Royal Dairy

PEST Analysis (Egypt Market) External Audit Threats Opportunities

Amira Elsayed Sara Mohamed

Bassem Safwat Boushra

Agenda

Introduction
Key Facts about Egypt
Full name: Arab Republic of Egypt Capital: Cairo Population: 82,079,636 million (July 2011 est.) Age structure: 0:14 years: 32.7% (male 13,725,282/female 13,112,157) 15:64 years: 62.8% (male 26,187,921/female 25,353,947) 65 years and over: 4.5% (male 1,669,313/female 2,031,016) (2011 est.) Median age: total: 24.3 years male: 24 years female: 24.6 years (2011 est.) Population growth rate: 1.96% (2011 est.) Birth rate: 24.63 births/1,000 population (2011 est.) Death rate: 4.82 deaths/1,000 population (July 2011 est.) Area: 1 million sq km contains land: 995,450 sq km & water: 6,000 sq km Major Language: Arabic Major Religions: Muslim 90% , Coptic 9% & other Christian 1% Currency: Egyptian Pound Natural resources : petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, zinc Main exports: Petroleum, petroleum products, cotton, Textile, Metal product and Chemicals. Geographical Location: Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula

Introduction
PEST Analysis

P
E

Political Factors

Economic Factors

S
T

Sociocultural Factors Technological Factors

Political Environment
Political structure
President: Vacant Vice President: Vacant Following the resignation of President Mohamed Hosni MUBARAK in February 2011, the Supreme Council of the Armed Forces, headed by Defense Minister Muhammad Hussein TANTAWI, assumed control of the government Head of Government: Kamal Elganzoury

Legislative Branch: bicameral system consists of the Advisory Council or Majlis al-Shura (Shura Council) that traditionally functions mostly in a consultative role (264 seats; 176 members elected by popular vote, 88 appointed by the president; members serve six-year terms; mid-term elections for half of the elected members) and the People's Assembly or Majlis al-Shaab (518 seats; 508 members elected by popular vote, 64 seats reserved for women, 10 appointed by the president; members serve four-year terms)
Judicial branch : Supreme Constitutional Court.

Political Environment
Main Political Parties
The multi-party system was restored in 1976 by president Mohamed Anwar ElSadate. However, in practice it is the ruling National Democratic Party (NDP) which completely dominates the political arena. The Muslim brothers, a brotherhood created in 1928 by Hassan El Banna is the main opposition party of the country. They were banned but in spite of it, they were able to win 88 seats in the People's Assembly in the 2005 elections. The other opposition parties like Wafd, El-Ghad or the Nasserian Party are minority parties and were nearly wiped out in the 2005 elections. Currently power has been dominated by Islamists in Egypt after the Freedom and Justice Party won the majority seats in parliament, followed by Elnour ElSalafi Party.

Political Environment
Environmental Laws and Foreign
The Principal Functions of the Environmental Agency Include: Formulating environmental policies. Preparing the necessary plans for Environmental protection and Environmental development projects, following up their implementation, and undertaking Pilot Projects. The Agency is the National Authority in charge of promoting environmental relations between Egypt and other States, as well as Regional and International Organizations. Existence of the free trade treaty with the United States in 2006

Political Environment
Tax Rate
The corporate tax rate is 32% on profits arising from export operations and on profits of an industrial company as long as they arise from its industrial activities. Social Insurance Contribution Rates
Employer(%) On basic monthly salary up to L.E. 500 / month On variable pay (such as production incentive bonuses)-up to L.E. 500/month 26 Employee(%) 14

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Political Environment
Labor Forces
26.1 million (2010 est.) Labor force - by occupation: Agriculture: 32% Industry: 17% Services: 51% Unemployment rate: 11.6% (2011 est.) 9.7% (2010 est.) 9.4% (2009 est.) Population below poverty line: 25% (2005 est.)

Economical Environment

The budget deficit climbed to over 8% of GDP and Egypt's GDP growth slowed to 4.6% In the past year, the economic team has simplified and reduced tariffs and taxes, improved the transparency of the national budget, designed to foster private sector-driven economic growth and improve Egypt's competitiveness. Despite these achievements, the economy is still hampered by government intervention, substantial subsidies for food, housing, and energy, and bloated public sector payrolls. STRENGTHS Egypt boasts diversified sources of foreign exchange (the Suez Canal, tourism, private transfers, and oil and gas exports). The country enjoys the political and financial support of Western countries. WEAKNESSES The interest on public debt and the cost of subsidies weighs on public finances limiting the capacity for infrastructure development. The banking system is not yet capable of meeting the economy's needs. The tourism sector, whose revenues are of fundamental importance to the current account balance and economic growth, remains vulnerable to the terrorist menace

Sociocultural Environment
Egypts total population stood at 82,079,636 million. Out of this approximately 90% are Muslims while the remaining are Christians. Most of the population inhabits the area near the Nile River and almost half of Egypts population is urban, living in the densely populated cities such as Cairo and Alexandria. Unemployment rate is rapidly increasing Literacy Rate (Males 68%, Females 47%)

The healthcare system in Egypt is underdeveloped

Technological Environment
Finance and telecoms sectors account for more than 25% of Egypt's total spending. Communication
Telephones - main lines in use:10.313 million (2009) Telephones - mobile cellular:55.352 million (2009)

Opportunities & Threats

Opportunities
Cheap labor (For Plants and dairy stores) Free trade treaty with the United States in 2006 Tax rate is 32% (Low in comparison with other countries) Tariffs are reduced by 2010 The country enjoys the political and financial support of Western countries and USA Weak position of the Egyptian Pound related to the US Dollars Well implementation of the telecommunication infrastructure Population is high Cows feed of corn and grain are cheap 65% of poplulation is under 20 years Dairy industry are growing over time

Threats
Instability of Political Situation U.S. District Vandalism and Theft Population below poverty line almost 25% Unemployment rate is 11.6% in 2011 The budget deficit climbed to over 8% of GDP and Egypt's GDP growth slowed to 4.6% The interest on public debt increased Literacy Rate is very low The healthcare system in Egypt is underdeveloped Weak Stock Market Interest rate is high relative to other countries