Prime Group - 2010 Case Notes Prepared by: Dr.

Victor Sohmen Case Authors: Marina Apaydin, Mohamed El Ashmawy, Mohamed Ezzat, Anas Salem, and Ahmed Maher

A.

Case Abstract

Prime Group (PG) (www.primegroup.org) was founded in 1992 as a consulting office, and was initially set up to provide financial advisory services to the government of Egypt under the privatization program. Under the leadership of an ambitious management team who realized the new opportunities and potential that the financial industry has gained over the years, the firm was successfully reinvented to become one of the most prominent regional investment banks with presence in major Arab markets. In 2006, Prime Group entered the UAE market with the establishment of Prime Emirates, which is mainly a brokerage firm, also offering related financial and investment services, with a head office in Abu Dhabi and a branch in Dubai. The company also entered Qatars financial market in 2008 with the establishment of Prime Qatar in Doha, which offers a wide array of investment banking services to the booming market. The management team considered entering a number of new regional markets to spread the economic risk they would face in any particular country and to increase the rapid growth that the group has witnessed over the past 17 years. The proposed two new markets are Saudi Arabia and Morocco. Several questions needed analysis: How should the company evaluate the two markets? Should the company enter the two markets simultaneously or enter only one at a time? What should be the mode of entry and for which market is preferable? Which age group or social structure should be included in the target market and what factors does the company possess in order to attract these clients? What additional import and export opportunities in both countries can Prime Group find? What marketing strategies should Prime Group use? What ideas can the company use to support its operations there?

B. Vision Statement (Actual)

Our vision at PG is to become the premier regional financial investment group in the MENA area.

C.

Mission Statement (Actual)

PG strives to be the most successful publicly listed strategic investment group in the MENA region, with a diversified portfolio of financial services including corporate finance, investment banking, stock broking, mutual funds, and the portfolios of wealthy families.

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Mission Statement (Proposed)

Our mission at Prime Group is to be the most successful (5,6,8) financial services group in the MENA region (3) with a diversified portfolio (4) of businesses including stock brokerage, investment banking, mutual funds, corporate finance, and private financial portfolio management (2,5) and served by our highly competent (7) personnel (9) for discerning customers (1). 1. 2. 3. 4. 5. 6. 7. 8. 9. Customer Products or services Markets Technology Concern for survival, profitability, and growth Philosophy Self-concept Concern for public image Concern for employees

D.

External Audit

CPM Competitive Profile Matrix The Competitive Profile Matrix (CPM) identifies a firms major competitor(s) and its particular strengths and weaknesses in relation to its strategic position. PGs relative strengths and weaknesses based on the case details are portrayed in the weighted scores. PG is currently among the most prominent financial investment groups in the MENA region with a diversified portfolio of financially-related services. As explicit data for competitors in the Saudi Arabian and Moroccan markets are unavailable from the case, they are represented respectively as X and Y. Their weighted scores are based on their hypothesized strengths and weaknesses comparative to PG, and in terms of the critical success factors explicitly or implicitly reflected in the case. It can be seen that, with a score of 3.36, PG is ahead of the competitors in the respective host countries Saudi Arabia and Morocco represented by X and Y with a score of 2.78 and 2.18 respectively. The main strengths of PG are its variety of services (service lines), regional expansion (global expansion), technology, and service quality and image. However, PG needs to improve on its financial position (see Income Statement below). The student is urged to identify genuine competitors in Saudi Arabia and Morocco to make a more realistic Competitive Profile Matrix (CPM).

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X PG Rating ScoreWeighted Saudi Competitor Rating ScoreWeighted

Y Morocco Competitor Rating ScoreWeighted 0.24 0.08 0.24 0.20 0.24 0.16 0.16 0.12 0.30 0.20 0.24 2.18

Critical Success Factors Price Competition Global Expansion Management Technology Service Lines Customer Loyalty Market Share Advertising Service Quality Service Image Financial Position TOTAL

0.12 0.08 0.08 0.10 0.12 0.08 0.08 0.06 0.10 0.10 0.08 1.00

Weight

3 3 4 4 4 3 3 2 4 4 2

0.36 0.24 0.32 0.40 0.48 0.24 0.24 0.12 0.40 0.40 0.16 3.36

3 1 3 3 3 2 4 2 3 3 3

0.36 0.08 0.24 0.30 0.36 0.16 0.32 0.12 0.30 0.30 0.24 2.78

2 1 3 2 2 2 2 2 3 2 3

Opportunities 1. Egypt has a stable economy and enjoys continuous growth with development in both public and private sectors 2. Egypts progress towards a more market-oriented economy has increased foreign investment and enhanced macroeconomic indicators 3. Moroccos Casablanca Stock Exchange is easy to enter, with very little competition 4. Prime Group is free to begin operations in Saudi Arabia in corporate finance, mutual funds, and stock portfolios 5. The MENA region is an expanding market in terms of investments Threats 1. The pace of structural reforms has been slower in Egypt than predicted 2. Egypt now faces policy challenges concerning the consolidation and extension of the nations ongoing efforts to achieve economic stability and prosperity 3. Getting the brokerage license for Saudi Arabias Tadawul Stock Exchange could be a challenge 4. There is intense competition in the consolidated Egyptian Stock Market External Factor Evaluation (EFE) Matrix An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. Prime Group is in a comfortable position with its competitive stance in Egypt as a respected player with a Copyright 2011 Pearson Education Limited

range of expertise in financial management services. With Egypt having a stable economy and a robust, consolidated stock market, PG needs to assess its external opportunities and threats carefully and strategize by building on its distinctive competence in brokerage and investment banking. As the competition is still low in Morocco and other markets, perhaps PG could capitalize on the opportunity presented by this promising financial services industry across the MENA region. Inevitably, PG cannot compromise on quality and service to differentiate itself and consolidate its market share; and it certainly needs to penetrate underexploited areas such as the Saudi and Moroccan markets.

Key External Factors Opportunities 1. Egypt has a stable economy and enjoys continuous growth with development in both public and private sectors 2. Egypts progress towards a more market-oriented economy has increased foreign investment and enhanced macroeconomic indicators 3. Moroccos Casablanca Stock Exchange is easy to enter, with very little competition 4. Prime Group is free to begin operations in Saudi Arabia in corporate finance, mutual funds and personal portfolio 5. The MENA region is an expanding market in terms of investments Threats 1. The pace of structural reforms has been slower in Egypt than predicted 2. Egypt now faces policy challenges concerning the consolidation and extension of the nations ongoing efforts to achieve economic stability and prosperity 3. Getting the brokerage license for Saudi Arabias Tadawul Stock Exchange could be a challenge 4. There is intense competition in the consolidated Egyptian Stock Market Total

Weight

Rating

Weighted Score

0.10 0.14 0.10 0.08 0.12

3 4 2 2 4

0.30 0.56 0.20 0.16 0.48

0.10 0.12

2 3

0.20 0.36

0.10 0.14 1.0

4 3

0.40 0.42 3.08

The average total weighted score is considered to be 2.5. A total weighted score of 4.0 indicates that the entity is responding in an outstanding way to existing opportunities and threats in its industry. In other words, the firms strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of external threats. A total score of 1.0 indicates that the firms strategies are not capitalizing on opportunities or avoiding external threats. The total weighted score of 3.08 suggests that PG has recognized the opportunities and threats it faces, and needs to embark on a serious review of its potential for dominance in Egypt and market leadership in the MENA region specifically in promising stock exchanges of Saudi Arabia and Morocco. Copyright 2011 Pearson Education Limited

Product Positioning Matrix After markets have been segmented so that a firm can target particular customer groups, the next step is to find out what customers want and expect. Many firms have become successful by filling the gap between what producers see and customers perceive, as good service. Product positioning entails developing schematic representations that reflect how a firms products compare with their competitors regarding dimensions most important to success in the industry. Two matrices are presented below for PG and the competitors. Product Positioning Matrix for Technology vs. Service Lines As depicted in the Product Positioning Matrix below for Technology vs. Service Lines, PGs Service Lines are more varied than those of its close rivals, X (Saudi) and Y (Morocco). Whereas the two competitors are localized to their own countries, PG has already entered markets in other Arab nations such as Qatar and the UAE, and sharpened its international clout in technological viability. Thus, PG is in a stronger location on this Product Positioning Matrix than its competitors X and Y.

Technology (High)

PG X (Saudi)
Service Lines (low) Service Lines (High)

Y (Morocco)

Technology (Low)

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Product Positioning Matrix for Global Expansion and Product Image It can be seen from the Product Positioning Matrix below for Global Expansion vs. Product Image that PG surpasses both X and Y in Global Expansion with its aggressive mandate to stretch across the MENA having already forayed into Kuwait, Qatar, and the UAE. Though PG has a strong base in Egypt which has a relatively stable economy, its mission is to be a leader in the MENA region. PGs product image also is impeccable due to its experience and high standards of performance in the intensely competitive and volatile stock exchanges.
Global Expansion (High)

PG

Product Image (low)

Product Image (High)

X (Saudi) Y (Morocco)

Global Expansion (Low)

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E.

Internal Audit

Strengths 1. Prime Group has successfully reinvented itself to become one of the most prominent regional investment firms with presence in the UAE, Qatar, and Kuwait 2. Today, with the companys presence in the UAE, Qatar, and Kuwait, they are expanding regionally to provide a distribution network covering 750 institutions 3. Prime Securities, a subsidiary firm, was established in 1997, and is ranked among the largest 10 brokerage firms in the Egyptian Stock Market 4. A higher market share can be expected for Morocco due to the size of the market and the market participants 5. PG is competent to expand into the MENA region as an investment banker and a securities brokerage firm 6. Prime Groups brokerage firm is authorized to provide all services of the Egyptian Stock Exchange, which demonstrates the high standards possessed by the firm 7. Prime Group can rely on its capabilities and experience in securities brokerage industries in Egypt, the UAE, and Qatar to enter the Moroccan and Saudi markets Weaknesses 1. Prime Group will be able to capture only 0.35 percent of the Saudi stock market in terms of brokerage 2. The net income in 2009 has dropped considerably from that of 2008, showing loss Financial Information for Prime Group (Income Statement only) YTD December YTD December 31, 31, 2009 2008 Revenues Operating Expenses Gross Operating Margin Net Income before taxes Deferred Taxes Net Income before Minority Interests Minority Interests Net Income after Taxes & M.I. Annual revenue growth % 55,120,952 69,441,737 (14,320,785) (4,097,892) 942,087 (5,039,979) 2,828,952 (2,211,027) -0.48% 106,185,895 77,212,799 (28,973,096) 34,298,771 5,880,883 28,417,888 (4,062,612) 24,355,276 -

Net Income % of Revenues -0.4% 22.9% Source: Adapted from consolidated financial statements and auditors report of Prime Group for the year ended December 31, 2009. It is evident from the Income Statement results of PG for the years 2008 and 2009 that income has shown negative growth with -0/4% in 2009, down from 22.9 percent in 2008. It would be better to see a steady increase in income representing real growth from expanding into the Saudi and Morocco markets, and this will need astute strategic planning and execution by the Prime Group companies. Internal Factor Evaluation (IFE) Matrix

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A summary step in conducting an internal strategic-management analysis is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among them. Itemized below are the strengths and weaknesses of PG from the information provided, there are many more strengths than there are weaknesses. Key Internal Factors Strengths 1. Prime Group has successfully reinvented itself to become one of the most prominent regional investment firms with presence in the UAE, Qatar, and Kuwait 2. Today, with the companys presence in the UAE, Qatar, and Kuwait, they are expanding regionally to provide a distribution network covering 750 institutions 3. Prime Securities firm was established in 1997, and is ranked among the largest 10 brokerage firms in the Egyptian Stock Market 4. A higher market share can be expected for Morocco due to the size of the market and the market participants 5. PG is competent to expand into the MENA region as an investment banker and a securities brokerage firm 6. Prime Groups brokerage firm is authorized to provide all services of the Egyptian Stock Exchange, which demonstrates the high standards possessed by the firm. 7. Prime Group can rely on its capabilities and experience in securities brokerage industries in Egypt, UAE, and Qatar to enter the Moroccan and Saudi markets Weaknesses 1. Prime Group will be able to capture only 0.35 percent of the Saudi stock market in terms of brokerage. 2. The net income in 2009 has dropped considerably from that of 2008, showing loss. Total 0.14 4 0.56 Weight Rating Weighted Score

0.14

0.56

0.10 0.12 0.10

3 2 3

0.30 0.24 0.30

0.10 0.12

3 3

0.30 0.36

0.08 0.10 1.00

2 3

0.16 0.30 3.08

Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position. In light of this, PGs position with a score of 3.08 reflects a moderate internal position. This may be a reflection of PGs deployment of its diverse tangible and Copyright 2011 Pearson Education Limited

intangible assets across the MENA region (Qatar, UAE, and Kuwait) to establish its market position and to build up its public profile and image. The SWOT Strategies analysis below will provide a more cogent picture of PGs strategic viability.

F.

SWOT Strategies

Any organization, whether military, product-oriented, service-oriented, governmental, or even athletic, must develop and execute good strategies to win. A good offense without a good defense, or vice versa, usually leads to defeat. Developing strategies that use strengths to capitalize on opportunities could be considered an offense, whereas strategies designed to improve upon weaknesses while avoiding threats could be termed defensive. Taking into consideration the above identified External Audit of the Opportunities and Threats (OT) and the Internal Audit of Strengths and Weaknesses (SW), a SWOT Matrix can be compiled and is presented below as: SO (strengths-opportunities) Strategies; WO (weaknesses-opportunities) Strategies; ST (strengths-threats) Strategies; and, WT (weaknesses-threats) Strategies. Matching key external and internal factors is the most difficult part of developing a SWOT Matrix, requiring good judgment and there is no one best set of matches.

Strengths 1. Prime Group has successfully reinvented itself to become one of the most prominent regional investment firms with presence in UAE, Qatar, and Kuwait 2. Today, with the companys presence in the UAE, Qatar, and Kuwait, they are expanding regionally to provide a distribution network covering 750 institutions 3. Prime Securities firm was established in 1997, and is ranked among the largest 10 brokerage firms in the Egyptian Stock Market 4. A higher market share can be expected for Morocco due to the size of the market and the market participants. 5. PG is competent to expand into the MENA region as an investment banking

Weaknesses 1. Prime Group will be able to capture only 0.35 percent of the Saudi stock market in terms of brokerage. 2. The net income in 2009 has dropped considerably from that of 2008, showing loss.

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Opportunities 1. Egypt has a stable economy and enjoys continuous growth with development in both public and private sectors 2. Egypts progress towards a more market-oriented economy has increased foreign investment and enhanced macroeconomic indicators 3. Moroccos Casablanca Stock Exchange is easy to enter, with very little competition 4. Prime Group is free to begin operations in Saudi Arabia in corporate finance, mutual funds and personal portfolios 5. The MENA region is an expanding market in terms of investments

and a securities brokerage firm 6. Prime Groups brokerage firm is authorized to provide all services of the Egyptian Stock Exchange, which demonstrates the high standards possessed by the firm 7. Prime Group can rely on its capabilities and experience in securities brokerage industries in Egypt, the UAE, and Qatar to enter the Moroccan and Saudi markets S-O Strategies 1. Prime Group should continue its expansion into the MENA region, focusing on investment banking and securities brokerage 2. Prime Group should enter the Moroccan stock market and begin corporate finance, mutual funds, and personal portfolio management in Saudi Arabia

W-O Strategies 1. Prime Group should intensify operations in the lucrative Saudi Arabian market in order to first improve its profits (from current income deficits) before entering Morocco

Threats

S -T Strategies

W-T Strategies

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1. The pace of structural reforms has been slower in Egypt than predicted 2. Egypt now faces policy challenges concerning the consolidation and extension of the nations ongoing efforts to achieve economic stability and prosperity 3. Getting the brokerage license for Saudi Arabias Tadawul Stock Exchange could be a challenge 4. There is intense competition in the consolidated Egyptian Stock Market

1.

2.

PG should move out of the Egyptian stock exchange and focus on establishing a high market share in Morocco PG should focus its efforts on obtaining the brokerage license in Saudi Arabias Tadawul Stock Exchange by relying on its experience in Egypt, the UAE, and Qatar

1. PG should refrain from global expansion and focus on consolidation of its existing market in Egypt

SO Strategies use a firms internal strengths to take advantage of external opportunities. PG can continue its expansion into the MENA region, focusing on the Moroccan stock market, and the portfolio of investment banking, mutual funds, securities brokerage, and personal wealth management in Saudi Arabia. WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. PG should intensify operations in the lucrative Saudi Arabian market in order to first improve its profits (from current income deficits) before entering Morocco. ST Strategies use a firms strengths to avoid or reduce the impact of external threats. PG should move out of the Egyptian stock exchange and focus on establishing high market share in Morocco, and on obtaining the brokerage license in Saudi Arabias Tadawul Stock Exchange by relying on its experience in Egypt, UAE, and Qatar. WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding external threats. As a defensive tactic, PG could refrain from global expansion and focus on consolidation of its existing market in Egypt.

G.

SPACE Matrix
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The Strategic Position and Action Evaluation (SPACE) Matrix below indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given firm. The axes of the SPACE Matrix represent two internal dimensions: (Financial Strength [FS] and Competitive Advantage [CA]), and two external dimensions: (Environmental Stability [ES] and Industry Strength [IS]). These four factors are perhaps the most important determinants of an organizations overall strategic position.

PG
Conservative

FS
+7 +6 +5 +4 +3 +2 +1

Aggressive

CA

IS
-7 -6 -5 -4 -3 -2 -1 -1 -2 -3 -4 -5 -6 +1 +2 +3 +4 +5 +6 +7

Defensive

-7

Competitive

ES
Financial Strength (FS)* Return on Investment Leverage Liquidity Working Capital Cash Flow (*These figures are best estimates based on PGs performance, market realities, and financial information available in the case) 4 3 3 4 3 Environmental Stability (ES) Risk involved in business Technological Changes Price Range of Competing Products Competitive Pressure Barriers to Entry -2 -2 -3 -3 -1

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Financial Strength (FS) Average

3.4

Environmental Stability (ES) Average

-2.2

Competitive Advantage (CA) Market Share Service Quality Customer Loyalty Product Life Cycle Technological Know-how Control over Suppliers & Distributors

-2 -2 -3 -5 -3 -3

Industry Strength (IS) Growth Potential Financial Stability Ease of Market Entry Resource Utilization Profit Potential Technological Know-how Productivity, Capacity Utilization

4 3 3 4 2 4 3 2.6

Competitive Advantage (CA) Average Y-axis: FS + ES = 3.4 + (-2.2) X-axis: CA + IS = (-3.0) + (2.6)

-3.0

Industry Strength (IS) Average

= +1.2 = - 0.4

The directional vector of the SPACE Matrix above indicates that PG is in Quadrant II of the SPACE Matrix. Therefore, according to the results of the SPACE Matrix, it is recommended that PG embark on a Conservative Strategy of cautious expansion. The company should thus balance all extant external and internal realities impinging on it. According to the SWOT strategies, the company could avail of market penetration, market development, and product development. It would not be timely for the company to be horizontally integrated (acquiring similar competitive firms towards oligopoly or monopoly), forward integrated (taking ownership of distribution channels), or backward integrated (acquiring firms contributing to PGs service lines). The conservative strategy yielded by the SPACE Matrix is reflective of the significant drop in revenues in 2009 over the previous year. It appears from the overall strategic thrust of the various analyses including the CPM, EFE, IFE, SWOT, and Product Positioning Matrix, that PG is unlikely to adopt further related or unrelated diversification as it needs to consolidate its core competencies. Thus, PG will certainly need to embark on a market penetration and market development strategy, together with product development to meet quality, price, and demand for various market segments for its promising foray into the MENA region.

H.

Grand Strategy Matrix

All organizations can be positioned in one of the Grand Strategy Matrixs four strategy quadrants. The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth. PGs sales growth is substandard at -0.48 percent for 20082009, but its market stature with recent expansion into Kuwait, Qatar, and the UAE, as well as its distinctive competencies, have put the company in a conservative annual growth trajectory. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. Firms such as PG located in Quadrant II of the Grand Strategy Matrix are in a weak strategic Copyright 2011 Pearson Education Limited

position, but with rapid market growth. Because Quadrant II firms are in a rapid-market-growth industry, an intensive strategy (as opposed to an integrative or diversification strategy) is usually the first option that should be considered. However, as PG has strong distinctive competence with competitive advantage in its current markets in Qatar and the UAE, horizontal integration is not desirable. For PG, continued concentration on current markets (market penetration and market development) and services (services development) is an appropriate strategy (see also the SPACE Matrix above). As it would be unwise for a Quadrant II firm to shift notably from its established competitive advantage(s), PG should consolidate and expand its market. It is recommended that PG take calculated risks for expansion and consolidation of its market bases (see also the SPACE Matrix above).
Rapid Market Growth

Quadrant II

PG

Quadrant I

Weak Competitive Position

Strong Competitive Position Quadrant III Quadrant IV

Slow Market Growth

1. 2. 3. 4. 5. 6. 7.

Market development Market penetration Product development Backward integration Forward integration Horizontal integration Related diversification

According to its Quadrant II location in the Grand Matrix, PG is in a moderate competitive position, and underscores the competitive stance reflected in the SPACE Matrix. PG has a good portfolio of service/product lines (see Product Positioning Matrix above, with comments), and can hold its own in a competitive arena. As a Quadrant II firm, PG can afford to take advantage of external opportunities in several areas, especially in its plans to enter the Saudi Arabian and Moroccan markets. Thus PG can take moderate risks to expand into the MENA region with Copyright 2011 Pearson Education Limited

some confidence. The past image, research skills, and successful forays into the Qatar and the UAE markets should certainly infuse sufficient confidence in expansion plans attended by some caution.

I.

The Quantitative Strategic Planning Matrix (QSPM)

The only analytical technique in the literature designed to determine the relative attractiveness of feasible alternative actions is the Quantitative Strategic Planning Matrix (QSPM), which comprises Stage 3 of the strategy-formulation analytical framework. This technique objectively indicates which alternative strategies are best. The QSPM uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies. That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1, coupled with the SWOT Matrix, SPACE Matrix, and Grand Strategy Matrix that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3). The QSPM is a strategic decision-making tool that allows strategists to evaluate alternative strategies objectively, based on previously identified external and internal Critical Success Factors. Like other strategy-formulation analytical tools, the QSPM requires good intuitive judgment. The left column of a QSPM consists of key external and internal factors (from Stage 1), and the top row consists of feasible alternative strategies (from Stage 2). Specifically, the left column of a QSPM consists of information obtained directly from the EFE Matrix and IFE Matrix. In a column adjacent to the Critical Success Factors, the respective weights received by each factor in the EFE Matrix and the IFE Matrix are recorded. The top row of a QSPM consists of alternative strategies derived from the SWOT Matrix, SPACE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives. However, not every strategy suggested by the matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive judgment in selecting strategies to include in a QSPM.

Strategy 1 Prime Group should continue its expansion into the MENA region, focusing on investment banking and securities brokerage

Strategy 2 Prime Group should intensify operations in the lucrative Saudi Arabian market in order to first improve its profits

Strategy 3 PG should refrain from global expansion and focus on consolidation of its existing market in Egypt

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Key Factors Opportunities 1. Egypt has a stable economy and enjoys continuous growth with development in both public and private sectors 2. Egypts progress towards a more market-oriented economy has increased foreign investment and enhanced macroeconomic indicators 3. Moroccos Casablanca Stock Exchange is easy to enter, with very little competition 4. Prime Group is free to begin operations in Saudi Arabia in corporate finance, mutual funds and personal portfolios 5. The MENA region is an expanding market in terms of investments. Threats 1. The pace of structural reforms has been slower in Egypt than predicted 2. Egypt now faces policy challenges concerning the consolidation and extension of the nations ongoing efforts to achieve economic stability and prosperity

Weight

AS

TAS

(from current income deficits) before entering Morocco AS TAS

AS

TAS

0.10

0.20

0.30

0.40

0.14

0.28

0.28

0.42

0.10

0.40

0.10

0.10

0.08

0.24

0.32

0.08

0.12

0.48

0.36

0.12

0.10

--

--

--

--

--

--

0.12

0.24

0.12

0.48

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3. Getting the brokerage license for Saudi Arabias Tadawul Stock Exchange could be a challenge 4. There is intense competition in the consolidated Egyptian Stock Market TOTAL Strengths 1. Prime Group has reinvented itself to become one of the most prominent regional investment firms with presence in the UAE, Qatar, and Kuwait 2. With its presence in the UAE, Qatar, and Kuwait, PG is expanding regionally to provide a distribution network covering 750 institutions 3. Prime Securities firm was established in 1997, and is ranked among the largest 10 brokerage firms in the Egyptian Stock Market 4. A higher market share can be expected for Morocco due to the size of the market and the market participants 5. PG is competent to expand into the MENA region as an investment banker and a securities brokerage firm 6. PGs brokerage firm is authorized to provide all services of the Egyptian Stock Exchange, which demonstrates the

0.10

0.30

0.20

0.20

0.14 1.0

0.14 2.28

0.42 2.10

0.56 2.36

0.14

0.56

0.42

0.42

0.14

0.56

0.42

0.42

0.10

0.30

0.30

0.40

0.10

--

--

--

--

--

--

0.12

0.48

0.48

0.24

0.10

0.40

0.40

0.30

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high standards the firm has 7. Prime Group can rely on its capabilities and 0.12 experience in securities brokerage industries in Egypt, UAE, and Qatar to enter the Moroccan and Saudi markets Weaknesses 1. Prime Group will be able to capture only 0.08 0.35 percent of the Saudi stock market in terms of brokerage 2. The net income in 2009 has dropped 0.10 considerably from that of 2008, showing loss. SUBTOTAL 1.00 SUM TOTAL ATTRACTIVENESS SCORE

0.48

0.48

0.24

0.16

0.32

0.16

--

--

--

--

--

--

2.94 5.22

2.82 4.92

2.18 4.54

J.

Recommendations

Strategy #1:- It is recommended that Prime Group should continue its expansion into the MENA region, focusing on investment banking and securities brokerage.

K.

Epilogue

Following a multi-pronged analysis using judgment and reasoning coupled with numerical and graphical outputs, three strategic choices were presented for Prime Group: (1) Prime Group should continue its expansion into the MENA region, focusing on investment banking and securities brokerage. (2) Prime Group should intensify operations in the lucrative Saudi Arabian market in order to first improve its profits (from current income deficits) before entering Morocco. (3) PG should refrain from global expansion and focus on consolidation of its existing market in Egypt.

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According to the comprehensive and decisive Quantitative Strategic Planning Matrix (QSPM), Strategy #1, with the highest Sum Total Attractiveness Score (STAS) [5.22], has emerged as the best option among the three alternatives. This involves PG pursuing the MENA market for its financial investments portfolio. Even though Strategy #2 is a respectable second with a STAS of 4.92, it is not as comprehensive as Strategy #1 involving international expansion in the MENA region which includes Saudi Arabia and Morocco that are highlighted in the far more conservative Strategy #2. Strategy #3 may be too reticent in light of the MENA market opportunities and recent successes of Prime Group in Kuwait, Qatar, and the UAE. The Prime Group operates through deploying a strategic portfolio of five businesses: Prime Capital is the investment banking arm of Prime Holding Prime Markets (Prime Powerhouse Investment Research) firm does equity research Prime SICAV was established for the purpose of setting up funds Prime Industrial Holding makes strategic investment in private equity in MENA Prime Emirates offers brokerage and related financial and investment services. As one of Egypts most respected companies with a high reputation for wellresearched, high-quality financial services, Prime Groups public profile is wellestablished in Egypt and its neighborhood. PG is thus a seasoned regional player with legitimate global ambitions based on its excellent track record in Egypt. The future bodes well for PG group with a dynamic and related portfolio of five businesses at this time. It appears that the most promising of these sectors are investment banking and stock broking. The cautious expansion mode recommended through the SPACE Matrix should still be considered, as the present low profit generation of PG remains a challenge to overcome. Overall, Prime Group appears to be a stable and mature conglomerate with proven capabilities to cautiously and deliberately pursue the recommended strategy of expansion into the MENA region.

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