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Elaj group strategic project (1)
1. STRATEGIC MANAGEMENT
Elaj Group for medical
services
Presented to Dr. Ashraf Labib
Presented by:
Ola Ahmed Mahmoud
Bahaa Gendy Labib
Ahmed Ismael
Ibrahim Alaa
Raghda Kamal
Table
2. 1
of content
Contents
5
Section 1: Mission , Vision and generic strategies
4
1.1 Current situation
4
1.2 Generic strategies
5
1.2.1 Cost leadership strategy
6
1.2.2 Differentiation strategy
7
1.2.3 Focus strategy
8
1.3 Vision
8
1.4 Mission
8
1.5 corporate governance
9
1.5.1Board of directors
10
1.5.2 Top management
14
Section 2 : External Environment Analysis:
17
2.1 Factors affecting the company : ( PESTEL ANALYSIS )
18
2.2 Task Environment : ( Porter's five forces model )
18
2.3 Strategic Group Map
19
2.4 Strategic Type
20
2.5 Four Corner Analysis
21
2.6 Value discipline Triad
22
2.7 BCG Matrix for Elaj
23
2.8 Industry Attractiveness
24
2.9 Competitive Strengths
24
2.10 Industry Matrix
4. 3
Introduction
Elaj Group was established in 1994 primarily focusing on Chronic Care Delivery
Model, then evolved into integrated healthcare delivery system in the MENA
region with an initial focus on Saudi Arabia and Egypt markets with a remarkable
presence in UAE, Qatar, Oman, Kuwait, Sudan, Ethiopia, Italy and UK.
Medical Centers
are present in KSA, Egypt, Qatar and Oman. The centers focus on treatments
related to andrology, infertility, urology, spine and joints, dermatology spine and
joints.
6. 5
Labs
Operate in the medical laboratory segment with a network of 16 laboratories (12 in
the KSA and 4 in the UAE) & 36 branches in Egypt.
Healthcare Investments
SHIC was founded as the regional healthcare investment arm of Elaj.
7. 6
History
Elaj Medical Services Company was formed as a limited liability company
commencing operations in 1994 by establishing a “Quality of Life Enhancement
Center” Elaj has positioned itself as a quality of life enhancement healthcare
services provider in the Middle East region, with an initial focus on the KSA
market and now present in UAE, Qatar, Oman and Egypt. Elaj has plans to expand
to other MENA countries such as Kuwait, Bahrain, Syria among others The
Company’s healthcare centers, known as Elaj Medical Centers, KSA (“Elaj
Centers”) operate on a geographically scalable model and there are 25 such centers
in operation ,These facilities focus on treatment and management of illnesses
related to Andrology (male sexual dysfunction), infertility, urology, spine and
joints, dermatology and allergy which together account for 70% of the Company’s
revenue and 80% of its profit The Company’s core business is based on the
“chronic care model”, which focuses on treating and managing chronic illnesses on
an ongoing basis. Other service lines addressing chronic illnesses have also been
added such as diabetes mellitus care unit and obesity unit Elaj Centers,
8. 7
Section 1: Mission , Vision and Generic strategies
1.1
Current situation
business
Elaj
century saw an adjustment in
th
The most recent years of the 20
methodology. the organization moved from being an innovation drove
organization for Laboratory health care, to being a science driven, wellbeing
and health organization.
1.2
Generic strategies
The three core business strategies of Elaj include: Cost leadership, differentiation
and focus strategy.
1.2.1
Cost leadership strategy: Elaj is a top quality medical services. It
purchases the highest quality of Medical and non-medical supplies
from a large scale of suppliers from the market. Therefore, its costs of
operation are comparatively higher than those of small scale and low
quality services. Due to these high costs of medical services, Elaj is
still unable to achieve low cost leadership in its services. However, its
business level strategies are largely focused on achieving this goal
through cost efficient operations, quality assurance and effective
inventory management.
1.2.2
Differentiation strategy: the purpose of adopting this strategy is to
build a unique brand image in the minds of potential consumers.
Currently, Elaj medical services are on different levels of healthcare
industry. Most of these services can be easily differentiated from their
competitor services on the basis of quality features, excellence of
services. Elaj never compromises on the quality of its services in order
to achieve economy or scale or low cost leadership in the health
industry. Rather, it strives to build a differentiated position among its
industry rivals on the basis of medical services quality and associated
luxury and professionalism.
1.2.3
Focus strategy: The third most important strategy of Elaj is to focus
on the differentiation and low cost leadership in specific services or
operational areas. For example, it uses a focused low cost strategy to
control cardiac catheterization. This strategy is used in order to lessen
9. 8
the financial burden. Similarly, the focused-differentiation strategy is
to give emphasis on making improvements and alterations in the organ
transplantation instead of differentiating all the services in the
hospitals.
1.3
Vision
Elaj strives to utilize its presence in the Middle East & Africa to benefit from
synergies and sizes providing leading health care services focused on closing the
gap of tertiary care services.
1.4
Mission
To build and operate an international standardized network of diagnostic &
medical centers, as well as, hospitals providing the best clinical outcome through
the provision of high-quality medical services at affordable prices.
Comment on mission:
▪ Customers : Not defined
▪ Industry: Medical Industry
▪ Primary Market: Not defined.
▪ Technology : not defined
▪ Growth and profitability: Not defined.
▪ Distinctive Competitive Advantage: Providing the best quality and
offering wide range of diversified services to satisfy customer's needs.
1.5
Corporate Governance:
Bishri
-
Dr. Mohamed Fawaz Al
Chairman of the Board of Directors, ELAJ
.
S.A
Mr. Ehsan Al Shanti
Chief internal Audit
Dr. Mohamed Amin
CEO of ELAJ for medical services
Mr. Mohamed Abdel Mohsen
Corporate investment Director
10. 9
Dr. Hesham Zaki
Vice president for IT and health informatics,
VP for health insurance sectors, VP
for medical imaging sectors.
Mr. Haitham Mouminah
Executive Vice President for business
development and implantation of
strategic plans.
Eng. Mohamed Musharraf
Chief Technology Officer Elaj S.A.
Ahmed Mahmoud Abdullah
Chief Financial Officer Elaj
1.5.1Board of directors
Elaj board of directors consists mostly of non-executive members that are independent,
no history of being pervious members of the management and with no significant
business connections with the company.
The Board is the primary governance finger of the corporate governance. It is liable and
held responsible for the supervision of company executive's activities. Some of
the non-transferable duties of ELAJ's board of directors are as follows:
▪ providing an overall direction to the company, to its management, conduct
and strategy.
▪ Electing and assigning the chairman and the vice chairman by the General
meeting.
▪ Assigning members of the top management Executive board.
▪ Granting Legitimate powers to spokesperson representing the company.
▪ Negotiation and approval of:
● Company's long-term strategy and investment budget.
● Expanding company activities in other markets, in countries
where the company has not been present.
● Significant financial operations.
11. 10
▪ Supervision and monitor to activities of the Executive board especially in
terms of their compliance to the laws and government regulations.
▪ Closure and establishment of company branch offices.
1.5.2 Top management
The Executive board constitutes top management in Elaj. The members, they,
manage Day to day business operations as well; handle diverse operations and
activities internationally. Elaj's strategic management process is mainly
emphasized by the CEO, tasks to carry out the strategic vision that is delegated
through the CEO to other members of the executive board and lower level
managers in order to create a climate that suits the strategic decision making
process and ensures that every business operation is carried out with respect to
Elaj's strategic vision. When it comes to dealing with customer's matters, lower-
level managers are given a large degree of autonomy.
The decentralized organization structure allows every executive to share his/her
expertise and implement his knowledge into the effort of carrying out the strategic
management process through every decision and business operation. This
organization structure enables the ease of communication between the executive
board members and lower level managers.
At all levels of product life cycle, Elaj's executive's board ensures that every
business practice is carried out in respect to environmental sustainability. The
executives in Elaj are always emphasizing continuous improvement in the
environmental performance. The strategic management process is carried out in
manner that the company minimizes its environmental impact as much as possible.
The executive board at Elaj carries business operation with respect to the company
Supplier code that insures that every practice with supplier, agents or
subcontractors is performed with business integrity and complying with the ethical
standards. The Supplier code enables the executives to demonstrate Elaj's fairness,
integrity and honesty in the business environment.
12. 11
Section 2 : External Environment Analysis:
2.1 Factors affecting the company: (PESTEL ANALYSIS)
a) Political environment:
The political environment can especially be problematic for multinational
companies because it can hinder business developments by its new governments or
tough regulatory environment. As Elaj is operating in more than 8 countries then it
will be facing a lot of political problems as each country has its own regulations
that could have a negative impact on its operations.
b) Economic environment:
One of the biggest economic issues facing hospitals like Elaj is the foreign
exchange swings. Due to these swings in 2016 it resulted in foreign exchange
impact of 3.7 on group revenues although in the comparative analysis it increased
by 1.2 increase in revenues (Annual Report 2016). According to financial times (
2017), the decline in the value of the pound led to the rise in price inflation that
affected people's living standards because their real income growth among wage
earners has fallen. There is also the issue of increasing price of supplies such as
ICU and lab supplies, machines and consumables that will increase the cost of
service production thus increase the service's price. Further increase in price will
result in decrease in rate, margins & brand switching. On the other hand there are
some economic opportunities as increase the health awareness among people and
regular checkup Which is a perfect opportunity for Elaj to increase the rate.
Elaj also tries to deal with certain economic issues by enhancing the suppliers and
deal with syndicates’ and deal with GCC Embassies to examine the travelers to the
gulf countries.
c) Social environment:
The macro social environment can include changes in people's lifestyles, fashion,
labor composition, or other demographic trends that have the potential to be threats
or opportunities for businesses. The biggest life style change is consumer focus on
prevention of illness and particular focus on chronic diseases. There is an obvious
trend towards healthy life style as high percentage of adults is concerned about
regular checkup and seeking for the medical advice from the professional experts.
Elaj noticed that this change in consumer life style may affect rate dramatically.
13. 12
Accordingly, Elaj started to focus on Mobile outpatient clinics to cope with the
healthy life style of its clients. In addition, homecare service, Elaj can go into
comprehensive medical services.
d) Technological environment:
The technological environment that might affect Elaj in the macro environment is
the digital revolution that could be either an opportunity or a threat for some
hospitals. It is called the "Fourth industrial revolution" for the sheer scale of
transformation it is having on societies. The challenges it presents for healthcare
providers such as Elaj are many. But the biggest one is digital disruption and the
new technology it is unleashing such as Internet of Things technology that can be
used to track their patients to follow up them anywhere, or how digital marketing is
changing the way brand owners communicate and market to patients and clients as
well as the use of big data in creating a competitive advantage. All these
technologies are already disrupting the medical industry and for as Elaj.
e) Legal environment:
The legal environment concerns the regulatory environment, Laws as litigious
situations from the external environment, which can impact a firm's operations in
multifaceted ways.
f) Environment Factors:
The transition to non-invasive procedures such as HIFU and non- surgical
procedures and laser.
14. 13
Summary of PESTEL analysis:
Number Description Factor
1. Political environment Instability of political policies in different
countries
2. Economic environment Foreign exchange swings
Decreasing value of pound that led to rise
in price inflation which affected people's
living standards and squeezing people
incomes
Increasing price of supplies and
consumables that will increase the cost of
services, thus increase the service's price.
Further increase in price will result in
decrease in rates and margins.
3. Social environment Changes in people's lifestyles, disease
prevention and control or other
demographic trends
4. Technological environment "Fourth industrial revolution" and the
transformation it is having on societies.
5. Legal environment Concerns the regulatory environment, laws
as well as litigious situations that impact
hopital's operations.
6. Environmental Transition to mobile outpatient clinics and
homecare
15. 14
Remote Analysis using issue priority matrix
Threat
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
E1
Foreign
exchange
swings
High 2
Medium
Low
Threat
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
E2
Increasing
price of
supplies
High 2
Medium
Low
Threat
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
P1
Political
Instability
High 1
Medium
Low
16. 15
Opportunity
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
S1
Trend
towards
healthy
life
style
High
Medium 4
Low
Opportunity
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
S2
Regular
checkup
High
Medium 7
Low
Opportunity
Probability impact on corporation
Factor High Medium Low
Probability
of
occurrence
T1
Development
of new
technologies
High 1
Medium
Low
17. 16
2.2 Task Environment : ( Porter's five forces model )
a) Competitive Rivalry:
Elaj has a very strong position in the medical industry but few major rivals do exist
in the industry like Cleopatra group and Andalusia hospitals Group.
Above mentioned groups are fighting continuously to get on to each other and
avoid any sort of competition but still there. Competition is violent in the
healthcare industry, and this is a plus point for clients’ loyalty. Provided that these
groups carry on in competing with each other, clients will persistently enjoy
improving service and price qualities.
b) Threat of New Entrants:
Although Elaj has accomplished a strong name in the market but as the healthcare
industry is very huge and viable; so there are a lot of healthcare firms who already
entered in this market and somehow achieved a place in the market even though
they could not cross Elaj is terms of market share. Every year number of
companies attempt to enter the market and strive for their share of profit and
productivity in the market but very few survive. It has become a very big challenge
for the new entrants to not only work over their quality but they also have to cut
the share of Elaj to survive which is quite equal to impossible. Fundamentally, Elaj
is persistently on the board, and therefore the threat of new entrants is temperate.
c) Bargaining power of Suppliers:
Elaj is known for strong relations with the suppliers around the Middle East and
gulf due to its immense buying power and also because of the fact that in such the
medical consumables and supplies quality is always important. Elaj as always
focused over strong and sturdy business relations to make the ongoing quality
stronger. Additionally, Elaj also presents helpful guidance to its suppliers on how
to work more proficiently to decrease redundant expenses. And thus it cares of its
suppliers which I return pays them off in the form of quality supplies.
d) Bargaining power of Buyer:
Clients and patients carry huge quantity of bargaining power concerning their
utilization of different Elaj Services. It is very important to understand the power
18. 17
of the clients and also their needs so that they can be better satisfied. This is what
Elaj always cares about and that is reflected in Elaj health and wellness programs
that are being used wile creation of new services as society has in progress of
becoming more health conscious.
e) Threat of New services (Home care):
Home Care has always been in line whenever we talk about healthcare market. Elaj
have many Ideas, Man power, Medical devices but its good quality of services and
credibility in healthcare industry helps in maintaining the market share of the
group. At the same time, Elajl eads in innovating its services tremendously to stay
in the market and to work efficiently for removing the threat of home care
difficulties. We can take the example of recent innovation, which is health
consciousness in the chronic diseases that has been introduced in all services of
Elaj. Such initiatives would make it easier for Elaj to go beyond the Home care and
early detection of chronic diseases.
19. 18
Industry analysis using issue priority matrix
Nu Description Probability Impact on
Corporation
1 Bargaining Power
of Buyer
(Threat)
Probability
of
occurrence
High Medium Low
High 2
Medium
Low
Probability Impact on
Corporation
2
Competitive
Rivalry
(Threat)
Probability
of
occurrence
High Medium Low
High 2
Medium
Low
2.3 Strategic Group Map:
To identify direct competitors, opportunities and strategic problems.
The procedures for constructing strategic group are:
Steps 1: Analyze the overall industry and identify the competitive characteristic of
features. Then prioritize them from most important to the least ones. Those
features are:
1. Brand
2. Price
3. Quality
4. Stability
5. Availability
6. Health and Safety
20. 19
Step 2: Plot the firm on the two most important characteristics or drivers.
No Brand Name Group
1 Saudi German Hospitals
Group 1
2 International Al-Salam Hospital
3 Dar Al-Fouad Hospitals Group
4 Military hospitals
5 Elaj Group2
6 Cleopatra Hospitals Group
7 Andalusia Medical Group
8 Shifa Hospital Group3
9 Nasaem Hospital
After Strategic group analysis we found Elaj direct Competitors are:
▪ Cleopatra Hospitals Group
▪ Andalusia Hospitals Group
And the most two important drivers for Clients are brand name and price of
services.
2.4 Strategic Type
a) Prospectors Healthcare providers are: Military Hospitals, Dar Al-Fouad
hospitals, Saudi German Hospitals, International Al-Salam Hospital.
▪ They are proactive companies with huge resources and high research and
development department.
▪ They pursue an offensive strategy and they are willing to take risks.
▪ Their aim to develop new markets and service opportunities.
b) Analyzers companies are: Elaj, Cleopatra and Andalusia:
▪ They are analysis the markets and are trying to balance opportunities with
the risks.
▪ They sustain market share and appropriate growth rate.
▪ They are trying to create new market opportunities.
21. 20
c) Defenders companies are: Shifa nd Nasaem:
▪ They are less proactive than the others two types.
▪ They are seeking stability by maintaining current market position.
▪ They want preserve market share.
▪ They tend to minimize their cost to survive.
2.5 Four Corner Analysis:
Saudi German Hospitals
Drivers Current strategy
The company's primary goal is to
introduce the maximum quality of
services at off levels of healthcare
industry
Accelerating growth in Gulf and North
Africa
Being present, connecting with Excellence
and standardization.
Expanding and leveraging the international
lead of the brand.
Accreditation oriented. Sharpening focus on profitability and
increasing shareholder returns
Capabilities
Management Assumption
Entering the market of virtual medical
care.
Invest $50 million in financing for
farmers by 2020
Increasing the range of its services
through the introduction of
comprehensive services
Train 3000 healthcare workers by 2020 to
improve the long-term sustainability
For more stability and security of
services.
Develop its own IT system.
22. 21
Andalusia
Drivers Current strategy
The company's primary goal is to be the
best Dental Centers.
The company is aiming to double its
annual product, brand and line extension
launches.
Sustaining the value of shareholders and
delivering extended financial
performance.
Focusing on emerging markets.
Creating a safe and healthy culture. Cost cutting and community orientation.
Andalusia says 2020 will start its journey to best-in-market operations
Capabilities
Management Assumption
Maintaining high standard for service quality
and integrity
Customer Loyalty is high
Generating revenues and reinvesting back into
new services.
Adapting to changing quickly
The ability to differentiate their brands, such
as dental clinics, different size of existing
services
Double its annual product, brand
and line extension launches
23. 22
Cleopatra Hospitals Group:
Drivers Current strategy
Cleopatra primary goal is to add
services of good price, meeting
needs for diagnosis and treatment.
To realize our vision we have
invested In a long term strategy of
divisions and brands that deliver
growth to the benefit of all
stakeholders.
Develop new ways of doing
business that will allow us to
double the size of the group while
reducing our environmental impact.
Work with government, NGOs and
stakeholders to drive change that is
good for society and business.
Helping people feel good, look
good and get more out of life.
Work with partners in our supply
chain to create innovations in
private health sector.
Management Assumption Capabilities
Expansion strategy to open new
GAMCA (Gulf Approved for
Medical Centers Association )
Invest around 10 Million $ opening
new centers.
It will be possible to convert all
Labs Centers and outpatient clinics
into GAMCA
Maintaining high standards for
service and quality and integrity
Cleopatra hospitals group is to pioneer the break through GCC travellers’ medical
examination
Ventures.
24. 23
Shifa Hospital:
Drivers Current strategy
The company’s primary goal is to
introduce medical services as a
hospital with various department
Balanced lifestyle is the broad
strategic objective of the company
Wants to offer a broad spectrum of
comprehensive services within the
medical horizon at the utmost and
highest levels of privacy and
quality.
Shifa participate in the creation of
healthier lives within the
community; by practicing to serve
and manage illnesses with skill and
compassion.
Creating healthy culture Focus on diversity
Management assumption Capabilities
To lead in cosmetic surgeries and
minor surgeries
Generating revenues and
reinvesting back into new services
Attract the professors and
physicians from the universities.
The ability to build a reputable
organization.
Value discipline triad:
• This tool looks at three areas or in which can focus:
• Operation excellence
• Product leadership
• Customer intimacy
Each one of them results in customers valuing the enterprise in distinct way.
in size among Private sector in Egypt
th
Shifa is ranked 6
25. 24
Elaj
Cleopatra
Andalusia
Cleopatra Elaj Cleopatra
Elaj
Andalusia
Andalusia
1. Customer intimacy:
Andalusia is the leading in customer intimacy there no threat from other
companies, Elaj comes in the second place.
2. Product leadership:
Elaj is leading group in product leadership because the big net rates in Gulf
and Egypt
3. Operational excellence:
Cleopatra is the leading in operational excellence cause of its cost leadership
strategy.
Elaj is the third so it must enhance its cost leadership strategy to reduce the
gap between itself and the competitor.
Operational excellence Customer intimacy
26. 25
NU Description Probability impact on
corporation
High Medium low
1 Product leader shipProbability of
occurrence
High 1
Medium
Low
2 Customer intimacyProbability of
occurrence
Probability impact on
corporation
High Medium Low
High
Medium 4
Low
3 Operational excellence
Probability of
occurrence
High Medium Low
High
Medium 4
Low
NU Description O/T
1 Product leader ship Opportunity
2 Customer Intimacy Threat
3 Operational Excellence Threat
27. 26
Comment:
Elaj has a great opportunity in product leader ship.
BCG Matrix for Elaj :
A) Star products: Gulf Approved Medical Center Association. GAMCA
● Our star services is GAMCA Centers as they have high market
share and high growth rate.
● IN 2019, Elaj generated 175 Million L.E from GAMCA Centers
B) Cash Cow Organizations : Al Amal Hospital .
● The most profitable organization is Al- Amal hospital, it has a
large market share but low growth rate.
●
C) Question Mark organizations:
● Allied Labs are our question mark products which has low market
share and low growth rate.
●
D) Dog products: Cairo Labs
● These business units tend to hold a small market share in the
industry and with the low potential of growing into high market
share businesses. Cairo labs were lunched when Elaj wanted to buy
all the branches and the brand name in 2017
high Low
Star
GAMCA
Question mark
Allied Labs
Ibn Sina Hospital
Cash Cow
Al Amal hospital
Al Borh medical Labs
Dogs
Cairo Labs
Al-Mashriq hospital
28. 27
Industry attractiveness:
Industry
Attractiveness
Organ Transplantation Cardiac Catheterization
Weights attractiveness Total
attractiveness
Weights attractiveness Total
attractiveness
Foreign
exchange
swing
0.25 2 0.5 0.25 4 1
Increasing
commodities
0.19 4 0.76 0.19 4 0.76
Political
instability
0.2 3 0.6 0.2 3 0.6
Trend
towards
healthy life
style
0.16 2 0.32 0.16 3 0.48
New
technologies
0.2 4 0.8 0.2 4 0.8
Sum weight 1
Sum total
attractiveness
score
2.98 3.64
29. 28
Industry
Attractiveness
Organ Transplantation Organ Transplantation
Weights attractiveness Total
attractiveness
Weights attractiveness Total
attractiveness
Foreign
exchange
swing
0.25 4 1 0.25 4 1
Increasing
commodities
0.19 4 0.76 0.19 4 0.76
Political
instability
0.2 2 0.4 0.2 3 0.6
Trend
towards
healthy Life
Style
0.16 3 0.48 0.16 1 0.16
New
technologies
0.2 2 0.4 0.2 2 0.4
Sum weight 1
Sum total
attractiveness
score
3.04 2.92
30. 29
Industry
Attractiveness
Organ Transplantation Cardiac catheterization
Weights attractiveness Total
attractiveness
Weights attractiveness Total
attractiveness
Foreign
exchange
swing
0.18 4 0.72 0.18 4 0.72
Increasing
commodities
0.19 4 0.76 0.19 4 0.76
Political
instability
0.21 5 1.05 0.21 5 1.05
Trend
towards
healthy life
style
0.17 4 0.68 0.17 3 0.51
New
technologies
0.16 5 0.8 0.16 4 0.64
0.09 5 0.36 0.09 3 0.27
Sum weight 1 1
Sum total
attractiveness
score
4.37 3.95
31. 30
Industry
Attractiveness
Organ Transplantation Cardiac Catheterization
Weights attractiveness Total
attractiveness
Weights attracti
veness
Total
attractiv
eness
Foreign
exchange
swing
0.18 3 0.54 0.18 3 0.54
Increasing
commodities
0.19 3 0.57 0.19 3 0.57
Political
instability
0.21 4 0.84 0.21 3 0.63
Trend
towards
healthy life
style
0.17 3 0.51 0.17 2 0.34
New
technologies
0.16 4 0.64 0.16 3 0.48
0.09 3 0.27 0.09 2 0.18
Sum weight 1 1
Sum total
attractiveness
score
3.37 2.74
32. 31
Industry Matrix:
Competitive
strength
Weight Elaj Andalusia Saudi German
Rate Weighted
score
Rate Weighted
score
Rate Weighted
score
Brand 0.18 5 0.9 4 0.2 4 0.72
Price 0.19 4 0.76 3 0.57 4 0.76
Quality 0.21 5 1.05 4 0.84 4 0.84
Stability 0.17 4 0.68 3 0.51 3 0.51
Availability 0.16 3 0.48 3 0.48 3 0.48
Health
&safety
0.09 4 0.36 4 0.36 4 0.36
Sum 1 4.23 3.48 3.67
Comments:
● After industry matrix analysis, we found that we have the first best
weighted-success factor. We figured out that our competitive advantage
is based on brand, quality as well as stability.
33. 32
Situational analysis:
Threats:
A) Completion in the market:
With increasing number of local and national players is becoming very hard
for the companies to differentiate themselves from others.
There is also threat from counterfeit services destroying its hospital image in
the market.
B) Price of medical consumables:
Increasing price of consumables such as ventilators and other consumables
will increase the cost of services, thus increase the service price. Further
increase in price will results in decrease in rate, margins & brand switching.
C) Buyers power: with highly diversified healthcare market where there are
lots of brands claiming different sorts of benefits, it is very difficult for
clients and patients to stick to particular healthcare provider & hence results
into brand switching where got power to select a brand on several factors
like availability, reference group recommendation, preference & price.
D) Economic policy: one of the biggest economic issue facing comprehensive
healthcare groups like Elaj is the foreign exchange swings. The swings lead
to depreciating a currency against the other which results in increasing the
price of supplies and consumables imported from abroad. As a result prices
of the services will increase leading to inflation as well as affecting people’s
living standards by the decrease of their real income.
E) Political environment: As Elaj is operating in more than 8 countries then it
will face a lot of political problems as each country has its own regulations
that could have impact on its operations.
F) Another threat is considered to be the growth of private health sector
and medical industry. The growing number of Hospitals and Outpatient
clinics that introduce their own services which cost less and make it compete
with more expensive services like those of Elaj to increase their own profits
will have negative impact on Elaj services portfolio.
Opportunities:
A) Expanding markets: By entering into other markets & penetrating more &
more in other Governorates through its robust supply chain and transition of
spots of unorganized business to organized one will lead to further
expansion of the group’s business.
34. 33
The ability to partner with different organizations in different fields: This will help
Elaj to grow faster. Elaj already started to take advantage of this opportunity by
engaging in partnerships with number of major hospitals and labs, such as
International Alexandria hospital and several others. This will help the group in
further growth.
B) Trends toward home care: As patients and clients trend switch to take
comprehensive service at home. Elaj tries to introduce more services as
mobile X-Ray imaging, ECG and Sonar in addition to lab testing and clinical
examination.
C) The development of new technologies: As technology is expanding rapidly
worldwide so this can be used as an opportunity for Elaj to develop its
services.
35. 34
2.12 EFAS Matrix:
Comments
Weighted
score
Rate
Weight
Threats
Elaj is stable in its position in the
minds of the consumers due to its
high quality services that create
loyal customers and avoid a big
part of this threat.
0.36
4
0.09
1) Competition in the
market
Elaj tries to deal with a lot of
suppliers to overcome the delay.
0.3
3
0.1
2) Price of
Consumables
Elaj is having high quality of
services will create loyal
customers to avoid the buyer
power threat.
0.32
4
0.09
3) Buyers power
Elaj can adapt quickly to each
country it operates in to reduce
the threat of any political
differences.
0.36
4
0.08
4) Political
Environment
Elaj tries to diversify its services
to meet all needs and to cover the
gap that is not covered by private
sector.
0.21
3
0.07
5) Growth of private
labels
Elaj already opened its own Labs
and separate it from the hospital
services.
0.36
4
0.09
6) Economic policy
1.91
0.52
Sub total
3.51
1
Total
36. 35
Comments
Weighted
score
Rate
Weight
Opportunities
Elaj successfully expanded its
supply chain to reach almost
Cairo, Giza, Alexandria as well
as its wide services
diversification that entered the
market.
0.64
4
0.16
1) Expanding Markets
Elaj already started engaging in
partnerships with a number of
major hospitals, such as Dar Al-
Oyon and International
Alexandria hospital.
0.24
3
0.08
2) The ability to
partner with different
organizations in
different fields
Elaj has a strong health
informatics department that helps
it catch up with all new
technologies.
0.24
3
0.08
3) The development of
new technologies
Elaj tries to introduce more
discounted packages for our
patients .
0.24
3
0.08
4) Trends toward
Regular checkup for
chronic diseases
Elaj can go into home care
integration service to increase its
service portfolio.
0.24
3
0.08
5) Trends for Home
care project
48
.
0
Sub total
37. 36
Internal Environment Analysis
Section 3:
3.1 Value chain analysis (VCA):
Is a process to analyze a corporate's business activities; mainly primary and
support activities that add value to the final services and then analyze these
activities to see how the group can create competitive advantage. It help the group
to understand how value is added to its services and subsequently how it can sell
its product or service for more than the cost of adding the value, therefore
generating a profit margin.
In other words, the value chain helps us to differentiate the steps that are needed
from those that are not, in order to make the service or the product to offer the best
value to the customer. The more value you create, the more people will be prepares
to pay a good price for your services.
a) Primary activities: are the activities involved in the creation of product,
marketing, and transfer to buyer and after sales support.
b) Support activities: assist the firm as a whole by providing infrastructure or
inputs that allow primary activities to take place.
Criteria
Primary activities
Efficiency of supply chain management
Inbound Logistics
Productivity of equipment compared to Elaj’s key
competitors
Operation
Efficient scheduling
Operation
Efficiency of delivery of services
Outbound Logistics
Effectiveness of market research to better understand
customers' needs and wants
Marketing
Effective sales packages and advertising
Marketing
Innovation of integrated services
Marketing
Marinating a good quality image
Marketing
Expanding customers base and increasing customer
loyalty for the group name.
Marketing
Effective addressing of customer complaints
Service
38. 37
upport activities
S
Capability to identify new product market opportunities
and potential environmental threats
General Administration
Strategic planning to achieve corporate objectives
General Administration
Public image and corporate citizenship
General Administration
Coordination and integration of all value chain activities
among organization submit
General Administration
Level of info systems support in making strategic and
routine decisions
General Administration
Timely and accurate management info on general and
competitive environment
General Administration
Effectiveness of procedures for recruiting, training and
promoting all levels of employees
Human Resource
A work environment that minimize absenteeism and
keeps turnover at desirable levels
Human Resource
Levels of employee motivation and job satisfaction
Human Resource
Active participations by managers and technical personal
in professional organization
Human Resource
Success of research and development activities in leading
to product and process innovation
Technology
Quality of working relationships between health
informatics and other departments
Technology
Ability of work environment to encourage creativity and
innovation
Technology
Development of alternate sources for inputs to minimize
dependence on single supplier
Procurement
Procedures of procurement of workshop machine
Procurement
Good long-term relationship with reliable suppliers
Procurement
39. 38
3.2 Value Rareness Imitability Organization Matrix (VRIO)
It is a tool in strategic planning, used by firms to make efficient business decisions.
The analysis provides information and the results will provide a competitive
advantage.
VRIO
Activities
Organized
Costly to
imitate
Rare
Valuable
Inbound Logistic
√
√
√
Efficiency of supply chain
management
Operation
√
√
Productivity of equipment
compared to key competitors
√
√
Efficient scheduling
Outbound Logistics
√
√
√
Efficiency of transportation,
shipping and delivery
Marketing
√
√
√
√
Effective sealed promotions and
advertising
√
√
Innovation of promotions
√
√
Marinating a good quality image
√
√
√
Expanding customers base and
increasing customer loyalty for the
brand
Service
√
√
√
Effective addressing of customer
complaints
General Administration
√
√
√
Capability to identify new product
market opportunities and potential
environmental threats
√
√
Strategic planning to achieve
corporate objectives
√
√
Public image and corporate
citizenship
√
√
Coordination and integration of all
value chain activities among
40. 39
organization submit
√
√
Level of info systems support in
making strategic and routine
decisions
√
√
√
Timely and accurate management
info on general and competitive
environment
Human Resource
√
√
Effectiveness of procedures for
recruiting, training and promoting
all levels of employees
√
√
√
A work environment that
minimize absenteeism and keeps
turnover at desirable levels
√
√
√
√
Levels of employee motivation
and job satisfaction
√
√
√
Active participations by managers
and technical personal in
professional organization
Technology
√
√
Success of health informatics
activities in leading to service and
process innovation
√
√
√
Quality of working relationships
between health informatics and
other departments
√
√
√
Ability of work environment to
encourage creativity and
innovation
Procurement
X
X
X
X
Development of alternate sources
for inputs to minimize dependence
on single supplier
√
√
Procedures of procurement of
workshop machine
√
√
√
Good long-term relationship with
reliable suppliers
41. 40
S/W
Comment
Description
Number
Strength
Through an efficient
marketing team
creating a high
perceived value
Effective sales
promotions and
advertising
1
Strength
Through higher
salaries and bonuses
compared to other
competitors
Levels of employee
motivation and job
satisfaction
2
Weakness
Competitor depend on
a lot of supplier
which increase
concentration risk and
power of supplier
Development of
alternate sources for
inputs to minimize
dependence on a
single supplier
3
3.3 Corporate culture
Elaj has strong corporate culture ,Elaj believes that good health is the primary
source of life , thus it always puts quality and excellence as the core of its business.
The company tries to further develop and emphasize on these aspects.
Talking about the group culture, which is, related its people structure, Elaj has the
culture of team focused and open door policy that become one of its corporate
strengths.
The group focuses on collectivism and performance orientation attitude to
encourage employees to work harder. The statement from CEO is in line with the
fact that Strategic Purpose isn't only concerned with what the organization should
achieve but also who has influence over the purposes. In every organization there
should be some people that have complex role in affecting the organizational
purpose. These people are the stakeholders of the company. Elaj wants the
stakeholders are well served which is returned in the company's log-term objective:
to create sustainable value for its shareholders, which require it to create the value
for the societies.
3.3.1 Elaj System and Organization Structure
A company's organizational chart typically demonstrates relations between people
within an organization. Such relations might include managers to sub-workers,
42. 41
directors to managing directors, chief executive officer to various departments, and
so forth. When an organization chart grows too large it can be split into smaller
charts for separate departments within the organization. Elaj Company is a
decentralized organization that is organized according to the matrix structure. Elaj
as a decentralized organization permits to subordinate branches to enjoy a
proportionately high level of independence. Although it still makes major strategy
decisions at the headquarter level, daily operations are left up to subordinate
branches to derive and perform. The responsibility for operating decisions is push
down to local units.
3.3.2 Elaj resources, Tangible and intangible Product:
Resources are the source of the firm's capabilities. Resources are bundle to create
the organizational capabilities. Some of a firm's resources are tangible and
intangible.
Tangible resources are assets that can be seen and quantified. Intangible resources
include assets that typically are rooted deeply in the firm's history and have
accumulated over time.
Intangible resources are relatively difficult for competitors to analyze and imitate.
The four types of tangible resources are Financial, Organizational, Physical and
Technological. And the three types of intangible resources are Human, Innovation
and Reputational.
le:
a)Tangible resources of Nest
1. Financial Resources:
* Total revenue
* Operating income
* Profit
* Total Equity
* Total Assets
2. Organizational resources:
* The chairman and the CEO are the leaders of the company
* Elaj Governing body is the annual general meeting of shareholders
43. 42
* The most relevant of Elaj's organizational measures were the creation of
product technology Centers, local application and clusters.
3. Physical resources:
* Beds
* Machines
* Medical supplies
* ICU and Operation rooms
* Laboratory results
* Pharmaceuticals
4. Technological resources:
* Elaj moved from being a technology led company that introduce high quality
medical services, to being a science driven, health care organization.
* Continual involvement of rapid technological change
b) Intangible Resources:
1. Human resources:
*Approximately 8500 people have been employed by Elaj company
* Elaj provides training on the code, with staff from the 14 department that are
parts of the code's compliance system participating in yearly or twice yearly
training.
2. Innovation resources:
* Elaj health informatics generates the innovative science and technology
needed to build health benefits into service offerings.
3. Reputational resources:
* Elaj scientists' play their part in communicating the medical benefits of
services to consumers.
44. 43
4. Management Information System:
* By using their research for information technology, they can control all aspects
more efficiently.
5. Marketing:
* Using a famous brand name and efficient strategy to meet the needs of each
type of client.
● To increase sales and build up an image in the mind of clients and patients.
6 .Management:
● Elaj company as a board of directors, led by their chairman who was the
former of Elaj CEO
● The day to day management of Elaj business is taken care of buy executive
board members composed of company executives and department heads.
3.4 Situational analysis:
3.4.1 Strengths:
a) Elaj has strong relationships with retailers.
b) Brand image and services quality.
c) Skilled labor and educated stuff
d) Elaj corporate culture is easily identified amongst all subordinates inside the
corporation, the collectivist strong nature of the corporate culture
perpetuates team work and group effort stimulating employee efficiency
e) Elaj has a very good CSR department that engage in different CSR activities
not for the sake of enhancing reputation but for the sake of helping society
f) Effective sales promotions and advertising through an efficient marketing
team creating a high-perceived value.
g) Levels of employee motivation and job satisfaction through higher salaries
and bonuses compared to other competitors.
45. 44
3.4.2 Weaknesses:
a) Much of its rate depends upon a few well-recognized brands. This makes the
company vulnerable to any sudden changes in consumer behavior.
b) the company is heavily dependent upon advertising to shape the consumer
opinion and drive traditional sales. This can lead to high marketing costs with a
questionable return on investment
d) Weak promotional activities through websites.
e) Prices are suitable for most of customer segments.
f) Development of alternate sources for inputs to minimize dependence on a single
supplier, competitor depends on a lot of suppliers, which increases concentration,
risk and power of supplier.
3.5 financial ratios:
Liquidity
ratios
Ratios 2017 2016 2015 2014
Current
ratio
89% 85% 88% 103%
Quick ratio 64% 63% 64% 75%
● After holding a time series ratio analysis, it was observed that liquidity ratios
have been deteriorating throughout the given years. Therefore, the company
may face risk in fulfilling its short-term obligations.
51. 50
:
IFAS Matrix
1-The
innovation
leader in
private
healthcare
sector
0.07 4 0.28 Nestle is one
of the first
companies
that innovates
new services
such as the
home care
and chronic
diseases
department
2-offering
promotions
and
discounted
services to
meet all the
customer
needs
0.08 4 0.32 It’s one of the
big
companies
that offer
diversified
services due
to its health
informatics
department
3-strong
relationship
with retailers
and suppiers
0.05 3 0.15 Elaj has a
distribution
channel that
appears in its
availability in
the market
4-Brand
image and
servicequality
0.1 5 0.5 Elaj meets
the highest
quality and
this is
reflected by
the loyalty of
its clients and
patients
5-skilled
labor and
educated staff
0.08 4 0.32 Elaj focus on
the
qualifications
of its
employees in
order to
receive the
52. 51
high
performance
it shows
6-corporate
social
responsibility
0.05 5 0.25 Elaj has a
very good
CSR
department
that engage in
different CSR
activities not
fo the sake of
enhancing
reputation but
for the sake
of helping
society
7-the
collectivist
strong nature
of the
corporate
culture
perpetuates
team work
and group
effort
stimulating
employee
efficiency
0.08 5 0.4 Elaj motivate
its employees
that is
reflected in
the
performance
of thegroup
8- effective
sales
promotion
and
advertising to
satisfy all
classes of the
customers
0.05 5 0.25 Elaj has
efficient
marketing
team that
works on
creating a
high
perceived
value
9- level of
employee
motivation
and job
satisfaction
0.05 4 0.2 Elaj offer
higher
salaries and
bonuses
compared to
53. 52
other
competitors
subtotal 0.61 2.67
weakness Weight Rate Weighted
score
Comments
1-sales
depend upon
a few well
recognized
services will
make the
company
vulnerable to
changes in
consumer
taste
0.07 4 0.28 Although
Elaj has
many
services that
are well
known for all
its customers
such as their
Labs and
oncology
center but
this will not
cause a great
change in the
group
because it's
very costly
and need
specic
proffesionals.
2-new
projects such
as home care
and chronic
diseaes
department
0.05 4 0.2 Elaj is a huge
campaign
that could
reach its
target market
well with no
need to go to
specific
marketing
plan
3-weak
promotional
activities
through
website
0.09 3 0.27 Elaj can
reach its
target market
well and
could go
further by
54. 53
using more
promotional
techniques
4- prices are
not suitable
for all
customers
segments
0.07 3 0.21 Elaj prices
could not
cover all
segments but
at least it
covers their
target classes
5- company
is heavily
dependent
upon
advertising
this can lead
to high
marketing
cost
according to
the return on
investment
0.07 4 0.28 Although the
high cost it
spend on
advertising
but it can
create profits
as well
6-
development
of alternate
sources of
inputs
0.04 3 0.12 Elaj works
for having
more than
one supplier
to avoid the
power of
supplier
subtotal 0.39 1.36
total 1 4.02
55. 54
Section 4 : strategic factor analysis
4.1 SFAS Matrix
comments
Weighted
score
rate
weight
factors
Elaj meets the highest
quality and this reflected
by the loyalty of its
customers
0.5
5
0.1
S4.brand
image and
services’
quality
Elaj has a very good csr
department that engage in
different csr activities not
for the sake of enhancing
reputation but for helping
the society
0.5
5
0.1
s6.corporate
social
responsibility
Elaj is one of the first
companies that innovate
new products such as
fitness bars that is not yet
imitated
0.32
4
0.08
S1.the
innovative
leader in the
private
healthcare
sector
Elaj can reach its target
market well and could go
further by using more
promotional techniques
0.3
3
0.1
W3.weak
promotional
activities
through
website
Elaj prices couldn't cover
all segments but at least it
covers their target classes.
0.24
3
0.08
W4.prices
are not
suitable for
all customer
segments
Elajsuccessfully expanded
its supply chain to reach
all rural and urban regions
as well as its wide product
diversification that
entered the market
0.32
4
0.8
01.expanding
markets
Elajalready started
engaging in partnerships
with a number of major
companies such as l'oreal,
and several others
0.27
3
0.09
02.the
opportunity
to partner
with different
organizations
56. 55
in different
fields
0.3
3
0.1
04.trends
towards
healthy
eating
0.27
3
0.09
T3.buyers
power
Elaj tries to open its own
Labs and other
comprehensive services
that produce its services
in certain regions to avoid
the threat of increasing
the service value that will
affect its prices
0.27
3
0.09
T2.price
commodities
Elaj already opened its
own Labs and other
integrated services
0.36
4
0.09
T6.economic
policy
3.38
1
total
57. 56
4.2 Space matrix
Industry strength
Rate
Competitive advantage
rate
Expanding markets
4
Brand image and
product's quality
-5
The opportunity to partner with
different organizations in different
fields
3
Corporate social
responsibility
-5
Trends toward comprehensive
services
3
The innovative leader
in the private healthcare
sector
-4
Average =(3.333)
Average =(-4.666)
Total x score = -4.666 + 3.333 =-1.333
Financial stability
Rate
Environmental stability
rate
Group is heavily dependent upon
advertising this can lead to high
marketing costs compared to return
on investment
4
Economic policy
-4
3
Price of commodities
-3
Buyers power
-3
Average =(3.5)
Average = (-3.333)
Total y score =-3.333 + 3.5 =0.17`
Tows matrix
Weakness –w
1. Weak promotional
activities through
websites.
2. Prices are not
suitable for all
customer segments.
3.concentrating
product to giant
retailers
4. High advertising
expenses.
Strength-s
1. considered the
innovation leader in
the private healthcare
sector
2.offering discounted
services and contract
with a lot of
governmental and
non-governmental
organizations
3.Elaj has strong
relationships with
retailers and suppliers
4.brand image and
services' quality
5.skilled labor and
Tows matrix
58. 57
educated staff
6.corporate culture
7.corporate social
responsibility
8.high capital
Ow –strategies
-development of
quality products to
target middle class
consumers (w2+o1)
Os-strategies
- related
diversification to help
in more global
expansion (o1+s8)
- forming strategic
alliance with it
organizations to take
advantage of the new
developed
technologies
(o4+o2+s2)
- creating awareness
campaigns and
promote green
marketing concepts
and healthy eating
among people (o3+s7)
Opportunities-o
1.expanding markets
2.the opportunity to
partner with different
organizations in
different fields
3.trends towards
healthy eating
4.the development of
new technologies.
5.anti-allergy products
Tw-strategies
-increasing
promotional activities
with more web
development to lead
industry
Threats –T
1.competition in the
market
2.price of
consumables
3.buyers power
4.economic policy
5.political
environment
59. 58
4.4 Grand strategies
a) Product growth strategies.
The emphasis in product portfolio analysis is on managing an existing set of
products in such a way as to maximize their strength, but groups also need to look
to new services and markets for future growth'. The most efficient way for
analysing the opportunities for growth in an organization is the ansoff matrix.
b) Market penetration
Market penetration is the process of increasing its customer base in the existing
market by winning over the customer base of its competitors for further growth by
means of achievements, promotion, price cutting, and differentiation and seeking
new segments.
This can be achieved by acquisitions in the case of Elaj , when it acquired Cairo
Labs in 2017.
c) Product development
Product development involves the development of new product ranges for an
already existing market for further growth .one way of product development is
replacing the old product with a newer version. Another means of achieving this is
to expand its product line thereby providing more choices to the customers.
Elaj has opened an oncology center which is specific and unique.
e) Diversification
Diversification can be achieved ''either with related products or services and
markets and unrelated products that are totally unconnected with the existing
products and markets.
Elaj services’ diversification is clearly evident from its services portfolio where
they have Employing company and Insuring company, which are different from
other services.
60. 59
Section 5: quantitative strategic planning matrix (QSPM)
Market
development
Market
penetration
Key internal factors
TAS
AS
TAS
AS
weight
Internal strengths
0.35
5
0.28
4
0.07
The innovative leader in the
private healthcare sector
0.32
4
0.4
5
0.08
Offering multiple services
0.2
4
0.25
5
0.05
Strong relationship with retailers '
0.4
4
0.4
4
0.1
Brand image and services ‘quality
0.24
0.24
3
0.08
Skilled labor and educated staff
0.2
0.2
4
0.05
Corporate social responsibilities
0.24
0.24
3
0.08
The collectivist strong nature of
the corporate culture perpetuates
team work and group effort
stimulating employee efficiency
0.2
4
0.25
5
0.05
Effective sales promotions and
advertising
-
-
0.05
Levels of employee motivation
and job satisfaction
2.15
1.86
Internal weakness
0.21
3
0.28
4
0.07
Sales depend upon a few well-
recognized brands will make the
company vulnerable to changes in
customer needs
0.15
3
0.15
3
0.05
New projects such as homecare
might not reach other places like
rural areas
0.45
5
0.36
4
0.09
Weak promotional activities
through website
0.35
5
0.28
4
0.07
Prices are not suitable for all
customer segments.
0.35
5
0.28
4
0.07
Company is heavily is dependent
upon advertising, this can lead to
high marketing costs compared to
the return on investment
0.08
2
0.12
3
0.04
Development of alternate sources
for inputs
1
sum
61. 60
Key external factors
opportunities
0.8
5
0.64
4
0.16
Expanding markets
0.4
5
0.24
3
0.08
The ability to partner with
different organizations in different
fields
0.32
4
0.4
5
0.08
The development of new
technologies.
0.24
3
0.4
5
0.08
trends towards healthy eating
0.24
3
0.32
4
0.08
Trends for anti-allergy products
Threats
0.27
3
0.36
4
0.09
Competition in the market
0.5
5
0.5
5
0.1
Price of commodities
0.18
2
0.18
2
0.09
Buyers power
0.24
3
0.24
3
0.08
Political environment
0.28
4
0.35
5
0.07
Growth of private labels
0.36
4
0.45
5
0.09
Economic policy
1
sum
7.57
7.41
Total sum of attractiveness score
