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Pestel Analysis of Morocco
Pestel Analysis of Morocco
Assignment
By Sreenesh L Bhat-u112113
The report gives a brief snapshot of the country Morocco and its PESTEL analysis. The
industry chosen is the Tyre manufacturing industry. Porter’s Five Forces analysis is carried
out for the tire manufacturing industries in The United States of America and India.
The Country: Morocco
Morocco, known officially as the
Kingdom of Morocco, is the most westerly of
the North African countries. It has Atlantic and
Mediterranean coastlines, and a rugged
mountain interior. The main religion is Islam.
The official language is Literary Arabic.
Moroccan Arabic, Berber and French are also
spoken.
On the west, Morocco has a coast on the Atlantic Ocean that reaches past the
Strait of Gibraltar into the Mediterranean Sea. It is bordered by Spain to the north,
Algeria to the east, and Western Sahara to the south. Since Morocco controls most of
Western Sahara, its de facto southern boundary is with Mauritania.
The constitution grants the king honorific powers; he presides over the Council of
Ministers; appoints the Prime Minister from the political party that has won the most
seats in the parliamentary elections, and on recommendations from the latter, appoints
the members of the government. The King is formally the chief of the military. Some of
the facts and figures are:
The services sector accounts for just over half of GDP. Agriculture accounts for only
around 14% of GDP but employs 40–45% of the Moroccan working population.
Morocco’s economy depends heavily on the weather, a typical characteristic of third-
world countries.
The major resources of the Moroccan economy are agriculture, phosphates, and
tourism. Sales of fish and seafood are important as well. Industry and mining contribute
about one-third of the annual GDP. Although Morocco runs a structural trade deficit, this
is typically offset by substantial services earnings from tourism and large remittance
inflows from the diaspora, and the country normally runs a small current-account
surplus. Some of the facts and figures are:
Social: According to the United States government, Morocco has inadequate numbers of
men physicians (0.5 per 1,000 people) and hospital beds (1.0 per 1,000 people) and
poor access to water (82 percent of the population) and sanitation (75 percent of the
population). The health care system includes 122 hospitals, 2,400 health centers, and 4
university clinics, but they are poorly maintained and lack adequate capacity to meet
the demand for medical care. Only 24,000 beds are available for 6 million patients
seeking care each year, including 3 million emergency cases. The health budget
corresponds to 1.1 percent of gross domestic product and 5.5 percent of the central
government budget. In 2011, Life expectancy at birth of female and male was 74 years
and 69 years respectively.
Morocco has one of the lowest rankings in the world in terms of Education.
Education in Morocco is free and compulsory through primary school. The estimated
illiteracy rate for the country in 2004 was 30.8% for males and 54.7% for females and
the ratio of female to male primary enrolment (%) in 2011 was 94%. Morocco has more
than four dozen universities, institutes of higher learning, and polytechnics dispersed at
urban centres throughout the country.
Environmental: In 2008, about 56% of the electricity source of Morocco came from
coal. However, as forecasts indicate that energy requirements in Morocco will rise 6%
per year between 2012 and 2050, a new law passed encouraging Moroccans to look for
ways to diversify the energy supply, including more renewable resources. The
Moroccan government has launched a project to build a solar thermal energy power
plant and is also in looking into the use of Natural Gas as a potential source of revenue
for Morocco’s government. Morocco has embarked upon the construction of large solar
energy farms to lessen dependence on fossil fuels, and to eventually export electricity to
Europe. Some of the facts and figures are as follows.
Legal: Morocco's legal system is a mixture of several from around the world. Morocco's
legal system is a combination of both Muslim Law and Civil Law. Civil Law originates
from Continental Europe and it consists of an actual written code. It is a rational (based
on reason) code that is universal (applies to everyone). The dual legal system consists of
secular courts based on French legal tradition and courts based on Jewish and Islamic
traditions. The secular system includes communal and district courts, courts of first
instance, appellate courts and a supreme court. The Supreme Court is divided into five
chambers: criminal, correctional (civil) appeals, social, administrative, and
constitutional.
MRF is a market leader in the Indian Tyre Industry with a market share of 30%.
It has total turnover of Rs. 8589.68 Cr. with average margin of 3.37% which is lower
than industry average of 4%. Its Net Sales has grown strongly with a 5 year CAGR of
close to 18%. It also has one of the highest Net Profit growth rates with a growth of
68.3% CAGR over the last 5 years. However, in terms of net sales growth and highest
profit margins, Balkrishna Industries Ltd. is far ahead from other industry players. Its
Net Sales has grown strongly with a 5 year CAGR of 27.87%. It also has highest profit
margin of 10.55% (5 year average) in the industry. This is because it operates in Off-
the-Road tyres, a niche segment. Other major players are Apollo Tyre, JK Tyre &
Industry, CEAT and Goodyear India.
Other Petro chemical based material (Carbon black, Nylon tyre cord etc.): The power of
suppliers is high in this category as India is limping back in case of Petro based raw
materials like carbon black and chemicals which account low in quantity terms but are
high cost generators. Also the price of NTC fluctuates in line with the prices of
Caprolactam (a petroleum derivative), its main raw material. The prices of these
materials are beyond control of tyre industry.
This can be segregated into two parts as follows according to the customers of
tyres.
OEM's: The OEMs are always in strong position when the bargaining power of buyers is
concerned. The reason behind this is most of them are having contract with their
relative tyre manufacturer under which the prices of tyre remains stable for this OEM
irrespective of market price. The benefits are given to them as they are buying in bulk
and the relation gives the tyre firms something called brand association.
3) Threat of substitutes
The threat of new entrant is moderate or can be described as low because the
industry is highly capital intensive and the level of technological expertise required is
also highly specific. But if we see from domestic (Indian) industry's point of view, this
better can be defined as high. The reason being, global tyre industry is already seeing
mergers and acquisitions in order to restructure. And as of now India and China going to
be the hub of activities as far as tyre industry is concerned due to low production cost as
5) Industry rivalry
High, because gradually the overseas players are expanding their wings over
Indian tyre industry and also a limited and every player is moving towards automated
technology, like ERP and SCM. Apart from the aforementioned reason, the industry is
seeing high competitive scenario at present because of various reasons like rising input
costs, low realizations from growing OEM segment where the vehicle manufacturers are
not ready to share the burden of tyre firms, the portion of replacement pie continuously
taken away by the re-treading sector which is slowly but firmly rising its head and that
to in high realization segment of Bus-Truck tyres and last but not the least the
unorganized sector is always there to give head ache to these established players like
CEAT, JK, Apollo and MRF etc.
Bargaining
power of
Supplier - High
Bargaining
power of
Buyer - High
The bargaining power of the suppliers is high. Tires are a necessity. Raw material
suppliers can exercise high pressure on the prices for their input materials in tire
manufacturing due to strong competition in a rather commoditized market.
2) Buyer power
3) Threat of substitutes
Tire as a product is hard to differentiate. Still there are some variations under
different brand names. And companies have to spend in huge number to make their
products identifiable to the customers. Moreover they not only want to keep their
existing customers but also want to acquire their competitors' customers. Threat of
substitutes is low which is favorable for the existing players. That said, each of the
major players differentiates itself from its competitors in unique ways relating to
diversification (Continental), footprint (Bridgestone), premium brand (Michelin) and
overall reputation and reputation for new product development (Goodyear).
4) Barriers to entry
Supplier
Power - High
Buyer Power
- High
Bibliography
http://www.maroc.ma/PortailInst/An/
http://www.atmaindia.org/
http://www.tireindustry.org/
http://www.us-tra.org/
http://www.wikipedia.org/