Fast Innovation/Unrivalled R&D, Expected increasing sales volume
8
by 5% 0.04 4.00 0.16
Digital Transformation and online shopping, increase sales volume
9
by 2% 0.02 3.00 0.06
10 Global Recognized Brand, increase sales volume 4% 0.02 4.00 0.08
11 Environmental sustainability efforts, increasing sales volume by 3% 0.02 3.00 0.06

Weighted
Weaknesses Weight Rate
Score
1 Export Sales performance, Decreasing Sales volume 5% 0.07 2.00 0.14
2 Price fluctuation by agents, Decreasing profit by 5% 0.06 2.00 0.12
3 Organization structure/Span of control, Decrease profit by 4% 0.05 2.00 0.10
4 High reliance on advertising, Decrease sales volume by 5% 0.05 2.00 0.10
5 Over dependence on some products, Decrease Sales volume by 5% 0.04 1.00 0.04
6 High cost of launching new brands, decrease profit by 5% 0.05 1.00 0.05
7
High attrition rate for resources, decrease profit by 4% 0.01 1.00 0.01
8
Some brands considered old fashion, decrease sales volume by 2% 0.01 1.00 0.01
9 Social criticism by wrong product marketing, decrease volume 2% 0.02 1.00 0.02
Social Controversies -over water usage- forced child labor and
10
other unethical practices, decrease sales volume by 2% 0.01 1.00 0.01
11 Contaminated food recalls, decrease sales volume by 10% 0.03 2.00 0.06

Total
1.00 2.97

Internal Factor Analysis summary IFAS

According to Fred R. David the total weight score is 2.97 which is on a 1-4
scale is above average so Nestle business is doing pretty well taking
22
 advantage of internal strength and overcome their weakness. there is
always a room for improvement

Strengths

 Financial position with growing revenue expected increasing profit by 5%, by enhancing expenses and decreasing sales
and marketing expenses.
 Excellent Nestle-Global financial capital expected increasing sales volume by 10%, facilitating entrance of projects.
 Well established relationships with Customers (Retailers) and other brands expected increasing sales volume by 5%
 Extensive/Diverse portfolio expected increasing sales volume by 3%
 Worldwide presence expected increasing sales volume by 10%
 Strong supply chain operations expected increase profit by 5% through agreement with suppliers.
 Efficient employees along with decentralization expected increasing Profit by 5% through utilizing resources efficiently.
 Fast Innovation/Unrivalled R&D expected increasing sales volume by 5% through establishing new products and
enhancing current portfolio.
 Digital Transformation and online shopping expected increasing sales volume by 2% though exploring product portfolio
in several sales and marketing channels.
 Global Recognized Brand expected increasing sales volume 4% via applying more advertising referring and linking all
subsidiary brands to Global Nestle.
 Environmental sustainability efforts expected increasing sales volume by 3% as normally current customer behavior tend
to companies that applying more Environmental sustainability efforts.

Weaknesses

 Export Sales performance may decrease Sales volume 5%.

 Price fluctuation by agents may decrease profit by 5%.
 Organization structure/Span of control may decrease profit by 4%.
 High reliance on advertising may decrease sales volume by 5%.
 Over dependence on some products may decrease Sales volume by 5%.
 High cost of launching new brands may decrease profit by 5%.
 High attrition rate for resources may decrease profit by 4%.
 Some brands considered old fashion may decrease sales volume by 2%.
 Social criticism by wrong product marketing may decrease sales volume by 2%.
 Social Controversies -over water usage- forced child labor and other unethical practices may decrease sales volume by
2%.
 Contaminated food recalls may decrease sales volume by 10%.

23
 10.SWOT Matrix

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

S
financial position with
W O T
Exchange rates change of US
Export Sales performance Economic Growth (Increase cost of imported
growing revenue
raw material)
Exchange rates change of Increase of Egypt inflation
Excellent financial capital Price fluctuation by agents
USD (Enabling Export) rate
Presence of Egyptian trade
Well established Organization structure/Span High Bargaining buyer power
agreements (Enabling
relationships of control switching to competitors
Export)
Over access to the Nile's
water Egypt and Ethiopia
Extensive/Diverse portfolio High reliance on advertising Political stability
situation Grand Ethiopian
Renaissance Dam
Over dependence on some Very Highly Competitive
Worldwide presence Population growth rate
products Rivalries
Strong supply chain High cost of launching new High presence of
Lifestyle digitalization trend
operations brands substitutions
Customer behavior Trend Pandemic and Russian-
Decentralization with High attrition rate for
toward longer workdays Ukraine war affect badly
Efficient employees resources
continues supply chain
Climate change significantly
Fast Innovation/Unrivalled Some brands considered old Customer behavior Trend for
increased the cost of
R&D fashion sustainable products
agricultural products
Social criticism by wrong Egypt Disposable income
Digital Transformation
product marketing decreased
Egyptian lack in knowledge
Social Controversies
Global Recognized Brand for commodities that
unethical practices
considered healthier
Environmental sustainability
Contaminated food recalls
efforts

24
 11.TOWS Analysis

S1 Financial position Growing revenue W1 Export Sales performance

Excellent financial capital Nestle-
S2 W2 Price fluctuation by agents
Global
Organization structure/Span of
S3 Well established relationships W3
control
INTERNAL S4 Extensive/Diverse portfolio W4 High reliance on advertising
Over dependence on some
S5 Worldwide presence W5
products
EXTERNAL S6 Strong supply chain operations W6 High cost of launching new brands
Decentralization with Efficient
S7 W7 High attrition rate for resources
employees
Some brands considered old
S8 Fast Innovation/Unrivalled R&D W8
fashion
Social criticism by wrong product
S9 Digital Transformation W9
marketing
Social Controversies unethical
S10 Global Recognized Brand W10
practices
S11 Environmental sustainability efforts W11 Contaminated food recalls

O1 Economic Growth
Exchange rates change of USD (Enabling 1. Horizontal integration 3. Market Development
O2
Export) O1, O4, O5, O6, S1, S2, S3, S5, S6, S7, O1, O2, O3, O4, O5, O6, O8, W1, W4,
Presence of Egyptian trade agreements S8, S10 W5, W6
O3
(Enabling Export) Acquire Competitor Juhayna Launch Nestle EG-product in MENA
O4 Political stability 4. Product Development
2. Forward integration
O5 Population growth rate
O1, O4, O5, O6, O7, S1, S2, S3, S4, S5, O1, O5, O6, O7, O8, W4, W6, W9, W10,
O6 Lifestyle digitalization trend
S6, S7, S8, S10 W11
Customer behavior Trend toward longer
O7 Acquire Advertising Company R&D Launch healthy product line
workdays continues
Customer behavior Trend for sustainable
O8
products

Exchange rates change of US

T1
(Increase cost of imported raw material)
T2 Increase of Egypt inflation rate
5. Harvest & Divest 7. Retrenchment
High Bargaining buyer power switching to
T3 T1, T2, T6, T7, T8, T9, S3, S4, S6, S8
competitors T1, T8, T9, W1, W4, W5, W7, W8
Over access to the Nile's water Egypt and Sell Production line related to
T4 Ethiopia situation Grand Ethiopian Renaissance old fashion product Retrenchment portion of
Dam 6. Joint venture marketing & Sales related to old
T5 Very Highly Competitive Rivalries T1, T2, T3, T5, T6, T9, S1, S2, S3, S5,
fashion products
S6, S7, S9, S10
T6 High presence of substitutions JV with Danone Egypt

Pandemic and Russian-Ukraine war affect badly

T7
supply chain
Climate change significantly increased the cost
T8
of agricultural products
T9 Egypt Disposable income decreased
Egyptian lack in knowledge for commodities
T10
that considered healthier

25
 TOWS Analysis

First Quadrant:

Integrative strategies below can be applied:

1. Strategy No1: Horizontal integration strategy

Acquire competitor Juhayna, As Juhayna market share is 27 % in Dairy segment so directly will increase Nestle market
share in Dairy segment from 15% to 42% and along with the strengths, Macro opportunities and Micro Opportunities
and by merging the product portfolio of Nestle and Juhayna, Nestle Market share in dairy segment can even reach 50%.
2. Strategy No2: Forward integration
Acquire Advertising company, in order to penetrate the market with professional marketing events and promotions,
along with applying deals with distributers in Egypt.

Second Quadrant:

Intensive strategies below can be applied:

1. Strategy No3: Market development strategy

Launch retail segment MENA Region, by approaching distributers and apply agreements with at least three distributers
in each country including annual consumption and rebate policy, this strategy will double with couple of years the
export sales revenue that reach 50MUSD in 2021 which considered to be around 15% of total Egypt Nestle Sales.
2. Strategy No4: Product development strategy
Launch Healthy product line with sustainable packaging to complete product portfolio using another technology to be
available along with exist technology to have competitive edge to fulfill all customer needs.

Third Quadrant:

Conservative strategies below can be applied:

1. Strategy No5: Harvest & Divest strategy

Selling production lines related to old fashion product with minor sales contribution to total Sales of Nestle Egypt.
2. Strategy No6: Joint Venture strategy
Joint Venture with the competitor Danone, where Danone market share is 8% in dairy segment and this will enable to
increase Nestle market share by at least 15% as product portfolio of Nestle and Danone will be merged to capitalize
more opportunities and avoid threats.

Fourth Quadrant:

Strategy No7: Retrenchment strategy

Retrenchment portion of Marketing and Sales Teams related to old fashion product with minor sales contribution to
total Sales of Nestle Egypt.

26
 12.QSPM
Strategy 1 Strategy 2
Horizontal integration Forward integration
CSF Weight Acquire Competitor
Juhayna
Acquire Advertising
company
AS TAS AS TAS
S1 Financial position with growing revenue 0.06 4 0.24 3 0.18
S2 Excellent financial capital 0.05 4 0.2 3 0.15
S3 Well established relationships 0.025 4 0.1 3 0.075
S4 Extensive/Diverse portfolio 0.01 3 0.03 4 0.04
S5 Worldwide presence 0.05 4 0.2 3 0.15
S6 Strong supply chain operations 0.03 4 0.12 2 0.06
S7 Decentralization with Efficient employees 0.025 4 0.1 3 0.075
S8 Fast Innovation/Unrivalled R&D 0.02 3 0.06 3 0.06
S9 Digital Transformation 0.01 4 0.04 4 0.04
S10 Global Recognized Brand 0.01 4 0.04 4 0.04
S11 Environmental sustainability efforts 0.01 3 0.03 4 0.04

W1 Export Sales performance 0.035 3 0.105 4 0.14

W2 Price fluctuation by agents 0.03 4 0.12 2 0.06
W3 Organization structure/Span of control 0.025 3 0.075 3 0.075
W4 High reliance on advertising 0.025 3 0.075 4 0.1
W5 Over dependence on some products 0.02 4 0.08 2 0.04
W6 High cost of launching new brands 0.025 3 0.075 4 0.1
W7 High attrition rate for resources 0.005 2 0.01 2 0.01
W8 Some brands considered old fashion 0.005 4 0.02 2 0.01
W9 Social criticism by wrong product marketing 0.01 2 0.02 4 0.04
W10 Social Controversies unethical practices 0.005 2 0.01 2 0.01
W11 Contaminated food recalls 0.015 2 0.03 2 0.03

O1 Economic Growth 0.06 4 0.24 3 0.18

O2 Exchange rates change of USD (Enabling Export) 0.05 4 0.2 3 0.15
O3 Presence of Egyptian trade agreements (Enabling Export) 0.05 4 0.2 3 0.15
O4 Political stability 0.03 4 0.12 3 0.09
O5 Population growth rate 0.025 3 0.075 2 0.05
O6 Lifestyle digitalization trend 0.02 3 0.06 4 0.08
O7 Customer behavior Trend toward longer workdays continues 0.01 3 0.03 4 0.04
O8 Customer behavior Trend for sustainable products 0.01 3 0.03 3 0.03

T1 Exchange rates change of US (Increase cost of imported raw material) 0.035 2 0.07 1 0.035
T2 Increase of Egypt inflation rate 0.05 3 0.15 2 0.1
T3 High Bargaining buyer power switching to competitors 0.035 4 0.14 3 0.105
Over access to the Nile's water Egypt and Ethiopia situation Grand
T4 0.025 2 0.05 1 0.025
Ethiopian Renaissance Dam
T5 Very Highly Competitive Rivalries 0.025 4 0.1 3 0.075
T6 High presence of substitutions 0.025 3 0.075 3 0.075
T7 Pandemic and Russian-Ukraine war affect badly supply chain 0.03 2 0.06 2 0.06
Climate change significantly increased the cost of agricultural
T8 0.005 1 0.005 1 0.005
products
T9 Egypt Disposable income decreased 0.01 3 0.03 3 0.03
T10 Egyptian lack in knowledge for commodities that considered healthier 0.005 2 0.01 4 0.02
Total 1 3.425 3.425 2.825

27
 Continued 12. QSPM
Strategy 2
Strategy 3
Product Development
CSF
Market Development
Weight Launch healthy product
Export MENA Region
line
AS TAS AS TAS
S1 Financial position with growing revenue 0.06 3 0.18 4 0.24
S2 Excellent financial capital 0.05 3 0.15 4 0.2
S3 Well established relationships 0.025 4 0.1 3 0.075
S4 Extensive/Diverse portfolio 0.01 4 0.04 2 0.02
S5 Worldwide presence 0.05 4 0.2 2 0.1
S6 Strong supply chain operations 0.03 4 0.12 4 0.12
S7 Decentralization with Efficient employees 0.025 4 0.1 3 0.075
S8 Fast Innovation/Unrivalled R&D 0.02 3 0.06 4 0.08
S9 Digital Transformation 0.01 4 0.04 3 0.03
S10 Global Recognized Brand 0.01 4 0.04 3 0.03
S11 Environmental sustainability efforts 0.01 3 0.03 4 0.04

W1 Export Sales performance 0.035 4 0.14 2 0.07

W2 Price fluctuation by agents 0.03 2 0.06 2 0.06
W3 Organization structure/Span of control 0.025 3 0.075 2 0.05
W4 High reliance on advertising 0.025 2 0.05 2 0.05
W5 Over dependence on some products 0.02 3 0.06 4 0.08
W6 High cost of launching new brands 0.025 4 0.1 3 0.075
W7 High attrition rate for resources 0.005 2 0.01 4 0.02
W8 Some brands considered old fashion 0.005 1 0.005 1 0.005
W9 Social criticism by wrong product marketing 0.01 2 0.02 4 0.04
W10 Social Controversies unethical practices 0.005 2 0.01 4 0.02
W11 Contaminated food recalls 0.015 2 0.03 4 0.06

O1 Economic Growth 0.06 4 0.24 3 0.18

O2 Exchange rates change of USD (Enabling Export) 0.05 4 0.2 2 0.1
O3 Presence of Egyptian trade agreements (Enabling Export) 0.05 4 0.2 3 0.15
O4 Political stability 0.03 4 0.12 3 0.09
O5 Population growth rate 0.025 3 0.075 4 0.1
O6 Lifestyle digitalization trend 0.02 3 0.06 4 0.08
O7 Customer behavior Trend toward longer workdays continues 0.01 3 0.03 3 0.03
O8 Customer behavior Trend for sustainable products 0.01 2 0.02 4 0.04

T1 Exchange rates change of US (Increase cost of imported raw material) 0.035 4 0.14 2 0.07
T2 Increase of Egypt inflation rate 0.05 4 0.2 2 0.1
T3 High Bargaining buyer power switching to competitors 0.035 3 0.105 4 0.14
Over access to the Nile's water Egypt and Ethiopia situation Grand
T4 0.025 1 0.025 1 0.025
Ethiopian Renaissance Dam
T5 Very Highly Competitive Rivalries 0.025 3 0.075 4 0.1
T6 High presence of substitutions 0.025 3 0.075 3 0.075
T7 Pandemic and Russian-Ukraine war affect badly supply chain 0.03 2 0.06 2 0.06
Climate change significantly increased the cost of agricultural
T8 0.005 1 0.005 1 0.005
products
T9 Egypt Disposable income decreased 0.01 4 0.04 2 0.02
T10 Egyptian lack in knowledge for commodities that considered healthier 0.005 2 0.01 2 0.01
Total 1 3.3 2.915

28
QSPM Analysis

The strategies under evaluation for level of attractiveness for appropriate

prioritization showed that Horizontal integration are the most appropriate
strategy for implementation.

29
 13.SPACE Matrix

■ The SPACE matrix is a management tool used to analyze a company. It

is used to determine what type of a strategy a company should
undertake.

■ The Strategic Position & action Evaluation matrix or short a SPACE

matrix is a strategic management tool that focuses on strategy
formulation especially as related to the competitive position of an
organization.

■ The SPACE matrix can be used as a basis for other analyses, such as the
SWOT analysis, BCG matrix model, industry analysis, or assessing
strategic alternatives

30
 Sub-Factors Score Average Sub-Factors Score Average
Industrial Attractiveness (IA) Financial Strength (FS)
Growth Potential 5 Return on Investment 5
Profit Potential 4 Liquidity 3
4.5
Financial Stability 4 Debt Ratio 2 3.8
Complexity of entering industry 5 Cash flow 4
Competitive Adv. (CA) Inventory Turnover 5
Market Share -2 Environmental Stability (ES)
Product Quality -1 Technological Change -2
-1.75
Product Life cycle -2 Inflation Rate -4
Customer Loyalty -2 Demand Volatility -2 -2.4
Price range of competitive products -2
Price elasticity of demand -2

X axis value = IA + CA = 4.5 – 1.75 = 2.75

Y axis value = FS + ES = 3.8 – 2.4 = 1.4  (2.75,1.4)
(2.75,1.4) presence in Quadrant 1, Industry is attractive and stable, Nestle Egypt have
competitive advantage which we must strive to retain, and should select integrative Aggressive
strategy which is Horizontal integration (Acquire Competitor Juhayna) as an output of QSPM
Page 28, along with Market Development strategy (Nestle Egypt Export to MENA) as an output
of QSPM Page 29.

Aggressive

31
 Nestle are located in the aggressive quadrant of the space matrix.

■ According to space matrix analysis Nestle is in an excellent position to use

its internal strength to take advantage of external opportunity, overcome
internal weakness, and avoid external threats.

■ Nestle are financial strong firm that has achieved major competitive
advantages in growing and stable industry.

14.BCG Matrix

Growth Rate
Toughest Competitor Juhayna Market Share = 27%

Nestle Egypt Market Share = 15% 25%

15%

Relative Market Share

RMS = 15/27 = 55.5%

RMS
Industry Growth Rate = 8.85%
0
50 100
-
15%
-25%

Presence in Quadrant 1, Industry is attractive and stable, Nestle Egypt have competitive
advantage which we must strive to retain, and should select integrative Aggressive strategy
which is Horizontal integration (Acquire Competitor Juhayna) as an output of QSPM Page 28,
along with Market Development strategy (Nestle Egypt Export to MENA) as an output of QSPM
Page 29.

32
 Market Share

36%
27%

15%
10% 9%
Nestle Juhayna Americana Danone Others
Market Share 15% 27% 10% 9% 36%

Market Share

16.Most Important Strategies

Strategy No1: Horizontal integration strategy

Acquire competitor Juhayna, As Juhayna market share is 27 % in Dairy segment so directly will increase Nestle market
share in Dairy segment from 15% to 42% and along with the strengths, Macro opportunities and Micro Opportunities
and by merging the product portfolio of Nestle and Juhayna, Nestle Market share in dairy segment can even reach 50%.

Strategy No2: Forward integration

Acquire Advertising company, in order to penetrate the market with professional marketing events and promotions,
along with applying deals with distributers in Egypt.

Strategy No3: Market development strategy

Launch retail segment MENA Region, by approaching distributers and apply agreements with at least three distributers
in each country including annual consumption and rebate policy, this strategy will double within couple of years the
export sales revenue that reach 50MUSD in 2021 which considered to be around 15% of total Egypt Nestle Sales.

Strategy No4: Product development strategy

Launch Healthy product line with sustainable packaging to complete product portfolio using another technology to be
available along with exist technology to have competitive edge to fulfill all customer needs.

33
 Retrenchment portion of Marketing and Sales Teams related to old fashion product with minor sales contribution to

total Sales of Nestle Egypt Nestle Egypt have competitive advantage which we must strive to
retain, and According to SWOT/TOWS/QSPM/SPACE/BCG/IE analysis, selected below
Main strategies to be applied

Strategy No1: Integrative Aggressive strategy which is Horizontal integration (Acquire Competitor Juhayna)

Strategy No3: Intensive Aggressive strategy which Market Development strategy (Nestle Egypt Export to MENA)

As Acquiring Juhayna will increase local market share and increase the capacity of production as well that will be utilized in
the Export to MENA Region through Market development strategy.

34
 17.Hierarchy of Objectives

Nestle Egypt Long-Term Objective

Double company revenue in 4 years through
Horizonal integration and Market Development
(Current revenue 5,600MEGP)

Division 1 : Division 2 : Division 3 :

Powdered and Liquid Prepared dishes Water
beverage and Milk products and cooking aids
ANNUAL OBJECTIVE ANNUAL OBJECTIVE ANNUAL OBJECTIVE
Increase divisional revenues by 50% Increase divisional revenues by 10% Increase divisional revenues by 5%
in 2023 and 15% each next 3 years each next 4 years each next 4 years
Growth 128% in 4 years to reach Growth 46% in 4 years to reach Growth 22% in 4 years to reach
8,660MEGP in 2026 1,903MEGP in 2026 607MEGP in 2026
(Current Revenues are 3,800MEGP) (Current Revenues are 1,300MEGP) (Current Revenues are 500MEGP)

R&D Production Marketing Sales Finance HR

Annual Objective Annual Objective Annual Objective Annual Objective Annual Objective Annual Objective

 Lead Acquiring  Raise production  Apply at 4 Marketing  Upward 30 percent in Obtain Long-Term  Raise this year's
project of Juhayna efficiency by 15% this events Quarterly in monthly order intake. financing of 1.5 training
year. EGYPT and MENA each. BEGP in next 6 participation rate
to be settle in Q1.  Increase customer
 Merge Product  Boost Production  Organize all brochures months from 25% of
list by 50 new
Portfolio of Nestle Capacity 15% by Q2. & documentations employees to
customers monthly.
& Juhayna in Q2. related to merge of 40%.
 Settle new price list  Utilize a system
 Apply all required Nestle & Juhayna product
with in Q1 for MENA of monthly
certificates for portfolio in Q1. Auditing
Purchasing per each country. Accounting evaluation and
complete portfolio  Apply Agreements with
Logistics  Set quarterly forecasts Investments best-performer
to be established Quality Control distributers for MENA
for production team. Collections rewards.
in Q2. retail segment with in Q2.
Advertising  Set next 4 years plan Working Capital
 Juhayna Acquire
Promotion approach presenting Structure should
Research MENA be organized and
Public relations settled.

35
 18.Requirements of Implementation

o Annual Objectives
 Included in Hierarchy of objectives Page 36.
o Tactics and Policies
 Production
o Production Make to stock strategy to be fully applied and adhered to Sales Quarter forecasts.
o Set waste management in production hierarchy to implement waste reduction Audits.
o Eliminating Non-value-added activities.
o Add additional shifts.
o Increase the workforce.
o Utilize modern tools and technology.
o Dealing with procurement to establish a contract with parties who rent M/Cs.
o Raise production effectiveness by 15%.
o Consider Closed-Loop manufacturing process.

 Quality
o Set availability tactics (Detect faults, Recover from Faults, Prevent faults)
o Set performance tactics (Control resource demand, Manage resources)
o Increase the number of inspection points.
o Raise inspector’s stages.
o Apply ISO standards.
o Implement a third-party inspection for Juhayna facility.

 Marketing
o Focus individual Nestle branding for all brands which help it in creating high visibility & awareness, Announce and set Celebration
festival related to acquiring Juhayna.
o Penetration to the untapped market is what driving the industry to further growth.
o Frequent on monthly basis Customer analysis to be fully aware and reflect immediately with any change in customer behavior.
o Frequent on monthly basis competitive analysis to implement on spot competitive attack plan.
o Apply four marketing events each quarter in MENA region and Egypt.
o Enable make product available to the end consumer through extensive network of distribution via Distributor Agreements for the retail
market by the end of Q2.

 HR
o Attracting and retaining the right people.
o achieving the full potential of our business and our people, Conduct training programs for every department.
o Creating an ethical, responsible and high-performance culture by conducting awareness sessions for Nestle Corporate Business
Principles, Nestle Management and Leadership Principles and the Nestle Code of Business Conduct.
o Ensure compliance with external standards, such as the UN Global Compact, through CARE Program (Compliance Assessment of
Human Resources, Occupational Safety, Health, Environment and Business Integrity). This includes regular external auditing by an
independent certification body.
o Apply incentives for employees to reduce turnover.
o Conduct periodic department meeting seeking for employee’s satisfaction.

36
  Sales
o Be persistent with leads and develop the habit of following up with each customer, Audited customer visit program.
o Develop the ability to actively listen to customers, Sales services ticketing program along with settled service level of agreement SLA.
o Develop relationships with retailers, implementing frequent celebration announcing Top ten monthly retailers.
o Increase monthly order intake by 30%
o Increase customer list by 50 new customers monthly.
o Set Forecast for Production team Quarterly
o Settle new price list with in Q1 for Egypt & MENA and to be reviewed by weekly.

 R&D
o Cover products with required certificates.
o Enhance materials usage in products to decrease production defect rate.
o Develop process and product to reduce resources usage and raw materials, going more sustainable.
o Merging and developing product portfolio of Nestle and Juhayana, attract more demand upon appealing customer needs.
o Interact immediately to the output of marketing team (consumer analysis and competitive analysis)

 Finance
o Decrease indirect expenses.
o Increase profit.
o Enhance collection
o Long-financing, 20% Debt & 15% equity.

o Resource Allocation
o Included in Hierarchy of objectives Page 36.

o Middle Manager Training and development

o Apply frequent training for leaders
o Communicate strategies, Objectives and KPIs
o Hiring all required talents to fulfill all gaps and requirements needed up on strategy.

o Organizational Structure

CEO

Production
Quality Director R&D Director Commercial HR Director CFO HSE Manager
Director

SALES

Marketing

o Organizational operational system

 All departments to review all departments procedures with Quality control department and KPIs
to be aligned with the strategies and communicated to the whole Team.

37
 19.Strategic Implementation Matrix

Horizontal integration (Acquire Competitor Juhayna)

Strategy
Market Development (Nestle Egypt Export to MENA)

2023 Sales Growth 35%

Strategic Double Nestle Egypt Revenue 2024 Sales Growth 14%
Annual objective
objective In 4 years 2025 Sales Growth 14%
2026 Sales Growth 14%

Functional area Functional Objectives Policies/Tactics/Procedures KPI’s

 Increase more shifts.

 Increase number of employees.
 Use new technology and machines.  Overall prod. Eff. To be 98%
 Increase production efficiency by 25%  M/Cs uptime rate to be 98%
 Dealing with Procurement to have  Unit maintenance cost by 5%
Increase production capacity by 15% agreement with third parties renting M/Cs  Defect rate by 5%
Production Increase production eff. by 15%  Make to stock strategy to be fully applied  OEE by 5%
and adhered to Sales Quarter forecasts.  Capacity Utilization 2% monthly
 Set waste management in production  Overtime hours by 4%
hierarchy to implement waste reduction
Audits.
 Eliminating Non-value-added activities.
 Increase inspection points.  No. of compliance issues by 2%
 Increase inspector’s stages.  Avg. time to solve issues by 10%
Quality Decrease number of defects by 2%
 Apply ISO standards.  No. Right-first time% by 5%
 Apply 3rd party inspection.  overdue audit/training by 20%
 Apply at 4 Marketing events Quarterly in  MKT Campaign Events 4/Country
MENA & Egypt  No# Customer & Competitor
Marketing Increase sales volume by 35% in 2023  Apply Agreements with Distributers in Q2 analysis to 12/year
 Focus individual Nestle branding  No# Distributers to 15/Country
 Monthly customer & competitor analysis
 Attracting and retaining right people.  Training to be 40% of employees
 Achieve full potential, Conduct training  Apply monthly appraisal system
programs. along with monthly reward for
Increase overall all efficiency by 20%
HR Increase Workforce by 15%
 Give incentives for employees to reduce best employee in each
turnover. department.
 Conduct periodic department meeting  Results of employee’s satisfaction
seeking for employee’s satisfaction survey by 20% to be 95%
 Sales volume to be
 Increase monthly order intake by 30%
630MEGP/Month
Increase sales volume by 20%  Settle new price list with in Q1 for MENA &
 Profit by 10%
Sales Increase profit by 10% Egypt.
 Order intake by 30%
 Audited Customer visit program.
 Customer visits by 20%
 Set Forecast for Production team Quarterly
 Customer satisfactions by 10%
Lead Acquiring project  Response time to MKT by 25%
 Immediate interact to marketing analysis
Decrease Defect rate by 25%  Defect rate by 25%
R&D Decrease response time to MKT analysis
 Enhance materials usage in products to
 Merge & Develop Nestle-Juhayna
decrease production defect rate.
by 25% product portfolio
 Decrease indirect expenses.  Net profit by 10%
Obtain Long-Term financing of 1.5BEGP  indirect expenses by 10%
 Increase profit
Finance Increase profit by 10%
 Long-financing, 20% Debt & 15% equity.  Enhance collection period by 20%
 Enhance collection  Obtain Long-Term fin. 1.5BEGP

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 20.Strategic Control Matrix

Horizontal integration (Acquire Competitor Juhayna)

Strategy
Market Development (Nestle Egypt Export to MENA)
2023 Sales Growth 35%
Annual
2024 Sales Growth 14%
Strategic
2025 Sales Growth 14%
objective 2026 Sales Growth 14%
Functional
Functional Objectives
Functional area Objectives Deviance Possible reasons Corrective Action
(Planned)
(Achieved)
 Enhance procurement
 Increase production capacity  Delay of arrival of procedures.
by 15%  13%  -2% planned M/C  Apply training for
Production  Increase production eff. by  14%  -1  Recent untrained hiring workers to increase
15% workers production rates and
efficiency.
 Not all inspection
 Include required
points covered as
 Decrease number of defects inspection points
Quality by 2%
 1.5%  -0.5% referred.
 Enhance raw material
 Raw material
inspection procedures
acceptance criteria.

 Applied campaigns
 Sustain actions
achieved over
 Increase sales volume by  Follow up pipeline to
Marketing 35%
 38%  +3% expected
fast-track future
 Export to MENA Region
opportunities.
increased Revenue

 Increase employees
 Perc% of employees training perc% to be
 Increase overall all efficiency trained 35% which is 90% by conducting
 18%  -2%
HR by 20%
 12%  -3%
not sufficient. online sessions.
 Increase Workforce by 15%  Hiring process period  Enhance hiring process
more than 2 month to be 1.5 months
maximum.
 Audit Customer visit
 Sustain actions
program efficiently
 Reflect the increase of
applied
 Increase sales volume by cost in price list of local
 Export to MENA Region
Sales 35%  38%  +3%
increased Revenue
market.
 Increase Profit by 10%  9%  - 1%  Follow up pipeline to
 Due to exchange rate
fast-track future
in local market cost
opportunities.
increased.
 Great efforts applied to
 Lead Acquiring project  Settle by weekly
 Achieved finalize acquiring
 Decrease Defect rate by 25% meeting with marketing
R&D  Decrease response time to MKT
 25%  0% project
team to enhance
analysis by 25%  20%  -5%  Impact on response
response time.
time to MKT analysis
 Obtain Long-Term financing  Apply Authorization
 1.5BEGP  0%  Increase in business
Finance of 1.5BEGP
 9%  -1% trips expenses
matrix and Grades
 Increase profit by 10% allowances

39
 21.Strategic Evaluation Matrix

Industrial
Performance area Achieved Deviance Possible reasons Corrective Action
indicator
 Enhance hiring process
Hiring Talent  40  Hiring process period more
 50 Employees  -10 to be 2 months
Employees Employees than 2 month
maximum.
 Due to pandemic situation
Percentage of yearly  Apply online training to
 40%  35%  -5% face to face training
trained employees deducted
cover the gap.
 Sales and marketing to
 Acquired Juhayna Sustain actions
Sales Volume Growth  8%  38%  +30%  Export to MENA Region  Follow up pipeline to
results fast-track future
projects
 Applied planned actions to
Number of Marketing
 15  32  +17 fulfill the gap of marketing  Sustain actions
Campaigns performance of past year
 Apply training for
workers to increase
Overall Production  Applied planned actions
 99%  99.7%  +0.3 production rates and
efficiency fulfilled the gaps
efficiency to keep on
track.
 Order acknowledgment
form should be
 Delivery commitment
Customer Satisfaction  90%  80%  -10%
required to enhanced
submitted to the
customer.
 Settle Delivery KPIs
Current Ratio  1.1  0.9  -0.2  Current liabilities value  Decrease current Lia.
Quick Ratio 1  0.6  -0.4  Current liabilities value  Decrease current Lia.
 Keep on forecasting
 5.4  5.7  +0.3  Accepted Inventory levels
Inv. Turnover strategy with sales.
 Long Payment Terms with  Enhance payment
 42  53  -11
Avg. collection Period clients Terms
Total Assets turnover  1.5  1.6  +0.1  Efficient Assets efficiency  Keep on Actions
 Keep on Actions and
 Due to Project &market keep tracking the
Debt Ratio  91%  95%  -4%
expansion plans outcomes and
investigate quarterly
 Keep on actions and
increasing production
Gross profit margin  35%  40%  +5%
 Due to enhancements in
efficiency will even
materials applied by R&D
enhance the figure
more.
 Apply Authorization
matrix and Grades
Net profit margin  8%  12%  +4%
 Actions applied by Finance
allowances, decrease in
to decrease expenses
business trips expenses
and enhance figures

40
 22.Business Plan

Marketing Plan

Marketing Mix of Nestle Egypt

With more than 2000 brands serving almost every FMCG industry sub-segment,
Nestle is the largest food and beverage company in the world.

 Product Mix of Nestle

The needs of its customers for instant food are what Nestle focuses on. The
business also concentrates on processed and ready-to-eat food products.
Nestle’s product mix consists of:

 Dairy products: Nestle Milk, Nestle Slim, and Nestle Everyday.

 Chocolates: KitKat, Munch, Polo, Milky bar, Crunch, etc.
 Coffee: Nescafe, Nescafe Dolce Gusto, Nespresso, etc.
 Ready to cook or instant food: Nestle Maggi, Buitoni, Jacks, Herta
etc.

 Price Mix of Nestle

For its products, Nestle Egypt typically uses only two pricing methods:

 Competitive Pricing: For its products that operate in a competitive

market like chocolates, instant food, etc., the company bases its
product pricing on the prices of its competitors' products upon
monthly competitive analysis and accordingly updating product list.
 Skimming Pricing: For the products where Nestle excels, the
company sets a price that is higher than the opposition. These include
items like Nestle A+ Slim and Nestle A+ Toned, etc.

 Place Mix of Nestle

Nestle uses a four- to five-level distribution channel that includes manufacturers,

agents (sometimes more than one), wholesalers, and retailers to deliver its products
to customers.
The business even sells its products through cutting-edge distribution channels like
online shops and marketplaces.
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  Promotion Mix of Nestle

For the purpose of promoting its products to customers, Nestle uses a combination
of ATL, BTL, and digital marketing channels, includes:
 Advertisements: on television, radio, print, and online.
 Sales Promotion: active marketing campaigns to boost POS sales.
 Public Relations: Through news articles, events, etc., it keeps the
brand's reputation positive.

 People Mix of Nestle

Through social media platforms, the business maintains a positive engagement

with the target market. Additionally, ensures that salespeople are thoroughly
trained before they interact with customers and other stakeholders like the media,
retailers, wholesalers, etc.

 Process Mix of Nestle

The business strives to develop its products using cutting-edge, reliable technology
and to maintain constant availability at the point of sale. In order to create and
deliver better offerings, the company also actively studies and comprehends the
changing needs of its target customers.

 Physical Evidence Mix Of Nestle

To deliver its products, Nestle employs unique branding and packaging techniques.
To create a comprehensive physical evidence mix for the offerings considered to
design the shelves that products are displayed on. the brand is represented on the
company's user-friendly website, which lets customers view the products and
engage with the company.

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 Marketing Plan

Analysis Issues and Strategies Executional Plans

P&L Forecast Key Issues Advertising Digital Marketing wheel

SALES -What’s the priority choice for growth: find -Website Content & Design
Gross Margin new users or drive usage frequency among
-Email marketing
GM 40% loyalists?
Marketing Budget 500MEGP -Where should the investment/resources focus, -YouTube
Contribution Margin and deployment be to drive our awareness and
-Social Media
CM 5% share needs?
Drivers -How will we defend against fear of health risk -Blogging
-Easy access and flexibility a high conversion of some products?
-Display Ads
trial to purchase Strategies
-Strong listing and distribution in all channels -Continue to attract new users -Radio and Podcasting
-Exceptional design and outlook -Focus investment on driving awareness and
-Pay per click Ads
trial with new users and building presence
-After Sales Services and Customer satisfaction Sampling
specially at countryside.
Inhibitors Periodical promotions for free products to
-Build defense plan against fear of health risk
-Build up loyalty by applying promotions for attract new users for the current product
of some products and users that uncomforted to
redundant users portfolio in order to increase penetration and
use Nestle products
-Awareness held back due to weak advertising sustain customer loyalty
Goals
Distribution
-Well coverage for countryside users - Increase penetration from 15 % to 50%,
-Focus on countryside promotions and MENA
Monitor usage frequency among the most loyal
-Notification specially for loyal users region awareness events to penetrate and
to ensure stay steady
Risks increase the usage in countryside and MENA.
- Increase awareness from 30% to 70%
- Users comfort with local brands Innovation
- Penetration of governance that not yet
-Launch the new healthy sustainable product
- Users fear of health risk of some product penetrated by at least 20%
line and explore the benefits to the customers
Opportunities
and relate it with current portfolio.
-trend to healthy and sustainable products
Competitive Attack Plan
-Align with retailer in MENA region to have
-Presence of Kiosks in front of the citizens
significant Export growth
going for retailers to guide them for Nestle.
-Explore social media to convert Loyal
-Publish Kiosks all over the countryside and
following.
MENA in order to explore awareness by Nestle
products.

43
 continued 22. Business Plan

Business budget plan for next 4 years

Nestle budget plan for next four years showing 35% growth in 2023 due to the
expansion in local market via acquiring horizontal integration for Juhayna and the
effort in Market development in MENA region that will increase Export sales
revenue, then 15% growth is fixed annually for 2024 to 2026.

11.2
9.8
8.6
7.6
5.6

BUDGET BEGP
Dec-22 Dec-23 Dec-24 Dec-25 Dec-26

44
continued 22. Business Plan

Financial plan

45
 Operational plan

Annual Up on
Functional area Policies/Tactics/Procedures
Functional Objectives output
 Increase more shifts.
 Increase number of employees.
 Use new technology and machines.
 Increase production efficiency by 25%
 Dealing with Procurement to have agreement with third New way
Increase production capacity by 15%
Production Increase production eff. by 15% parties renting M/Cs Of Doing
 Make to stock strategy to be fully applied and adhered to Sales
Quarter forecasts.
 Set waste management in production hierarchy to implement
waste reduction Audits.
 Eliminating Non-value-added activities.
 Increase inspection points.
 Increase inspector’s stages. New way
Quality Decrease number of defects by 2%
 Apply ISO standards. Of Doing
 Apply 3rd party inspection.
 Apply at 4 Marketing events Quarterly in MENA & Egypt
 Apply Agreements with Distributers in Q2 New way
Marketing Increase sales volume by 35% in 2023
 Focus individual Nestle branding Of Doing
 Monthly customer & competitor analysis
 Attracting and retaining right people.
 Achieve full potential, Conduct training programs. New way
Increase overall all efficiency by 20%
HR Increase Workforce by 15%
 Give incentives for employees to reduce turnover. Of Doing
 Conduct periodic department meeting seeking for employee’s
satisfaction
 Increase monthly order intake by 30%
Increase sales volume by 20% New way
 Settle new price list with in Q1 for KSA & Egypt.
Sales Increase profit by 10%
 Audited Customer visit program. Of Doing
 Set Forecast for Production team Quarterly
Lead Acquiring project  Immediate interact to marketing analysis New way
R&D Decrease Defect rate by 25%  Enhance materials usage in products to decrease production Of Doing
Decrease response time to MKT analysis by 25% defect rate.
 Decrease indirect expenses. New way
Obtain Long-Term financing of 1.5BEGP Of Doing
 Increase profit
Finance Increase profit by 10%
 Long-financing, 20% Debt & 15% equity.
 Enhance collection

46
23.Recomendations

In order to achieve our strategy objective in 2024, we briefly discuss the steps we took last year that led to
our impressive results in 2023. We will also discuss how we will maintain our strategy while taking some
corrective measures.
Through the establishment of priorities, resource allocation, teamwork, and alignment, our strategic
management project seeks to increase entity profits, survival, and business sustainability, Capitalizing
Opportunities, avoid threats by utilizing strengths and improving weakness points and the starting point
we settled our Vision and Mission.
PESTLE analysis applied to analyze the Macro external factors and Porter analysis applied to analyze
Micro external factors Consequently, we used the EFE Matrix to identify and assess Nestle's opportunities
and threats.

Value Chain analysis applied to analyze the internal factors as a result, we used the IFE Matrix to identify
and assess Nestle's strengths and weaknesses.
Through several strategic matrices SWOT, TOWS and QSPM and consolidated identical output by
applying SPACE, BCG and IE Matrices as a result the industry is attractive and stable, according to all
available methods and Nestle has a competitive advantage that must be maintained, accordingly selected
two aggressive strategies to be applied for this period.
1. Horizontal integration (Acquire Competitor Juhayna)
2. Market Development strategy in MENA
According to TOWS matrix we decided to go with another two strategies in another phase.
3. Joint Venture strategy with Danone (Postponed checking Horizontal integration results)
4. Retrenchment portion of Marketing and sales team for old fashion products (Postponed)
The strategy's goal is to double the company's revenue in four years through horizontal integration and
market development (2022 revenue 5.6BEGP), and we are on track to achieve our planned growth of 35%
in the first year as 2023 revenue 7.7BEGP with 38% Revenue Growth. The implementation journey
began once we had chosen the two strategies by applying the hierarchy of objectives, requirements of
implementation, and implementation matrix.
Strategic Control Matrix and Strategic evaluation matrix applied to analyze our achieved data and put the
necessary corrective measures in place to stay on track and reach our primary goal of 8.6BEGP in 2024 as
scheduled.
Business plan applied for the period up to 2026 presenting the annual budget and expected to be enlarged.
Thanks for your support and guidance,
Sincerely,

47
 24.References

 IMF revises up Egypt's 2022 real GDP growth forecast to 5.9%-SIS

 Nestlé: Good food, Good life | Nestlé Global (nestle.com)
 https://www.theglobaleconomy.com/Egypt/wb_political_stability/
 https://enterprise.press/wp-content/uploads/2021/01/Country_Report_Egypt_January_2021.pdf
 https://www.macrotrends.net/countries/EGY/egypt/gdp-gross-domestic-product
 https://tradingeconomics.com/egypt/interest-rate
 Egypt announces flotation of Egyptian pound on Thursday - Egypt Independent
 Income and Expenditure: Egypt | Market Research Report | Euromonitor
 Egypt: total population by age group 2022 | Statista
 https://www.youtube.com/watch?v=JR9Uajpy4vk

48