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The Devil Wears Prada: the effect of privatization on Organisational Behaviour in Egypt - The case of Al-Ahram Beverages Company (ABC)

Introduction

 

No company is now given in a stable environment. Even traditionally stable industries have witnessed and continue to turbulent Changing experience. Thus, the dynamic and changing environments face that require organizations to adapt, sometimes reactions call for deep and fast, "Change or die! "Is the watchword in today's global managers. Forces such as the nature of the workforce, technology, economic shocks, competition, social trends and World politics act as a stimulant for change.  

 

The theory of privatization and competition and the related scientific literature suggests that privatization produced significant change and that these organizational changes in connection with market forces and appropriate action by the government to be positive results in terms of profitability, efficiency, etc. Many changes in organizations simply Might happen. Some organizations treat all change as a random event, but we are concerned that here the proposed amendment with that ABC occurred during the privatization process at the Al-Ahram Beverages Company () allegedly tried, the company's ability to adapt to changes, to improve and change the behavior of its employees.

THE REPORT OBJECTIVES

This report examines the relationship between privatization of state-owned enterprises (SOE), organizational change, behavior and performance - the case of Al-Ahram Beverages (ABC). It explores the processes through which privatization affects corporate performance by internal changes within the organization. The analysis shows significant Differences between the types of property in relation to organizational elements, the changes were expected. The findings suggest that the privatization process changed the behavior, incentives and performance of the formerly state-owned enterprises (SOE).

 

It also analyzes the Micro-institutional level, organizational change and transformation of the Egyptian state-owned enterprises in the case of ABC. Such an analysis of a "success story" on the impact of privatization on organizational change and performance would help managers understand the nature of the transition process, place during the change of ownership. An important byproduct of the privatization and restructuring of public programs in Egypt is the growing demand for effective managers, both state-owned enterprises privatized and companies.

Most studies on the performance the companies' post-privatization have focused on the bottom line, that is, they have financial measures to examine quantifiable indicators of change monitor. But taken only a few studies have a look at how the post-privatization organizational culture change within the company Organizational Behavior.

Scientists, management experts typically describe major differences between public and private sector administrative and bureaucratic practices. And the organizational development literature emphasizes the immense challenges to changing organizational cultures and behaviors. This brings us to this report, the primary Question: What is the effect of privatization on organizational behavior in Egypt? The case of Al-Ahram Beverages Company (ABC).

In discovering a lack of empirical data on behavioral changes within the company, "Post-privatization, we have addressed this issue and discussed changes in the organizational culture and behavior that the variety of results, the theory says, are identified in connection with privatization. Then we have tries, Case implementation of the results at the Al-Ahram Beverages.

Why Al-Ahram beverages?

Al-Ahram Beverages Firm was founded more than 110 years. The story began in 1897 when the Crown Brewery Firm (ABC oldest predecessor registered) in the Kingdom of Belgium (home of the famous Stella Artois beer) to go to Alexandria in operation.

Later in the year 1946, the company in a technical Assistance agreement with the leading Dutch brewer Heineken entered. However, in 1963 nationalized the company and was supported by the government in the last 50 years. After more than 22 years, the company eventually changed its name to "Al Ahram Beverages Firm (ABC).

Al Ahram Beverages Firm (ABC) has evolved from an antiquated Egyptian public sector in order dynamic world-class brewery Firm drinks. In 1997, an Egyptian businessman bought it during the Time of privatization. Along the way privatization was acclaimed ABC "The model of the".

 

Finally, in 2002, led the firm commitment for the development to the acquisition of ABC by Heineken group, but it remained for three years under the direction of the previous owner belong.

In January 2006 the company went through a complete change in all its areas and activities. Today, ABC offers a wide range of Portfolio beverages including beer, wine, spirits, and his ground-breaking non-alcoholic malt beverage, Fayrouz, Birell & Amstel Zero. The company is now under the direction of a national and multinational team.

Egypt Heineken is now among the 20 largest markets, and the Netherlands Company has put wine in the heart of its latest marketing push. Egypt's history as a nation, wine has been well documented; Pharaonic vineyards were among the first to the human record. But spur local consumption is still great task for the beverage company. Supply and demand in modern industry are largely of foreign nationals - Al-Ahram boss is Belgian and over 80 percent of sales come from wine tourists.

ABC was from Forbes Global classified Magazine as one of the 200 best-managed small companies in 2001, and one of the top 20 in 2000. The company's shares were on the Cairo & Alexandria Stock Exchange listed (CASE), and it was honored with MEED's Business-to-Consumer Product Manufacturer Award 2002 for Business Excellence. Experts in the global economy applauded ABC for being the best privatization success story in the world.

LITERATURE REVIEW

The sale of state-owned enterprises (SOEs) to private investors and the competitive situation, provision of market Government goods and services is an epitome of the "global public policy." More than 160 countries have taken measures their Industries privatized. The World Bank, counsel for the International Monetary Fund and other multilateral institutions require - at times - the privatization policy as a condition of Grants and loans are issued.

The logic of politics "Privatization and Competition as Reform (PCR) is grounded in the thesis that basic management of private enterprises - utilities is different, especially from supervisors and their management by the governments. Even in areas that are traditionally of basic public services are increasingly prescribing PCR. One way to engage private management on the operations of companies it is to transfer ownership - partly or fully - to private investors, although there are many other approaches to address the same objectives. The occurrence of PCR as a global policy by both ideological and practical considerations were raised.

The dissolution of the Soviet Union and the resulting resulting transformation of the economies of the former Soviet Union (FSU) and Eastern European countries have focused on the privatization policy as a vehicle for a transition rely on the market such as economies and greater integration into the global economy. The sale of shares in state companies mentioned that the state revenue Budget deficits in a timely manner reduced.

One area that can be differentiated in the state enterprises from the private companies is the way their goals. In typical analysis of agency costs in SOEs, researchers rely on the assertion that managers in state enterprises to focus on the objectives of the politicians, instead of the company to maximize efficiency. In state enterprises, the goals are vague, multiple, contradictory and unstable, and both financial and political goals. This view is well established in the literature. It is generally acknowledged, however, that the goal in private companies is clear and in terms of maximizing profits and shareholder value creation for. Apart from commercial objectives, some state enterprises include macro-economic Objectives concerned with some issues such as employment, inflation, equity and so on. This is certainly to be considered in the Egyptian case as an economic entity and SOEs to achieve the government tool for macro-economic objectives apply.

In private companies, managers' main objectives are the pursuit the long-term profits for their shareholders. SOEs are predicted to be low performers, because the politicians to impose targets on them that can help, but they win against conflict with efficiency and customer orientation. After privatization, senior managers have discretion to redefine the organization's objectives to reflect the objectives of its largest players.

Since the company from public to private, it is expected that the privatization tasks organizational changes and objectives, the more value to the search for efficiency, customer satisfaction and reduce the social esteem.

Of a corporate governance perspective could change the benefits of ownership are explained in several ways. First, managers have to be privatized in a achieve successful transition from public to private governance and the need to implement several measures to achieve expected gains in performance. Manager should develop strategies to the analysis of industry and market-and technology-based opportunities. After privatization, management should have the following Goals have the choice to define new organization, to take account of the objectives of its key stakeholders.

Second, benefits of privatization the company can be achieved by transfer to professional management capabilities of managers who have the requisite training and skills at all levels. The separation of ownership and management could, however, encourage management largely inexplicable shareholders and their own interests in the pursue shareholder meeting costs (agency costs). Privatized companies could develop the internal and external control mechanisms that the losses to the division between to reduce ownership and management. Internal control mechanisms that are in the incentives and monitoring equipment to promote professional managers at the shareholders meeting best Interest to act founded. With internal control mechanisms work well, the Board of Directors changes in top management be in the best interest of society required. As an internal control mechanisms are inadequate, but external control (on share prices, takeovers, and the relationship-based control) can be used to managers' interests with those of investors will focus again.

As predicted in the agency theory, control mechanisms in private Company can be considered more efficient than in state enterprises, as the internal control departments and boards of directors to exercise control in private companies generally better informed than their counterparts in state-owned enterprises. The objectives of the board and internal control departments are also more aligned with those of the owners "are Objectives of external agencies in general. Managers of SOEs usually have limited discretion to initiate and implement strategic changes as are covered constrained by bureaucratic controls that limit their activities and authority.

A further postponement of the expected organizational behavior practices is a change in the criteria of the board's appointment. The overhaul of top management in the privatized Companies are expected to achieve a successful transition from public to private sector mindset culture. Agencies with private sector experience to skills Business development and venture, marketing and finance are equipped in - needed to develop technology and to profit on market opportunities. The appointment of the Supreme Management in newly privatized companies would be in Commerce, based on past experience rather than those with influence and political connections.

the private sector corporate governance mechanisms in ensuring that leadership often monitored and controlled by market mechanisms as stock prices, potential investors and the media. This may explain why share issue privatizations can have a significant impact on the efficiency of enterprises . Lead However, the researchers stressed that developing countries - like Egypt - the lack of market-supporting institutions. In this case managers can companies rely heavily on layoffs and increasing sales to bring in the profit zone. Even if individually dispersed and weak shareholders intend to replace the incumbent management, they lack the ability to recruit appropriately qualified executive candidates, and they are usually not the administration with the support he needs to implement dramatic change in operating systems and culture offer

The stereotype of the public company structure is that SOEs are environmental bureaucratic, inflexible, rigid and outside the adjustment. Politically controlled entities are not politically defined structures - These are probably not optimal for privatization. Therefore, it is expected that private companies as a transition from the public, there is a change in the organizational structure. In addition, drawing upon the field of management and organizational research writer, is the privatization of a sentence from a functional Associated form from organization to organization control inputs and outputs for the whole, and usually arranged in activities requiring privatization in profit or cost centers. It is in connection with the move, a flattening of the pyramid and executives a "m-form", but "U-shaped" structure.

In addition, by releasing leaders from politics "control; privatization managers can freely exercise their latent Managerial talent. Middle-level executives, for example, whose main role under state ownership was a pure administrative control, may find their jobs changed as they become responsible for monitoring the implementation of changes and for the coordination and motivation of the teams they content.

Privatized companies also change their organizational structures to ensure that faster decisions by the Eliminating layers of management and the reduction of bureaucratic rules, and the integration of persons / entities in the organization. Flatter organizational structures are therefore more likely in privatized companies, and they usually facilitate communication and cooperation between individuals and units. Improved communication, the commitment of employees strengthen the organization, which encourages employees to be more productive and innovative (Perceived Organizational Support).

 

Egypt's privatization program has actually run in 1996 since May. Since that time the government went to sell much of the portfolio of privatization under Law 203, and is both the stock market and the strategic sales methods as the primary mechanism for the transactions. Although there is no Doubt that the privatization of such a large portfolio of state-owned enterprises is a great success, there is currently very little information available about the post-privatization development of these enterprises.

It is too early to conflicts between employment and personnel policies, from privatization argue, however, these conflicts show us the significant impact of privatization on labor and politics. Transformation of public enterprises generated comprehensive and far-reaching effects on the labor market, employment and social protection in particular. This problem is less well treated by the existing Literature. To minimize the negative impact of the transition of public companies, has some literature claims that it is crucial to public awareness to increase the costs, benefits, timing and modalities of such a transition through broad participation.

PRE-PRIVATIZATION Organisational Behaviour

 

Unlike in the organizational structure of state institutionalized Authoritarianism and centralization of administrative apparatus are reinforced by the organizational culture of public and reflect the general culture of the Egyptian society as a whole. Authoritarian attitudes cultivated, sustained, perpetuated by paternalistic family structures, religious and educational institutions and the political system generally. In a large bureaucracy with a promotion system performance on seniority and not low monthly basic salaries and allowances controlled by management, employees are invited to participate in the good books of their superiors be. Submission to a superior officer is necessary to secure additional payments and tolerance for any staff absences, when other part time jobs . Take After reaching its position thanks to their long years of service or professional contacts, not merit, senior officials derived their prestige only punish them from their bureaucratic rank, which gave them the authority or to reward junior staff. Senior officials were determined to preserve its authority and refuse one of its powers delegated to junior staff. In the absence of significant financial compensation to achieve a leadership position after long years of Service and unsatisfactory career, authority over colleagues servant was probably used as a self-psychological actualising Reward for the civilian. This explains the high degree of resistance to any decentralization or delegation of powers (resistance changes).

All Egyptian SOEs - including ABC introduced - a pattern of significant power distance, where the company agrees that the unequal Distribution of political and economic power is also reflected in an unequal distribution of power and authority of state institutions and organizations. Though the prevailing attitude was one of the covert resistance to such authority. That is, nominally accept authoritarianism, but in the Practice, they incapacitate. For example, employees would comply with fake decrees, but also minimizes their input and try to maximize its benefits, either by increasing the Absenteeism and hesitation, or participation in corruption and favoritism. In this context, officials were accountable only to higher levels of government and citizens a superfluous detail.

Having reviewed the organizational structure and culture of the state-owned enterprises (SOE) in Egypt, we can see that the potential agents of change and innovation were mainly top management and that officials uncooperative subjects of reform and partners were not included in the change.

Previous studies have concluded on that top management in the public sector were the ones who are empowered to initiate and manage change most, but had the slightest interest to implement it on the general impression. Innovators have been intimidated in large part either by economic and political costs or marginalized in non-political leadership positions.

Recent trends in public sector reform approaches the problem of leadership in public service with enthusiasm, devotes a considerable attention on leadership development and facilitating the promotion of promising individuals for decision making position. The idea is that the reform needs visionary leaders that know-how are bound to change, to take are ready to conduct and personal integrity and their risks and to encourage reforms.

But in the context of the personalized and authoritarian culture of the state enterprises, we should be careful not to mix Tours between visionary and charismatic. Charismatic leadership is based on the personal characteristics of individual leaders and their ability to operate others to achieve certain goals. Charismatic leaders tend to be autocratic and institutionalize hardly change, which is linked directly to their person.

Visionary and leader of the directive, on the other hand, are more geared towards involving their employees in goal setting, the internalization reforms in the daily operational procedures of the institutions and the strengthening of their employees so inspiring enthusiasm, commitment and leadership at the various Levels of the organization. Visionary and Directive guides are more likely to bring about an institutional development that is sustainable.

PRIVATISATION

"The privatization was the organizational buzzword of the 1980s and is intended to ensure the public Administration in the next century to make new. The term is both a diagnosis of the popular dissatisfaction with the government (Government is inefficient), and a recipe for to heal its sick. In return, the growth of the privatization of significant new challenges for human resources and the training of future officers. It is often assumed lower the cost of employment when the privatization comes as the new private owners will be willing to the extra work with public ownership of the firm's maintained. The loss of jobs will have an immediate negative impact of social protection of the labor market. The resistance to the privatization of the ground that they weaken the position of the work is therefore expressed.

Organizational level responses to the privatization is not yet widely studied been. The enormous changes in organizational behavior, strategy and structures, systems and incentives (ie changes in the "Black Box") have systematically and thoroughly investigated in order to gain insight into the processes of transformation of state enterprises. The main argument is that only those processes the privatization suited to positive organizational change fundamentally different state enterprises and to a competitive market environment lead to improved business performance.

The concern about the social hardships for workers and their family, especially when alternative employment opportunities and without the social safety nets are often major concerns in the privatization process. While many laid-off workers temporarily suffer losses and recover can when they rapidly expanding sectors. Others suffer longer-term loss or displacement in the lower-paying jobs.

The following points provide some analytical background of the impact of privatization on labor:

(A) If a company overtime for a given production level, privatization Incentives to increase the efficiency of an enterprise is expected to lead to a reduction in the workforce;

(B) could push privatization the new owner to introduce capital-intensive technologies. This can result in lower wages and a need for fewer employees;

(C) The newly privatized companies may restrict output level to maximize profits.

This can have a corresponding negative impact on employment, and cheap labor force participation is an incentive for foreign investors in the privatization program. Investors benefit when their companies Workers paid low wages and the number of employees. The privatization of state enterprises often with changes in the hiring, firing and working conditions their employees. The effect can be positive or negative, depending on the individual situation and the subjective perspective of the individual worker. In the short term, employees can change adapt to the conditions of service, including the need for retraining and greater job mobility, less security of tenure and the loss of certain Advantages and benefits. Evidence obtained suggests that privatization and liberalization of the economy and reduce employment tends to cause or to a reduction in wages.

ABC's Post-Privatization Fund Organizational Changes

 

1. Structural changes

This report provides insight into the organizational changes that accompanied the privatization process influenced by ABC's organizational behavior within the privatized companies. The report noted marked differences between ABC as a public and privatized companies in the importance of efficiency, economy (cost control) and customer objectives. Managerial incentives to increase energy efficiency increased after privatization in the search for, cost control and improvement of product and Service quality, where there is a shift from 'Engineering Excellence' to 'Customer Excellence' mentality the ministries and the dominance of technical experts, the company went through significant changes in the number and structure of employees, and radical Transformation of management systems to customer behavior, team work practices and policies shareholder value.

The company was as SOE in general inefficiencies due to the overcrowding, the dependence on subsidies that leave is competition, and poor managerial incentives. Intern The company was corrupt, irrational organized and staffed overstaffed, with about five times the number of staff required is. Seniority promotions were instead merit. Few formal systems established. Therefore, efficiency and cost savings behavior were the most commonly reported sources of performance after privatization.

The impact of privatization on the characteristics of the governance culture at ABC proved itself as an organization significant in terms of perceived improvements for both the external and the internal control. Significant differences were found in the corporate governance practices, particularly with regard to the existence of audit committees that were independent of the management. In addition, ABC has been privatized as a company to disclose more information company, for example, transactions with related parties and bonuses. privatization also reduced the scope for political interference in strategic decision-making and the appointment of directors. Boards were responsible for the strategic direction and economic performance with Given incentives based on commercial performance indicators. All these changes led to increased managerial discretion in the transformation of the enterprise.

As the company moved to private public decentralized organizational structure of, bowed to flatter, more organic and and moved to a matrix structure in the form of integration easier, to organizational. ABC also reported improved communication and coordination between individuals and units following privatization as the organizational rules moved towards cutting red. In particular, changes in the organizational structure following privatization were not only as a continuous Process seen, they were also seen to be multi-dimensional nature. Through various transitions, structures were flattened dramatically, leaving only four fifty-six Levels in the operational areas.

Almost immediately after gaining control of the company in February 1997, the Luxor Group began the task of Transformation of the company's management and operational development. They appointed five new executives (including three non-Egyptians) within the first hundred days of his takeover of ABC. For the next 100 days, seven more executives have been recruited. Most Appointments were made in the area in the Investor Relations and Media, Human Resource Management, Marketing, Export Promotion and Sales Management. These appointments show that an overhaul of management in the company. Another 45 people were also appointed ABC's Sales Force.

Although the majority the company's 3200 strong pre-privatization employees remained with the company, which succeeded in eliminating a lot of privatized companies, the middle and higher management level, with the ABC's rentierist practices in the public sector was linked to the way for a comprehensive restructuring of the company's internal organizational culture.

1. CHANGE In the corporate culture

While the privatized sector Company has achieved a lot in eliminating the public personality of the company (ie, public management titles were for the most part Sales Manager has been replaced with standard private sector titles such as Marketing Manager; hierarchical promotions were of a meritocracy was based system replaces the labor regime is in society characterized by long working hours and much higher salaries for officials of the middle management level), high levels of internal bureaucracy exists at the firm. Managerial decision-making, while multinational corporations have adopted the style of a still go through a sequence of "in-house approvals, which lead to significant delays in the conduct of business (although this is not a rare feature of internal organization, that it is a number of other Egyptian public and private companies).

A number of conclusions on the basis of this culture the relationship can be drawn from this analysis authority. Post-privatization, have structures that were intended to to limit power and provide a degree of accountability do not work - even if the management changed. The absence of countervailing powers, or checks the CEO - the Belgian - allowed him to always be the Leviathan. Power is still centrally concentrated in his person. Rigid hierarchy, and arbitrary Fear of authority led to sycophantism, and bow. With so much discretion subordinates with superiors were not as relatively equal involved and were not prepared to question or criticize.

1. PERFORMANCE Evaluation System

Performance Evaluation serves a number of purposes. One goal is to make general administration personnel decisions. Evaluations provide input on important decisions such as promotions, Transfers and dismissals. Evaluations also identify training and development needs. They locate staff skills and competencies, which is currently lacking, can be developed but for which remedial programs. Evaluations also fulfill the purpose of providing feedback to employees, how much the Organization views the performance. In addition, performance evaluations are the basis for wage assignments. Decisions about who merit pay increases and other Receives rewards often determined by performance evaluations. Each of these functions of performance evaluation is valuable. But their importance depends on the perspective of the organization increases. Some are clearly relevant to human resources management decisions. But our interest here is in Organizational Behavior. As a result, we have stressed on the performance evaluation as a mechanism for providing feedback and as a determinant of wage assignments.

Under the public sector developed ABC Reputation of an internally hierarchical organization where people were promoted or rewarded on the basis of their seniority in the hierarchy - not on the merit of their performance. The privatized companies promoted meritocracy requires service, sought to replace ABC system of internal organizational culture with a modern multinational management technique by the introduction of a performance evaluation. This device outlined a job description for each of ABC staff and through a series of bi-annual performance appraisal meeting between the employee and a supervisor appointed, the employee's progress throughout the ABC would be monitored and employees accountable for their performance.

Performance was also affected by changes in the internal environment of the company, including the organization, structure, objectives, management, labor relations, communication and reporting system and the type and location of the business. But the welfare and industrial relations staff were very limited and were the lowest priority in the company privatization process.

1. CHANGE in Human Resource Management

One of the most anticipated Changes in ABC of a SOE to a privatized company was in the relationship between management and workers. As an SOE, workers were protected political factors. As a privatized company, not the workers protected. The compensation was calculated on the basis of productivity rather than seniority or political Contacts. Skills of employees, the work and contributions, the benefits have been rewarded.

The salaries of the upper and middle management in society (especially in the sales and marketing departments) are now compatible with most of the leading private companies and multinational companies in the country. Wages are not drastically increased for the line workers, however, if the bonus system and benefits package is at the company have been changed since the privatization to reflect a Employee's contribution to productivity growth, rather than length of tenure at the company. In addition, the ABC employee stock options package offered first made by an Egyptian company and led a series of profit sharing since the privatization.

But the evidence that appears on the employment effects of privatization did not confirm a significant reduction of employment at the company as a result of privatization.

In addition, these changes have "missed the essence of human resources". Change in ownership has different structure of incentives for the management and led to changes in management behavior and performance; where reward incentive plans is now in connection with the performance and programs such as stock ownership and options.

It is worth noting that job losses ABC in general have been addressed in the friendly way in one, often without redundancies: staff turnover has resulted from employees and by the use incentives for individual retirement or resignation. This does not mean that there were no disputes over the employment cuts, but that the parties have generally been able to reach an agreement, controversial and in most situations.

For all practical purposes, the Egyptian Trade Union Federation (ETUF), the national umbrella organization which covers all factory-level unions, was an extension of the state. As a corporatist entity, it was like any other public Facility be granted. It was big, bureaucratic, incompetent, self-serving and intellectually bankrupt. He looked very little, if no trust was used in the working It claims to be. As an institution, it is to control and co-opt, workers to disseminate propaganda, provide the appearance of representation, and the occasional channel limited services for public employees, workers and non-workers alike benefit.

There seems not all strong ties between ABC's his workers and the public sector national workers' organizations / unions. The union did nothing of the things that unions usually do. Collective bargaining and contract negotiations were outrageous. Strikes and independent organization remain illegal, and not studied the complaints union or management misconduct, defend the rights of workers, or address employee concerns.

1. Changes in attitudes and beliefs

 

Positive beliefs about the economic and organizational benefits of privatization attitudes explained beyond negative beliefs about their social and national costs. The interaction between these beliefs, however, indicated that extremely negative beliefs can override positive beliefs. The Adjustment of public sector workers were more strongly associated with negative beliefs and positive beliefs are less connected.

Despite the important role of the settings in the privatization process, most privatization efforts have been top-down driven with minimal input from stakeholders. A better Understanding of the role of attitudes in the design of the success or failure of privatization in ABC needed an assessment of the consequences of beliefs on the privatization substrates correspond to the position.

Given the link between attitudes and behavior, improved Understanding of the underlying beliefs should be suitable evidence, have the programs for the privatization of NBC regarding the level of stakeholder support and targeted programs to address the greatest impact in the context of beliefs.

Union leaders and employees of the public Service at ABC strongly opposed to privatization. But after the receipt of a plan that excluded massive layoffs, that was probably a very bad privatization in the context with the belief of the candidate, to change their existing beliefs, their positive attitudes to privatization. The strongest opposition to the privatization ABC has come in many sectors of the workers and trade unions as representatives of the public. This opposition was not surprising, because the costs of privatization appeared for public employees and the long-term gains seemed high, as small privatization directly threatens their jobs, wages, and influence. Bearing the fact that, workers and workers at Al-Ahram Beverages by one of the highest paid in the country.

Evidence suggests before that staff at ABC were more likely to believe that privatization would increase the efficiency of services, improve customer service, the modernization of technology increase in the country the country's ability to compete in the global market, and increase the range and quality of the products. However, they seemed less likely to believe that paying for existing help promote the privatization of public debt, reduce corruption, increase the efficiency of production, lowering prices, competition, merit increase in government from the sale of assets, and reduce the burden on public budgets and the size of government.

On the other hand, they seemed concerned about the privatization of the promotion of private monopolies, increasing the price of subsidized goods and services, decreasing social services and increase the discontent of the people and the unemployed. However, they seemed less concerned with privatization to deprive the country of technological knowledge, increasing Unemployment, increasing social injustice, growing pollution of the sale of the heritage of the country at prices below value, and deprives governments of revenue.

1. Changing values

 

One of the most dramatic changes in the ABC from pre-to post-privatized Companies associated with changes in corporate values and goals. The privatization led to a stable and productive Employment that exports benefited both the workers (higher wages and benefits) and the society in general (higher government revenues, increased).

Changes in values tend to have the participation brought an increase in morale and employee. Specifics include better wages and benefits (such as transportation to and from work, uniforms and lunch) and much more attention to quality and productivity. All reported much fear through the transition and the need for careful planning. Managers reported a shift of "seniority and Politics "on" meritocracy "as a basis for rewards and increased pride in the product and themselves as workers.

 

1. MOUNTING A professional team

 

"Internally, your focus must [be on management] management, coupled with as much as possible inter-office communication. Keep open your door and let your employees know, that you are there. The people are your assets. Do not forget about your employees and not to forget about your consumers. "- Ahmed Zayat reported.

ABC has a successful effort to attract a coterie of well-trained, motivated and experienced managers and employees (after Zayat reforms), as a fundamental Step for the transition from a corrupt, poorly managed companies into an efficient enterprise.

So enjoy the most talented Managers and employees to create, while the long-term shareholder value, as part of the privatization scheme introduced in 1997, Zayat two radio programs: the Employee Share Option Plan ("Employee Plan") and Managing Director Option Plan (the "Director Plan") under which 622.5 thousand shares were issued. ABC was the first company in the MENA offer options to their employees at all levels.  

"The superstars were drawn to our company, not only because of the challenge and the real growth ... [we were supply], but also because of the, what I call the "Magic of Options", for which we are a pioneer in Egypt. As the single largest shareholder in ABC and as Executive Chairman, I am proud that we have hundreds of ABC executives and employees are counted as other shareholders. I am proud to align [our] financial interests will benefit, so that all of us. "- Zayat

ABC's employee stock option plan offered to managers and employees the opportunity to shares of the company. Under the Employee Plan, the maximum number of shares that could be granted options for 250,000 EGP at 105th Maximum shares under the plan Director were offered at 372 500 EGP was 20, and were met exercisable only after certain conditions. The prices of the options offered were intended Directors the Board. The plan was to win this through and retention of highly qualified and talented managers and employees, whose interests our stakeholders with management and others. Family members and Sheriff Ahmed Zayat, both managing directors were both awarded the Director Plan.

1. CHANGES IN DECISION MAKING

 

As already mentioned, changed privatization both decision making and the degree of state influence on decision making in strategic decisions. Therefore, the change of ownership structure was expected to reduce the scope for political interference in the operation of businesses and to simplify the targets. In Egypt, the government has not only executives life determined, but also control key resources, market channels, and sources of raw materials for SOEs' operations.

Political influence in any way restricts the SOEs' managerial measures to implement the strategic changes. The result suggested that as companies from public to private, the forms of political interference have been systematically reduced. However, because of the privatization program on ABC, stock market played a role in which the company had to lay open the operation, material issues regarding the company. In 2002, the companies were listed on the shares on the Cairo & CASE Alexandria Stock Exchange (). Consequently Stock Exchange rules to some extent limited other influences on decision-making process. It has been reported that as a result of the Boards' appointment with ABC Post-privatization based on criteria such as professional reputation, experience, business networks and Skills. These criteria were believed to be a secondary factor, if not non-existent before the privatization. It was widely assumed that the directors and managers "Non-events at ABC as SOE based on merit but on the basis of political relations and" cozy "relationships between the numbers of government and administration. The results support the idea that the privatization of the scope for political influence and interference by the government reduced in the decision-making and the appointment of the company boards.

Although the literature shows that privatized firms become decentralized, was this is not the reality is confirmed. ABC managers reported a greater centralization of decision making to the acquisition by Heineken. This may be reflective of the need for the strategic direction and quick decision making from the board and top management. It may also in part by to spend the kind of work are explained in the culture of the country and the long time for them under a centralized system. However, a greater discretion was of lower-level managers also reported by some of the managers, so suggesting that the more an implementation of decentralization as a strategy for decision making.

1. THEORY (X) is still in ABC FACTORIES

An ideology justify inequality and authoritarian social relations still existed post-privatization in the ABC factory. Managers and many workers felt that supervisors, to be tough and far, and in some cases, be considered offensive and condescending required. If supervisors was too close to their subordinates, the thinking went, would Subordinates lose respect for them and would not be willing to follow their orders. Control would be lost, would worsen the chain of command, and nothing would be done. Domination and inequality were seen as functionally necessary for respect, authority, and ultimately to production.

Ramzi, a young administrator who first in the company as a shift supervisor in the SOE structure worked, reported the potential "dangers" of becoming too friendly with a subordinate. At first, the Unlike most managers have not Ramzi out that his workers formally address him in the workshop. As a warning, which could lead to, but he told an interaction he had with one of his workers outside the factory: I was walked in the street with my wife, and a worker saw me and she said, "Hi, ya Ramzi. How are you? "My wife asked me who it was. Of course I could not tell her she was a worker. I said," She's a colleague. "But on the Next day I told [the workers], "It's ok to call me Ramzi here [at work], but without respect important." Ramzi echoed the importance maintaining distance between himself and his subordinates. He and his wife had the system of rigid hierarchy and inequality (and the importance of Position, prestige, internalized, and so on) is menacing informally to such a degree that he speaks of a worker he was in public, in front of his wife. Ramzi did not even need to ask his wife what she thought. He knew she would find it embarrassing, if not unacceptable, for his subordinates to him by his first address name.

Workers and employees who regularly suffer from arbitrary and capricious authority of superiors and lacked functioning institutional Mechanisms for redress of their grievances. Rigid authoritarian hierarchy and relationships are still the norm, and she pushed Not only in obvious ways, such as the CEO of the power or the shift supervisor, the physical abuse of workers, but also in smaller, more subtle practices, mannerisms and rules of conduct. The relationships become the superiority and subordination was so internalized that it appeared natural and have been taken for granted.

Finally, another important issue identified in this report concerned the importance of leadership and participation in the re-structuring of an ABC SOE to a privatized company and especially in dealing with the costs of the dismissed employees. It seemed clear that the management capability of the General Manager of the company after privatization was a key factor of a commitment to the development of the company and its employees, on the political skill in dealing with the transition SOE to a privatized company. There are training managers in virtually all aspects that the company leadership & management, and management challenges, during the privatization process.

1. PERCEIVED Organizational Support (POS)

Post-privatization (POS) has shown that ABC will be a high degree of. Employees in the company's factories and workers have noticed after privatization as with fair rewards were supportive, and the staff had voice in the decisions (after all, Heineken took over one) and was more superior in their Support and so they have seen are from now to organizational citizenship behavior and higher levels of job performance.

Fortunately, positive effect of privatization on labor costs was a it too. workers are often obtained privatization as new investments and dynamic expansion led to the creation of new jobs, both at company and sectoral levels, and as the productivity leads to better terms and conditions of service. Also Workers, the development remained with the company following its privatization career have often benefited by obtaining better-paid jobs, to share business and improved Training and prospects. ABC in the new owners increased the wages and had profit-sharing scheme. Also, in exchange for higher Wages, rigid labor contracts often have been revised. Pre-agreed conditions and contracts were not approved by the new owners of the company. Some benefits such as pension rights, severance payments, early retirement was covered by labor law and regulations on ownership, while others, such as seniority and service qualities, Transportation, child care and Health Insurance is still in danger.

1. CREATIVITY

Organisational creativity in ABC-Post privatization culture meant deliberately altered current methods to new levels of quantity, quality, Costs and customer satisfaction possible. The new structure identifies privatize certain results from the increase of organizational creativity, including new Products and processes, greater efficiency, increased motivation, job satisfaction, teamwork, focus on customer satisfaction and more strategic thinking at all levels.

After detailed examination of the firm's organizational structure creativity pattern, it was deducted that the functional cultures or the cultural aspects, whether the individual is regarded as a manager or as a non-managers within the enterprise. have affected his / her behavior towards creativity and innovation capacity at ABC, it was found that when compared to managers, postal managers displayed positive attitudes towards Privatized not creativity and divergent thinking. This suggests that those in higher positions more organizational creative-oriented than they were in lower positions because they not afford to not appear or are not intended to be adventurous people who come with new, unusual, off-the-wall "ideas. Such behavior is associated with sincerity and dedication to the job at hand and thus the preservation of self-fulfilling prophecy that they are adaptable to the privatization trend.

Gender is one of the most important variables in creativity. Unfortunately, ABC has no evidence of gender differences in attitudes towards organizational Creativity reported. This is one of the gaps that we could fill.

Functional cultures were found to conduct to influence leaders in Al-Ahram Beverages (ABC) as well as most SOE now privatized companies. It was found that Managers from different functional areas of the same questions of management considered in considerably different ways. In fact, it defines the problem largely in terms of activities and goals of their own areas. "functional interpretation I could have resulted from group" "Think, adopted by the new government encouraged individuals to think about what issues closely, about the same way. It was noted that marketing and operations managers Believe violates organizational rules and organizational hierarchy of the company to achieve goals, and that finance managers were uncomfortable ambiguity and expressed strong tendencies to follow rules.

The people in the management function found to adopt creative practices because they had positions within the organizational structure Hierarchy that reward and punish innovators to enable guardians of the status quo. Technical people have been found, to take creative role, because innovation was an important component of many technical jobs (non-alcoholic malt beverage, Fayrouz, Birell & Amstel Zero). Accountants are rarely as heroic innovators shows how in most companies. This may be partly attributed to the assumption that the profession is not viewed as a creative prophecy a (self-fulfilling).

The privatization of the company at a later appointing younger managers, are expected to have creative strategies to pursue because older cribs change known from the former SOE cultural aversion were led from the status quo and show greater Compliance with the standards of the organization. Younger managers reported more liberal attitudes toward organizational creativity and innovation than older Executives.

With regard to the provision of an enabling environment, in recognition of the characteristics that typically in the Egyptian Culture in terms of power distance and hierarchy are embedded implied that the post-privatization managers were low on improving the environment for creativity required. Thus, in ABC she realized the true meaning of consultation and implementation of a consultative management style. The new management knew that if the risk aversion Egyptian employees are not provided active support and do not see that their input is valued and that is being traded, they will be reluctant to grant.

The post-privatization strategy for compliance with NBC Diversity Management was founded in 2002 under the new CEO (Marc Busain) - A young Belgian business sense - to record the fact that Egyptians are an extremely collectivist people there is in social interactions and the formation of groups to facilitate. This can result in collectivism strong group loyalty and cohesion and is a potential source of positive "social capital" - the Resources from the network of relationships in a team, organization derived. Egyptians value of the person and the relationship more than the task. The post-privatization Challenge for an Egyptian team working, then was the focus on maintaining a strong influence on the performance group. While this is found to be positive, could it have the same limited group of openness to alternative ways of doing things. The results of this strategy implies that staff teams have the opportunity should decide how they will achieve their goal, allow such freedom and autonomy float makes intrinsic motivations.

1. SHIFT IN leadership styles - from Alpha to Beta

Ahmed El-Zayat (charismatic leadership) - Alpha Team

 

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It was late in the afternoon of the 5th April 1997, when Ahmed El Zayat, newly appointed CEO of the newly privatized Al Ahram Beverages Company (ABC), sat in his office at the brewery and began to write about ABC's financial statements. Scrutinising the data, he saw potential and dangers. ABC had no competition, and had regularly yielded profits. But the company was also concerned with a public service mentality. Puffing on his cigar, Zayat knew that there was no way back. The business was closed and he needed to figure out what to do next. His immediate concern was how to enable ABC to increase the performance and position itself locally and internationally for a sustainable competitive advantage. With a powerful board of directors and senior managers, Zayat was confident of his ability to grow the company and to help each to develop.

Nevertheless, he would have thought long and hard about which strategies to adopt think.

From the time the company was privatized in 1997, its lavish (and brilliant) management team headed by Chairman Ahmed El-Zayat took a brave step after another, ABC Insurance is a leader in the industry headlines. The media frenzy that surrounded ABC ended during its turnaround in a historic 2002 M & A deal, if international brewing giant Heineken snapped up 98% percent of ABC for a whopping 1.33 billion LE.

After the acquisition, things have been "Still, still" on ABC, sparking speculation in the economy, where the company wants, and who took it there. Rumors swarmed that El-Zayat, who remained as chairman after the deal with Heineken, played a less Role.

Now, after all these years of autocratic leadership, including El-Zayat was delegating day-to-day, while on the strategy . Concentrate For whom he was delegate to the acquisition taken place? It was a new generation of leaders Junior ABC. El-Zayat is nicknamed "Alpha Team, "were instrumental in having ABC in a new direction.

The Alpha Team

ABC's marketing director, Strategic Planning Manager, and three technical experts in the beer-operation come from the Netherlands' Heineken, but the core of the company remains 100% Egyptian.

"The airplane is now my home, but ABC has always been and still is my baby. It's always the same concentration, if not more, than in the past. During my first three or four years at ABC, I was a very hands-on manager. I paid attention to every detail. I do not have people want to micromanage the process, But at the time of the company required a great deal of attention. After all the basic elements were in place and we had consolidated our dominance, I have the second phase of my Mission, that needs my attention, I started out again, "says El-Zayat.

It was during this second phase that El-Zayat Heineken much orchestrated. He claims that he had just a third phase of its master plan for the company, one that required him again to spend much more completed Time in Egypt and in the office.

"As a much more mature and experienced manager now than I used to, I could mentor a lot of people. The new players are now much younger than their predecessors. I call it the hope of Egypt, "says El-Zayat's Alpha Team.

The Alpha team has a Key role played in two post-acquisition and restructuring of companies started ABC's new product lines.

El-Zayat decided in 2003 Introduction of the Alpha team in September. The idea was hires, creating a group of six ambitious young people, half of of them within the company and the other new, to monitor the entire ABC-operation with a bird's eye view. You report directly to El-Zayat, and make Sure, its instructions are properly carried out in accordance with the general vision of society.

In the beginning, nobody really understood what was going on. It looked just as young people bossing around great directors and stuck their nose into everything. But it was a great learning experience for the young team. They were in all meetings and brainstorming sessions. He made them feel really a part of decision making. Before the Alpha team, the various departments such as separate islands. Part of their Work is to increase the level of communication. They created an unprecedented level of transparency in the company.

Another new concept was initiated a break-up the company into separate business units, one for non-alcoholic malt beverages [Fayrouz and Birell], a] for the beers [Stella, Heineken and Sakkara a for wines and spirits for the fourth. They had for the creation of "owner" for the various segments of the corporation, so that they could all in this segment, in close cooperation with the departments: sales, marketing and production, something that never before would have occurred under the old management style.

ABC tends to undergo a certain degree of restructuring every year and remains undaunted transferred staff from one area to another.

In connection with the restructuring, the chairman distributed a 28-page report on the company new vision. Its stated objectives include a thorough training of all personnel, further automation of everything from production to warehousing and distribution, and more on consumer research.

Then El-Zayat, a second generation Alpha team, so that fresh eyes to a new Outlook to question NBC operations. The first group more or less represented the much Westernized Egyptian people with a lot of foreign exposure during this new group draws from various elements in society. They even have a veiled female member in the group.

 

The organizational structure under Ahmed El-Zayat Leadership

 

 

 

 

 

 

 

MARC BUSAIN (visionary leadership) - BETA TEAM

 

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Chairmen and CEOs come and go, but there are times in which companies and others whose leaders are so closely linked that it is difficult conceivable that one without that as in the case of ABC and its founder, Ahmed El-Zayat.

Although El-Zayat physical pres

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