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International Business: Egypt

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by

Kacie Barnwell

on 12 November 2012

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Transcript of International Business: Egypt

International Business: EGYPT Political Environment a time of change Reconstruction after revolution
Protests and demonstrations
Who all is in charge?
Islamic power Legal Environment New constitution in formation
Honors pre-revolution treaties and agreements
Honors Protection of Property Rights
Bribing is a common issue Okay, there's high political risk. So, What should we do? Foreign companies can gather current information from specialized independent agencies
Seek advice from others Economic & Monetary Environment Large debt (over $3 billion to the U.S.)
2011 GDP: $525.6 billion (increasing)
GDP per capita at PPP (Purchasing Power Parity) in 2011: $6,600 (increasing)
Unemployment is increasing (9% in 2011 - 12.2% in 2012)
Inflation is decreasing (11.1% in 2010 - 10.2% in 2011) So what does this mean? Increasing GDP means market is growing
GDP per capita at PPP reveals that market intensity (buying power of market) is relatively low Labor Force: services (51%), agriculture (32%), industry occupations (17%) Dominating Industries: textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, and light manufacturing Main agricultural products: cotton, rice, corn, wheat, beans, fruit, vegetables, cattle, water buffalo, sheep, and goats Egyptian Pound Central Bank of Egypt (CBE) has the responsibility of formulation and implementation of monetary policy
Monetary Policy Committee is the decision making body - meets on 1st Thursday of each month to decide policy rates
Overall, monetary policy is stable and predictable "Fiscal & monetary policy actions helped cushion the impact of the global slowdown on the economic activity in Egypt" Rates should be stable and changes in fiscal policy and monetary policy are unlikely. (Corporate tax rate is a standard 20%)
Easier for businesses to predict future earnings & calculate capital needs Businesses should seek information from the World Bank and International Monetary Fund. Growth in imports has created a trade deficit Main exports: oil & petroleum products, cotton, textiles, metal products, chemicals, and processed food Most exports are sent to: Italy, Germany, the U.S., India, Saudi Arabia, Spain, & France Main imports: machinery, foodstuffs, chemicals, wood products, and fuels Imports come from China, the U.s., Germany, Turkey, and Brazil Culture Friendly
Strong family ties
Hosting is taken seriously Language: Arabic
Muslim (90%), Coptic (9%), Christian (1%) Ramadan: a month usually around August/September Muslims fast during the day
A meal is eaten at night
Businesses close Businesspeople should greet with, "Ramadam Karim" Festive and decorative Always say, "No, thank you," first
Never tip business professionals
Personal space is not an issue with Egyptians
Conservative dress
Showing sole of shoe is disrespectful
Business cards should always have an Arabic side
Large power distance
Collective society over individualist
Age is respected
Eye contact is a sign of honesty and sincerity Opportunities Strategic location
Food and beverage sector expanding because of economic growth
Stability in monetary environment
Predicted improvement Challenges Unpredictable muddle of guidelines and protocols can be confusing & could effect profitability
Unfamiliar practices and bureaucratic processes make performing business slow Professionals should visit www.egypt.gov Egypt is undertaking a major evolution and conversion in its investments, business, and commercial laws 3 branch system
Executive branch
Legislative branch (bi cameral)
Judicial branch Keep a thumb on it!
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