Running head: Egypt 1
Business Environmental Analysis Report: Egypt
Rosa Roberts
Liberty University
August 08, 2015
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Running head: Egypt
Abstract
The country of Egypt can be found in the northern part of Africa. This part of the world
can be dated back to ancient times and therefore it is home to a large amount of culture and
history that is still being studied today. Egypt has some larger cities, such as Cairo, that be used
as for profitable business locations as well as domiciles for businesspeople. Most of Egypt’s soil
composition could be considered desert, however the farmers there are able to still produce crops
such as rice, beans, and cotton. The airports and roads need some major upgrades but they still
allow for the transport of people and goods. The revolution of past years made the way for
government changes and the citizens of Egypt are still adapting to the new ways. Islam is the
main religion practiced in this area and may conflict with Western Christian beliefs. Egypt could
prove to be an excellent prospect for international investors that are willing to do business in this
area of the world.
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Running head: Egypt
Purpose of the Report
Egypt is located in Africa and is one of its larger countries. The area of Egypt is so large
that it can accommodate many different religions, cultures, and even businesses. A large part of
the residents live in the major cities, such as Alexandria, and other inner-city areas. Even though
the inner part of the land may be dry and comprised of desert, Egypt does have access to canals
which aid in transportation opportunities. The country recently faced a major uprising by its
citizens which brought political change and, in spite of everything; the populaces are hoping to
recuperate.
The aim of this paper is to review and analyze Egypt’s cultures, both social and business,
to discuss whether or not Egypt would be a viable area for business prospects. The revolution
faced by the nation would need to be examined to see if there is any remaining discourse that
could harm business dealings. Investors and managers would need to look at the land and
climate of Egypt to determine what natural resources would be available and the cost of attaining
needed raw materials. The ease and availability of advanced technological resources would need
to be a consideration for future business since the global market is largely computerized. Also,
the Islamic culture would need to be analyzed as there might be some issues that arise with
Christians and how they view business transactions.
Natural Resources and Environmental Sustainability
Egypt is positioned in the northern part of Africa and can claim a population of
approximately 63 million people (El Bedawy, 2014). The industrialized areas are more
populated than the outskirts of the country which is mostly undeveloped desert land. Although
it there is a considerable amount of land, the country does have access to several different seas
that can be used for transportation purposes. The summer climate can be very hot however the
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Running head: Egypt
winter climate is much more pleasant. The hot, dry climate of Egypt does not allow for a
substantial farming industry. The country does manage to grow legumes and other vegetables
that are sustainable with such an environment. In fact, the agricultural product of the country
significantly contributes to the overall wealth of Egypt and provides an occupation to the
residents.
Water is a large natural resource and one of the most important. It is needed for the
development and endurance of businesses. It is also needed for the production of food. Because
there is so much desert land in Egypt, the country does have some problems with the water
provisions and this problem is more prevalent in the inner cities. Even though Egypt is large and
has a rich history, it is still considered a developing nation (El Bedawy, 2014). Richer countries
that face water issues are able to use their resources to make up for the shortage by investing in
expensive technology to help recycle the used water. Developing nations, such as Egypt, are not
afforded such luxuries and must find other ways to resolve the pending water crisis. If Egypt
does not do something to correct the water issues, the future may be look bleak.
There are several factors that contribute to the water shortages faced by Egypt. An
increase in population, wastewater, and industry are a few of the reasons. “Agriculture in Egypt,
as in most developing countries, represents the main usage of water, followed by the residential
and industrial uses” (El Bedawy, 2014, p.109). Another issue is that poorer residents that live
near the canals may dispose of their trash into the water since the really have no other alternative
for refuse removal. Currently, Egypt is almost completely dependent upon the Nile; however
there is little rainfall that adds to the river’s level.
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Running head: Egypt
Egypt has the capability of improving its current situation. Changes, such as the Ministry
of Water Resources and Irrigation, are in place to face the water shortage challenges however the
government needs to implement strong policies and procedures to address the issues. Water
management recourses need to be analyzed and organized by the Egyptian government to alter
the current water usage and waste. Even though Egypt does use much of its water sources for
agriculture, they still have to import most of their food grains.
Economic and Socioeconomic Forces
Much of Egypt’s financing is received from a various number of resources. The poorer
or less advantaged citizens live in outside the cities in the rustic areas of Egypt. The wealthier
parts of the population live in the inner cities, close to the industries. Egypt may not be as
modern as other Middle East countries however they do have technologies as radio and
newspaper. Egypt has roadways that lead to the cities and villages however very few of them are
paved. This may cause a problem if a company has to import goods into the area. Even the
paved roads are in substandard condition. The roads that are in partially acceptable condition are
overworked which means the acceptable condition is short-lived.
The country does have access to numerous railroads. However, just like the roadways,
the rails are not in ideal shape and upgrades to the system are desperately needed. Railroads can
be an important method of transportation to both import and export goods. Those areas in the
more rural areas may need to rely on the railway system if the roads are inadequate for larger
delivery vehicles. Egypt also has several airports that can be used both for personal
transportation and the transportation of goods. However, these airports are also in need of
maintenance and are considered substandard to that of more developed countries. Reliable
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Running head: Egypt
transportation systems are needed to help develop a stable economy and keep it functioning
successfully.
Privatization has been an interest in Egypt. It was enacted as a tool to help encourage
economic growth (Gebba & Ahmed, 2013). The ones that have supported the idea of
privatization believe that service and performance are better delivered from the private sector.
Privatization in Egypt occurred in 1991 to aid the country’s economic reform programs. “The
central objective of the privatization program in Egypt was to increase assets efficiency” (Gebba
& Ahmed, 2013, p. 252). The privatization program would also help Egypt create long-term
employment options and would allow for more funds available to social services programs.
After the revolution of 2011, the country faced financial and political uncertainty. There
were protests and demonstrations that hindered any type of economic growth and negatively
affected the established businesses. With all of the turmoil, the current investments and
investment opportunities into Egypt also suffered. In 2013, the economy was still distressed and
needed to find ways to regenerate revenue by analyzing not only the economic policies but also
societal and ecological polices (Ramzy, 2013).
The Egyptian government needed to reanalyze and re-assess the current status of some of
their revenue producing opportunities. One of the largest revenue sources in Egypt is tourism.
Because of the rich history of the land, Egypt has experienced a large revenue from tourismary.
Even after the revolution, Egypt still produces literary masterpieces. “Therefore the literary
realism of significance may be said to be a matter of an awareness of the present continuous or of
modernity as a continual entering into history” (Rooney, 2011, p. 370). Due to the evolution, the
tourism industry saw a steep decline in revenue. Before the revolution, tourism brought in
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Running head: Egypt
approximately 13 billion dollars (Ramzy, 2013). However, that number declined by about 45%
in 2011. The steep decline in the revenue also affected the Egyptian workers. The tourism
industry in Egypt accounted for about 3 million jobs and approximately half of that was lost as a
result of the revolution. While it is not as large as tourism, the industry of construction is another
one that may prove to generate revenue for the country. An increase in the prices of concrete and
steel should have proved fruitful for the nation however Egypt has not been able to harness the
full potential of the products.
The size of Egypt can be a positive factor for a strong economy. The financial status of
Egypt is determined by different factors such as the tourism and construction industries as well
as such small industries as oil, textiles, agriculture, and mining. Egypt also exports petroleum to
different parts of the world such as the United States and Germany. The country is also a large
exporter of cotton, which proves to be a profitable agricultural export. The country also imports
such goods as wood and leather.
While a large populace can be a good thing, it can also create problems for a country that
is already struggling. The increase in population has created an increased demand what little
natural recourses available to Egypt (Baghat, 2013). The need for gas, oil, and electricity has
become so large at times that the needs have not been filled.
Political Forces
A tragic incident in 2012 would overshadow the ceremony of Mohamed Morsi. Sixteen
soldiers would killed shortly after he was officially named president.. The new president viewed
this as an opportunity to reorganize the Egyptian military forces. Many current leaders were
released and General Abdel Fatah Al-Sissi was hired to direct the newly streamlined military.
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Running head: Egypt
Morsi became obsessed with control. His next actions were to obtain power over all of Egypt’s
government and banned any media that would publically stand against any of these movements.
Since he had control of the government, Morsi decided that there would not be any type of
judicial review allowed on his arrangements. This decision was the onset of Egypt’s political
troubles and turmoil that would start a revolution.
The recent actions taken by Morsi afforded him a great power over the nation of Egypt.
His current position of President was being misued by not allowing any type of objection to the
moves or decisions that were being made (Trager, 2013). “Furthermore, when President Morsi
feared that the judiciary would also close the upper house and the constitutional assembly, he
decreed on November, 22, 2012, that those assemblies were immune from judicial action and
that his own degrees were immune from judicial review” (Lesch, 2014, p.68). The political
turmoil was not the only effect of his Presidency. There was also a disruption arising in the
religious community. Those residents of Egypt that did were not Islams began to protest Morsi
while the Islamic party supported his decisions. The Muslim community has a strong influence
in Egypt while there are not officially viewed as political. On June 3, President Morsi was taken
out of power. Adly Mansour was named as his official replacement.
Egypt can mostly be considered a conservative country. The nation has faced its fair
share of government corruption and disorder however the citizens have been able to recover and
move forward. However, the corruption that has existed within their government has affected
their economic status. “In addition, the interaction between corruption and government
expenditure lowers the economic growth in Egypt by reducing the effectiveness of government
expenditures on economic growth” (Ghalwash, 2014, p.1008). While the revolution may be a
thing of the past, the country is still healing and must make important choices regarding their
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Running head: Egypt
future. Mistakes of the past should resonate throughout the country as a reminder of how things
can become devastatingly bad very quickly.
Legal Forces
While the Muslim population is not considered a political party, it does have a strong
influence on Egypt’s government. The Muslim Brotherhood, as they are known, are not
advocates of change in the nation and are the greatest opposition to the country’s advancement.
“Instead of adapting to the norms of the state, al-Anani said, the Brotherhood has made the
mistake of trying ‘to adapt the state to their organizational norms and values’” (Sprusansky,
2013, p. 59). Islam is the main religion in Egypt and Muslims are trying to incorporate their
belief system into government policies and regulations.
The pressure on government officials by the Muslims can prove to be very effective.
Lawmakers can feel distressed when the Brotherhood tries to influence law and policies. Even if
Muslims are not able to incorporate their beliefs into the laws of Egypt, their presence can sway
public opinion since the nation is largely Islamic. They can then use their platform to tell the
Islamic population that their government does not respect their beliefs by not incorporating Islam
into Egyptian law.
The legal system can face its battles with the Muslim Brotherhood as well. For instance,
there may be times when the law does not agree with Islam. In most instances, the presiding
judges would issue their rulings so that the Islamic beliefs are upheld. Even if the ruling was
appealed to a higher court the rulings are usually not overturned (Moustafa, 2010).
Financial Forces
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Running head: Egypt
Egypt has received financial support from both the World Bank and International
Monetary Fund. The International Monetary Fund (IMF) had an ulterior motive as they were
interested in created state-owned corporations. However, Egypt had no interest in doing that
since they desired to maintain the public owned industries. Even though the idea was rejected,
Egypt did receive financial aid from the IMF to help their economy advance. They have also
received financial assistance from the United States and other countries located in the gulf.
Egypt also participates in Islamic banking practices. Islamic banking started with two
institutions back in 1967 and Islamic financing has continued to grow. Religious foundations are
the basis behind Islamic banking which means the industry rules must coincide with the rules of
Islam. There are four ideologies that dictate how the establishment conducts business. The first
one, and probably most important, does not allow for interest to be collected or paid. In 1974,
Nassar Social Banks was created and it was the first bank that barred any activities that involved
interest (Fayed, 2013). The second principal prohibits any business transactions that may be
considered abstract. Thirdly, Islamic banking has placed a ban on any type of gambling activities
as it violates the Shari’aa. The last rule is that offerings must be given.
As it was established in the 1960s, the concept of Islamic banking is not new however
there has not been significant growth in Egypt. As of 2009, Islamic banking only accounted for
a fraction of Egypt’s banking industry (Fayed, 2013). Corporations that do business with Islamic
banks must be aware of certain conditions. There will be an Islamic tax that is charged and the
bank will openly discourage the production of any goods or services that go against Islamic
values.
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Running head: Egypt
While the growth of Islamic banks in Egypt may be slow, there are currently over 500
Islamic financial institutions around the world. Their current assets have grown by more than
20% in only a few years. The Islamic banking structure has proven to be a valuable asset in
money countries and has gained acceptance in many communities. “It has also gained approval
by international financial institutions (IFI), professional bankers and the academic world”
(Fayed, 2013, p. 2).
Labor Forces
The tourism industry is a large contributor to the employment status of many Egyptian
citizens. The revolution, however, reduced the number employed in the tourism industry from 3
million to about 1.5 million (Ramzy, 2013). Most employees work a long shift that can start at
that lasts approximately 11 hours however there is generally a long lunch break that divides the
time. The work schedule is the same as the Western part of the work and the weekend is Saturday
and Sunday. Most of the employees are located within the inner cities however a small amount
of workers do exist in the farmlands.
Egypt does face a challenge in creating more jobs for its citizens. The revolution
eliminated many of the tourism jobs and an increase population of college graduates has created
a dreadful unemployment situation for the country. “It is estimated that the Egyptian economy is
in need to create a million jobs every year to absorb the new entrants into the labor market
(estimated at 700,000) and reduce the persistently high unemployment rate that has surged above
13 percent post the revolution and is significantly higher among the youth, more than 25 percent”
(Hassan & Kandil, 2014, p. 130). The areas in Egypt that have the greatest possibility of added
jobs are construction and manufacturing.
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Running head: Egypt
Implications for US Managers
There are several issues that could face United States managers if they try to establish a
business in Egypt or even conduct business transactions with corporations. They should be
Managers must be cognizant of their responsibilities to the area in which they are trying to do
business. Upper management should definitely be aware of cultural differences and language
barriers that will exist in different countries. In Egypt, there are three languages that are
commonly spoken: English, Arabic, and Spanish. Corporations may also face pressure from
governments to certain demands and criteria.
One main item of concern for any corporation is the large religious population in Egypt.
The country is home to several different religions, such as Christianity and Islam. The variety of
religions that exist in Egypt could prove problematic for outside business, especially if that
religion does not agree with their policies. For example, the large Muslim population in Egypt
could protest or block any dealings with the United States as they view Westerners as evil. They
are not willing to allow the beliefs of the Western world penetrate their lands.
As previously mentioned, Egypt’s telecommunications systems may prove to be
inadequate for the demands of a fast-paced global corporation. While they do have telephone
systems in Egypt, they may not be of a high quality which could hinder some telephone
transactions. The phone equipment is in desperate need of maintenance and Egypt’s financial
situation may not allow for these upgrades to be made. There is also the option of cell phone use
in the country however you would have to be able to locate a cell tower.
Managers need to be aware of the continued turmoil that exists between two Islamic
groups that live in Egypt. There are belief differences between the Muslim Brotherhood and a
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Running head: Egypt
group of Salafists that could prove to be almost dangerous for any outsider. Salafists believe that
true Islam is linked back to the very earliest generations and that those primal beliefs should still
be honored. The Qur’an, the book used by Islam, is one that should be respected and practiced
fervently. They believe this so much that the men will style the hair on their face so that they
more closely resemble Mohammed, who is their prophet. It is because of these beliefs, they
played a major role in the revolution as they tried to return Egypt to a nation that only honored
the Islamic faith.
The Salafists have a stricter belief system than that of the Muslim Brotherhood. The
Brotherhood’s beliefs are slightly more liberal as they believe that every person should be
allowed certain freedoms. However, these freedoms should still be based on the word of the
Qur’an and be within the Islamic beliefs. The freedom valued by the Brotherhood does not
translate to the freedom found in the West, especially in the United States. With regards to the
Qur’an, the Brotherhood allows a little more interpretation into its words whereas the Salafitsts
are more literal in its meanings.
Managers should definitely be aware of the tensions that may still exist between the US
and Egypt. These tensions have been existence since President Morsi was removed from power
in 2013. Many Egyptians feel that the United States only became involved or interested in the
political unrest to protect their interests in Egypt. “American policy vacillated between tacit
support and criticism of the new government, especially after its crackdown on Morsi supporters
in mid-August, but did not fundamentally change as Washington tried to preserve it equities in
Egypt since the 2011 revolution and reflects continuing US policy goals in the Arab world’s most
populous country” (Aftandilian, 2013, p. 17). The United States did not take a definitive stand
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Running head: Egypt
when it was obvious the nation of Egypt was in trouble. Because of their lack of action, United
States policy makers have very little control on Egyptian policies.
This prompted many protests and demonstrations within the country. However, the
United States failed to react to the news which led many Egyptians to believe that the United
States had entered into some type of agreement with the Muslim Brotherhood. Even though
John Kerry, Secretary of State, publically stated in a visit to Egypt that he was only there on
behalf of President Obama and now other reason, opponents were still suspicious.
These events have created a low opinion of the United States in Egypt. The US
government seemed to back Morsi and openly questioned his removal from the Presidency.
Many Egyptians feel that the United States does not have a complete understanding of the threat
the Muslim Brotherhood can pose to the nation. On the other side of the issue, the Muslim
Brotherhood feels the United States is backing the military forces in Egypt with no concern to
human rights and their currency policies are against true democracy in the land. In order to
establish a positive relationship with Egypt, the United States must realize where they have
failed. The US government should have been more vocal, and possibly, active against any
violent protests held by the Muslim Brotherhood. The U.S. also needs to continue to provide aid
to Egypt as that would be in the best interest for an already strained relationship. “Hence, it
would not be prudent for the United States to suspend or cut off aid because that would remove
whatever limited influence the United States still has in Egypt, and would not advance the
democracy agenda” (Aftandilian, 2013, p. 26).
Those looking to make the investment in Egyptian businesses have advantages that they
can explore. Short term financing may be available and the market has been redesigned so that it
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Running head: Egypt
can efficiently handle any type of outside investment. Because of the ever changing global
society, corporations are struggling to remain a competitive force.
Integration of Faith and Learning
Faith and religion can shape the ideals and policies of any country. As seen in the case of
Egypt, their Islamic faith is very strong and has caused a rift in their population. Managers
should be sensitive to the religious beliefs and customs of any country with which they plan to
do business. The religious beliefs of a nation can be found instilled in their customs, policies,
and even laws. The country of Egypt does not harbor some of the radical Islamists like other
Middle Eastern countries, however there Muslim population have very strong opinion as to how
their country should be lead and what direction needs to be taken in the future.
The increasing influence of Islam in Egypt has created some stumbling blocks for the
Christians that currently live there and for those that choose to conduct business in that region
(Hanna, 2014). Therefore, Christian managers need to be prepared should any disputes arise
because of the religious differences that exist. Even though there may be some variances in the
beliefs, people should still treat each other with respect. This also should apply to business
dealings. he book of Leviticus tell us “You shall not steal, neither deal falsely, neither lie one to
another” (Leviticus 19:11, KJV). All business transactions should be handled with honestly and
a sense of morality.
Managers should also be cautious about entering into business relationships in countries
that do not honor the Christian faith. While all corporations are in business to make money, the
word of our Lord must take precedence. “For what shall it profit a man, if he shall gain the
whole world, and lose his own soul? Or what shall a man give in exchange for his soul?” (Mark
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Running head: Egypt
8:36-37, KJV). The pursuit of money and riches should not interfere with our relationship of our
Lord, Jesus Christ. When we start to put worldly greed above God, then our lives are in peril.
Managers also need to evaluate how a country supports its people. No manager should
enter into a business relationship with any country that takes part in corrupt actions such as abuse
or neglect of its countrymen. Managers should also investigate potential partners to determine if
they take part in any illegal activity such as drug trafficking or providing weapons or financial
aid to those who participate in violent acts against the people. Managers must realize that the
name and reputation of their company could come under fire if it was discovered they had any
type of relationship with a company that was participating in such deplorable acts.
Christians can still conduct business transactions with other corporations or countries
even though a different religion may be practiced there. However, the Christian manager must
be willing to stand strong if, or when, Christian beliefs come under fire by those that do not
believe in God. As previously stated, there is no amount of earthly riches that should be worth
the riches put aside in Heaven for those that do God’s work here on Earth. All parts of the U.S.
Corporation, especially the stockholders, should be on board if a dispute should arise that
involves the Christian faith.
Christian managers should also be mindful of their own company and its product. All
business transactions should be honest and all parties should be treated with the upmost respect.
The product or service provided should be of the best quality and should be a representation of
our Lord’s work. Managers should not endorse any product or service that would bring shame to
God and His word.
Conclusion
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Running head: Egypt
While the relationship between Egypt and the United States may be strained, there are
still some opportunities to establish business relationships within the country. The land is full of
rich culture and offers the inner city need of a large corporation. However, there is a lot of
political and religious unrest that could cause problems for an outside company. Also, some of
the transportation avenues, such as the railways and airfields, are substandard which could hinder
the transportation of product. There is a shortage of water and the phone lines are not adequate
for a large company’s needs. The Islamic population is strong and you do have some extremist,
such as the Salafists and Muslim Brotherhood that would need to be considered before
establishing any corporation in the nation. There is a lack of funds in the economy due to the
revolution that had a negative effect on the tourism industry. All of these items should be
considered when analyzing Egypt for a potential are of business.
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Running head: Egypt
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