Case
Teaching Notes
Supplementary Resources
Abstract
On December 3, 2016, Mostafa, the CEO of EMA-INK, had just finished a meeting with the company’s top executives following a month of many changes that had had a huge effect on its wealth and stability. It had been one month since the central bank of Egypt (www.cbe.org) had announced the devaluation of the Egyptian pound to a value of 18 EGP/US$, up from 8.88 EGP/US$, which constituted a tremendous change in the currency’s exchange rate.
The company’s performance had been very good since it started, with constant growth from year to year. In 2011, after the Egyptian revolution, the company’s sales growth had begun to slow down, with the presence of lower-priced competitors and the economic downturn that happened in Egypt. Since then it had been struggling, trying to reduce its expenditure and innovating for new product launches.
The paints industry was still a lucrative and growing market, with numbers showing a positive outlook into the future. The main entry barrier was the development of good formulas that were compatible with mixing machines and remained competitive. Could this be done and could the company develop the know-how to achieve this? Eng. Aly, a newly hired expert in paints, had interesting yet perplexing suggestions to offer to top management that would entail a decision on whether to invest in inks, the current company business, or focus on a new star, paints, that could leverage the company’s future position.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved
Resources
Table 1. Actual vs. Forecasted Paints Industry Growth. | ||||||
---|---|---|---|---|---|---|
Actual | Forecasted | |||||
Year | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
Paints sales (US$ mn) | 706.2 | 764 | 855.7 | 958.36 | 1073.4 | 1202.169 |
Table 2. Egypt’s economic indicators. | ||||
---|---|---|---|---|
Indicator | 2017 | 2018 | 2019 | 2020 |
Real GDP growth | 4.2 | 4.8 | 5.3 | 5.5 |
Lending rate (av) | 19.5 | 16.5 | 13.5 | 12 |
Exchange rate EGP/US$ (av) | 17.79 | 16.56 | 15.89 | 14.88 |
Consumer price inflation (av) | 26.8 | 15 | 10.7 | 9.7 |
Table 3. Flexographic ink market share by supplier. | |||||||
---|---|---|---|---|---|---|---|
Market share | Actual (%) | Forecasted (%) | |||||
Company | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
EMA-INK | 65.0 | 58.0 | 55.0 | 49.0 | 46.0 | 40.0 | 40.0 |
Pachin | 10.0 | 12.0 | 14.0 | 16.0 | 18.0 | 20.0 | 22.0 |
Techno | 2.0 | 6.0 | 9.0 | 10.0 | 12.0 | 15.0 | 18.0 |
Others | 23.0 | 24.0 | 22.0 | 25.0 | 24.0 | 25.0 | 20.0 |
Table 4. Market size and cost of goods sold (COGS) for flexographic inks. | |||||||
---|---|---|---|---|---|---|---|
Market size (EGP mn) | 50 | 55 | 62 | 100 | 111 | 120 | 127 |
COGS % | 70.00 | 70.00 | 72.00 | 80.00 | 80.00 | 82.00 | 83.00 |
Table 5. Expected market share of EMA-INK in paints. | ||||
---|---|---|---|---|
Year | 2017 | 2018 | 2019 | 2020 |
EMA-INK expected market share (%) | 0.50 | 0.90 | 1.20 | 1.50 |
Table 6. Expected improved market share and export value in the case of investment in marketing by EMA-INK. | ||||
---|---|---|---|---|
Year | 2017 | 2018 | 2019 | 2020 |
Local market share (%) | 50.0 | 57.0 | 61.0 | 64.0 |
Export market sales value (US$) | 90,000 | 187,000 | 420,000 | 670,000 |
The parts labeled comprise an ink pan, fountain roll, anilox roll, plate cylinder, and impression cylinder.
A boat-shaped structure at the base forms the ink pan which is mounted with four rollers adjoining one above the other. A roller mounted into the ink pan is labeled fountain roll. Adjoining the fountain roll is another roller labeled anilox roll. Adjoining the anilox roll is another roller labeled plate cylinder. The plate cylinder has three equidistant indentations along the edge. Adjoining the plate cylinder is another roller labeled impression cylinder which is separated from the plate cylinder by an angular structure. The ink flows from the ink pan to the fountain roll, anilox roll, plate cylinder, and into the impression cylinder respectively indicated by alternate anticlockwise and clockwise arrows within the rollers.
Figure 1. Flexographic Printing.
A rectangular package has a label of Whole Wheat flour.
An arrow indicates toward the front of the package which reads as follows:
Food grade Kraft brown/white paper FDA, FSC, SGS Certifications.
An arrow indicates along one of the sides of the package which reads as follows:
Surface Finishing:
Printing: CMYK plus 2 color flexo printing with water based ink.
An arrow indicates along the inner side of the package which reads as follows:
Inside Finishing:
Full poly lamination inside for water, tear resistance.
Figure 2. Flexographic Ink on Paper Bags.
Figure 3. Flexographic Ink on Cartons.
Figure 4. Traditional Paint Color Mixing Machine.
Figure 5. Paint Coloring Machine Proposed by Eng. Aly.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved