Government and Politics

Governance in Egypt is exercised and based on the amended constitution of 1971. The executive power is wielded by the president. The president is also the head of state and he is elected by popular vote, usually for a term of six years. In addition, the government is headed by the prime minister. The country operates two chamber legislatures: the People’s Assembly and the Advisory Council. The People’s Assembly has 454 positions; 444 positions are filled by popular vote and 10 through presidential appointments. The Advisory Council has 264 seats; 176 are filled by popular vote and 88 through presidential appointments (Bassem, 2012). The government is charged with approving the formation of political parties. Moreover, religion-based political parties are prohibited in Egypt but, nevertheless, the Muslim Brotherhood has been allowed to operate openly, at times.

Egypt has been under military rule from January 2012 following the ousting of its long standing president, Hosni Mubarak. Legislative powers rest with the government and the People’s Assembly. The country held the first round of presidential elections in May 23, which did not yield a decisive winner. The run-off elections are scheduled for June 16 and 17, where Mohammed Morsi of Muslim Brotherhood will face Ahmed Shafik, a former prime minister. This election will hopefully result in the country’s first democratically elected president (Bassem, 2012).

Formal Trade Barriers

Egypt has committed itself to maintaining and promoting an open investment environment. The country offers preferential treatment to foreign firms to encourage foreign direct investments (Bassem, 2012). It also allows international investors to transfer their funds freely and has ratified the international standards for expropriation and compensation.

Promoting Global Business

Egypt has sought to promote global business by implementing free trade agreements with various countries including the US and other countries in Europe, North and sub-Saharan Africa. The Egyptian government has also created a regulatory framework that supports global business while decreasing trade barriers that act as impediments to world trade (Bassem, 2012). Besides, the country’s tax regime does not differentiate domestic from foreign firms. The country’s government is committed to promoting both national and international entrepreneurship with the aim of creating jobs, enhancing community integration, and building human capacity.

Intellectual Property

The Egyptian legislature enacted a key legislation in 2002 for upholding intellectual property rights beside updating its legal framework for protection and enforcement of these rights (Bassem, 2012). This situation notwithstanding, the government has recently announced that it will enhance the intellectual property rights enforcement capacity with the view to making the country a regional hub for innovation.

Action Plan

Objective: To assess the political-legal environment of our target market.

Steps:

  1. Establishing the country’s political risks;
  2. Establishing the country’s trade barriers;
  3. Determining the country’s attitude towards international trade;
  4. Evaluating the country’s intellectual property laws;

Selecting  a Global Company Structure

Strategic Planning

Our global strategies will include sharing information across geographical regions regarding successful strategies and transferring such strategies from one region to the other (Gary & Roger, 2007). The company will also seek to recruit its staff from all regions of the world to ensure that we get the best employees, who will steer the firm to success and give us a competitive advantage in the industry. Our organizational culture will promote innovation and creativity by allowing employees to share their opinions about products and organizational processes freely and through allocating adequate resources to research and development. Moreover, the company will adopt a market-oriented approach, in which all changes in the organization will aim at delivering more value to the customer (Gary & Roger, 2007). The firm will work closely with critical stakeholders such as governments, consumer, and supplier groups in all the countries where we shall launch operations, with the aim of mitigating environmental risks.

Entry Modes

The international business environment is fraught with many devastating risks. It is very difficult to quantify all these risks when a company is seeking to launch its operations in a foreign market for the first time (Shapiro, 2009). In order to minimize business risks, our company will start by establishing marketing subsidiaries in the country of operation. Specifically, we will start by selling our ice cream product through agents mainly wholesale and retail chains. Selling our product through marketing subsidiaries first will enable us to gather sufficient information on whether we should establish production facilities in the host country (Shapiro, 2009). The factors that will influence this decision will include the risk of expropriation among others comparative advantages of home versus foreign production, and market size.

Strategic Alliance

To ensure sustained success, the company will seek a partner with various stakeholder groups (Gary & Roger, 2007). First, the firm will work together with the mainstream local media to promote publicity and advertisement of its products. Such media will consists of major television and radio stations as well as popular publications. Secondly, the company will collaborate with local universities with the aim of recruiting the best talents to join its local operations. Thirdly, the firm will form alliances with local trade unions and consumer groups to advance labor and consumer rights, respectively (Gary & Roger, 2007). This will build the company’s image and reputation, which are important for the long-term success of any firm. Finally, the firm will endeavor to produce environmentally friendly products through working closely with both local and international environmental conservation groups.

Organizational Structure

Our company, Ben and Jerry Ice, will have a divisional type of organizational structure where the divisions will be based on the geographic regions that will serve. Each division shall have its own functional departments making the divisions self-sufficient (Bruno, 2010). This will also eliminate interdepartmental delays, which are common in a centralized functional organizational structure. In addition, the organizational structure will enable each division to get acquainted with the consumer behavior of the relevant geographic regions, which can be a source of competitive advantage (Bruno, 2010).

Action Plan

Objective: To create a globally competitive Ice Cream firm.

Steps:

  1. Preparing the company’s strategic plan;
  2. Establishing the organization structure.;
  3. Identifying the best entry mode;
  4. Identifying the crucial strategic alliances;

Financing Sources for Global Business Operations

Economic Environment

As a result of the political revolution of 2011, Egypt recorded a very modest GDP growth of 1.8 percent during that year. However, this situation is expected to change in the near future and the World Bank predicts that the country’s economy will grow by 3.8 percent in 2012 and 5.5 percent in 2013.

Egypt’s hard currency reserves declined from $39bn in December 2010 to $3.4bn just prior to the revolution, indicating poor economic management in the previous regime. The net foreign direct investment was a negative figure for the first time in 2011 and was recorded at $65bn. This reflected increased political risk in the country because of the revolution. The stability and security of Egypt as a destination for foreign direct investment is bound to improve soon following change in governance.

The global markets have seen less volatility in the recent times and they present various opportunities for financing a global venture. These opportunities include international bank loans, initial public offerings, issuing commercial paper and bonds, lines of credit, and venture capital financing.

Startup Costs

Start-up Requirements

Costs

Consulting

$100

Insurance

1200

Other

34,710

Total start up costs

36,010

Assets:

cash

10,000

inventory

1,325

Other current assets

625

Total current assets

12,000

Long-term assets

4,000

Total requirements

$52,010

Funding:

Investor 1

$10,000

Bank loan

42,010

Total Funding

$52,010

Financing Sources

Berry and Jerry Ice Cream Inc. will seek financing from two main sources. The first source will involve a venture capitalist. Venture capitalists are investors, who are willing to fund start up businesses in exchange for shares in the company. After such companies have become successful, the investors sell their shares at a profit to recoup their finances (Grabbe, 2009). Our firm is very promising and we have a team that is highly skilled and that will be able to come up with an innovative ice cream product. As a result it will be easy to sell our business idea to potential venture capitalists. Specifically, we are going to target international investors, who are located in the US.

Our second source of financing, which will be the largest will consist of a bank loan. In this case we are going to target those banks that can finance international ventures at reasonable interest rates (Grabbe, 2009). Because of the soundness of our business idea, it will not be difficult to obtain such a loan.

Action Plan

Objective: To obtain financing for our start-up venture.

Steps:

  1. Searching for potential venture capitalists in the US stock markets.
  2. Approaching banks in the US to determine the possibility of obtaining a long-term loan.

Crediting a Global Mis (Managment Information Systems)

Global Information Needs

The world is turning slowly into one big marketplace as a result of globalization. A global economy requires players in this marketplace to implement a global management information system so as to get the most one out of their businesses (Bruno, 2010). A global MIS is necessary for coordinating production, acquiring and retaining customers, and running efficient supply chains.

Global Information Sources

There are various sources of information for a global MIS. The first source is the production plants of a company, which could be located in different parts of the world (Shapiro, 2009). These plants are useful sources of critical management information like the cost of production and the impact of producing a product on the local environment.

The second significant source of information for a global MIS are partners in the global supply chain, who include suppliers, retailers, financiers, insurance companies, etc. These players provide important information that can be used to cut costs, enhance a product or service, or to improve customer service (Shapiro, 2009). The last key source of information for feeding a global MIS is information generated from customers. Such information may take the form of customer feedback or it can be generated by analyzing customer purchase behavior.

Technology for Managing Information

Our firm will seek to establish a global management information system in three key areas namely production, customer relationship management, and supply chain management. Consequently, the company is going to institute efficient IT technology for customer relationship management (CRM), supply chain management (SCM), and enterprise resource processes (ERP). Implementing these systems will ensure the creation of more value in our supply chain and lead to efficient production and quality customer service (Grabbe, 2009).

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