Cross-Cultural and Global Management in Hospitality: Egypt Report

This report offers an in-depth analysis of the Egyptian hospitality market, focusing on its potential for accommodation services. It begins by examining the influence of globalization on Egypt, highlighting both positive and negative aspects such as economic restructuring, Americanization, and immigration. The report then delves into a PESTEL analysis, evaluating the political, economic, social, technological, environmental, and legal factors impacting the market. Following this, it presents a cultural analysis using Hofstede's dimensions, including power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence. A SWOT analysis is also provided, identifying the strengths, weaknesses, opportunities, and threats within the Egyptian hospitality sector. The report concludes with a determination of the appropriateness of entering the Egyptian market, based on the comprehensive analysis.

Cross-Cultural and Global Management in
Hospitality
Country Report
Egypt
2019
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Contents Page
1. Introduction....................................................................................................................................3
2. Influence of globalization on Egypt................................................................................................3
3. Pestel..............................................................................................................................................4
3.1. Political...................................................................................................................................4
3.2. Economic................................................................................................................................4
3.3. Social......................................................................................................................................6
3.4. Technological..........................................................................................................................6
3.5. Enviromental..........................................................................................................................7
3.6. Legal.......................................................................................................................................7
4. Hofstede’s cultural analysis............................................................................................................8
4.1. Power distance.......................................................................................................................8
4.2. Individualism..........................................................................................................................9
4.3. Masculinity.............................................................................................................................9
4.4. Uncertainty Avoidance...........................................................................................................9
4.5. Long Term Orientation.........................................................................................................10
4.6. Indulgence............................................................................................................................10
5. SWOT Analysis..............................................................................................................................10
5.1. Strenghts..............................................................................................................................10
5.2. Weaknesses..........................................................................................................................11
5.3. Opportunities.......................................................................................................................11
5.4. Threaths................................................................................................................................12
6. Conslusion....................................................................................................................................13
7. Reference List...............................................................................................................................14
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1. Introduction
This work will analyze the Egypt market for entering of accommodation services. This 5star
hotel is located by the Sea in Hurghada city, targeted at specific client segments. This
product could support the further development of tourism in Egypt, which is now one of the
fastest-growing and dynamic tourist destinations. The thesis will first concentrate on
Influence of globalization on Egypt, then on examining PESTEL variables, then on present
the cultural analysis of Hofstede, followed by SWOT analysis. Finally, the conclusion,
determine whether it is appropriate to enter the Egypt market.
2. Influence of globalization on Egypt
With globalisation, Egypt is becoming one of the Middle East North Africa region's leading
financial centres. Globalization has been instrumental in economic restructuring and
reinterpretation of traditional values in Egypt. The country, through the intervention of the IMF
and World Bank, has transformed itself economically from an administrated economy to a
free market economy. Many other problems, such as climate change, energy, economic
development, and HIV / AIDS, are dealt with very successfully. The Egyptian press has
become an essential part of that success. They're also many challenges ahead with success.
It begins with secular division and religion, along with the division of the upper aged with the
youth. The way young Egyptians express themselves by mixing Egyptian Arabic with English
is evolving with the internet today. (Mathieu, Mathieu and profile, 2020)
Globalization has some negative aspects to it. Globalization's most significant impact on
Egypt is "Americanisation." This means that some well-known US corporations like
McDonald's and Starbucks have expanded across the world and have brought some adverse
effects to the industries and eating habits of every country. Citizens often assault with that
US companies and shops owing to ethical problems.
Increasing the number of Egyptian immigrants is also a significant problem exacerbated by
globalization. Most people from this state had run looking for a safe place to another state. A
substantial number of immigrants mainly live in European countries. Globalization has
caused environmental degradation and international terrorism since traveling across the
globe has become simpler than ever.
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There are also some positive sides of globalization. In Egypt, the most significant aspect of
globalization is the rising economy owing to free trade in international society. Egypt
continues to market its natural wealth, such as natural gas oils and minerals. The tariff is the
most beneficial thing for making a lot of money by carrying out making international trade
with foreign countries. Tariff impacts are so high that several nations have sought to
negotiate and change tariff rates for a secure and productive business. (Globalization in
Egypt, 2020)
3. Pestel
3.1. Political
Egypt is a Constitution-based republic, adopted by referendum in January 2014 (modified in
2019). A presidential structure governs the State.
The President is the head of administration and the armed forces 'Supreme Leader. He is
elected to the post for a six-year term. The President is the head of the branch of the
Executive and appoints the Prime Minister, who must be supported by a vote of confidence
in Parliament. The President also appoints the head of the ministerial council. He may
dissolve the congress by decree and law.
The legislative power is monocameral. The authority resides in the House of
Representatives, consisting of 596 representatives elected by universal suffrage for a term of
five years.
The 2019 constitutional referendum calls for the formation of an upper chamber, called the
Senate, with 180 seats. (EGYPT: ECONOMIC AND POLITICAL OUTLINE, 2020)
According to Countries and Territories, 2020 was Egypt ranked among countries with no
global freedom statute.
In 2019 Egypt ranks 163. place in the World Press Freedom Index. (2019 World Press
Freedom Index | RSF, 2020)
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3.2. Economic
The Egyptian economy that had earlier shown resilience to the global financial crisis faced
the internal political crisis and the 2011 popular uprising. Nevertheless, as of the financial
year 2016-17, the economy started to rebound, with growth projections reaching 5,5% in
2019, up from 5.3% a year earlier. The IMF expects the country to continue to expand at a
rapid rate, with projections at 5, 9% and 6% respectively in 2020 and 2021. (EGYPT:
ECONOMIC AND POLITICAL OUTLINE, 2020)
According to official World Bank statistics and Trading Economics forecasts, the Gross
Domestic Product in Egypt was worth 280 billion US dollars in 2019. Egypt's GDP size
accounts for 0.23% of the global economy. (Egypt GDP | 1960-2019 Data | 2020-2022
Forecast | Historical | Chart | News, 2020)
The travel and tourism industry is making a substantial contribution to the economy, with a
total contribution of 374.6 billion EGP to GDP, equivalent to an 11% share of GDP in 2017.
The industry is estimated to make a full contribution to the Egyptian economy of over 600
billion EGP by 2028. (Egypt’s tourism saw 21% growth in 2019: UNWTO, 2020)
According to Egypt Unemployment Rate | 1993-2019 Data | 2020-2022 Forecast | Calendar |
Historical, 2020, in the fourth quarter of 2019, the unemployment rate in Egypt dropped to 8
percent, compared to 8.9 percent in the same timeframe a year earlier and 7.8 percent in the
previous quarter. The number of unemployed people has gone down to 2,33 million by 162
thousand.
Registered Egyptian currency is the Egyptian pound (EGP). The symbol used for the EGP is
E£. One Egyptian pound contains 100 piastres. The lowest denominations are 25 piastres,
and 50 piastres, all available in the form of coins or notes. Notes occur in the following
denominations as well: 1, 5, 10, 20, 50, 100 and 200. (Everything You Need to Know About
Currency in Egypt, 2020)
Currency statistics according to XE Currency Converter - Live Rates, 2020, on 5.4.2020,
13:20.
 1 GBP = 19.3134 EGP
 1 EUR = 17.0051 EGP
 1 USD = 15.7404 EGP
According to Average Salary in Egypt 2020 - The Complete Guide, 2020, a person who
works in Egypt usually earns around EGP 11,200 per month. Salaries range from EGP 1,510
(lowest average) to EGP 49,400 (highest average, higher real gross salary).
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3.3. Social
Ethnic Eastern Hamitic stock groups make up about 99 percent of Egypt's population; these
include Egyptians, Bedouins, and Berbers. They are a result of ancient Egyptians
intermingling with the invaders of several centuries from different parts of Asia and Africa.
The remaining 1% of the population consists of minorities, mostly Nubians, Armenians,
Greeks, and other Europeans, mostly Italians and French. (Egypt, 2020)
According to Egypt Population (2020) - Worldometer, 2020, Egypt's total population is
101,866,898 as of Monday, April 6, 2020, based on the latest United Nations data drawn up
by the Worldometer. According to UN info, the population of this state 2020 is estimated at
102,334,404 people at the mid-year time. Egypt's population represents 1.31% of the world's
total population. Egypt ranks number 14 on the list of countries (and dependencies)
according to the community. In Egypt, the population density is 103 per square kilometer
(266 people per mi2). The total land area is 995,450 Km2 (384,345 sq. miles) 43% of the
population is urban (44,041,052 in 2020). The median age is 24.6 years in Egypt.
According to Egypt population (2020) live — Countrymeters, 2020 — Countrymeters, 2019,
was on Monday, April 6, 2020, 50,935,383 (50.2%) of current male population and
50,509,086 (49.8%) of current female population.
Gender equality is established by law but it discriminates against women in other areas of
law and common practice. Under Egyptian law, only males may pass on their children or
spouses' citizenship. Across a variety of fields, women have developed job opportunities.
Muslim female heirs receive half the sum of a male heir, and Muslim Christian widows have
no right of inheritance. Domestic violence and harassment are common. (Social
development - Egypt, 2020)
Egypt: Index of Globalization (0-100): 1970-2017. Over that time, the average value for Egypt
was 54.73 points, with a minimum of 35.04 points in 1970 and a high of 68.77 points in 2008.
The most recent 2017 rating is 66.76 points. (Egypt Overall globalization - data, chart |
TheGlobalEconomy.com, 2020)
3.4. Technological
The Academy of Scientific Research and Technology in Cairo is the national body
responsible for science and technology. Throughout the fields of agriculture, medicine,
research, and technology, Egypt also has 12 professional learned societies. The National
Research Center also conducts studies in the pure and applied sciences in Cairo. The
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Ministry of Agriculture has 20 research institutes attached to Cairo and Giza. Twenty other
institutes do medicine, science, and development research. R&D investment totaled 0.2% of
GNP in 1987–97; 341 technicians and 459 scientists and engineers per million people
engaged in research and development. (Science and technology - Egypt - located, 2020)
3.5. Enviromental
Egypt is consists of more than 90% of desert areas. (Egypt today, 2020)
The environmental issues in Egypt stem from its aridity, highly unequal population
distribution, arable land scarcity, and pollution. Soil productivity has decreased due to over-
cultivation and the urbanization and desert winds. The agricultural land was lost. Additionally,
oil pollution threatens the nation's beaches, coral reefs, and wildlife habitats. Heavy use of
pesticides, insufficient treatment of waste, and unregulated industrial effluents have created
significant problems with water contamination. Following the completion of the Aswan High
Dam in 1970, the extensive irrigation of desert areas has increased soil salinity and helped
spread diseases through the water. Cities in Egypt produce 3.0 million tons of solid waste per
annum. Half of Cairo's raw water is pumped to the sea in open sewers, and about 100 of 120
towns have no sewerage systems at all. The National Committee for the Environment is the
main body with environmental responsibilities within the Prime Minister's Office.
Centuries of human habitation in the Nile Valley over the centuries have decimated Egypt's
wildlife in that region. Overall, less than 1% of the total land area in Egypt is protected. Law
forbids the killing of any species. In 2000, 15 of the 98 species of mammals in Egypt were
endangered. (Environment - Egypt - area, farming, 2020)
3.6. Legal
The personal income tax rate in Egypt is a tax levied from individuals and placed on various
sources of income, such as wages, pensions, interest, and dividends. The index used for
individuals refers to the Top Marginal Tax Rate. Personal Income Tax Rate collections are a
significant source of income for the Egyptian Government. (Egypt Overall globalization -
data, chart | TheGlobalEconomy.com, 2020)
According to Egypt Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption,
2020, is the highest income tax rate for people 25%, and the highest corporate tax rate is
23%. Other taxes include real estate tax and general sales tax. The gross tax burden is
equal to 15.2% of total domestic revenue.-
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Egypt, though a signatory to international arbitration agreements, does not always accept
foreign decisions by its courts. Commercial dispute settlement is protracted, with the time to
settle an average three to five years to resolve a case. Specific obstacles to increased trade
and investment include unnecessary bureaucracy, shortage of skilled labor, restricted access
to credit, sluggish and inefficient customs processes, problems of intellectual property,
corruption, and non-tariff barriers to trade. (Egypt Market Challenges | International Trade
Administration, 2020)
4. Hofstede’s cultural analysis
Hofstede's historical research is used to discuss social idiosyncrasies. Geert Hofstede
(2020), says that six cultural dimensions set major differences between nations. Society
needs to be faced by communities to achieve good security organization.
4.1. Power distance
That describes the behavior of the culture toward these differences between us. Egypt
scores high on this dimension (score of 70) which means people are embracing a
hierarchical order in which everyone has a position and no further reason is required. In an
organization the hierarchy is seen as representing inherent inequality, centralization is
commonplace, subordinates expect to be told what to do and the ideal boss is a benevolent
autocrat.
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4.2. Individualism
It means how interdependent the members of society are. Egypt is considered a collectivistic
culture, with a ranking of 25. This is evident in a near long-term commitment to the 'gang'
member, whether it is a family, extended family, or extended relationship. Loyalty is
paramount in a collectivist system, which overrides any laws and regulations in society. The
society encourages strong relationships in which everyone takes responsibility for their
group's fellow members. Within collectivist cultures, offense contributes to shame and loss of
face, relationships between employer and employee are viewed in moral terms, that means
like a family connection. Promotion and hiring decisions take into consideration the in-group
of the person. Management is group management.
4.3. Masculinity
It determines whether culture is guided by competitiveness and achievements which are
seen as a system of value by begging people to be educated at school. In this dimension,
Egypt scores 45 and is therefore considered to be a relatively feminine society. In Feminine
countries, the concentrate is on "working to live," managers strive for consensus, people in
their working lives value equality, solidarity, and quality. Conflicts are resolved by negotiation
and compromise. Incentives like flexibility and free time are favored. The focus is on
wellbeing; status is not expressed. An effective manager is a supportive one, and through
involvement is achieved a decision-making.
4.4. Uncertainty Avoidance
This dimension is about the fact the future can never be known. Egypt has got 80 on this
dimension and consequently has a high preference to avoid uncertainty. Countries with high
Uncertainty Avoidance maintain strict codes of behavior and belief and are intolerant of
untraditional ideas and behavior. There is an emotional need for rules in these cultures, even
when the rules don't seem to work. Time is money; people have an inner impulse to be busy
and work very hard, punctuality and precision are the norms; innovation can be avoided;
security is an essential factor of individual motivation.
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4.5. Long Term Orientation
This dimension describes how each society must maintain certain connections with its past
while tackling present and future difficulties. The meager score of 7 in Egypt indicated that
their culture is very normative. People in these societies have a strong concern to establish
the absolute Truth; in their thinking, they are normative. They show great respect for
traditions, a relatively low propensity to save for the future, and a focus on achieving results
quickly.
4.6. Indulgence
This dimension is referred to as the extent to which people try to control their impulses and
desires. Egypt is shown to be a very Restrained country with a shallow score of 4. In this
dimension, societies with low scores tend to be cynical and pessimistic. Also, Restrained
organizations, contrary to Indulgent societies, do not place much emphasis on free time and
control the gratification of their needs and desires. People with this behavior have the
perception that social norms restrict their actions and think that indulging themselves is
wrong.
5. SWOT Analysis
5.1. Strenghts
Geopolitical significance guarantees financial assistance in times of crisis
The strategic importance of Egypt stems from the economic significance of the Suez Canal
and the critical role of the country in regional diplomacy. It also makes more available
financial support in crisis times.
Transit revenues in the Suez Canal that are resilient to the turmoil of politics.
Income from the services consists mainly of receipts from transit through the Suez Canal and
tourism. Except for tourism, the political turmoil has not affected revenues from the Suez
Canal. (Country Report Egypt, 2020)
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Highly attractive tourism, popular tourist destination
The attractions of the country are varied, from specific historical sites to picturesque sandy
beaches and different cultural festivals to desert trekking. This richness in the tourism
offering is helping the country evolve into one of the region's most popular destinations,
which is no small achievement considering the competition. The relatively well-developed
tourism infrastructure in Egypt, including international connections and large bed capacity
and direct, has helped attract a growing diversity of visitors from Asia, Europe, and the
Middle East. (Egypt's tourism sector showing strengths despite challenges, 2020)
According to Topic: Travel and tourism industry in Egypt, 2020, was Egypt placed third
amongst the Middle Eastern countries with most international tourist arrivals (more than 8
million) in 2017.
5.2. Weaknesses
Dependence on food and fuel imports
Egypt imports more than half of the 19 m tons of wheat it uses up each year and most of the
fuel it needs, making the country especially susceptible to these markets 'volatile prices.
(Country Report Egypt, 2020)
The environmental issues
Aridity, highly unequal population distribution, arable land scarcity, and pollution, water
contamination. Oil pollution threatens the nation's beaches, coral reefs, and wildlife habitats.
Half of Cairo's sewers are pumped to the sea. About 100 of 120 towns have no sewerage
systems at all.
5.3. Opportunities
The fast-growing international tourism
The UNWTO reported that the tourism sector in Egypt saw an impressive 21% growth in
2019, welcoming 13.6 million visitors, according to a January 20 report released. The Middle
East was the fastest-growing spot in the world welcoming international tourists while growth
in Asia and the Pacific was slowing. UNWTO also added that, compared with previous years,
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Europe also saw slow growth at just 4%.(Egypt’s tourism saw 21% growth in 2019: UNWTO,
2020)
increasing the daily spend average of visitors
According to (Egypt's tourism sector showing strengths despite challenges, 2020) is Egypt
since 2015 trying to increase the average daily spend of its visitors by 30%.
A free trade zone
between all littoral Mediterranean states (El-Nakib, 2012)
5.4. Threaths
Expensive food and fuel subsidy programsFuel subsidies amounted to around 6% of
GDP in 2014. These programs have already been in place during the Mubarak regime and
are contributing actively to a high fiscal deficit. The population is highly reliant on it.
Nonetheless, the government intends to eliminate fuel subsidies almost entirely in the next
five years. (Country Report Egypt, 2020)
Skills and education of employees
Although the educational levels are relatively high, there is a considerable discrepancy
between the skills taught in schools and those most employers require.
Safety
litant and terorist attacks on tourist sites pose a downside risk. Increased security spending is
required. (El-Nakib, 2012)
High competition
Tourist centers in large cities are in large numbers and close to each other. Other
international tourism destinations may also be competitive for Egypt.
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6. Conslusion
Reviewing trends in globalization, PEST analytical data, Hofstede insights, and SWOT
research, it becomes evident that Egypt will be a good choice for Luxury 5stars Hotel market
entry. Through well-structured plans and methods, the organization will outweigh the
country's little risk of doing business. The tourist attractions and the incredible beauty of the
Red Sea attract visitors from all over the world, so the number of visitors to Egypt is
increasing. Recommended approaches include engaging in productive CSR initiatives,
establishing constructive partnerships with the government, discussing cultural complexities
and adapting corporate culture to them, and making use of the Hotel's strengths to benefit
from opportunities. It is essential to choose the right management, as the Egyptians make
quick, thoughtless decisions, in the first few years, it would be better to put European
employees in control. The inhabitants of Egypt then install in lower positions. Citizens
emphasize their faith; the rights of men and women are not equal here. In most cases, only
men work. Egyptians as employees are pleasant and helpful; for customer satisfaction, they
can do almost anything. Money is essential here. Hurghada is one of the most famous
Egyptian cities where the Hotel will be built, as it is close to the main international airport,
other major shopping areas, and the picturesque Red Sea.
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