How to Make a National Company in Egypt into a Multinational One?

This research explores the challenges and opportunities of transforming a national automobile company in Egypt into a multinational one, with a focus on expanding into the United States market. The article discusses the current state of the automobile industry in Egypt, the advantages of expanding into the United States market, and the factors affecting the automobile industry in the United States. The article also covers the business strategy theory and its application in international expansion.

Running Head: HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO
A MULTINATIONAL ONE?
Students ID:
Name of the University
Authors Note

1HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
Introduction
The topic chosen in the research deals with the combination in between a company
and industry for transforming the national company in to multinational one. However, the
subsequent topic focuses on a Family business of El , which implies the automobile industry
in Egypt. It has been found from research that the automobile industry in Egypt has suffered
highly for the period of 3-4 years since the surge of dollar currency during inflation.
Therefore, business owners as those period, has faced high losses in terms of their
productivity.
According to Ascani Crescenzi & Iammarino (2016), the Egyptian Industry of automobile
resonates as a market of prestige and self-sufficient industry, but it also has tangible
advantages for growing the economy of the country.
In spite of the positive forecasts of Egyptian automobile market, industry players are
less expecting for their short-term outlook in the industry. This is because, most of the 2015
era have seen the manufacturers subject to a huge dimensions of wider macroeconomic
challenges consisting of an energy crisis, a devaluation of currency and reeducation in dollar
that is hampering the results and inflating cost of manufacturing. Apart from these, AMIC has
given an optimistic assumption that there will be 7% growth in the year 2017, but the existing
figures of the industry shows that there is tough year ahead for the industry (Manova, Wei &
Zhang, 2015). However, in existing era, the ownership of vehicles in Egypt is comparatively
low, with an approximate amount of 35% out of every Egyptians who owned care in relation
to the statistical figure of almost 130 per car amongst 1000 in Algeria (Lasserre, 2017).
The weakening Egyptian pound has made the importation of the car products for
assembling more expensive than any other countries. Provided with this, the automobile
industry transports almost 60% of the required parts, as a result, there is a substantial effect
on the cost of production followed by the selling price of the vehicles (Preuss, Barkemeyer &

2HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
Glavas, 2016). Therefore, provided with limited availability to Egyptian dollars owing to the
measures taken by the Central bank of Egypt to stop the currency in an effort to resist the
prolonged political instability, the automobile manufactures have faces several challenges in
receiving the letters of credit from the banking organization.
As a result people are now scared to go near the automobile companies as they are
scared of hearing the surging up of prices. It is evident that purchasing a car is not luxury
people can afford currently. Specifically for those, people, who had the choice to upgrade
their new cares and for even those who purchased the cars for their members within the
family. It has turned increasingly difficult and problematic for the peoples to pay such huge
amount on things that they already have (Eljayash, 2015). Other than purchasing, people
would like to maintain their vehicles so that they could utilize the products as long as possible
in a proper condition.
The significance of the issues lie in the question such as to “how to transform the
national automobile company in Egypt to a multinational company? “
“What are trending issues that could impact on the company while starting the
business in other country?”
The issue is significant because the present condition of automobile industry in Egypt
is in a situation of stake. Government have passed several regulation for managing the care
production industry in Egypt that is estimated to be approved by the parliament in November
and regional care industry is preparing for expanding their business in to multinational
company of manufacturing. The legislation that has been passed address to provide incentives
to the Egyptian automobile industry by expanding the local factors in vehicle assembly from
45% to 60% (Andreff & Balcet, 2015). The law has stipulate that automobile industries
cannot produce less than 60,000 cars within a period of eight year for taking the advantages
from exemptions of tax and customers.

3HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
Therefore, in order to face those challenges the automobile industry is seeking to take
an aggressive action for enhancing their competitiveness in the global market. In this context,
several approaches taken by the private organization and government initiatives are under
consideration. In this one of the proposal is readjustment of the sales tax for regional
assemblers for redeveloping the cost of advances. There are several other suggestion for
restructuring the industry through global expansion thereby increasing its value and
sustainability and by expanding the local products of the industry. In this study, this
suggestion has been seen as Key component for expanding El Kersh Cars Company into the
United States. Therefore, this would allow the company as well as the industry to increase the
local value added parts and the producers as well would be able to reduce their liabilities of
tax.
Based on this the research is based on the opportunities and challenges faced by the
automobile industry if they decide to place the business in United States. In this context,
contributing factors and challenges will be determined through primary quantitative research
on the United States market.
Literature review
Multinational company
A multinational company can be illustrated as an organisation that involves with the
foreign direct investments and that owns their investment to certain extent, manages value
added practices in different countries. As stated by Oppong (2017), these activities are carried
out within subsidiary that can also take the formation of completely owned subsidiary and
minority equity investments and joint ventures as well. However, Multinational companies
exist in different variety of forms ranging from smaller organisation that has invested abroad
to larger groups that handle the subsidiaries in different countries. Presently, the boundaries
in between the multinational company and the environment have turned lose. This is because

4HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
foreign organisation nowadays frequently cooperated with the regional and national
organisation for interacting in an autonomous way with other actors of local business
environment. Therefore, multinational companies are embedded within several channels that
are likely emerge over the period in accordance to the local environment where they function.
According to the figures reported by UNCTAD, there are almost 82,000
multinational organisation in all over the world that has more than 810,000 subsidiary
scattered in several countries (Bucheli & Kim, 2015). In this context, Egypt’s existing
framework of investment continuous to support the interest of the multinational organisation
over the interest of the public, this national infrastructure is the reflection of the international
framework prepared by the world trade organisation along with its specified rules and
regulation that has particularly the perception of local government.
Automotive industry in United States
The United States has one of the largest automobile markets in the global markets and
is the home for several major vehicle and parts of auto producers. In the year 2017, the sales
for light vehicles in US reached 17.1 million units along with the third straight year in which
the production reached over $17million. Overall, United States is the world’s second largest
automobile market for the production of vehicles. As stated by Waycaster et al., (2018) the
automobile industry is at the primary front of innovation due to its R&D approaches that are
consistently to the growing opportunities of the 21st century. According to Auto Alliance, it
has been observed that almost $108billion is spend globally for the purpose of R&D and
almost fifth, if it is expended in the United states (Noori & Tatari, 2016). In the year 2017,
the United States exported approximately 2 million new light automobile vehicles and nearly
130,000 medium and heavy trucks to almost 200 markets across the international boundary.
Therefore, with an open investment policy, a large consumer market, a highly expertise

5HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
workforce and accessible infrastructure and with state government incentives, the United
States is the premium market for the 21st Century automobile sector.
Changing forces in the United States Market
Necessary changes are undergoing in the U.S market, both in terms of vehicles
preferred by the customers and the system of production that helps in delivering the vehicles
to the customers. Alongside this, equally important, foreign organisation are opening new
assembly plants in the United States and foreign suppliers of parts that are building a regional
presence in the country. However, Hashmi & Biesebroeck (2016) states that in response to
the changing preferences of the customer, there are variety of products has grown in a
dramatic way specifically in case of products that are being produced by automobile industry.
At the same time, the average transaction price for the new automobile products have also
started to rise at a fast rate that is higher than the growing average household income. This is
posing a severe challenge for the automobile industry in the United States.
On the contrary, Hu & Chen, (2016) states that dramatic change is also taking plan in
the down streaming activities of the automobile industry, in case of distribution and retailing
of products. These activities shows 20-30% of the value for the new automotive vehicle and
these are significant sources of cost savings. However, these changes in these areas represent
a shift from the capital-intensive operation towards information intensive functions. Hence,
this shift is resulting in the establishment of flexible and high entrepreneurial structures that
provide service to the customer. According to Benmelech, Meisenzahl & Ramcharan (2017),
recently, new assembly plans for automobile industry by the Japanese and German
automobile manufacturers have been developed in the United States, thereby introducing
additional competitive challenges for the emerging industry. These, new manufacturing
transplanting facilities have been accompanied by the emergence of the new suppliers that

6HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
has benefitted both the new assemblers and the Big 3 by launching additional competition
into production.
From a wider perspective it has been found that the productivity date underlying the
requirement of cont9nious improvement in those areas showing the convergence of average
performance across the international boundary. It has been reported that European plants has
enhanced their production to almost 30% and new emergence of the countries has reported
potential improvements as well.
Factors affecting the automobile Industry in United States
The global automobile industry is a subject of several factors that are drastically
increasing complicacy and affecting the economic options accessible to the automobile
manufacturers. As stated by Lo (2014), the majority of these factors interacts with one
another and has strong interdependencies with each other. In this the factors that automobile
production directly are:
Globalisation and convergence of the market
As stated by Byrne, Fernald & Reinsdorf (2016), it has been found that liberalisation
has turned the national market in to increasingly globalised nation. These, provides the
companies with a chance to expand in to emerging markets, and also pose challenges for the
new emergence in the market and increased competition in the United states market.
Increased diversification of consumer and changing behaviour patterns
As stated by Guajardo, Cohen & Netessine (2015), customers are no longer accepting
standard products, rather they are asking for products that help in satisfying their individual
needs. Specifically, target groups have been highly downsized by the organisation so that the
products that are offered attract the customers. On the contrary Desmet & Rappaport, (2017)
stated that due to the international increase in the competition along with the strong focus on

7HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
prices and not on the brand loyalty, customers are easily drawn towards the organisation that
offer individualised products. As a result, of these issues, automobile companies have new
demanding needs within their field of practice.
Growing modification and diversification of automobile products
The companies in United States have to limit their product lifecycles of the
automobile models in order to respond towards the changing expectations of individualise
and fast changing customers’ demands for bringing innovation in the products. However,
Majid & Russell (2015) states that during the past, an average lifecycle of the products was
about eight years while in the existing period the automobile industry have to bring changes
and improvement in their products within a period of two years. Moreover, the cost of
development for the new model are also increasing. These indicates shortening of
amortization time for the OEM provided with lower amount of profits for the Industry.
Changing nature of automobile Industry with the digital Technology
In the year 2002, digital technology in cars averaged at almost 22% of the total
production of cars, with an assumption to increase with 35% of the total production in the
year 2010. However, Eid et al., (2016) states that the incorporation of hardware and software
components in to the automobile industry could increase the operation ability of the car but
that could increase the complicacy of the products. Therefore, this complicacy in results in
the overstrained development of car departments, failures of the products, explosion of cost
in accordance to the guarantee and warranty cost of the product may influence the satisfaction
of the customers.
Business strategy theory
The business strategy method is developed based on pragmatism philosophy. In this
context, the business strategy theory states that organisation may make trade-off in between

8HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
some of the variables in their decision making or internalising the methods. In this context,
Palmer et al., (2018) argues that international expansion of a business is based on
contingency that usually takes place by making an choice in between rivalry expansion
strategy directed by the nature of market. Therefore, Antwi & Hamza, (2015) states that this
factors are required to be analysed while utilising the business strategy approach, market
attractiveness, accessibility and informal challenges.
Transactional cost theory
This theory implies to the cost that incurred while developing economic trading
within an international market. The theory involves with the cost that incurred from the
starting of a given transaction until its logical end. Creswell (2014) states that it can be
signified as the complete expenses of all the incurred cost before establishing business in the
different market. Majid & Russell (2015) explains that international entry market strategy is a
sensible issue as the transaction of cost plays a major role that is needed to be analyses before
establishing automobile subsidiary in the other market.
Research Methodology
Sample Size
The size of the sample for the study will be decided in relevance to the questionnaire
and survey results that will be carried out. In this context, the most appropriate way to collect
a large number of sample will be reliable by consulting with people and by gathering various
opinions from the people residing in United States and Egypt. All the questions will be based
on a specific subject where all the perceptions will be seen from different perspective.
Collection of Data
The main method of the following research will be collecting information through
mixed methods of qualitative and quantitative interviews and survey questionnaires collected

9HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
from the course papers and various professional documents and studies that have been carried
out on particular industries and different markers (Sparkes, 2015). In this the survey, and
interview questionnaires will be carried out either on a personal level through the method of
phone calls and face-to-face meetings that will consisted of a discloser message that the
information cannot shared with any one.
Data analysis
Data analysis will be followed a mixed method of study, where the primary
qualitative data will be collected through interviews. In this context, all the data will be
properly analysed as per confidentiality and relevancy of the results deduced. However, in
case analysing secondary, data several reports will be evaluated from the organisation and
industries reports (Sparkes, 2015). Moreover, whole analysis group of population or industry
survey, the statistical results will be analysed to measure the error within the readings and
then recommendation will be passed based on the results.
Operationalizing of variables
In order to remove and reduce the ambiguity within the written research, all relevant
variables are required to be illustrated. In order to operationalize the variables within the
study, all the concepts of the study is required to be illustrated in an effective way for
measuring the results quantitatively and qualitatively (Creswell, 2014). Therefore, while
approaching the research it is necessary to demonstrate the assessment task. In this, it is
required to recognise the actions that is needed to be undertaken and compared with each
other by classifying the results in to major elements thereby operationalizing the variables
(Turner, Cardinal & Burton, 2017). The research will be based on three months period for
measuring the data and results. In this period all, the data will be measured based on
theoretical framework in support of the research. However, this variable is required to be

10HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
utilised in a manageable way, that it is not only about measuring the data but all the results
and data is needed to be manipulated in accordance to the criteria of the research.
Expected Results
The research study is expected to produce e a new knowledge on the international
opportunity for El Kersh Cars Cars in United States provided with the challenges and benefits
of setting up business in other country. It will be found from the study that international
strategy does not only influence the financial dimensions of business, in the international
market bit will also help in enhancing the strategic position of the organisation thereby
dealing with the global competition. In terms of scientific contribution, the expected results
of the study are associated with the emergence of theoretical understanding of management
of business services in the multinational market. Therefore, by combining various fields of
research, including marketing and management of network the study will offering a holistic
understanding of the topic provided with cross-disciplinary approach.
Since the international strategy of business is multidimensional in nature, the
research is expected to incorporate all the dimensions of the global study, other than one
factors. This will help in bringing out a significant comparison amongst various studies
thereby enhancing the understanding about the international strategy.
Moreover from the conducted survey ad interview the study will be able to determine
the feasibility of the new market opportunities, availability of resources from which the
company will be required to compete with the organisation that are already existing in the
country and will be needed to improve the technology as well.
Prospective Contribution
The research will enhance the prospects of the economy as a whole and will help in
improving the capabilities and competitive benefits of the service provided by the business

11HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
company. In this aspect, the study also targets Small and medium enterprises to enhance
possibilities of growth. Therefore, the study will contribute towards the environment of
business with stronger awareness about the challenges in service business and different ways
to overcome the issue.

12HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
References list
Andreff, W., & Balcet, G. (2015). Emerging multinational companies investing in developed
countries: at odds with HOS?. In world scientific reference on globalisation in
eurasia and the pacific rim: Volume 1: Foreign Investment (pp. 313-338).
Antwi, S. K., & Hamza, K. (2015). Qualitative and quantitative research paradigms in
business research: A philosophical reflection. European Journal of Business and
Management, 7(3), 217-225.
Ascani, A., Crescenzi, R., & Iammarino, S. (2016). What drives European multinationals to
the European Union neighbouring countries? A mixed-methods analysis of Italian
investment strategies. Environment and Planning C: Government and Policy, 34(4),
656-675.
Benmelech, E., Meisenzahl, R. R., & Ramcharan, R. (2017). The real effects of liquidity
during the financial crisis: Evidence from automobiles. The Quarterly Journal of
Economics, 132(1), 317-365.
Bucheli, M., & Kim, M. (2015). Attacked from both sides: a dynamic model of multinational
corporations' strategies for protection of their property rights. Global Strategy
Journal, 5(1), 1-26.
Byrne, D. M., Fernald, J. G., & Reinsdorf, M. B. (2016). Does the United States have a
productivity slowdown or a measurement problem?. Brookings Papers on Economic
Activity, 2016(1), 109-182.
Creswell, J. W. (2014). A concise introduction to mixed methods research. Sage Publications.
Desmet, K., & Rappaport, J. (2017). The settlement of the United States, 1800–2000: the
long transition towards Gibrat’s law. Journal of Urban Economics, 98, 50-68.

13HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
Eid, C., Codani, P., Perez, Y., Reneses, J., & Hakvoort, R. (2016). Managing electric
flexibility from Distributed Energy Resources: A review of incentives for market
design. Renewable and Sustainable Energy Reviews, 64, 237-247.
Eljayash, K. M. (2015). Documentation of environmental disclosure practices in the oil
companies in the countries of the arab spring–some evidences from Egypt, Libya and
Tunisia. Journal of Economics, Business and Management, 3(10), 954-960.
Guajardo, J. A., Cohen, M. A., & Netessine, S. (2015). Service competition and product
quality in the US automobile industry. Management Science, 62(7), 1860-1877.
Hashmi, A. R., & Biesebroeck, J. V. (2016). The relationship between market structure and
innovation in industry equilibrium: a case study of the global automobile
industry. Review of Economics and Statistics, 98(1), 192-208.
Hu, K., & Chen, Y. (2016). Technological growth of fuel efficiency in european automobile
market 1975–2015. Energy Policy, 98, 142-148.
Lasserre, P. (2017). Global strategic management. Macmillan International Higher
Education.
Lo, K. (2014). A critical review of China's rapidly developing renewable energy and energy
efficiency policies. Renewable and Sustainable Energy Reviews, 29, 508-516.
Majid, K. A., & Russell, C. A. (2015). Giving green a second thought: Modeling the value
retention of green products in the secondary market. Journal of Business
Research, 68(5), 994-1002.
Manova, K., Wei, S. J., & Zhang, Z. (2015). Firm exports and multinational activity under
credit constraints. Review of Economics and Statistics, 97(3), 574-588.

14HOW TO MAKE A NATIONAL COMPANY IN EGYPT INTO A MULTINATIONAL ONE?
Noori, M., & Tatari, O. (2016). Development of an agent-based model for regional market
penetration projections of electric vehicles in the United States. Energy, 96, 215-230.
Oppong, N. Y. (2017). Evaluation of a management development programme: A critical
discourse analysis. Qualitative Research in Organizations and Management: An
International Journal, 12(1), 68-86.
Palmer, K., Tate, J. E., Wadud, Z., & Nellthorp, J. (2018). Total cost of ownership and
market share for hybrid and electric vehicles in the UK, US and Japan. Applied
energy, 209, 108-119.
Preuss, L., Barkemeyer, R., & Glavas, A. (2016). Corporate social responsibility in
developing country multinationals: identifying company and country-level
influences. Business Ethics Quarterly, 26(3), 347-378.
Sparkes, A. C. (2015). Developing mixed methods research in sport and exercise psychology:
Critical reflections on five points of controversy. Psychology of Sport and
Exercise, 16, 49-59.
Turner, S. F., Cardinal, L. B., & Burton, R. M. (2017). Research design for mixed methods:
A triangulation-based framework and roadmap. Organizational Research
Methods, 20(2), 243-267.
Waycaster, G. C., Matsumura, T., Bilotkach, V., Haftka, R. T., & Kim, N. H. (2018). Review
of regulatory emphasis on transportation safety in the United States, 2002–2009:
Public versus private modes. Risk analysis, 38(5), 1085-1101.