* Background about ABC Company
Al Ahram Beverages Company was established on 110 years ago. In 1897, the Crown Brewery Company starts to be included in Belgium to begin its functions in Alexandria. Then in 1946, Dutch Brever Heineken entered in cooperation with the Company. In 1963, the government was under control of the company for the past 50 years. After 22 years, the company's name was changed to al Ahram Beverages Company. In 1997, the company was privatized by an Egyptian entrepreneur. Finally in 2002, because of the company's development, there was an acquisition of ABC by Heineken group. In January 2006, there was a complete turnover for all the company's activities and overall domains to the extent that it is under the national and multinational supervision. The high degree of the company's commitment to grow and develop has a positive effect on all its different procedures for the good benefit of the portfolio, development programs for the employees, career enhancement and higher performance. In 2002, Heineken international provided ABC for a total enterprise value of 360$ million which was considered one of the most successful and beneficial deal to apply to the concept of privatization. ABC had also signed a deal with Saudi Arabia, Bahrain, Kuwait and Qatar for the distribution of its non-alcoholic products in these countries in order to increase profit and to become more global in the Arab countries beside its alcoholic products and soft drinks.
I. Current situation
A. Current Performance:
Profitability is the state of I financial profit or gain to the corporation, it is often measured by price to earnings ratio. Profitability is the potential to be financially successful and the company’s goal to be making a huge profit not a loss. In Al Ahram Beverages company case (ABC), we can see than at year 1997 it hadn’t any competitors at this time therefore it had a yearly regular profits. In the 1970’s abiding by the public sector financial system ABC Company suffered from a slowdown in revenues, this was clear that the profitability decreased. During this period beer revenues were adversely affected so the profit curve was affected too. Due to the geographic location of Egypt that is positioned in the northern corner of the African continent, this provided more investors to ABC Company and an easy access to many countries. Due to Egyptian's location, there was a huge profitability. Soft drinks in ABC Company made 37 % of gross profits. According to the Egyptian’s law, employees were entitled to at least 10 % of net profits to be paid in cash. Also profits were distributed among the work force, to an amount that didn’t exceed their total annual salaries. * Market share:
Market share is the markets total sales that a certain company earns over a certain period of time. We can calculate the market share of any company by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. Market share is the percentage of sales of a particular thing such as a product or service in a given region that are controlled by a company. In 1993 at ABC Company it transferred its shares to the holding company. In February 1997, a sale of the government’s remaining 75% of shares in ABC Company was completed within the true privatization. The shares were bought for USD 96 million by the Luxor group. An additional 700 shares were sold to Luxor by the governmental holding company for 86.1 EGP per share. ABC Company products held between 90% and 95% market shares in alcoholic and nonalcoholic beer. * Return on investment:
It is a measure used to evaluate the efficiency of an investment or another use which is to compare the efficiency of a number of different investments. The formula of the return on investment is:
Return on investment is a way in order to consider...