LESIEUR

CRISTAL
2
Executive Summary
Lesieur Cristal is the leader in the Moroccan agro-industry. Since 1940, the company has been
committed to offer to everyone the best of nature. Lesieur Cristal represents the link between
the agriculture world and the modern consumptions by modernizing and adding a value to
the whole Moroccan chain of oil seeds and olive growing. For almost 77 years, Lesieur Cristal
has deployed its agro-industrial expertise to serve consumers interests by taking what is best
in nature from agricultural fields and putting in it on customers tables. Its optimal goal is to
satisfy the needs of the growing Moroccan population by capturing a significant market share
across all its product lines including edible oil, olive oil, condiments, personal hygiene, laundry
detergents, and oilcakes.

The main objective of our capstone is to conduct a detailed and comprehensive analysis of
the several business aspects of Lesieur Cristal. We applied all strategic management concepts
learned during the current semester combined with our acquired and diverse knowledge as
a team to assess the current situation of the company, its external and internal environment,
and the industry it operates in. To do so, we as a team conducted an exhaustive research and
used computational analyses and interpretations as well as benchmarking and comparative
methods.

We reviewed the companys mission, vision, and strategic goals. We assessed the companys
financial health, competitive advantage, strengths, weaknesses, opportunities, and threats
while taking into consideration the significant impact of the established internal and external
factors. All this helped our team to deeply understand the companys current position and its
future strategic plans. Based on the companys assessment, we succeeded to develop new
strategies, which comply with the companys short-term and long-term needs as well as its
business model.

We formulated three strategies that we strongly believe are going hand in hand with the
companys vision TGV de linnovation and are taking advantage from the opportunity Plan
Maroc Vert. Our first strategy is a product development strategy by presenting a new product
line of flavored olive oil with the typical Moroccan spices and flavored herbs. Our second
strategy is an innovation strategy in Morocco by launching an olive oil pod and a vinaigrette
one. Our third and last strategy is a related diversification strategy by introducing a new
product line of olives tapenade. Our three strategies fall under the same theme A train
connecting tradition to modernity at the speed of the groups ambitions

3
 Acknowledgement
"Alone we can do so little, together we can do so much." --Helen Keller
The completion of this capstone project has been the fruit of a continuous and

unconditional support coming from our cherished professors, friends and families. In

that sense we would like to express our deepest gratitude to every person who

contributed to make our final project possible and achievable.

First of all, we would like to express our most honest gratitude to Dr. Abderrahman

Hassi for his continuous and valuable motivation and encouragement in achieving

success. Thank you for always answering to all our questions and providing us with all

the skills needed to favorably evolve on our next step in the professional career.

Very special thanks are also addressed to Al Akhawayn SBA faculty in the person of

Dr. Asmaa El Hilali, Dr. Gerald Reimer, Dr. Samir Agnaou and Dr. Ahmed Baijou for

every valuable feedbacks and advices they provided us every time we sought for their

help; without forgetting all the professors whom classes we attended during these

last years made us become what we are.

Above all, nothing would have been realized without the considerable support and

encouragement of our dear parents and friends.

We leave to future generations of business capstoners a frank testimony of successful

years studied at Al Akhawayn University. Be curious, be passionate and strive for high

standards. These are our teams values that we wish to share with future reader of

this report.

Sofia El Otmani Anas Bennani Asseil Benchekroun Hicham El idrissi Mohammed Mehdi Hajji

Done on 04/18/2017, at Al Akhawayn University in Ifrane

4
Table of Content
What is Strategic Management? 8
Overview of Lesieur Cristal 10
Lesieur Cristals History 12
Vision Statement (What does LC want to become?) 13
Mission Statement (What is LCs Business?) 13
Governance 14
Stockholders 15
Subsidiaries & Shares 16
Production 17
Process ............................................................................................................................................... 17

Portfolio ............................................................................................................................................. 18

Locations and Facilities 26

Current Strategies 27
Strategy Formulation 30
Industry Analysis 31
PESTLE Analysis of the Moroccan Market .................................................................................. 31

Overview ............................................................................................................................................ 37

The Olive Oil Market ........................................................................................................................ 41

Financial Analysis of Lesieur Cristal 54

Profitability Ratios ............................................................................................................................ 54

Liquidity Ratios ................................................................................................................................. 56

Leverage Ratios ................................................................................................................................ 58

Activity Ratios .................................................................................................................................... 60

Strategy Analysis & Choice 61

The Input Stage ................................................................................................................................ 62

Matching Stage ................................................................................................................................. 90

Decision Stage .................................................................................................................................. 98

Strategy Implementation 100

5
Background 101
Plan Maroc Vert: A Win-Win Partnership at the Service of National Economy .............. 101

PMVs Strategic Importance for Lesieur Cristal ...................................................................... 102

Innovations High-Speed Train: A Train Connecting Tradition to Modernity at the Speed

of the Groups Ambition ............................................................................................................... 103

First Strategy : Product Development 106

Attractiveness of the strategy ..................................................................................................... 106

Objectives ........................................................................................................................................ 107

Target Segment/TAM .................................................................................................................... 108

Marketing Mix ................................................................................................................................. 109

Advertising ....................................................................................................................................... 111

Cost Estimation .............................................................................................................................. 111

Operating expenses ...................................................................................................................... 115

Sensitivity Analysis ......................................................................................................................... 117

Pro Forma Financial Statements: Balance Sheet and Income Statement ........................ 117

Limitations ....................................................................................................................................... 118

Contingency Plan ........................................................................................................................... 118

Second Strategy: Innovation 121

Attractiveness ................................................................................................................................. 121

Objectives ........................................................................................................................................ 122

Target Segment .............................................................................................................................. 123

Marketing Mix ................................................................................................................................. 123

Building Strategic Alliances .......................................................................................................... 125

Cost Estimation .............................................................................................................................. 126

Sensitivity Analysis ......................................................................................................................... 129

Pro Forma Financial Statements: Balance Sheet and Income Statement ........................ 129

Limitations ....................................................................................................................................... 130

Contingency .................................................................................................................................... 130

Strategy three: Product Development 132

Attractiveness ................................................................................................................................. 132

6
 Strategy Presentation ................................................................................................................ 134

Methodology: Market Segmentation......................................................................................... 135

Our Target Segment for this strategy ....................................................................................... 136

Product Differentiation................................................................................................................. 138

Product positioning ....................................................................................................................... 138

Marketing Mix ................................................................................................................................. 139

Time of implementation ............................................................................................................... 144

Potential Limitations ..................................................................................................................... 144

Contingency Plans ......................................................................................................................... 145

Cost Estimation .............................................................................................................................. 145

Leadership & Culture 149

What is next? 150
References 152

7
What is Strategic Management?

Strategic diagnosis analysis is the process of assessing the potential of a company

through the evaluation of its internal resources and the business environment within

which it operates. This analysis is later translated into the decision-making process

through the development of new strategies in order to take advantage from an

opportunity, reduce the risk of a threat, reinforce a strength or improve a weakness.

The major benefit of this analysis is allowing the company to become pro-active

through acquiring a detailed and comprehensive knowledge of its performance, its

competitiveness in the market, the industrys trends in which it operates, and its

customers needs. It is important to note that it does not guarantee success, but it

solely reduces risk of business failure. This process mainly includes three phases:

formulation, implementation, and evaluation. The formulation phase itself is

composed of three stages: input, matching, and decision stage. In the input stage, the

company is collecting the needed information and data about its internal

environment, its external one, and its competition. In the matching stage, the

company is generating feasible strategies that will be assessed in the next stage. In

the decision stage, the company is evaluating all pre-established strategies, and then

selecting the ones that will be implemented (Strategic Management Concepts and

Cases, 2011).

Lesieur Cristal is the leader in the Moroccan agro-industry operating in several sectors

such as edible oil, olive oil, condiments, personal hygiene, laundry detergents, and

oilcakes. For almost 77 years, the company has succeeded to capture significant

market share throughout its strong and diversified brands such as El Kef, Taous,

Lesieur, and Al Mabrouka to cite only few that are all well recognized by all generations

(Lesieur Cristal Rapports Annuel 2013 2015)

8
Our capstone report will start by a detailed overview of Lesieur Cristal in which we will

be highlighting the most significant historical dates and events, assessing its mission

and vision statements, presenting its governance and shareholders, describing its

production process and portfolio, mapping its locations and facilities, and discussing

its current strategies. Also, we will be reviewing the industries in which Lesieur Cristal

operates in, evaluating the companys external environment and competition, and

assessing its internal environment. We will formulate our six potential strategies

through various matrices, and then we will implement only the top three. For each

strategy, we will demonstrate the attractiveness, state the objectives, estimate the

total available market, develop the marketing mix, select the advertising mean,

estimate the costs and revenues, conduct the sensitivity analysis, present the pro-

forma financial statements, identify the limitations, and establish the contingency

plan.

9
 1

3
2

An agro-industrial strength at the service of

customers.
Lesieur Cristal Annual Report 2014

Overview of Lesieur Cristal

What makes a companys leadership? How
does a company create its competitive
advantage and sustains it? To what extent
people, process and structure define a
company? Lesieur Cristal does not only
generate profits but serves as witness of its
homelands history: Morocco. Reader of this
first part will be informed on Lesieur Cristals
vision and mission. Further content will
describe Lesieur Cristals market leadership
and strategic role as national agro-industrial
catalyzer for social and economic
development.

10
 For almost 80 years, Lesieur Cristal has symbolized performance and agro-

industrial excellence in Morocco. Nowadays, Lesieur Cristal is a corporate-subsidiary

to the giant Avril Group. Holding activities stretching along oleaginous seeds and olive-

growings value chain, and sustaining its industrial expertise through innovation,

Lesieur Cristal ensures quality, environmental and safety trademarks from seeds

trituration, crude oil refining, to edible oils packaging and commercialization. The

groups locomotive: its human capital. Stewardship, commitment, development,

leadership and passion form Excelliums values, Lesieur Cristals training center.

Globalization is a high-impact factor on Lesieur Cristals operations. Due to

oilseeds trades reliance on fossil commodities and a small number of international

actors, oilseeds pricing is volatile and market-trend dependent. In 2015, the

international trade was surprised by commodities price fall and a lack of currency.

Meanwhile, Moroccos economic growth increased by 4.6% and the countrys rain fed

agriculture showed satisfying results. Moroccos production of oilseeds being

insufficient, Lesieur Cristal imports approximately 98% of its upstream American soy

and European rapeseed, sunflowers are procured locally. The group displayed

positive results during this year. A turnover increase of 4.6% reaching 4 billion MAD,

an operating income that jumped to 300 Million MAD an evolution of 7.4%- and a

19.36% outstanding treasury equaling 302 Million MAD. Net result is the only negative

indicator, a decrease of 10.2% mainly explained by the groups asset disposal. 2015

results are aligned with our previous achievements and our development plan. Our

innovation strategy, agricultural upstream investment, cost-leadership and positive

national agricultural results have largely contributed to it argues M. Samir Oudghiri

Idrissi (Lesieur Cristas 2015 Annual Report).

11
 Lesieur Cristals History

1973-90 2013-16
1908 1993 2012
1973: Lesieur Afrique is nationalized
2013: Lesieur Cristal commits to
ONA (Omnium Nord African) national agricultural plan development
Creation of Lesieur
acquires Lesieur Afrique & (Plan Maroc Vert) through aggregation
Unigral Cristal (Previous Oil
1941
SEPO is merged to Lesieur contracts
Producers Union) Afrique Unigral Cristal and Sofiprotol (Avril group) 2013-2016: Lesieur Cristal launches
88-90: ONA merges the two becomes Lesieur Cristal acquires 41% of Lesieur the TGV de lInnovation Produces 11
Creation of Lesieur Afrique
companies to: Lesieur Afrique Cristal innovative and high-growth products
(Algeria & Morocco)
Unigral Cristal
Direct events
Direct events
Indirect
Indirect events
events

1937-54 2003-09
1937 : Creation of SIHAM (Socit industrielle des 2003: Lesieur Cristal acquires CMB Plastique
Huiles au Maroc) 2008: Cleaning
2004: Creation of Banchereau Maroc, in
1950 : Creation of SEPO (Socit dexploitation des partnership with Banchereau (Production & products asset disposal + 32% Shares
produits olagineux) Commercialization of delicatessen) acquisition of Distra (Detergent
producer)
1954: Oil Producers Union 2005: Lesieur Cristal Holds 34% of Raffinerie Africaine in
(SIHAM+HSM+GALIA+SIOM) Tunisia + Creation of Cristal Tunisia, in partnership with 2009: CMB Plastique Maroc disposal
Hamila group (Packaging of edible oils) and focus on core activity
2007: Cristal Tunisias shares decrease after Lesieurs 30%
capitalization, Lesieur Cristal 36% and Hamila 34%

Lesieur Cristal Official Website, 2017

Vision Statement (What does LC want to become?)

Lesieur Cristals vision is clearly expressed by M. Khalid Cheddadi, the groups

president.

To become an eco-responsible and national-

economy committed agro-industrial leader.

(Lesieur Cristals 2015 Annual Report)

Mission Statement (What is LCs Business?)

When seeking information through Lesieur Cristals literature, no explicit

mission statement was found. Combining founding elements of Lesieur Cristals

activities allowed us to suggest the following mission statement:

With over 70 years of experience, Lesieur Cristal is today, leader in

the Moroccan agro-industry (8) through combining what science

and nature offers best (6). Within a distinctive environment of

experts (3), we are dedicated to provide consumer goods (2) with

the best quality and highest value to fulfil the daily needs of our

professional and private customers (1). As sustainable growth

believers (4, 9), we aim to find the optimal balance between our

stakeholders satisfactions and our duties towards society and

environment
(1) Customer (7).
(2) Products/Services
(3) Employees
(4) Public Image
(5) Philosophy
(6) Technology
(7) Self-Concept
(8) Market
(9) Growth
 Governance
HR, Dev & Agricultural
Lesieur Cristals management governance
Upstream Management
follows a hierarchical structure. The General
Procurement Management is composed of six managers:
Management
General Management

Chief-Executive Officer
Supply-Chain
Management General Secretary

Quality Control Manager

Sales Management
QSE (Quality, Safety & Environment) Manager

Marketing Management Public Relations Manager

The General Management meets with other

Marketing Management
departmental Managers through specific 11

committees.
Industrial Management
Coordination
Committee

Lesieur Cristals Board of Directors is presided by the Executive

Committee

groups president and is attended by nine members

HR Committee
amongst them an OLEOSUDs representative and

LESIEURs. The BOD regulates the Groups matters

Investment
Committee
accordingly to the power attributed to each shareholder.
Innovation
The Management Committees assist the Board of Directors by Committee

providing Lesieur Cristals performance evaluation reports. Each Management RM Monitoring

Committees Committee
committee is created for a specific organizational purpose. Some
Logistics
committees assess LCs intra-organizational achievements such Committee

as Coordination (Commercial Achievements), HR (HRM), and

QSE Committee
Investment (Prod., Industrial Dev., and Process Engin. &

Investments). Others evaluate LCs external environment: RM General

Committee

Monitoring, QSE (Customers satisfaction). The General Com. and Health & Security
Steering

14
Executive Com. define LCs strategic orientations. Committee

Development
Committee
Stockholders
Lesieur Cristals Official Website, 2017

Lesieur Cristals first IPO (Initial Public Offer) was in 1972. Presently, Lesieur

Cristal operates as a corporation whose stockholders are numerous: Avril Group,

French giant agro-industrial group holding industrial and financial activities covering

various sectors, holds 41% after 2012 acquisition. Public Float which are shares

available for trade occupies 34.3%. Wafa Assurance, CIMR, Mamda-Mcma and CMR

represent 24.6%.

6%
6,2%

6,2%

6,2% 41% 6Bn 7K

Turnover (in euros) Employees Worldwide

82 21
34,3% Industrial Sites Worldwide Countries Presence

Lesieur Cristals Official Website, 2017

15
 Subsidiaries & Shares

Agricultural Upstream Industrial Downstream Other Activities

Lesieur Cristal holds shares in Since Avrils capitalization,

Lesieur Cristal strengthens its Lesieur Cristal has disposed
two oil industrial units located
upstream activity by investing several activities to focus on
in Tunisia, La Raffinerie
in olive growing lands through its core business. Nowadays,
Africaine (Oil refining) and
two subsidiaries Socit Lesieur Cristal still owns Hay
Cristal Tunisie (Oil packaging &
dExploitation de lOlive and Les Al Habaib a real estate
marketing). Olor (Oilseeds
Domaines Jawhara. project created in 1977,
trituration).
located in Tangier, Kenitra
and Casablanca- and Fireal
100% 100% 46% 34% (Detergent producer).

SEO Les Domaines Jawhara

Cristal Tunisie La Raffinerie Africaine
100%
9KT
Olives Annual Production
100% Hay Al Habaib

1,180Ha
Plantations
Olor 100%

500KTrees Fireal

Lesieur Cristals 2015 Annual Report

16
Production
Process
Lesieur Cristals activities cover the entire oilseeds value-chain. Oilseeds

(Rapeseeds, soy and sunflowers) are LCs major raw materials. Milestone of its current

strategy, LC seeks to secure its sourcing through seeds-growing investment. Raw

materials go through the first industrial step: trituration: A process consisting of crude

oils extraction from oleaginous seeds. Lesieur holds two industrial units, one is

located in Ain Sebaa (Casablanca) and the second -olive-oriented- is southern in

Kelaat Sraghna. Oilcake, a by-product, is aimed for livestocks nutrition. Also, LC is a

national leading actor in oilcakes production. Oil Refining performed at Ain

Harroudas industrial complex- is the second industrial step in which the crude oil is

refined through a physical-chemical process and is quality, food-safety and

environment certified. Part of production will be saponified (turned into soap). Olive

oils, edible oils and soaps will undergo a last step, conditioning. Through it, LC ensures

PET (Polyethylene Trephine) and PEHD (Polyethylene High-Density) Packaging

Production. Final products are ready for commercialization either in Morocco or

destined for foreign markets (Lesieur Cristal Annual Report, 2015)

Sunflowers Rapeseeds Olives Rapeseeds

Sourcing
98%
Raw Materials
Imports Procured from int. markets
Soybeans
Procured locally

3 300kT*
Transformation
Industrial Units
(A. Sebaa, A.
35kT*
n
Harrouda & K. Sgh)
9kT* *Production/Y

15 40 400
17 Commercialization National Business
Agencies
Exports Countries Trucks
 Portfolio

Since Avrils equity investment, Lesieur Cristal has Revenues per product share in 2015

witnessed an internal revolution. LCs disposal of many Lesieur Cristals 2015 Annual Report
Oilcake; Others
Olive
3% 1%
activities leads to focus on its core business: Oil production. Oils; 11%

In this fashion, Avril invested in LCs agricultural upstream

Soaps;
and industrial units. Nowadays, LC holds a products 13%

portfolio based mostly on rapeseeds and sunflowers

trituration in order to reduce soys commodification and to

Edible
protect its products from international market forces. LC Oils
72%
also decided -under Avrils supervision- to undergo a large

portfolio diversification which consisted of added-value oil

derivatives investment and current portfolio improvement. LC provides its customers with daily-

use products. LCs presence stretches from the traditional kitchen edible oils and condiments, to

bathroom hygienic soaps and laundry products. Each products category benefits from specific

innovation and strong branding.

In 2015, LC has realized an important growth of 4 billion MAD. This is mainly of products

market shares increase. LCs 2015 revenues mostly came from edible oils commercialization

(72%) which displays a 5% growth to 2014 results. Since olive-growing activities development,

LCs olive oil positioning has increased to represent 11% of its revenues. Soap activity displays

positive results. It is mainly explained by the variety of soap categories launched either in hygiene

(Taous) or laundry (El Kef). Generating 13% of shares revenues.

Additionally, M. Oudghiri Idrissi commented on LCs

LCs Turnover Evolution
4000
(in Million MAD) 2015 performance achievements by saying:

2014
Lesieur Cristal cannot achieve stable growth only
+4.6%

3810
2015 through innovation. Innovations dynamism is oriented

towards Lesieur Cristals new market penetration. To do so,

we have to rely on our key success factors.

18 (Lesieur Cristal Annual Report, 2015)

19
 Market share of LC

Oleaginous Oils 59%

within oleaginous
oil market (2015)

100% Colza, used for

seasoning and cooking.
Colza is an essential
source of Omega 3, 6 and
Containing A, D3 vitamins
and Omega 3. Used for Vitamin E.
salads, crudities and fried
meals.

Composed of Omega 3,
Vitamin A and D3. Cristal
targets 0% Cholesterol
users and contributes to
Made especially for frying- healthy lifestyle.
use, Friture is plant-based
and aims to bring
crispiness and enhance
foods savor.

Full of Omega 3, Oleor

promises to provide your
meals with tastiness and
the necessary nutrients to
your organism.
100% sunflower-made,
Huilor is an Omega 3 and
Vitamin E natural source.

20 Lesieur Cristals Annual Report, 2015

 Market share of LC

Condiments
within condiments
9% market (Lesieur Cristal
Annual Report,, 2014)

Launched in 2013, the condiments (Mustard, mayonnaise, ketchup) are

expected in the long run to hold 20% of market share (Lconomiste, March 2014).

Following Avrils guidelines, Lesieur Cristal mimics Lesieur by producing the oleaginous

derivatives. Also, LC markets its condiments with the Lesieur label. Condiments

production is the fruit of the alignment between local demand and LCs innovation

strategy. More tastes are to come.

21 Lesieur Cristals Annual Report, 2015

 Market share of LC

Olive Oils
within olive oil market
22% (2015)

LCs popular olive oil.

Guaranteed 100%
natural, Mabrouka
contains D & E vitamins.

Extra-virgin oil, Jawhara is

the combination of the
best Moroccan olives.
Composed of vitamin D
and natural antioxidants.

22 Lesieur Cristals Annual Report, 2015

 Solid form Liquid form Gel form

Body Soaps 73% 40% 8,5%

Taous branded forms and their respective market
shares within their markets (2015)

Solid form or soap is a recipe up-date of the authentic Taous. The new products

come with different odors: Lavender, glycerin and argan oil. The solid soap is positioned

as a beauty product. Since 2013, two derivative forms came out from Taous. Seeking

innovation and presence enlargement, Lesieur Cristal commercializes Taous through

gel and liquid forms. Bathing gels or gel forms contain various recipes: Argan oil, orange

blossom, almond & rose oil, almond milk and honey & lemon. Liquid forms are

launched with three different odors: lemon, anti-bacterial and almond milk.

Lesieur Cristals Annual Report, 2015

23
 Solid form* Dough form Powder form

Laundry Soaps 98% 26% 4,5%

El Kef branded forms and their respective market
shares within their markets (2015)

*El Menjel included in Solid form

El Kef is a 100% natural product with great popularity. Its formula has been

developed, El Kef solid form now comes with lemon odor or lavender. Other products

improvements are El Kef dough and powder to reach different usages and target new

segments. In 2015, Lesieur Cristal announced El Kefs liquid form destined for washing-

machine use. Keeping up with its traditional products, Lesieur Cristal holds El Menjel,

an economical soap which is adaptable to various kinds of laundry and prevents skin-

damage.

Lesieur Cristals Annual Report, 2015

24
 B2B / Industrial-Use Products

Trituration

Oilcakes

Refining

Saponification

From oilseeds (Soy, colza and

sunflower) trituration, Lesieur Bulk refined oil

Conditioning
Cristal obtains oilcakes that are

sold to livestock farming sector.

As an important nutrient for

animals, oilcakes provide LC also targets businesses by selling bulk

proteins and cellulose. It is the oil. LC is the leader-market in bulk refined

second most important oil supply for industrials. The target

nutrient in livestocks nutrition, segment is multi-sectorial and includes

Commercialization
right after cereals. companies operating in: cannery,

margarine-production, industrial paints

and pastry-production.

25 Lesieur Cristals Annual Report, 2007 & 2015

Locations and Facilities
Since its inception, Lesieur Cristal benefited from the strategic positioning of

its industrial sites. In Casablanca, An Harroudas industrial complex stays as the

groups pride. Along its 18 hectares and 80 year history, the plant daily refines more

than 1450 tons of oleaginous oil dispatched on 4 units and produces 140 Tons of

soap. Complementary to its core activities, conditioning and packaging are also held

within An Harrouda. Once acquired by Avril Group, LC launched the CAP 2018

industrial development plan. The industrial complex received higher attention which

translated into numerous capital expenditures as well as new process

implementation such as the lean manufacturing. By the end of its plan, LC promises

a full bio-mass based An Harroudas industrial complex.

In the same fashion, Avril Group re-oriented shares of its investment

An Seba
into the An Seba (Roches Noires)s trituration units.
An Harrouda
A 30 Million MAD were invested to launch LCs olive

trituration station which shows 270 Tons of daily

production capacity. Connected to its upstream olive

Kelat Sraghna
activity, LC manages three agricultural domain

reaching a surface of 1180 hectares and containing

500 000 trees. In fulfillment of its business

strategies, LC holds 15 sales offices

across Morocco linked to its

industrial activities through a Industrial Sites

fleet composed of 400 trucks.
Headquarters
(Lesieur Cristals Annual
Sales Offices
Report 2015, 2014)

26
Current Strategies

Human Resources Industrial Investment

Development

International Leadership Agricultural Upstream

Innovation & Diversification

Lesieur has recently updated its 2020 strategic plan of development (Telquel, 2016).
Innovation and diversification are at the hearts development. The Groups

Innovations high-speed train was enhanced through Avrils equity investment.

Through this perspective, LC keeps diversifying its current products portfolio by

introducing competitive innovations such as the 3G oil and importing Lesieurs

overseas distinctive brands as for condiments case. LC promises annuals objectives

of three to four new products. To concretize its ambitions, LCs structure went

through a considerable change. From conceptualization to production, LCs

innovations high-speed train aims to align operations with consumers needs.

We are not only agro-industrials, but also farmers argues M. Oudghiri Idrissi

(Telquel, 2016). With the Moroccan governments support, LC has initiated since 2013

a strategy of agricultural vertical integration. As so, LC has been entitled agricultural

aggregator. Moroccos Green Plan aims to establish win-win networks through the

aggregation system. Connecting farmers to strong businesses allows an efficient

synergy between the agricultural upstream and the commercial & industrial

downstream. Moreover, LC seeks also to cope with its importations, encouraging

rapeseeds (colza) and sunflowers production will improve its sourcing and lower

international-markets drawbacks on its operations. A truly win-win situation,

27
sunflowers output represented 21, 317 tonnes in 2015 while rapeseeds (colza)

equaled 540 tonnes. Olive oils, an LCs activity, also prospered through agricultural

upstreams investment through the creation of Socit dExploitation de lOlive (SEO)

which exploits the Domaine Jawhara and Kelaat Sraghnas olive-trees lands. Achieving

in 2015 a production 530 tonnes of olive oil (Lesieur Cristals Annual Report, 2015).

LC allotted an amount of 100M MAD to industrial capitals development. This

expresses LCs engagement to modernize its processes and to adjust its performance

with international standards. This strategy encompasses energy optimization (10%

decrease through Starlite technology), refinery development (15M MAD for material

flows management and 6kT additional storage capacity), soaping re-engineering and

conditioning improvement (10M MAD for pallet use and flows/quality management

through automating systems). In 2015, this industrial investment contributed to a 4%

production increase and a -7% production cost which refers to a 16,6M MAD savings

from operations. Staying socially responsible towards its environment, LCs industrial

development reduced 16,000 T of CO2 emissions and substituted 60% of its fossil

energies by renewables (Lesieur Cristals Annual Report, 2015).

We hold ambitions of relocation, We have in-process files related to Ivory Coast

and Cameroon confides M. Oudghiri Idrissi (Telquel, 2016). LC represents Avrils

bridge to foreign markets, its products are distributed in 40 countries. Additionally,

LC reinforces its global positioning through international showrooms. Sub-Saharan

and North-African countries are targeted by oleaginous oils and soaps whereas

European and American markets show more attractiveness towards olive oils. LCs

international operations weighed 566M MAD in 2015 with 90% growth related to

oleaginous and olive oils (Lesieur Cristals Annual Report, 2015). LCs long-term

objectives highlight the Groups strategy develop international leadership through

new markets penetration.

28
Human resources are a compulsory factor to strategies fulfillment. LC positions its
HR as a strategic corner stone. LC aims to develop, sustain and provide stewardship

to its human capital. Further, the Group mobilizes 1,000 individuals across Morocco

by adopting a modern management style and a flexible organizational governance

favorable to the establishment of a contributive culture and work-climate to

performance-enhancement. This granted LC with 2015 Best Moroccan Employer

label (Challenge, 2016). Such achievement also reflects the Groups Human Capital

Strategy through the creation of Excellium in 2008. Excellium is LCs academy and

training center that inculcates the Groups values and contributes to performance-

sustainment (Lesieur Cristal Official Website, 2017).

29
 1

3 2

If you know the enemy and know yourself, you

need not fear the result of a hundred battles.

Sun Tzu The Art of War

Strategy Formulation
Understanding and anticipating its environment is
crucial to a company: Under which industrial
context is Lesieur Cristal operating? What are its
strengths and weaknesses? Is Lesieur Cristal
surrounded by any opportunities or threats? How
does Lesieur Cristal react to its environment?
Which path should it take? From industry analysis
to strategy analysis stages, answers will be
provided to the above inquiries to finally decide on
Lesieur Cristals long-term orientation.

30
Industry Analysis
Throughout this section of the report, an analysis of the industry operating in

Morocco will be conducted. Descriptions and analysis of the oil and soap industry are

performed for the purpose of offering a deeper and more comprehensive

understanding of the Moroccan market and the industrys operations.

PESTLE Analysis of the Moroccan Market

Political
Moroccos Kingdom governance is established by the 2011 constitution which

advocated the foundation of a more democratic and open society in terms of

regulations and separation of power. The constitutional monarchy is currently lead by

the moderate Islamist party, PJD (Party for Justice and Development) (BBC Afrique,

2017). However, the government has been continuing to roll out the last pending

constitutional reforms established in 2011 and continues to support the promised

subsidy, pension, and capital market reforms. (The World Bank, September 2016).

According to the Corruption Perceptions Index, Morocco is ranked 90 th

(Transparency International, 2016) in terms of untrustworthiness and bad functioning

of public institutions. Nonetheless, despite the fact of a relatively low ranking in terms

of Corruptions in comparison to its neighbors from the Middle East, Morocco has a

more favorable position in terms of political stability : The global economy announces

a record of -0.341, with a maximum of 0.25 in 1998 (The World Bank, 2015).

The Corporate Tax Rate in Morocco stands at 31 percent with an average of

31.62 percent from 2004 to 2016. (Trading Economics, 2017). The Value Added Tax

varies between 7% and 20% depending on the types of good with the latter being the

standard rate (Invest.gov, n.d.). In terms of long-term projections, Morocco presents

more optimistic results. Morocco is ranked 4th out of 19 countries in the MENA

1
(-2.5 weak; 2.5 strong)

31
region, scoring 69.8% out of 100 for Long-Term Political Risk (BMI Research Report,

Morocco World News, 2017). Investments coming from the government in several

domains of the country represent the major political cornerstone for the nourishment

of businesses.

Economic
Moroccos economic planning agency (Haut Commissariat au Plan), expects

real GDP growth to reach 3.9% in the first quarter of 2017, in comparison to a 1.7%

of the same quarter last year. The positive economic outlook for Morocco is mainly

due to the favorable rainfall in the early months of the 2016-2017 agricultural

seasons, since agriculture still accounts for nearly 15% of the real GDP of the country

(The economist, 2017). It is also noted that the agricultural sector accounts for 40%

of the total national employment. Therefore, in Morocco, the quality of the harvest is

a key determinant of household spending.

The increase of precipitations this year is illustrated by the national data to be

12.9% higher than the average (first four months of the rainy season), which should

also boost the production of cereals and legumes. Consequently, the HCP expects

agriculture to grow by 11.1% on a yearly basis, based on the fact that higher crop

production will support export volumes and consequently reduce the need for a given

category of food imports. All of this appears as an underpinning to the overall

confidence in the Moroccan economy, which should also support the domestic

demand (The economist, 2017). Nevertheless, the economy is marked to remain

vulnerable to several risks. For instance, the drastic change in terms of precipitations

could reduce the agricultural output, with a direct negative effect on the overall

growth, and potential inflation.

32
 Figure of the World Bank-Spring 2016

The external demand is also an important factor on which the Moroccan

economy depends. The industrial factor seems to be a key factor in 2017, since global

demand for goods made in Morocco grew by 2.2% in 2016, thanks in large to the

European imports of vehicles produced in Morocco by foreign manufacturers.

Moreover, the country is implementing efforts to develop new industries in the

automobile, but also the aeronautics and electronics. The inflation rate, as illustrated

in the table above, has fluctuated from 0.4% to 2% throughout the last four years,

which reveals a relatively prudent monetary policy. When it comes to unemployment

rates, Moroccos rate has recently declined to 9.4 % (HCP, 2017). However, the country

is considered to have 1.7 million unemployed young Moroccans (from 15 to 25 years

old).

The Moroccans international trade is characterized by a wide variety of

agreements including the Arab Maghreb Union (AMU), the Greater Arab Free Trade

Area (GAFTA), and the Agadir Agreement (the Arab-Mediterranean Free Trade

Agreement). The Kingdom has also several bilateral Free Trade Agreements such as

the one signed with the US, the European Free Trade Association (EFTA) and the

European Community (EC).

33
Social-Cultural
Morocco is estimated to hold 33,848,242 individuals with a Diaspora of around 6

million of Moroccans around the world. It is considered to be a young population

since 50% of its population is under the age of 25 years old (HCP, 2014)

The majority of the population is considered to be Sunni Muslim, and the two official

languages spoken are Arabic and Amazigh.

Moroccan Distribution (Euromonitor, 2016)

According to the Trading Economics website, Moroccos Consumer Price Index

increased to 117.70 Index Points in January from 117.50 Index Points in December of

2016. (March, 2017). This translates into an increase in the prices paid by typical

consumers for retail goods. It reveals a changing attitude when it comes to the way

Moroccans buy. In fact, on the last decades, the increase of retail businesses such as

Bim, Carrefour and Marjane, illustrates the replacement of the open market or

Souk by the use of Supermarkets, for an an increasing number of households.

It has been noted by an Euromonitors international study that Moroccan

consumers shop stores for food is directly correlated to their income: people with

34
small incomes tend to buy in small stores, while when the household income

increases middle class to up families tend to buy in larger stores or supermarkets.

Technology
There are several technological factors that affect the Moroccan agro-business

industry. First of all, the Internet penetration rate of the Moroccan Society is around

56% (Internet Society, 2016)2, being ranked 67th with a growth rate of 3 %.This is

explained by the increasing number of households having access to Internet and also

the increasing number of cyber cafes. This represents a threat to the industry

because being able to access to the Internet is having access to all the information

concerning the products and prices of competition.

Secondly, Morocco is investing an important amount in Technology through its

diverse perspectives of a more developed agri-business industry. Plan Maroc Vert

launched by the government3 ensures the technological development in several

areas of the agro-industry4 such as the Agro-Land Infrastructure Development

Programs, the contribution to genetically improved grains and their certifications,

equipment development helps and many others. Through the Plan Maroc Vert,

Morocco aims to achieve the triple win of growth, adaptation and mitigation.

Finally, Lesieur Cristal awareness towards the importance of technology and

innovation is growing. Starting 2015, Lesieur Cristal follows an investment program

with more than 100 MDH per year. (Rapport Annuel, 2015). Lesieur Cristals has

created a multi-grain oil with the optimal nutritional quality: Lesieur 3G in 2015.

Concerning the soap Industry, Lesieur Cristals innovation is visible through its

diversification of the Taous brand, which comes from a complete renewal of the

fabrication methods used for the production of hard and liquid soap.

2
http://www.internetsociety.org/map/global-internet-report
3 http://www.agriculture.gov.ma/pages/plans-agricoles-regionaux
4
http://www.agriculture.gov.ma/fda

35
Environment
Because of poor conservation practices of the Moroccan soil and excessive use of

pesticides and insect infestations, the environment suffers a lot from desertification

and erosion.5 However, a lot of improvements have been established on the last five

years.

The World Bank announces that Morocco represents both a regional and

international example with its commitment for its environmental new policies. The

country developed a national strategy to reduce fossil fuel consumption through

increased energy efficiency and a shift to renewable energy while investing in the

better management of natural resources. (The World Bank, 2014)6 .A target of 42% of

installed renewable energy capacity by 2020 has been established, coupled with the

goal of a 15% reduction in projected energy demand through the implementation of

energy efficiency measures. To reinforce its energy conservation and anti-pollution

program, the country has also recently started reducing expensive energy subsidies

on diesel, gasoline and heavy fuel oil.

Furthermore, Morocco is considered to be a country with a relatively low emission of

CO2 with 2.1 tons per inhabitant per year in comparison to the average which is 4.9

tones per inhabitant per year. Despite that, Morocco is engaged to continue its

emission of CO2. (Construction21)7

Legal
Morocco follows a civil law system that leads both the administrative and judicial

system. Moroccos judiciary system allows businesses to deal openly with any other

5
http://www.un.org/en/events/desertificationday/background.shtml
6
http://www.worldbank.org/en/news/feature/2014/01/24/morocco-takes-the-long-view-on-green-growth
7
http://www.construction21.org/maroc/articles/ma/emissions-de-co2--le-maroc-sengage-a-plus-de-
reduction.html

36
country without restrictions with the exception of some businesses in Israel. (Maroc

Export, 2016)

Le Conseil de la Concurrence, also called the Competition Council has been created

in 2008 and reinforced in 2014 to fight anti-competitive practices and establish a

study of the markets functionalities. Moreover, the food regulation of the country is

strongly controlled by the ONSSA, Office Nationale de Securit Sanitaires de produits

Agricoles

Overview
As stated previously, Lesieur Cristal primarily operates in two main industries which

are the oil industry and the soap industry. However, lately, Lesieur Cristal, has been

aiming to gain position within the condiments industry.

Fierce competition, either local or multinational, is a clear and major characteristic of

the three industries where Lesieur operates. It is important to underline the fact that

the market of the soap and oil industries are inelastic, oil and soap both being

considered as basic products are not strongly influenced by prices. Customers of the

industry are characterized by their inclination preferences towards traditional

products, which are also widely offered by competitors. However, Lesieur Cristal is

relatively well positioned in terms of offering quality traditional products.

Although, LC dominates the market of the edible oil with a share of 59%, it is still not

that well relatively developed within the olive oil industry but it presents a progression

of 13.3% between 2010-2011 (Notes information LC, 2014).

The soap industry, which represents 12,000 tons of products sold in 2013 is in

constant growth with respective values of 9.2%, 1.5% and 1.1% for the solid soap,

shower gel and liquid soap. In parallel, the laundry and cleaning products has known

a spectacular evolution with a total sales number of 152 000 tons of products at a

value of 3.5 billion of Moroccan dirhams (NI, 2014).

37
Finally the industry of condiments is relatively new in comparison to LCs two other

industries. Lesieur has started operating in the sector right after its acquisition of the

Gnrale Condimentaire in 2008 in France. Few years later it has penetrated the

Moroccan market with an entry market share of 4% including ketchup, mayonnaise

and mustard.

The Edible Oil industry

This sector is characterized by the vegetable oils and the olive oil, which are both

dominating product within the edible oil industry. One of the main issues that is

continuously threatening LC is the strong presence of smuggling products in Morocco

that remain untraceable but strongly dominant in the markets at the frontiers of the

kingdom. The smuggling products of oil come mostly from Spain and Algeria and are

sold at a relative cheap and competitive prices beating the local Moroccan industrials.

This has led to a decrease of the Moroccan market share of oil at firms such as Lesieur

Cristal, Oued Souss and Siof. The smuggling products appear under a significant share

of the national sales, yet they represent a real danger for customers as they have poor

sanitary conditions.

Consumption trends
The global consumption of edible oil increased by 2.3% from 2008 to 2013.

This increase is due to the 13.3% raise of the olive oil consumption, and the 2.2 %

growth of the B to B edible oil which is caused by the growing demand of agro-food

industry mainly biscuits, canned products as well as the paint industry. The world

consumption of edible oil per household varies between 10 and 12 kg. In Morocco,

the consumption has reached 12 kg in 2013 (including B to B). The sector is therefore

expected to have a significant growth potential compared to other countries. The

different results are due to the culinary habits.

38
 Consumption of Oleaginous Oils per
Household (kg/habitant)

28 28

22 21

12
9
5

USA Espagne France Turquie Algrie Maroc Egypte

The Moroccan edible oil market is characterized by the dominance of soybean

oil which represents between 2/3 and of the whole edible oil consumption. This is

mainly due to the fact that its price is relatively affordable compared to other sort of

beans such as rapeseed and corn oil. Concerning the consumption of olive oil, it

represents up to24% of the oil consumption depending on the consumption of the

harvest levels.

Varieties of oils consumed by country (B to C)

20%
3,50%
3,50% 2,75% Others
0,60%
43% 19%
Rapeseed

4% 33% Olive
5% Corn
2% 20%
Sunflower
1,33%
79% 56% 77% Palm
33%
40% 34%
60% Soy
47%
41%

20% 16%
13% 9%
1,67%
USA Spain France Turkey Tunisia Saudi Morocco China Egypt
Arabia

39
Supply of the raw materials
All in all, the Moroccan edible oil market is heavily dependent on the supply of the raw

materials. This is due to the fact that the all rapeseeds consumed in Morocco are

imported from the international market as well as a significant quantity of sunflower

(unrefined oil).

National production and share of import

95%

5%

Imported Produced(Sunflower)

Inelastic market

The market of the edible oil is considered as inelastic. The Moroccan edible oil

market represents 474 KT (including B to B). This being said, edible oil represents 61%,

olive oil 24%, while the rest (other vegetable oils) is for the B to B. Between 2008 and

2013, the cooking oil consumption witnessed an annual average increase of 2.3%.

This increase took place despite the context of the market which is characterized by

a price increase of raw materials.

Customers characteristics of the edible oil

The Moroccan customer is very brand sensitive, and the loyalty scores of the edible

oil industry is believed to be 83%. Therefore, Moroccans are loyal to their brand. This

customer loyalty represents a major opportunity for the companies already existing

in the market as well as an important barrier to entry for the potential companies

willing to enter the edible oil industry. This being said, studies show that the switching

cost of moving from one brand to another is high.

40
However, Moroccans prefer 2 liter bottles or more over others. Bottles superior to 2

liter bottles represent over 56% of the total sales. This can be explained by the habits

of the Moroccan cuisine, but also by the attachment and loyalty towards the brand.

Consumption by bottle capacity

56%

34%

9%

>2 l 1l 0.5 ml

The Olive Oil Market

In 2013, olive oil production reached 100 KT making Morocco the seventh largest

producer in the world. However, bulk selling represents a significant portion of olive

oil sales in the Moroccan market. Bulk selling represents over 83% of total sales while

17% represents packaged bottles sold in either retailers or supermarkets. The reason

behind the dominance of bulk selling is that Moroccan customers perceive the latter

as sign of authenticity. Moreover, there is a strong traditional attachment regarding

bulk selling. Another characteristic of Moroccan customers is that they buy once or

twice the equivalent of the whole annual consumption of oil which makes bulk selling

important in the market.

41
 Market Structure of Olive Oil

83%

17%

Bulk Selling Bottled sales

With 58% of market share Huilerie de souss is the market leader, followed by Lesieur

Cristal with 24% market share, the remaining 18% is shared by local SMEs.

Market share for the bottled olive oil

18% 24%
Lesieur Crital
Huilerie de Souss
Local SMEs

58%

Porter Five forces Model for the Oil Industry

Threat of New Entrants: Medium.

Oleaginous oil industry is very competitive and requires a significant amount of capital for

companies willing to enter this industry. In addition, new entrants would need a large network

of farmers as well as a significant amount of labor force endowed with suitable expertise

42
when it comes to the technical aspect of the production process. The loyalty rate of

oleaginous oil in Morocco is approximately 84%. This shows that new entrants will have hard

times overcoming the already existing companies. Moreover, new entrants will spend

extensive time to achieve economies of scale and be considered a real threat for the existing

ones.

Threat of Substitute products or services: Low

Threat of substitute products is low mainly due to the fact that there is no actual substitute

product for edible oil. Yet, olive oil and butter might be considered as substitute products.

Also, the culinary customs and habits of the Moroccan cuisine makes edible oil a must and

an essential ingredient in the daily life of Moroccans.

Bargaining Power of Customers: Medium to High

The loyalty rate in edible oil is approximately 84%. This shows that customers are not willing

to easily switch to competition. However, the Moroccan customer is known to be price

sensitive, yet there are not a significant price differences between the products available in

the market. In addition, smuggling products that come from Algeria or Spain are a real threat

for Moroccan companies, because the latter products are known to be price competitive.

Concerning olive oil, its market is characterized by the dominance of bulk selling (83% of

industry sales in Morocco) which offers cheaper compared to the ones of bottled products

available in supermarkets as well as retail stores. This being said, we may conclude that the

bargaining power of suppliers is medium to high.

43
Bargaining Power of Suppliers: High

Companies operating in the edible oil industry depend heavily on imports. More than 95% of

edible oil is imported from the international market except sunflower which is produced in

Morocco. However, the quantity imported exceeds by far the quantity of sunflower produced.

Therefore, Companies such as Lesieur Cristal, Siof, Les Huileries de Souss are continuously

threatened by the fluctuations of international price of raw materials as well as that of the

exchange rate.

Rivalry among Competitors: High

There is a fierce competition in the edible oil industry. Companies are threatened by a lot of

factors and must adapt to the trends of the market as well as mitigate all the risk associated

with the importation of the raw products. Despite the fact that Lesieur Cristal is the market

leader in the edible oil sector, it is still under development the olive oil sector.

The Soap Industry

We divided the soap industry in two main predominant subsectors: The personal care

sector (solid soap, shower gel, hair care and liquid soap), and the home care sector

(laundry and cleaning products)

The personal care sector

LC personal growth sector has known a considerable annual growth of 7.1 % between

2011 and 2013 that also reflects the overall Moroccan changing trends when it comes

to the personal care products consumption.

In order to understand the position of Lesieur among its competitors and the

industry, we will provide a brief description in numbers of Lesieurs sales and compare

44
it to the overall Moroccan industry growth thanks to a study realized by Euromonitor

in 2016.

LC Industry Distribution

Evolution of the total sales Structure of consumption in

figures of the personal care the personal care market
sector in millions of MAD (LC)
600
500
9%
400 13% Liquid Soap
300
Shower Gel
200
100 Hard Soap
78%
0
2011 2012 2013

Sales (kt) Total Sales Figures ( in millions MAD)

Moroccos overview in the industry (Euromonitor 2016)

Total sales of Personal Care Appliances in MAD million

140 128,1
120,4
120 113,9
107,9
101,6
95,6
100

80

60

40

20

0
Personal Care Appliances

2011 2012 2013 2014 2015 2016

45
That is to say that the increase in the personal care applications is in growth at a rate

of 13% from 2011 to 2013. This shows that Lesieur is relatively responsive to the

market but is still subject to a very strong competition.

Competitive environment

The Moroccan competitive environment in the soap industry includes two main

players:

Local major enterprises including Lesieur Cristal and Azbane Laboratories

which produce brands that are well positioned in the market.

Multinational companies such as Unilever, Colgate-Palmolive, Henkel, Reckitt

Beckinser. These companies are market leaders at the international level in

personal care. In addition, multinational companies are known to provide high

quality goods which provides a strong added value for the customers. Those

products are mainly Dove, Dettol, Lux, Palmolive, Fa, and many others.

Thanks to its brand Taous, Lesieur Cristal is the market leader with a market share of

72%, followed by Dettol with 5.5% market share, and Dove with 3% market share. (NI,

2013)

The personal care segment includes three sub categories which are:

Shower gel and hair care: Currently representing 13% of the total segment

sales, the shower gel sub segment is witnessing an annual growth of 41% from

2008 to 2013.

Liquid Soap: This sub segment represents a weak portion of the total personal

care segment (only 9%). Yet, Liquid soap is witnessing a 38% growth from 2008

to 2013.

46
 Hard Soap: Hard soap is representing a significant portion of the personal

segment in Morocco with 78% of the personal care segment. Hard soap is

considered to be the most privileged sub segment.

However, a study realized by Euromonitor reflects changing percentages within

the market share, but LC still establishes a leading position. 8

Home Care
The Home Care sector in Morocco includes two main categories.

Hand Washing Laundry: This segment includes three forms which are washing

powder, hard (laundry soap bar) and paste soap. The traditional usage of those

products is the most dominant method that is adopted by Moroccan households.

Traditional Washing is still perceived by Moroccans as the most efficient and

performing way. This attachment to the traditional washing can be illustrated by the

market share of the products associated with the method which represents 73% in

2013.

Washing Machine Products:

LC SA: Competitive position

2,00%

16,50%

34,90%

28,00%

Beauty and personal care (ranked 10th) Bath and shower (ranked 1st)
Bar soap (ranked 1St) Liquid soap (ranked 1st)

8
Euromonitor 2015

47
Those products are adapted to more modern ways of laundry. Those products

witnessed an annual growth of 11.1% from 2008 to 2013. Unlike the hand washing

products, machine products represent 27% of the market share in Morocco.

The overall market of laundry and cleaning products is expected to grow at a constant

rate of 2.7% between 2013 to 2017 to reach 169,4 Kt in 2017. This is mainly explained

by a demographic growth of 1.5 % and an increase in the rate of laundry equipment

generated itself by a growing purchasing power within the kingdom.

Between 2008 and 2013 annual disposable income per household increased by 8%

to reach MAD87428 in 2013. Similarly the consumer expenditure increased by nearly

11% reaching MAD 84921 in 2013. Growth in both disposable income and spending

continued in 2014.

Urban areas are home to the middle class consumers with rising disposable incomes

towards modern incomes. However, demand for modern retail and more diverse

products sales is expected to expand into rural areas. Indeed, according to

Euromonitor, between 2013 and 2018, disposable income will grow by 28%, while

consumer expenditure will grow by 34%.

Structure of the Moroccan laundry market

(2013)

10% Hand Washing Laundry

Products

27% Washing Machine Products

63%
Laudnry soap bar

48
 Evolution of the consommation of the laundry and
cleaning products
175

170

165

160

155

150

145

140
2013 2014 2015 2016 2017

The Five Porters Model: Soap Industry

1. Rivalry among competitors High

Companies that produce soaps in Morocco are very competitive. Indeed Taous main

competitors are multinational firms such as Le Petit Marseillais,

Colgate(Palmolive),Fa, Unilever (Dove), Laboratoire Azbane (Fraicheur, Royal, Marie

France, Sahar, Nagoya) or Reckitt Benckiser (Dettol) . However, Taous still holds a

market share of 72% due to its customers loyalty.

In the Laundry soap industry, the main competitors of Lesieur are Oni, Procter &

Gamble (Ariel, Tide) and Unilever (OMO, Skip)

2. Threat of substitute products-Low

There is no real substitute for soap, which remains a basic product for households.

However, the use of dishwasher and the required specific product may be an

alternative to the manual washing and therefore the laundry soaps. However,

49
this remains a very restrained alternative since most households dont consider the

option of the dishwater.

3. Threat of new entrants- Moderate

Entering the soap industry is not very difficult since its production investment

remain affordable. However, the difficulty would be creating a strong brand

that can compete with the existing companies in the industry and gain a market

share by staying competitive.

4. Bargaining Power of consumers-High

The high competition in the market allows customers to switch from product to

product at a very low cost. Moreover, retail businesses that sell Taous or El Kef very

often also sell competitive brands, such as Skip, Omo or Lux or Dettol within the

different shelves of a supermarket or at retailer in urban or rural areas.

5. Bargaining power of suppliers-Moderate

Lesieurs main industry is centered on the oil production. Considering that Soap is

itself composed of fatty oils, we can say that Lesieur is self-efficient for its soap

production and presents a strong competitive advantage in comparison to its local

competitors. However, the supply chain of the Lesieurs oil production itself is

dependent on suppliers. Therefore, at this level the bargaining power of suppliers

may be high.

The condiments Industry in Morocco

Although, the condiments industry represented in 2013 only 0.1 % of the total

revenues of LC, Mr. Oudghiri had recently affirmed the aspiration to grow the

market share of condiments and therefore to enhance the total revenues it

represents for Lesieur. Because of this statement, we decided that it was relevant

not to neglect an industry study of the condiments sector in Morocco.

50
In October 2013, Lesieur has launched its Ketchup and Mayonaise and has been

gaining continuous market share throughout the years. These products have been

developed by Sofiprotol and were specifically adapted to the Moroccan taste.

Despite the increasing awareness of food additives and preservatives, sauces,

dressings and condiments in Morocco knew a constant growth of 4% current value

and 3% retail volume growth in 2016 (Euromonitor, 2016). Ketchup and mustard are

the ones who recorded the fastest current value growth of 6% each.

Les Conserves de Mekns Aicha SA leads the market with a market share of 17% in

2016, closely followed by VMM Maroc with a 16% value share. The industry is

expected to grow at an expected retail volume CAGR of 3% and a retail value of 4%

in 2016.

Competitive Landscape
As stated previously, Les Conserves de Mekns Aicha SA are leaders in the market

with a 17% market share in 2016, thanks to its incontestable success of Aicha

through it tomato pastes and purees .VMM Maroc follows with a 16% market share

due to its successful brand Star, that is low cost based and very diversified. Both

companies are strongly positioned in terms of advertising through various forms of

marketing support.

However, Lesieur Cristal SA has experienced the biggest increase in value sales

known in the Moroccan market history with an increase of sales of 49%

(Euromonitor, Dec 2016). Moreover, the brand is expecting to grow in the future,

since the company allocates strong efforts to position its products as organic and

safe through their labelling and very strong communication strategies.

51
Other international brands are also well positioned in the industry such as

Pikarome, Amora and Knorr who are strongly recognized by domestic consumers. In

addition, the strong communication media invested from these brands players

contribute to a highly commercialized and well-known product.

Sales of sauces and condiments by category value

(2011-2016)
500
450
400
350
300
250
200
150
100
50
0
2011 2012 2013 2014 2015 2016

Cooking Ingredients Bouillon Table Sauces Tomato Pastes and Pures

The Five Porters Model: Industry of Condiments

1. Rivalry among competitors Medium to High

There are local and multinational companies that are strongly positioned within the

Moroccan Consumers mind. This is due to the strong marketing investments that

local firms allocate to these category of products.

2. Threat of substitute products-Medium

There are a wide variety of sauces that can be substituted by other brands.

However, the customers loyalty to the taste makes the threat of substitutes

medium instead of high.

3. Threat of new entrants- Low

52
Entering the condiments industry is difficult because it necessitates a large economy

of scale in order to establish the price that the main players present in the market.

Moreover, the players strongly dominate the market in terms of customers

perception of the brand, making them acquire loyal customers.

4. Bargaining Power of consumers-Medium

The high competition in the market allows customers to switch from product to

product at a relatively low cost. However, the specific taste to each brand makes it

hard for a consumer to switch to another brand.

5. Bargaining power of suppliers- High

The condiments industry presents a wide variety of products, therefore the

variability of raw materials is very wide. If we consider the sauce industry (ketchup,

mayonnaise, mustard) which are the ones Lesieur produces, we can say that the

bargaining power of suppliers is relatively high, since those products are strongly

based on oil, and this lasts bargaining power of suppliers is high (following the

Supply Chain Logistics). Other raw materials may be based on eggs, vegetal (such as

the Brassicaceae for the mustard) and others components that the Moroccan land

doesnt offer, and therefore needs to be imported from abroad.

53
Financial Analysis of Lesieur Cristal
In this part of the analysis the focus will be on an in-depth study of the financial health

of Lesieur Cristal through the assessment of four major types of ratios; Profitability

with a DuPont perspective, Liquidity, Leverage and finally the operation part which is

crucial for a company like Lesieur with important variable cost.

In order to provide a comprehensive financial analysis, we must compare the

companys results and findings to either the major competitors or to the industry as

a whole. However, when conducting the necessary research we found out that

Lesieurs direct competitors are not listed in Casablanca Stock Exchange. Also, when

looking for the industry mean, we discovered that the latter includes all companies

that operates in the agro-food industry. Yet the latter companies have different

activities which are not related in any way to either olive oil, edible oil, or soap.

Therefore, we were limited to choose the industry median provided by Thomson

Reuters in the library. The industry median is not the best option, but we did include

as it is the closest possible comparison item.

Profitability Ratios

Net Margin Industry: 8.3%

6,0%

5,0%

4,0%

3,0%

2,0%

1,0%

0,0%
2011 2012 2013 2014 2015 2016

54
In order to evaluate the profitability of Lesieur Cristal we have decided to analyze a

first ratio called net margin. Net margin or net margin profit is according to

Investopedia the part of the revenues that is kept as earnings or net income. This

ratio has to be differentiated from the gross profit, which does not include fixed cost,

an important element to consider while analyzing Lesieurs financials position.

Lesieurs net margin was constantly increasing during the last Five years with a relative

stagnation for the last two years. The general director Samir Oudghiri, explained that

the condition were not propitious for expansions due to difficult economic

environment, which is characterized by a deceleration in economic growth of 1.1%

(compared to 4.5% in 2015), a drought that has seriously affected household incomes

and the decline of consumption for many food products. The Agri-Food industry

average is 8.3% in 2016 while Lesieurs was only scoring 5%, this is according to

Mr.Oudghiri mainly due to the decrease of the margins in edible oil sector that

represent 70% of the revenues. This is due to the fierce competition that Lesieur

encountered during 2016, which lowered drastically the margins.

ROE Industry: 16.4%

14,0%

12,0%

10,0%

8,0%

6,0%

4,0%

2,0%

0,0%
2011 2012 2013 2014 2015

55
The second ratio that we have chosen to analyze is the return on equity. According

to Investopedia Return on equity is the ratio between return and shareholders equity.

The Return on equity shows how the management of a company is effective at using

its equity financing for the growth of the company. How much the shareholders

earned from their investment in the enterprise. This ratio is crucial for shareholders

who can calculate the profitability of their investments. Analyzing Lesieur we notice

that the return is constantly increasing for the last five years reaching 12.4% in 2016,

which is quite less than the average industry of 16.4%. The return was weak before

the purchasing of Lesieur by Avril group in 2013, which lead to an increase of 62.5 %

increase of the ROE by implementing a new way of management. This new managing

style helped also in increasing the return on assets that you will find in the table below

reaching 6.01% in 2016 getting closer to the Agro-Industry average of 6.91%

ROA
7,00% Industry: 6.91%

6,00%

5,00%

4,00%

3,00%

2,00%

1,00%

0,00%
2011 2012 2013 2014 2015 2016

Liquidity Ratios
The liquidity analysis is the best way to evaluate the companys capability to pay its

current debt with its most liquid assets that we call current assets. The first ratio that

56
we will be discussing is the current ratio calculated as follow: Current Assets/Current

Liabilities. The Current is also in constant increase since 2014 with the establishment

of a new policy of managing the current assets by being able to collect account

receivables quickly and drastic decrease of its current liabilities by an average of 2%

each year. The second ratio that we wanted to discuss is the quick ratio calculated as

Quick Ratio = Current Assets-Inventory/Current Liabilities. The Quick ratio is more

relevant to discuss in the case of Lesieur since its inventory represented on average

45% of its current assets. In fact even though the ratio is in constant increase since

2011, it is still inferior to 1. For Lesieur Cristal to stay solvent in the market and

reimburse its short-term debt without having to sell its inventory, the quick ratio must

be at least 1.0 from which Lesieur is relatively close 0.86 knowing that the industry is

closer to 0.81.

Quick Ratio
0,90

Industry : 0.81
0,85

0,80

0,75

0,70

0,65
2011 2012 2013 2014 2015

57
 Current Ratio
1,55 Industry: 1.33

1,50

1,45

1,40

1,35

1,30

1,25
2011 2012 2013 2014 2015 2016

Leverage Ratios

Debt/Equity
0,16

0,14
Industry : 0.23
0,12

0,10

0,08

0,06

0,04

0,02

0,00
2011 2012 2013 2014 2015 2016

58
The Debt to Equity ratio measures the extent to which a firm is relying on debt to fund

its projects. A high debt/equity ratio means that a company is heavily dependent on

debt when it comes to financing. This decreasing trend is primarily due to an

important increase in equity (more than 20% from 2011 to 2016), but more important

than that a significant decrease in debt (88% decrease from 2011 to 2016).

Debt/Assets
0,07

0,06

0,05

0,04

0,03

0,02

0,01

0
2011 2012 2013 2014 2015 2016

The Debt to Assets ratio measures the amount of assets that are financed by debts

rather than equity. Despite the significant increase of assets (more than 12%), the

debt to assets ratio was noticing a decreasing trend from 2011 to 2015. This trends

proves the fact that Lesieur does not depend on debt to finance its assets (as stated

above, debt decreased its debt by 88% from 2011 to 2016).

59
Activity Ratios

Inventory Turnover
4,8

Industry : 5.8
4,6

4,4

4,2

3,8

3,6
2011 2012 2013 2014 2015 2016

The Inventory Turnover shows how many times the firms inventory was sold and

replaced over time. As shown in the chart above, the inventory turnover witnessed a

sudden and significant decrease in 2012. This is mainly due to the fact that commodity

prices increased during the same period. In addition, economic growth also witnessed

a decrease, which is primarily due to the drought. Also, the strong presence of the

smuggling products in the eastern part of the kingdom contributed to decreasing the

ratio.

Asset Turnover:

The Asset Turnovers purpose is to show the firms ability to generate revenues and

sales from its assets. The effectiveness of a company in using its assets to generate

revenues. Despite the fact of having a decreasing trend since 2012, the company is

still performing well compared to the industry as a whole (1.19 vs. 1.16). In order to

provide a deeper analysis to explain this decreasing trend, we must look at both

assets and revenues. In fact, during the same period revenues were volatile while

assets witnessed a growth of over 12%. The volatility of the revenues mainly due to

60
increase of commodity price increase and changing trends of harvesting that is

caused by climatic changes.

Asset Turnover
1,4

1,35
Industry : 1.16

1,3

1,25

1,2

1,15

1,1
2011 2012 2013 2014 2015 2016

Strategy Analysis & Choice

In above parts, thorough analyses were provided in what regards Lesieur Cristals

environment. To put these into perspective, this core step will show which path

should be taken by Lesieur Cristal in accordance to its vision, mission and objectives.

Moreover, the strategy analysis and choice produces a framework of action for the

company through the following:

Input
Stage
Matching
Stage
Decision EFE, IFE & CPM
Stage
IEE, GS, SPACE,
BCG & Swot
QSPM

61
The Input Stage
The Internal Factor Evaluation (IFE)

The objective of developing an Internal Factor Evaluation Matrix (IFE) is to

identify and assess the main strengths and weakness of Lesieur Cristal in the most

important functional areas as well as gauging the relationships among them. After

conducting a research about Lesieur Cristal, the major strengths and weaknesses are

the following:

Strengths
Strong brand image
We assigned a rating of 4 because Lesieur Cristal has a clear presence in the

minds of Moroccan consumers thanks to successful brands such as Lesieur, Huilor,

Cristal, Al Hora, El Kef, Taous, El Menjel that can be considered fully integrated

components of the Moroccan language and the popular culture.

Strong marketing expertise

We assigned a rating of 4 because Lesieur Cristal constantly develops

marketing and communication strategies in order to beat the strong competition in

the agro-industry by introducing new logos and new packages as well as advertising

their products through launching annual advertising campaigns and relying on

newspaper, telemarketing, social media and billboards.

Good innovation and research and development

We assigned a rating of 4 because Lesieur Cristal follows a constant search for

innovation in order to differentiate itself from competitors. Indeed, each year, the

company allocates a budget of around 80 Mil MAD in order to launch 4 major

innovative products each year. For example, thanks to its advanced research and

development department, Lesieur Cristal has recently introduced a new and high

technology recipe called 3Graines to produce the edible oil of the future.

62
Strong financial position
We assigned a rating of 3 because Lesieur Cristal is without saying the

Moroccan leader in the agro-industry since it benefits from its strong financial

position after taking a look at its financial statements and after calculating its final

ratios.

Leader in the agro-industry

We assigned a rating of 4 because according to its 2015 annual report, Lesieur

Cristal is the leader in the agro-industry in Morocco by having high market share in

Soap market with around 40% and 43% market share for Body and Laundry Soap

market respectively as well as in the Edible Oil market with 59% market share. It is

also on the right path to become the leader in Olive Oil market (22% markets share

in 2015).

Strong expertise in the agro-industry

We assigned a rating of 4 because Lesieur Cristal benefits from Avril Group

the leader of edible oil production in France, Morocco, and Romania as well as animal

nutrition in France- that owns 41% of the Moroccan company which enables it to

benefits from its expertise in the agro-industry.

Triple ISO Certification
We assigned a rating of 4 because according to its 2015 annual report, Lesieur

Cristal has three ISO certifications that stand respectively for a certification for quality

management system (ISO 9001), for the environmental management system (ISO

14001), and for food safety (ISO 22000).

High presence in retail chains

We assigned a rating of 4 because Lesieur Cristal is well present in the

Moroccan market either through small or large retail chains such as in 55,000

traditional retailers, 1,500 wholesalers and others.

63
Good energy efficiency
We assigned a rating of 3 because Lesieur Cristal is applying pomace burners

for heat in order to decrease its operating expenses as well as shifting from fossil

energy to sustainable energy. For example, in 2015 the company reduced its

operational expenses by 16.6 Mil MAD and achieved 60% substation rate from fossil

to sustainable energy.

Weaknesses
Low market shares in olive oil market
We assigned a rating of 2 because according to its 2015 annual report, Lesieur

Cristal has only 22% market shares in the olive oil market due to the strong

domination of the informal sector on the olive oil market (locally) as well as the strong

competition from Greece, Italy, Spain, and Eastern Europe (internationally)

Limited access to international markets

We assigned a rating of 2 because according to its 2015 annual report, Lesieur-

Cristal is making a significant move to enhance its exports, still, it exports to 40

countries such as Libya, Mauritania, Senegal, Angola, Russia, and U.S as well as its

revenues from exports are low compared to its domestic revenues.

High dependence on edible oil

We assigned a rating of 2 because according to its 2015 annual report, the

majority of its sales revenues (47%) come from edible oil which represents a real

danger for the companys overall performance by making its revenues fragile and

dependent on a single category of products that might face a crisis or drop in

demand.

Very sensitive to commodity prices

We assigned a rating of 1 because according to its 2015 annual report, Lesieur

Cristal is highly sensitive to international commodity prices, especially soya which

makes the companys revenues dependent on the fluctuation of international

64
 commodity prices. In fact, this factor has negatively led to a fall and decrease in its

revenues.

Key Internal Factors Weight Rating Weighted score

Strenghts 3 or 4
Strong brand image (successful brand names
such as El Kef, Taous, Lesieur, Huilor, Cristal, Al 0.1 4 0.4
Hora, El Menjel)
Good marketing and advertising expertise 0.06 4 0.24
Good Innovation and R&D (annual budget of 80
Mil MAD to launch 4 major innovative products 0.08 4 0.32
per year)
Strong financial position 0.06 3 0.18
Leader in the agro-industry in Morocco (edible
oil with 59%, body soap with around 40%, and 0.09 4 0.36
laundry soap with around 43%)
High presence in retail chains (55,000 tradtional
0.05 4 0.2
retailers and 1,500 wholesalers)
Triple ISO certifications (ISO 9001, ISO 22000, ISO 14001)
0.06 4 0.24
Good energy efficiency (reducing operational
expenses by 16.6 Mil MAD and achieving 60% 0.05 3 0.15
substitutio rate from fossil to sustainable
Strong expertise of the agro-industry (41%
owned by Avril Group the leader in production
0.08 4 0.32
of edible oil in France , Morocco, and Romania as
well as in annimal nutrition in France)
Weaknesses 1 or 2
Low market share in olive oil market (Only 22%
0.1 2 0.2
market share)
Limited access to international market
(exporting to 40 countries and low revenues 0.09 2 0.18
from exports)
High dependence on olive oil (47% of sales
0.1 2 0.2
revenues come from edible oil products)
Very sensitive to commodity price (importing
0.08 1 0.08
99% of raw materials for Oleaginious products)
Total 1 3.07

65
After developing the IFE Matrix, we came to the conclusion that Lesieur Cristal is

internally strong since it has a weighted score of 3.07 which is above average.

The External Factor Evaluation (EFE)

Opportunities:
Worldwide demand for olive oil increases
If the national consumption of edible has stabilized during the past 5 years with

only 1% growth with according to the specialist little hope for the future 9, the

international consumption is expected to be growing at a more interesting rate. In

fact according to agence ecofin The Worldwide consumption of vegetable oils is

expected to have increased by 39% by 2030. The olive oil segment seems to be the

main contributor of this growth, with countries like Japan, USA or Russia that have

increased their consumption by more than 350% during the last 10 years with

forecasts that the consumption will keep growing as fast for the next years10.

Concerning olive oil, the worldwide consumption of olive oil is growing from on

average 2.8 Mil Tones over the period 2004/2005 2009/2010 to on average 3 Mil

Tones over the period 2010/2011 2016/2017 and the expected one for 2016/2017

is on average 2.9 Mil Tones.

We assigned 3 as a rating because Lesieur Cristal is not taking enough

advantage of it, even though his exports have highly increased during 201511. Aiming

to relocateinto Ivory Coast is a smart move to take advantage of the cheap raw

material, but Lesieur fails to be present in countries like USA, Russia or Japan where

9
http://www.jeuneafrique.com/232487/economie/huile-de-table-lesieur-cristal-monte-en-gamme-pour-
conforter-sa-position-au-maroc/
10
https://www.oliveoiltimes.com/olive-oil-business/world-olive-oil-consumption-increased-by-73-percent-
over-a-generation/50731
11
http://www.maghress.com/fr/albayane/128350

66
growing forecast are much more interesting especially that Moroccan olive oil is the

cheapest to produce in the world.

New strategic association between Morocco and African countries is arising supported by
the King especially with the Africanisation of the Moroccan banks.
The presence of Moroccan banks like Attijariwafa bank or BMCE is a real advantage

for Moroccan companies, which want to relocate or expand their market in African

countries12. According to Omar Belmamoun "When you have your own bank also

operating in Ivory Coast or Senegal and offering to finance your projects, it makes

things simple.".Lesieur Cristal through his CEO Samir Oudghiri Drissi voice, said to

have understood this opportunity of exporting and implementing intoSub-Saharan

countries with high potential. Lesieur is pursuing to gain more market shares in the

Sub-Saharan African countries. Indeed, the general manager of Lesieur Cristal, has

stated during an interview with the magazine Telquel that Lesieur Cristal wants to

relocate itself in Cameroun13 and Senegal because of its high capacity of production

of groundnut (average of 540 000 tons per year14) and in Ivory Coast because it is the

main producer of palm oil in Africa.

We have decided to assign 4 as a rating since the company seems to have understood

that Morocco is preparing a royal road for Moroccan companies to relocate in Africa.

Investment incentive under the Moroccan strategy of Plan Maroc Vert will increase future
production of oilseeds.
One of the weaknesses of the edible oil market is that 99% of the raw material is

being imported from Argentina, Malaysia This is going to be reduced thanks to this

new Agricultural plan. The objective is to achieve by 2020 a coverage rate of 20% of

the country's needs, reducing the dependence of the industry on imports of raw oils.

Government is promoting and helping farmers to grow Sunflower and colza through

12
https://intellivoire.net/le-maroc-se-tourne-vers-lafrique-subsaharienne-synthese/
13
http://telquel.ma/2016/02/05/Lesieur-cristal-compte-simplanter-en_1481214
14
Agritrade 2011

67
the aggregation system to cover some of the local consumption by 100% Moroccan

products. The investment incentives are numerous and covering many aspects such

as Irrigation and Land Management, Equipment for farms, certified seeds and Fruit

plantations, Export Promotion, Genetic improvement, Valuation units. The control of

the production by a company like Lesieur is strategic especially if it is done through

the help of the government. The increase of the production will also be accompanied

by a decrease of the price of the olive and increase the cost leadership of Morocco in

this industry as stated by the report of Le ConseilOlicoleinternationale 15

We have decided to assign 4 to this opportunity since according to la nouvelle

Tribune the company has launched an aggregation program of 30 000 ha, of which

2000 ha are around its olive plantations16.

New techniques of valorization of olive sub-products: extraction of the energetic potential of

olive pit
In accordance with the national will of reducing its dependency to foreign energy, the

olive industry under the aegis of the institute Agro pole Olivier is looking for ways to

reduce its energy. In Meknes the institute has found that 2 kg of olive cores represent

the equivalent of the energy of one liter of gas oil, almost 10 KW, a very interesting

figure to value the energy potential of this biomass17. New environmental, food safety

and sanitary laws in force in Morocco, will increasingly lead the olive sector to base

itself on new principles and innovative technologies with reduced environmental

impact. We think that this real opportunity to optimize its operations in an industry

that as we have said previously has come to a high level of maturity where the only

way of increasing the profit is to lower its cost. This represent also a unique

opportunity of enhancing Lesieurs image and corporate responsibility on the

15
https://www.yabiladi.com/articles/details/40653/huile-d-olive-maroc-affiche-couts.html
16
https://lnt.ma/filiere-oleicole-lesieur-cristal-mise-sur-lintegration-en-amont-agricole-et-lagregation/
17
http://www.leconomiste.com/article/984657-valorisation-de-la-biomasse-de-l-olivier-meknes-une-future-
greencity

68
Moroccan and international scene. In fact the edible oil industry and especially the

olive oil industry is known for producing Amurca, a sub-product of the olive, which is

responsible of the pollution of millions of m3 of water every year in Morocco.

For this opportunity we assigned 4 since according to Fatima Zahra El Khlifi, Deputy

CEO at Lesieur Cristal, the Moroccan based company is aiming to support 50% of its

annual need of energy through the purchase of a boiler with olive pace thanks to a

loan from BERD European Bank for Reconstruction and Development. This shows

clerly that Lesieur is a company that is aware of its energetic potential and is highly

investing to take advantage from it.

Lucrative prospects for the detergent market

Three major players mainly dominate the detergent market in Morocco: multinational

companies (Unilever and Procter and gamble), Mutandis and Lesieur. Even though

the solid soap is leader in the market with El Kef (Lesieurs brand) dominating the

market with 98% of market share, specialists are forecasting the high development of

other detergent forms going along with the high development of household

equipment (ref). Experts of the market are expecting an increase in the sales by 3 to

5% from 2014 to 2020 representing today according to Nielsen a market of 3 billion

of dirhams. Bleach and dish washing liquid present the most rapid growth and are

two segments where Lesieur is completely absent

For this opportunity we have decided to assign the grade of 3. Even though Lesieur

has launched Keff liquid in 2015 and Keffpoudre in 2014, they are still absent in the

segment of low cost bleach and washing liquid which according to the director

detergent department MrLahlou is expected to grow double digit in the near future.

69
Lucrative prospects for the Body hygiene market
According to Note information of Lesieur published in 2015 the consumption in the

body hygiene market is expected to grow at an average annual rate of 6.8% over the

period 2013-2017. This growth is mainly led by the increase of shower gel sales in

retail (10ml) due to the changes in consuming behavior and higher purchasing power.

The trend is expected to be more important in the near future especially that the

economic growth is expected to be 4% for 2017 with a slight increase in the Moroccan

household purchasing power. In fact according to Lesieur the future incomes as well

as the company's results depend significantly on consumer spending and therefore

the disposable income of the population.

For this opportunity we have assigned 3 because Lesieur did a smart move by

launching Taous shower gel but failed to propose a wide range of size, which mainly

explained its very low market share in this segment

International demand for Argan oil

By 2022, Argan Oil market will be value at 600 Million MAD.

High market growth of condiments and sauces in Morocco

According to its 2015 report, Lesieur Cristals sales revenues heavily depends on its

large range of Edible Oil products (about 47%) while the other three main categories

of products generate respectively 39% (Olive Oil), 11% (Soap) and 3% (Oilcake).

According to Euromonitor, on one hand, the national consumption of edible oil has

stabilized during the past 5 years (average growth of 1%). On the other hand, the

condiments and sauces market in Morocco has been increasing over the period 2009

2013 by 3.87% and is expected to grow at 5.06% over the period 2014 2018. For

this reason, Lesieur Cristal has decided to develop a new range of condiments since

2013. Its current portfolio of condiments includes Ketchup, Mayo and Mustard but

according to Samir Oudghiri Idrissi, Lesieur Cristal is seeking to reach 20% market

share, thus it is willing to develop more condiment products.

70
We assigned a rate of 3 because Lesieur Cristal is aware about the potential of this

market and is aiming to reach 20% market share, but its portfolio of condiments is

still weak since it includes only 3 products.

Threat:
Price volatility of oilseeds and 2017 forecast on price
Morocco is importing 99% of its needs of oilseeds and oilcake due to the massive

decrease in local production of sunflower seeds and colza seeds during the last

decade. Moroccos supply is at 90% composed of soy seeds for which the price is

decided in Chicagos stock exchange and mainly by the level of production in

Argentina Brazil and USA representing 80% of the world production. Analysts said

USDA's estimate of the crop in Argentina should be slightly downward, while Brazil's

figures are expected to change slightly. Argentina was hit early in the year by heavy

rainfall that caused flooding and some damage to crops18. US and Brazils production

will compensate for the slight decrease in Argentinas production. The price will

therefore stay stable around 32 cents of dollar per pound19.

To this threat we have decided to assign the grade of 2 because Lesieurs will not be

highly impacted by the prices since they will stay quiet stable20.

Moroccan production of olive oil is under threat with the possible arrival of the bacteria Xylella
fastidiosa
After Italy, Corsica (France) and the Balearic Islands (Spain) in 2013 to 2015, Xylella

fastidiosa is now at the gates of Morocco. This bacteria is widely known to be

voracious of olive trees leading to the destruction of 30 000 hectares of olive trees in

south Italy between the last two years. The concern of agricultural professionals in

Morocco is now growing especially that many trees have been exported this last year

from countries infected.

18
http://www.agrisalon.com/actualites/2017/02/09/le-soja-monte-nettement-a-la-veille-du-wasde
19
http://www.agrimoney.com/feature/soybean-futures---will-they-outperform-in-2017-too--490.html
20
http://www.nasdaq.com/markets/soybean.aspx?timeframe=10y

71
 There is no miracle antidote to this threat and according to the professionals of

the sector the only way to reduce the risks is to stay attentive to some symptoms

indicating the presence of the bacteria to be able to identify it the most rapidly and

eradicate it by destructing the concerned trees.

We have assigned the grade of 2 to this threat because of the uncertainty of the

threat for the Moroccan trees21.

Appreciation of the American dollar

As we have said previously Morocco and thus Lesieur is mainly dependent to the

international imports of soy, colza and sunflower beans. The importation from US,

Argentina and Brazil is demanding from Moroccan trader Lesieur to deal with

American dollars for which the prices seem to have sharply increased in 2017 due to

two main reasons. First the FED has raised its rates as expected and sees three rises

in 201722, these rises make US securities more interesting for investors and leading

to a higher demand for US dollar which leads to an increase in its price. The second

factor is the investiture of Donald Trump as US president who is promising to cut

corporate tax by half to push US companies to relocate their operations in America.

By doing so companies will boost the US growth and do the same to the US dollar

making oilseeds importations more costly for Moroccan companies like Lesieur.

We have assigned the grade of 3 to this since according to the Note dinformation

to limit the uncertainty associated with its revenues and future purchases, Lesieur

Cristal has implemented a dynamic strategy to hedge foreign exchange risk, using

forward contracts and options, depending on market opportunities.

21
http://www.levert.ma/xylella-fastidiosa-alerte-maximale-maroc/
22
http://investir.lesechos.fr/marches/actualites/fed-yellen-suivez-notre-direct-a-partir-de-16-heures-
1617442.php

72
Climate dependence concerning the production of olive oil in Morocco
Moroccan agriculture lands are still depending on the precipitation as their main

source of water for 54% of them. According to Noureddine Ouazzani, directory of

Agro-ple Olivier ,

The year 2017 is expected to be a very poor year for the Moroccan producers a

decrease in production in olive-growing areas by 35 to 40% which will lead to an

increase of the local prices. This forecast will have to be relativized and maybe

corrected since it was published by leconomiste maghrbin in December 2016 and

may have not expected the good precipitation of the last weeks.

For this threat we have assigned the grade of 3 since the olive oil segment is

representing only 22% of the companys revenues. Moreover Lesieur is already

anticipating this threat by equipping its partners suppliers with irrigation systems

(Rapport annuel 2015).

Moroccan purchasing power

Lesieurs sales stay highly correlated to the Moroccan GDP and thus the purchasing

power of Moroccan households for which the consumption of oil or hygiene products

is according to la note dinformation highly depending on macro indicators.

We have decided to assign the grade of 2 because Lesieur has no control over these

indicators but the Moroccan GDP growth is expected to be growing by 4.3% this year

with going along a slight increase in the purchasing power23.

Informal sector
The informal sector has always been a threat for Lesieur, which was victim of

falsification of its Taous Soap in 2007 when 20 tons of soap coming from China have

intercepted by Casablancas custom24. Today it is more the smuggling trade that

23
https://www.moroccoworldnews.com/2017/02/208502/future-is-looking-good-for-morocco-bmi-research/
24
http://leconomiste.com/article/contrefacon-lesieur-defend-son-savon-taous

73
threatens the sector of oilseeds, detergent and body soap. In fact the oilseed sector

is facing unfair competition in the north east of the country where the subsidized

Algerian oil is present in all markets representing 60% of the local supply. The soap

and show gel industry is facing another unfair trade with the enclaves of Ceuta and

Melilia that gates for European products that is to be found in all traditional souks in

Morocco.

This threat to which we have not been able to assess the importance by statistic

seems to be reasonably important for Lesieur. Lesieur is officially not fighting this

problem, which indicates that the government is doing enough for the moment. For

these reasons we have assigned the grade of 2.

Competitive Profile Matrix (CPM)

The purpose of developing a Competitive Profile Matrix (CPM) is to determine Lesieur

Cristals major competitors while highlighting the key factors for being successful in

the agro-industry. Since Lesieur Cristal is operating in three main different sectors

with different competitors, we decided to develop three CPMs: the first one for Soap

sector, the second one for Oleaginous Oils sector, and the third one for Condiments

sector. The CPMs below illustrate the key success factors of Les Huileries de Souss

Bel Hassan, Savola Group, and SIOF representing the companys competitors in

Oleaginous Oils sector, Reckitt Benckiser, Unilever, Procter and Gamble, Le Petit

Marseillais, Delta Hygiene and Colgate Palmolive representing its competitors in Soap

sector, and VMM Group, Unilemer Group, Paladin, Nawals Finest Sauce, Catier Saada,

and Aicha representing the companys competitors in Condiment sector in relation to

Lesieur Cristals strategic position in the three sectors.

After conducting an industry research for, Oleaginous Oils, Soap, and Condiments

sectors, the major key success factors are the following:

High growth of catering market

According to LesEco, the catering industry in Morocco in currently witnessing a

74
significant growth. The most important actors which are considered to be monsters

in Moroccan catering are Newrest, Sodexo, and Ansamble. From corporations,

hospitals, university campuses, penitentiaries as well as aviation companies, the latter

companies cumulate significant growth in market share.

Each catering company follows a different model based on their sole mission and

vision. Sodexo for example is heading towards facility management such as

gardening, cleaning, and security. In fact, more Sodexo exploits more than 25,000

meals per day. Newrest, the market leader with 75% market share exploits more than

97,000 meals per day and generate a 495 million dirham revenues. In the recent years

Newrest has been able to gain more market share thanks to Cheikh Khalifa hospital,

Casablanca and Marrakesh University Hospital as well as penitentiaries. Except Al

Akhawayn University, Newrest is supplying university campuses in Settat, Oujda,

Agadir, and Fes. Ansamble is another catering operator in Morocco which supplies

more than 60 restaurants in the kingdom, and exploits more than 60,000 meals per

day. Ansamble considers itself to be second in the market with a market share of 25%,

yet the company is still expecting an increase of over 40 %.

According to Lavieeco, Moroccan catering is a flourishing industry. In fact, according

to the same source, the catering industry is expecting to double in size thanks to the

penitentiary market. The number of penitentiary institutions that are calling for bids

is 75. This is a key information which will enable catering companies to gain market

share.

We assigned a rate of 3 because Lesieur Cristal is aware about the potential of this

market to double in size as well as a continuous growth of catering in corporations,

university campuses, hospital, airline companies and others, but the company does

not take completely advantage from this opportunity.

75
76
 WEIGHTED
KEY EXTERNAL FACTORS WEIGHT RATING (1 to 4)
SCORE

OPPORTUNITIES
Raise in worldwide demand for olive oil (global consumption of vegetable oils
is expected to increase by 39% by 2030 with olive oil as the main driver for this 0,05 3 0,15
growth)
New strategic association between Morocco and African countries
(Africanisation of Moroccan banks and Lesieur Cristal is seeking to operate in 0,04 4 0,16
Senegal, Cemeroun and Ivory Coast)
Raise in future production oilseeds (investment incentive under the Moroccan
strategy "Plan Maroc Vert" in order to achieve by 2020 a coverage rate of 20% 0,06 4 0,24
of the Moroccan needs)
New techniques of valorization of olive by-products (extraction of the
energetic potential of olive pit example 2KG of olive cores are the equivalent of 0,04 4 0,16
1L of gas oil equals almost to 10KW)
Lucrative prospects for the detergent market (expected raise in sales by 3%
0,04 4 0,16
to 5% from 2014 to 2020)
Lucrative prospects for the body hygiene market (expected growth of 6.8%
0,07 4 0,28
over the period 2013-2017)
International demand for Argan oil (expected sales revenues of 600 Mil $ by
0,06 3 0,18
2022)
High market growth of condiments and sauces in Morocco (expected growth
of 5.06% in Morocco over 2014-2018 and Lesieur Cristal is seeking to achieve 0,08 3 0,24
20% market share)
Growing trend for organic in beauty and personal care in emerging
0,08 3 0,24
countries (exampe in India with 42%)
High growth of catering market (market leaders expecte a increase in their
0,08 3 0,24
total sales revenues of 20% by 2016)
THREATS
Price volatility of oilseeds (price is decided in Chicago Stock Exchange
0,08 3 0,24
according to the level of production in Argentina, Brazil and USA)
Moroccan production of olive is under threat (due to the possible arrival of
the bacteria Xylella fastidiosa to Morocco since neighbor countries were
0,06 2 0,12
affected such as Corsica (France) and the Balearic Islands (Spain) in 2013 to
2015)
Appreciation of the American dollar (expected three rises U.S. Fed rates by
2017 and expected cut of U.S. corporate tax by half after Donald Trump election 0,07 3 0,21
as U.S. President)
High climate dependence regarding the production of olive oil in Morocco
0,05 2 0,1
(rain is the main source of water for 54% of Moroccan agriculture lands)
Moroccan purchasing power (Lesieur Cristal sales revenues depends on
0,08 2 0,16
Moroccan GDP thus on purchasing power of Moroccans)
Financial losses due to informal sector (the strong illegal presence of
subsidized Algerian oil representing 60% of the local supply as well the illegal
0,07 3 0,21
presence of European body hygien products through the enclaves of Ceuta and
Melilia)
Total 1 3,09
Soap (body and laundry soap) sector
Price Competitiveness
We assigned a weight of 0.15 because it indicates the companys position in the

market place as well as since the products offered (Soap such as body and laundry

soap) are standardized, customers choices heavily depend on price, especially

Moroccan buyers who highly consider cost and shop closeness while searching for

consumer goods.

We assigned a rating of 4 because the company is the leader in the Moroccan market

with the highest market share as well as it is present in all retail shops regardless of

their size.

Marketing Expertise
We assigned a weight of 0.14 factor because while the competition is very high, the

product differentiation is very low in Soap sector, thus marketing and brand

awareness is necessary to sway consumers toward buying the competitors products.

We assigned a rating of 4 because according to the companys website, it continuously

launches new marketing campaigns in order to build customer loyalty and attract new

ones as well as demonstrate the benefits of its products through the advertising

Conseils Kizitek

Customer Loyalty
We assigned a weight of 0.05 because if the company establishes a sustainable

profitable relationship with customers, it will achieve repeated sales and make it hard

for customers to switch to competitors products which will positively impact its sales

revenues.

We assigned a rating of 3 because the company has a strong history with over 70

years of experience and all Moroccan buyers can easily recognize the companys

products among them Taous and El Kef, etc.

Innovation and R&D
We assigned a weight of 0.06 because although major innovation of Soap products is

limited, the company must continually add features to its existing products and create

new ones in order to attract customers away from competitors.

We assigned a rating of 3 because according to its 2015 annual report, the company

continuously launches new products to be added to its already existing family of

products under the brand name of Taous and El Kef. For instance, the company has

introduced a new range of Taous shower gels as well as El Kef laundry soap for

washing machine.

Product Portfolio
We assigned 0.12 because since the competition is very high, having a product group

or range will allow the company to spread the risk in case of sales declines of one

specific product, generate more revenues by selling more than one product, and

attract more than one segment of the market which will positively impact its sales

revenues and market share.

We assigned a rating of 3 because although the company has a large number of

products per category such as edible oil, olive oil, soap, oilcake, and other products,

one category remains much stronger than the others. According to its 2015 annual

report, the distribution of the companys sales revenues in 2015 was only 13% from

soap whereas 73% from edible oil, 11% from olive oil, 3% from oilcake and 1% from

other products.

Supply Chain
We assigned a weight of 0.12 because (from the supply side) since the price is very

critical for standardized products, signing annual contracts basis will definitely allow

the company to control costs and adjust pricing accordingly. Also, (from the

distribution side) since the competition is very high for standardized products,

offering purchase incentives for retailers (bulk discounts and others) will definitely

79
help the company to gain shelf space which will positively impact its sales revenues

as well.

We assigned a rating of 4 because according to its 2015 annual report, the company

has 15 sales offices, 1,500 wholesalers and semi-wholesalers, 55,000 traditional

retailers, 300 GMS visited per week, and a car park of 400 trucks. It has also a

production capacity of 35,000 tons per year for soap.

Financial Position
We assigned a weight of 0.11because if the company has a strong financial position,

it will be able to perform well in Soap sector since the latter requires a significant

amount of capital to be able to enter new markets and compete to get higher

percentage of the market share (advertising, expanding, producing, etc.)

We assigned a rating of 3 because according to its 2015 annual report, the company

achieved the following financial results: +4.6% in sales revenues, +7.4% in operating

income, +19.36% in cash flow whereas -10.2% in net income.

Packaging
We assigned a weight of 0.11 because the company needs to differentiate itself from

competitors since the product is standardized, thus it will have a positive shelf impact

which will lead to an increase in sales revenues.

We assigned a rating of 2 because the company is planning to invest in packaging in

order to compete with P&G and Unilever whose products have a really nice packaging

in terms of design, colors, etc

Product Quality
We assigned a weight of 0.13 because the competition is very strong in Soap sector,

thus the company is required to offer customers a good price quality ratio as well as

good quality is crucial to ensure customers safety since if soap has a bad quality, it

can directly harm customers health, more specifically their skin.

80
 We assigned a rating of 3 because according to its 2015 annual report, the company

holds the Triple-ISO representing certification for quality management system (ISO

9001), for the environmental management system (ISO 14001), and for food safety

(ISO 22000).

After developing CPM, we came to the conclusion that the most important key success

factors for Soap sector are price competitiveness, marketing, and product quality.

Furthermore, we ended up with an average weighted score of 3.3 for Lesieur Cristal,

preceded by Procter & Gamble with 3.8 positioned as the leader of the market and

Unilever with 3.66 positioned in the second place while Lesieur Cristal is directly

followed by Colgate Palmolive with 2.66, Reckitt Benckiser with 2.55, Le Petit

Marseillais with 2.58 and Delta Hygiene is positioned last with 2.38. This result could

say Lesieur Cristal is competing well in Soap sector but still not the leader in this

industry.
Reckitt
Lesieur Cristal Unilever Le Petit Delta Hygiene Procter & Colgate Palmolive (Tahiti,
Benckiser
(Taous,El Kef) (OMO,Dove,Lux) Marseillais (Doussy) Gamble(Ariel,Tide,Bonux) Palmolive, La Croix)
(Dettol)
Critical Success Weighted Weighted Weighted Weighte Weighted
Weight Rating Rating Rating Rating Rating Rating Weighted score Rating Weighted score
Factors score score score d score score
Price
0,15 4 0,6 2 0,3 3 0,45 2 0,3 3 0,45 3 0,45 2 0,3
Competitiveness

Marketing
0,14 4 0,56 2 0,28 3 0,42 2 0,28 2 0,28 4 0,56 2 0,28
Expertise
Customer
0,05 3 0,15 2 0,1 3 0,15 2 0,1 2 0,1 3 0,15 2 0,1
Loyalty

Packaging 0,11 2 0,22 3 0,33 4 0,44 4 0,44 2 0,22 4 0,44 3 0,33

Innovation and
0,08 3 0,24 3 0,24 4 0,32 2 0,16 2 0,16 4 0,32 3 0,24
R&D
Product
0,12 3 0,36 2 0,24 4 0,48 2 0,24 2 0,24 4 0,48 3 0,36
Portfolio
Supply Chain 0,12 4 0,48 2 0,24 4 0,48 2 0,24 2 0,24 4 0,48 3 0,36

Financial
0,1 3 0,3 3 0,3 4 0,4 3 0,3 3 0,3 4 0,4 3 0,3
Position
Product Quality 0,13 3 0,39 4 0,52 4 0,52 4 0,52 3 0,39 4 0,52 3 0,39
Total 1 3,3 2,55 3,66 2,58 2,38 3,8 2,66

81
For Oleaginous Oils (edible and olive oil) sector
Price Competitiveness
We assigned a weight of 0.14 because it indicates the companys position in the

market place as well as since the products offered (Oleaginous Oils such as edible

and olive oil) are standardized, customers choices heavily depend on price.

We assigned a rating of 4 because the company is the leader in the Moroccan market

with the highest market share as well as it is present in all retail shops regardless of

their size.

Marketing Expertise
We assigned a weight of 0.8 factor because while the competition is very high, the

product differentiation is very low in Oleaginous Oils sector, thus marketing and brand

awareness is necessary to sway consumers toward buying the competitors products.

We assigned a rating of 3 because according to the companys website, it continuously

launches new marketing campaigns in order to build customer loyalty and attract new

ones as well as demonstrate the benefits of its products through the advertising

Conseils Kizitek

Customer Loyalty
We assigned a weight of 0.05 because if the company establishes a sustainable

profitable relationship with customers, it will achieve repeated sales and make it hard

for customers to switch to competitors products which will positively impact its sales

revenues.

We assigned a rating of 3 because the company has a strong history with over 70

years of experience and all Moroccan buyers can easily recognize the companys

products among them Lesieur, Huilor, Cristal, etc.

Innovation and R&D

We assigned a weight of 0.06 because although major innovation of Oleaginous Oils

products is limited, the company must continually add features to its existing

products and create new ones in order to attract customers away from competitors.
We assigned a rating of 3 because according to its 2015 annual report, the company

continuously launches new products to be added to its already existing family of

products under the brand name of Lesieur, Huilor, Cristal, etc. For instance, the

company has introduced Lesieur 3G and a new range of Lesieur condiments for

edible oil as well as Al Horra for olive oil.

Product Portfolio
We assigned 0.1 because since the competition is very high, having a product group

or range will allow the company to spread the risk in case of sales declines of one

specific product, generate more revenues by selling more than one product, and

attract more than one segment of the market which will positively impact its sales

revenues and market share.

We assigned a rating of 3 because although the company has a large number of

products per category such as edible oil, olive oil, soap, oilcake, and other products,

one category remains much stronger than the others. According to its 2015 annual

report, the distribution of the companys sales revenues in 2015 was 73% from edible

oil and only 11% from olive oil, and the remaining was distributed as 13% from soap,

3% from oilcake, and 1% from other products.

Supply Chain
We assigned a weight of 0.1 because (from the supply side) since the price is very

critical for standardized products, signing annual contracts basis will definitely allow

the company to control costs and adjust pricing accordingly. Also, (from the

distribution side) since the competition is very high for standardized products,

offering purchase incentives for retailers (bulk discounts and others) will definitely

help the company to gain shelf space which will positively impact its sales revenues.

We assigned a rating of 4 because according to its 2015 annual report, the company

has 15 sales offices, 1,500 wholesalers and semi-wholesalers, 55,000 traditional

retailers, 300 GMS visited per week, and a car park of 400 trucks. It has also a refining

83
capacity of 300,000 tons per year for edible oil as well as 500,000 of olive trees, 1,180

ha of olive threes exploited, and a crushing capacity of 12,000 tons per year for olive

oil.

Financial Position
We assigned a weight of 0.11 because if the company has a strong financial position,

it will be able to perform well in Oleaginous Oils sector since the latter requires a

significant amount of capital to be able to enter new markets and compete to get

higher percentage of the market share (advertising, expanding, producing, etc.)

We assigned a rating of 3 because according to its 2015 annual report, the company

achieved the following financial results: +4.6% in sales revenues, +7.4% in operating

income, +19.36% in cash flow whereas -10.2% in net income.

Packaging
We assigned a weight of 0.8 because the company needs to differentiate itself from

competitors since the product is standardized, thus it will have a positive shelf impact

which will lead to an increase in sales revenues.

We assigned a rating of 3 because the company outperforms its competitors in the

local market whereas it is planning to invest in packaging in order to compete with

foreign brands in the international market.

Weather Conditions
We assigned a weight of 0.15 because it has a direct impact on the companys

operations and the products quality since Oleaginous Oils sector heavily depends on

natural resources.

We assigned a rating of 2 because the Moroccan weather does not provide with the

optimal conditions to produce raw materials such as soybean, sunflower, and

rapeseed compared to other South American countries such as Argentina and Brazil.

84
Product Quality
We assigned a weight of 0.13 because the competition is very strong in Oleaginous

Oils sector, thus the company is required to offer customers a good price quality ratio

as well as satisfy their nutrition needs.

We assigned a rating of 4 because according to its 2015 annual report, the company

holds the Triple-ISO representing certification for quality management system (ISO

9001), for the environmental management system (ISO 14001), and for food safety

(ISO 22000).

After elaborating CPM, we came to the conclusion that the most important key

success factors for Oleaginous Oils sector are weather conditions, price

competitiveness, and product quality.

Moreover, we ended up with an average weighted score of 3.22 for Lesieur Cristal,

directly followed by Les Huileries du Sous Bel Hassan with 2.61, Savola Group with

2.56 and SIOF is positioned last with 2. This result can be explained by the position of

Lesieur Cristal as the leader in the market regarding Oleaginous Oils sector.
Lesieur Cristal Les Huileries de Souss Bel Savola
SIOF
(Leisieur, Huilor) Hassan (Lousra) Group(Afia)
Critical Success Weighted Weighted Weighted
Weight Rating Rating Weighted score Rating Rating
Factors score score score
Price
0,14 4 0,56 3 0,42 3 0,42 2 0,28
Competitiveness
Marketing
0,08 3 0,24 2 0,16 2 0,16 2 0,16
Expertise
Customer Loyalty 0,05 3 0,15 3 0,15 2 0,1 2 0,1

Packaging 0,08 3 0,24 3 0,24 3 0,24 2 0,16

Innovation and
0,06 3 0,18 2 0,12 2 0,12 2 0,12
R&D

Product Portfolio 0,1 3 0,3 2 0,2 2 0,2 2 0,2

Supply Chain 0,1 4 0,4 3 0,3 3 0,3 2 0,2

Financial
0,11 3 0,33 3 0,33 3 0,33 2 0,22
Position

Product Quality 0,13 4 0,52 3 0,39 3 0,39 2 0,26

85
Weather
Conditions
0,15 2 0,3 2 0,3 2 0,3 2 0,3

Total 1 3,22 2,61 2,56 2

Condiment sector
Price Competitiveness
We assigned a weight of 0.15 because it indicates the companys position in the

market place as well as since the products offered (Condiments and Sauces) are

standardized, customers choices heavily depend on price, especially Moroccan

buyers who highly consider cost and shop closeness while searching for consumer

goods.

We assigned a rating of 2 because the company is still new in the Moroccan market

with a low market share compared to its two main competitors.

Marketing Expertise
We assigned a weight of 0.14 factor because while the competition is very high, the

product differentiation is very low in Condiment sector, thus marketing and brand

awareness is necessary to sway consumers toward buying the competitors products.

We assigned a rating of 4 because according to the companys website, it continuously

launches new marketing campaigns in order to build customer loyalty and attract new

ones as well as demonstrate the benefits of its products through the advertising

Conseils Kizitek

Customer Loyalty
We assigned a weight of 0.05 because if the company establishes a sustainable

profitable relationship with customers, it will achieve repeated sales and make it hard

for customers to switch to competitors products which will positively impact its sales

revenues.

We assigned a rating of 2 because although the company has a strong history with

over 70 years of experience and all Moroccan buyers can easily recognize the

companys products, its product line of condiments is very recent (only 2013).

86
Innovation and R&D
We assigned a weight of 0.08 because although major innovation of Condiments

products is relatively limited, the company must continually add features to its existing

products and create new ones in order to attract customers away from competitors.

We assigned a rating of 3 because although according to its 2015 annual report, the

company continuously launches new products to be added to its already existing

family of products under the brand name of Lesieur, its portfolio of condiments is still

very limited (only 3 products so far).

Product Portfolio
We assigned 0.12 because since the competition is very high, having a product group

or range will allow the company to spread the risk in case of sales declines of one

specific product, generate more revenues by selling more than one product, and

attract more than one segment of the market which will positively impact its sales

revenues and market share.

We assigned a rating of 2 because the company has a very limited number of products

and categories. Although according to its 2015 annual report, the distribution of the

companys sales revenues in 2015 73% from edible oil, the portion of revenues from

condiments is very low.

Supply Chain
We assigned a weight of 0.12 because (from the supply side) since the price is very

critical for standardized products, signing annual contracts basis will definitely allow

the company to control costs and adjust pricing accordingly. Also, (from the

distribution side) since the competition is very high for standardized products,

offering purchase incentives for retailers (bulk discounts and others) will definitely

help the company to gain shelf space which will positively impact its sales revenues

as well.

87
We assigned a rating of 4 because according to its 2015 annual report, the company

has 15 sales offices, 1,500 wholesalers and semi-wholesalers, 55,000 visited retailers,

300 GMS visited per week, and a car park of 400 trucks. It has also a production

capacity of 35,000 tons per year for soap.

Financial Position
We assigned a weight of 0.10 because if the company has a strong financial position,

it will be able to perform well in Soap sector since the latter requires a significant

amount of capital to be able to enter new markets and compete to get higher

percentage of the market share (advertising, expanding, producing, etc.)

We assigned a rating of 4 because according to its 2015 annual report, the company

achieved the following financial results: +4.6% in sales revenues, +7.4% in operating

income, +19.36% in cash flow whereas -10.2% in net income.

Packaging
We assigned a weight of 0.11 because the company needs to differentiate itself from

competitors since the product is standardized, thus it will have a positive shelf impact

which will lead to an increase in sales revenues.

We assigned a rating of 23 because the company is planning to invest in packaging in

order to compete with VMM and Unimer whose products are the leaders in the

Moroccan Condiments market.

Product Quality
We assigned a weight of 0.13 because the competition is very strong in Condiments

sector, thus the company is required to offer customers a good price quality ratio as

well as good quality is crucial to provide customers a good taste in order to

differentiate from competitors.

We assigned a rating of 3 because according to its 2015 annual report, the company

holds the Triple-ISO representing certification for quality management system (ISO

88
 9001), for the environmental management system (ISO 14001), and for food safety

(ISO 22000).

After developing CPM, we came to the conclusion that the most important key success

factors for Condiments sector are price competitiveness, marketing, and product

quality.

Furthermore, we ended up with an average weighted score of 3.07 for Lesieur Cristal,

preceded by VMM with 3.46 positioned as the leader of the market and Cartier Saada

with 3.31 positioned in the second place and Unimer with 3.15 while Lesieur Cristal is

directly followed Aicha with 2.92. This result could say Lesieur Cristal is competing well

in Condiments sector, but still not the leader in this industry.

Lesieur Cristal
VMM (Star) Unimer (Pikarome) Cartier Saada Aicha
(Lesieur)
Critical Success Weighted Weighted Weighted Weighted Weighted
Weight Rating Rating Rating Rating Rating
Factors score score score score score
Price
0,15 2 0,3 4 0,6 4 0,6 2 0,3 3 0,45
Competitiveness
Marketing
0,14 4 0,56 4 0,56 3 0,42 4 0,56 3 0,42
Expertise
Customer Loyalty 0,05 2 0,1 4 0,2 3 0,15 3 0,15 3 0,15
Packaging 0,11 3 0,33 3 0,33 3 0,33 4 0,44 3 0,33
Innovation and
0,08 3 0,24 3 0,24 3 0,24 4 0,32 2 0,16
R&D
Product Portfolio 0,12 2 0,24 4 0,48 3 0,36 3 0,36 3 0,36
Supply Chain 0,12 4 0,48 3 0,36 3 0,36 3 0,36 3 0,36
Financial Position 0,10 3 0,3 3 0,3 3 0,3 3 0,3 3 0,3
Product Quality 0,13 4 0,52 3 0,39 3 0,39 4 0,52 3 0,39
Total 1 3,07 3,46 3,15 3,31 2,92

89
 Matching Stage
IE Matrix
Based on the two environmental evaluation models, the IFE & EFE. The Internal-

External Matrix aims to find the most appropriate strategy by aligning evaluation of

environmental factors model. Along this report, IFE (x-axis) was demonstrated to have

equaled a score of 3.07. In the other hand, LCs EFE (y-axis) scored a 3.09. Plugging

these values into the IE Matrix allows us to see that LC falls within the first quadrant.

This implies a strategic orientation towards Backward, Forward, or Horizontal

Integration, Market Development, Market Penetration and Product Development.

IFE = 3.07

EFE = 3.09 I II III

IV V VI

VII VIII IX
Grand Strategy Matrix
Grand Strategy Matrix is the most common tool used to determine which strategy a

company should follow. This matrix is divided into four quadrants based two

dimensions: the first one is industrys growth in which the company operates and

company competitiveness in that industry. Since Lesieur Cristal operates in two

different industries, we decided to develop two Grand Strategy Matrices: the first one

for Oleaginous Oils sector and the second one for Soap sector.

For Oleaginous Oils and Condiments sector

90
According to an article published by Jeune Afrique in 2015, the expected average

annual growth for edible oil was estimated to 1% while the one for olive oil was

estimated to 14.6% and the one for condiment was expected to 5.06% which results

to an average annual growth of 6.88% for Oleaginous Oils sector which is higher than

5%.

According to its 2015 annual report, Lesieur Cristal is the Moroccan leader in the

edible oil market with 59% market shares and one of the leaders in the olive oil market

with 22% market shares.

For Soap sector

According to an article published by LA VIEECO in 2014, the expected average

annual growth for Soap sector in Morocco was estimated to 4.8% by 2020. According

to its 2015 annual report, Lesieur Cristal is the Moroccan leader in the soap market

with 41% and 43% markets shares respectively thank to its two successful brands:

Taous and El Kef.

Lesieur Cristal falls in the first quadrant, it should concentrate on the existing market

by adopting the following set of strategies: market development, product

development, and market penetration. Moreover, since it has mainly a focus on a

single product, it can go for related diversification strategy in order to minimize the

risk related to limited product line. Since it has also enough resources, it can go for

the following strategies: horizontal integration, backward integration, and forward

integration.

91
 Rapid Market Growth

II I
Weak Strong
Competitive Competitive
Position Position

III IV

Slow Market Growth

SWOT Matrix

We conclude Lesieur Cristal can develop the following strategies:

1) Product Development/Innovation: Developing premium flavored olive oil

(spicy, garlic, plants) in Morocco

2) Market Development: Developing an organic traditional soap in India

3) Product Development: Developing oilcake based fertilizer in Morocco

4) Related Diversification/Innovation: Developing condiments based on olive

and olive oil (tapenade) in Morocco

5) Product Development/Innovation: Developing olive oil pods in Morocco

6) Backward Integration: Securing soybean sourcing portfolio

92
 STRENGHTS WEAKNESSES
S1. Strong expertise of the agro-industry (41% owned by Avril
W1. Very sensitive to commodity price (importing 99%
Group the leader in production of edible oil in France , Morocco,
of raw materials for Oleaginious products)
and Romania as well as in annimal nutrition in France)

S2. Good energy efficiency (reducing operational expenses by

W2. Low market share in olive oil market (Only 22%
16.6 Mil MAD and achieving 60% substitutio rate from fossil to
due to low quality and lack of innovation)
sustainable energy)
S3. Strong brand image (successful brand names such as El W3. Limited access to international market (exporting
Kef, Taous, Lesieur, Huilor, Cristal, Al Hora, El Menjel) to 40 countries and low revenues from exports)

W4. High dependence on olive oil (47% of sales

S4. Good marketing and advertising expertise
revenues come from edible oil products)
S5. Leader in the agro-industry in Morocco (edible oil with
59%, body soap with around 40%, and laundry soap with around
43%)
S6. High presence in retail chains (55,000 tradtional retailers
and 1,500 wholesalers)
S7. Strong financial position
S8. Good Innovation and R&D (annual budget of 80 Mil MAD
to launch 4 major innovative products per year)
S9. Triple ISO certifications (ISO 9001, ISO 22000, ISO 14001)
OPPORTUNITIES SO WO
O1. Raise in worldwide consumption of olive oil (continuously growing and estimated to be on W3,O1: Market development - Developping flavored
average to be 3.1 Mil Tonnes annually) olive oil (spicy, garlic, plants)
O2. New strategic association between Morocco and African countries (Africanisation of
Moroccan banks and Lesieur Cristal is seeking to operate in Senegal, Cemeroun and Ivory Coast)

O3. Raise in future production oilseeds (investment incentive under the Moroccan strategy
"Plan Maroc Vert" in order to achieve by 2020 a coverage rate of 20% of the Moroccan needs)
O4. New techniques of valorization of olive by-products (extraction of the energetic potential
O4, S8: Product development - Developing oilcake based
of olive pit example 2KG of olive cores are the equivalent of 1L of gas oil equals almost to
fertilizer
10KW)
O5. Lucrative prospects for the detergent market (expected raise in sales by 3% to 5% from
2014 to 2020)
O6. Lucrative prospects for the body hygiene market (expected growth of 6.8% over the
period 2013-2017)
O7. International demand for Argan oil (expected sales revenues of 600 Mil $ by 2022)
O8. High market growth of condiments and sauces in Morocco (expected growth of 5.06% in O8,T5: Product Development - Developing condiments
Morocco over 2014-2018 and Lesieur Cristal is seeking to achieve 20% market share) based on olives and olive oil (tapenades)
O9. Growing trend for organic in beauty and personal care in emerging countries (exampe O9,S5: Market development - Developing organic traditional
in India with 42%) soaps
O10. High growth of catering market (market leaders expecte a increase in their total sales O10, W2: Product Development - Developing olive oil
revenues of 20% by 2016) podes
THREATS ST WT
T1. Price volatility of oilseeds (price is decided in Chicago Stock Exchange according to the W1 + W5, T1: Backward - Securing soybean sourcing
level of production in Argentina, Brazil and USA) portfolio
T2. Moroccan production of olive is under threat (due to the possible arrival of the bacteria
Xylella fastidiosa to Morocco since neighbor countries were affected such as Corsica (France)
and the Balearic Islands (Spain) in 2013 to 2015)
T3. Appreciation of the American dollar (expected three rises U.S. Fed rates by 2017 and
expected cut of U.S. corporate tax by half after Donald Trump election as U.S. President)
T4. High climate dependence regarding the production of olive oil in Morocco (rain is the
main source of water for 54% of Moroccan agriculture lands)
T5. Moroccan purchasing power (Lesieur Cristal sales revenues depends on Moroccan GDP
thus on purchasing power of Moroccans)
T6. Financial losses due to informal sector (the strong illegal presence of subsidized Algerian
oil representing 60% of the local supply as well the illegal presence of European body hygien
products through the enclaves of Ceuta and Melilia)
SPACE Matrix
The strategic position and action evaluation matrix aims at studying the positioning

of a company through internal dimensions (Financial Strength and Competitive

Advantage) and external dimensions (Environmental Stability and Industry Strength).

Throughout our assessments, strong conclusions were drawn about Lesieur Cristals

environment and capabilities. Such analysis allows us to establish a list of dimensions

components:
Internal Strategic Position External Strategic Position

Financial Strength (FS) Score Environmental Stability (ES) Score

Return on Investment 5 Rate of Inflation -2

Working Capital 5 Commodities Volatility -1

Liquidity 6 Barriers to Entry into Market -1

Inventory Turnover 6 Competitive Pressure -3

Earnings per Share 6 Governmental Policy -5

Average 5.2 Average -3.2

Competitive Advantage (CA) Score Industry Strength (IS) Score

Market Shares -2 Industry Growth 2

Brand Image -1 Financial Stability 4

Marketing Expertise -1 Profit Potential 3

Product Quality -1 Resource Utilization 5

Research & Development -1 Productivity, Capacity Utilization 5

Average -1.2 Average 3.8

Computation of x-axis components (FS+ES) and y-axis components (CA+IS)

(x = 2.6, y = 2)
 Plotting a directional vector in accordance with the mathematical findings above

display a result falling within the first quadrant which refers to aggressiveness. In this

fashion, Lesieur Cristal is financially strong, achieves competitive advantage and

operates growing and stable industry. Further, Lesieur Cristal is an ideal position to

take advantages of opportunities in order to succeed in reducing its weaknesses

impact and ultimately anticipate potential and future threats. As stated earlier, this

also translates in adopting the following strategies: Market Penetration, Market

Development, Product Development, Backward Integrations, Forward Integration,

Horizontal Integration, Diversification, or a suitable combination.

Financial Strength

Y=2
Competitive Advantage Industry Strength

X = 2.6

Environment Stability

95
 BCG Matrix
BCG Matrix is a useful tool applied to assess the companys portfolio and determine

the allocation of resources among its business units of product lines. This matrix is

divided into four quadrants: stars, question marks, dogs, and cash cows based on

two dimension: business units relative market shares and their annual real rate of

market growth.

Relative Market Share

High Low
Annual Real Rate of Market Growth

Low

96
Lesieur Cristals portfolio is composed of the following categories of products: edible

oil, olive oil, oilcakes, condiments, and soaps.

Edible oil products fall in the cash cow quadrant because the company has

the highest market share with 53% in the Moroccan market and edible oil

sector has a very low annual real rate of market growth with 1% growth in the

Moroccan market.

We conclude Lesieur Cristal has to manage this product line strategically because it

generates the majority of its total sales revenues about 73%. For this reason, the

company can adopt diversification and product development in order to maintain its

strong position in the market.

Olive oil products fall in the question mark quadrant because the company

has low market shares with 22%, and olive oil sector has a very high annual

real rate of market growth with 14.6% growth in the Moroccan market.

We conclude Lesieur Cristal has to reinforce it by adapting the following strategies:

market penetration, market development, and product development.

Soap products fall in the star quadrant because the company has high

market share in the Moroccan market and soap sector has a low annual real

rate of market growth with 4.8% growth in the Moroccan market.

We conclude Lesieur Cristal has to invest in this product line in order to maintain or

strengthen its position in the market by adopting integration strategies, market

penetration, and market development.

Condiment products fall in the question mark quadrant because the

company has low market share, and condiment sector has a very high annual

real rate of market growth with 5.06%.

We conclude Lesieur Cristal has to reinforce it by adapting the following strategies:

market penetration, market development, and product development.

97
Decision Stage
Final step of the strategy analysis and choice, the quantitative strategic planning

matrix stays as the decision-making tool by excellence. A true representation

objectivism, decision is made on the basis of score reached by each of six strategies.

As so, strategies are not selected on an intuitional basis but through quantitative

process which consists of matching the firms key external opportunities/threats and

internal strengths/weaknesses obtained from the input stages EFE and IFE. In

accordance with derived strategies from the matching stage. Final decision was to

select three out-scoring strategies out of six:

1) Product Development/Innovation: Developing premium flavored olive oil

(spicy, garlic, plants) in Morocco

2) Related Diversification/Innovation: Developing condiments based on olive

and olive oil (tapenade) in Morocco

3) Product Development/Innovation: Developing olive oil pods in Morocco

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 Alternative Strategies
Market Development Market Development Product Development Product Development Product Development Backward Integration
Key Factors Weight
Securing Soybean
Flavored Olive Oil Organic Traditional Soap OilCake Based Fertilizer Tapenade Olive Oil Podes
Sourcing Portfolio

Key External Factors AS TS AS TS AS TS AS TS AS TS AS TS

Opportunities
O1. Raise in worldwide demand for olive oil (global consumption of vegetable oils is expected
0,05 4 0,20 0 0,00 3 0,15 4 0,20 3 0,15 0 0,00
to increase by 39% by 2030 with olive oil as the main driver for this growth)
O2. New strategic association between Morocco and African countries (Africanisation of
0,04 0 0,00 0 0,00 2 0,08 1 0,04 3 0,12 3 0,12
Moroccan banks and Lesieur Cristal is seeking to operate in Senegal, Cemeroun and Ivory Coast)

O3. Raise in future production oilseeds (investment incentive under the Moroccan strategy
0,06 4 0,24 3 0,18 4 0,24 4 0,24 2 0,12 4 0,24
"Plan Maroc Vert" in order to achieve by 2020 a coverage rate of 20% of the Moroccan needs)
O4. New techniques of valorization of olive by-products (extraction of the energetic potential
of olive pit example 2KG of olive cores are the equivalent of 1L of gas oil equals almost to 0,04 2 0,08 3 0,12 4 0,16 3 0,12 4 0,16 3 0,12
10KW)
O5. Lucrative prospects for the detergent market (expected raise in sales by 3% to 5% from
0,04 0 0,00 0 0,00 0 0,00 0 0,00 0 0,00 0 0,00
2014 to 2020)
O6. Lucrative prospects for the body hygiene market (expected growth of 6.8% over the
0,07 0 0,00 4 0,28 0 0,00 0 0,00 0 0,00 0 0,00
period 2013-2017)
O7. International demand for Argan oil (expected sales revenues of 600 Mil $ by 2022) 0,06 0 0,00 4 0,24 0 0,00 2 0,12 2 0,12 0 0,00
O8. High market growth of condiments and sauces in Morocco (expected growth of 5.06% in
0,08 0 0,00 0 0,00 0 0,00 4 0,32 3 0,24 2 0,16
Morocco over 2014-2018 and Lesieur Cristal is seeking to achieve 20% market share)
O9. Growing trend for organic in beauty and personal care in emerging countries (exampe
0,08 0 0,00 4 0,32 0 0,00 0 0,00 2 0,16 0 0,00
in India with 42%)
O10. High growth of catering market (market leaders expecte a increase in their total sales 0,08 3 0,24 0,00 0 0,00 4 0,32 4 0,32 0 0,00
revenues of 20% by 2016)
Threats
Price volatility of oilseeds (price is decided in Chicago Stock Exchange according to the level of
0,08 1 0,08 0 0,00 1 0,08 1 0,08 2 0,16 4 0,32
production in Argentina, Brazil and USA)
Moroccan production of olive is under threat (due to the possible arrival of the bacteria
Xylella fastidiosa to Morocco since neighbor countries were affected such as Corsica (France) 0,06 1 0,06 3 0,18 1 0,06 1 0,06 2 0,12 0 0,00
and the Balearic Islands (Spain) in 2013 to 2015)
Appreciation of the American dollar (expected three rises U.S. Fed rates by 2017 and
0,07 0 0,00 0 0,00 0 0,00 0 0,00 0 0,00 4 0,27
expected cut of U.S. corporate tax by half after Donald Trump election as U.S. President)
High climate dependence regarding the production of olive oil in Morocco (rain is the main
0,05 1 0,05 1 0,05 2 0,10 1 0,05 2 0,10 0 0,00
source of water for 54% of Moroccan agriculture lands)
Moroccan purchasing power (Lesieur Cristal sales revenues depends on Moroccan GDP thus
0,08 3 0,24 1 0,08 3 0,24 4 0,32 4 0,32 3 0,24
on purchasing power of Moroccans)
Financial losses due to informal sector (the strong illegal presence of subsidized Algerian oil
representing 60% of the local supply as well the illegal presence of European body hygien 0,07 2 0,13 2 0,13 1 0,07 4 0,27 4 0,27 0 0,00
products through the enclaves of Ceuta and Melilia)
Total 1 1,32 1,58 1,18 2,14 2,36 1,47
Strenghts
S1. Strong expertise of the agro-industry (41% owned by Avril Group the leader in production
0,08 4 0,32 4 0,32 3 0,24 4 0,32 4 0,32 4 0,32
of edible oil in France , Morocco, and Romania as well as in annimal nutrition in France)

S2. Good energy efficiency (reducing operational expenses by 16.6 Mil MAD and achieving 60%
0,05 3 0,15 4 0,20 1 0,05 3 0,15 3 0,15 0 0,00
substitutio rate from fossil to sustainable energy)
S3. Strong brand image (successful brand names such as El Kef, Taous, Lesieur, Huilor, Cristal,
0,10 4 0,40 4 0,40 3 0,30 4 0,40 4 0,40 2 0,20
Al Hora, El Menjel)
S4. Good marketing and advertising expertise 0,06 4 0,24 4 0,24 3 0,18 4 0,24 3 0,18 0 0,00
S5. Leader in the agro-industry in Morocco (edible oil with 59%, body soap with around 40%,
0,09 4 0,36 4 0,36 0 0,00 4 0,36 4 0,36 3 0,27
and laundry soap with around 43%)
S6. High presence in retail chains (55,000 tradtional retailers and 1,500 wholesalers) 0,05 4 0,20 4 0,20 1 0,05 4 0,20 4 0,20 2 0,10
S7. Strong financial position 0,06 3 0,18 4 0,24 3 0,18 4 0,24 4 0,24 3 0,18
S8. Good Innovation and R&D (annual budget of 80 Mil MAD to launch 4 major innovative
0,08 3 0,24 4 0,32 3 0,24 4 0,32 4 0,32 4 0,32
products per year)
S9. Triple ISO certifications (ISO 9001, ISO 22000, ISO 14001) 0,06 4 0,24 4 0,24 4 0,24 4 0,24 3 0,18 4 0,24
Weaknesses
W1. Very sensitive to commodity price (importing 99% of raw materials for Oleaginious
0,08 2 0,16 0 0,00 2 0,16 2 0,16 2 0,16 4 0,32
products)
W2. Low market share in olive oil market (Only 22%) 0,10 4 0,40 0 0,00 0 0,00 4 0,40 4 0,40 0 0,00
W3. Limited access to international market (exporting to 40 countries and low revenues from
0,09 4 0,37 4 0,37 3 0,28 3 0,28 1 0,09 4 0,37
exports)
W4. High dependence on olive oil (47% of sales revenues come from edible oil products) 0,10 4 0,40 4 0,40 4 0,40 4 0,40 4 0,40 3 0,30
Total 1 3,66 3,29 2,32 3,71 3,40 2,62
Total (sum) 4,98 4,87 3,49 5,84 5,76 4,09
Total (average) 2,49 2,44 1,75 2,92 2,88 2,04
 1

3 2

Innovation is our battle horse now.

M. Samir Oudghiri Idrissi

Lesieur Cristals General
Manager

Strategy Implementation
A strategy is a firms long term plan. At this point,
several aspects of Lesieur Cristal were covered.
From its history, vision and mission to its financials
and environment, this reports part will
demonstrate how Lesieur Cristal will behave in the
light of the above elements. Three strategies will
be depicted along the implementation section.
Strategies that will show a common link and align
perfectly with Lesieur Cristals ambitions by
responding to a current problem faced by the firm.
What are they? The answer lies in the next pages.
Background
Prior to strategies discussion, a preliminary background explaining the context and

reasons behind our three strategies choice is relevant to mention. Moreover, our

three strategies applies at a national scale under Moroccos Plan Maroc Verts

supervision and in alignment with Lesieur Cristals Innovations high-speed train.

Plan Maroc Vert: A Win-Win Partnership at the Service of National Economy

The PMV positions agriculture as its core focus. The sector contributes to 19% of GDP

and employs 4M civilians. Due to its strategic importance in providing food security

for a large population of 30 Million individuals. In 2008, His Majesty the King

Mohammed VI has launched the Moroccan Green Plan (Plan Maroc Vert) with long

term objectives to position national agriculture as a social and economic development

leverage. The strategy deals with several sectorial limitations, the most noticeable

such insufficient investment, organization, management and supervision, limited

water resources, excessive parceling of property and dominance of cereal crops. To

cope with these, the national strategy rely on seven foundational blocks:

1. Make Agriculture a Lever for Growth During the Next 10 to 15 Years

Agricultural GDPs contribution reinforcement (70M to 100M MAD), jobs creation

(600,000 new jobs expected), fight against poverty through income improvement to

the advantage of the rural inhabitants, exports increase (8 to 44 M MAD) in

competitive sectors, 10 billion annual investments.

2. Adopt Aggregation as an Organizing Model for Agriculture

Creation of win-win partnerships between industrial upstream and commercial

downstream. Aggregation comes as a solution to lack of organization through the

establishment of management and financials lacking farmers and raw materials

security seeking agro-industries.

3. Insure Global Development of Moroccan Agriculture

Development of both modern and traditional agriculture.

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 4. Promote Private Investment

Financial public aid to promote private investment.

5. Adopt a Contract Approach to Plan Achievement

Mobilization of all the actors (Governmentt, local and regional representatives,

professionals and associations). Partnership of actors to develop framework

stipulating responsibilities.

6. Develop a Sustainable Moroccan Agriculture

Conservation of natural resources in view of insuring sustainable agriculture through

integration of climatic changes dimension, conversion of cereal crops into fruits

plantations, increase of agricultural space through the use of semi-desert zones,

support for the water conservation irrigation systems and the use of renewable

energies.

7. Dismantling of the Segmented Framework

Dismantling through property, water and national market policies.

Since its inception, 31 billion MAD were invested with 70% private funding.

Additionally, the number of plantations has increased drastically to reach 11% growth

with 1.7 Million registered lands. The overall agricultural production shows 43%

increase. Further, agricultural employment registered a breakthrough of 23%

(Moroccos Government of Agricultures Official Website).

PMVs Strategic Importance for Lesieur Cristal

Lesieur Cristal and Avril Groups strategic interest in promoting Moroccos Green Plan

(PMV) figures within the 2nd foundational block: The Aggregation. On April 2013, LC &

AG agreed to be involved in the national strategy and signed the aggregation contract.

This initiative announced the reinforcement of Lesieur Cristals downstream activities,

through a win-win co-operation with agricultural up-streams. Avril Group aimed at

boosting LCs olive-based activities. Nowadays, the group manages three olive tree-

102
domains with an in-site olive trituration. In 2015, LCs oil production displayed an

annual achievement of 12000 Tons, 37% originated from its lands, the remaining 63%

equivalent to 7500 Tons came from 200 olive aggregees. By 2020, Lesieur Cristal

estimates the number of aggregees to equal 500. In this perspective, LC started to

provide training and advisorship to its suppliers. Other aggregation partnerships were

contracted with rapeseeds and sunflowers professionals. Almost 900 aggregees

holding more than 22000 hectares supply LC. Unknown by Moroccan farmers, this

win-win partnership aimed also at promoting rapeseeds and sunflowers farming.

Drastically increasing the planted surfaces into 33 670 hectares dedicated for

sunflowers and 1340 hectares for rapeseeds. In 2015, LCs national procurement of

sunflowers and rapeseeds equaled respective volumes of 21 317 tons (S) and 540

tons (RA) (Groupe Avril).

Innovations High-Speed Train: A Train Connecting Tradition to Modernity at the Speed of

the Groups Ambition
In a slow-growth mature market, to sustain its leadership, LC has to look for new

sources of profit. Launched in 2013, Lesieur Cristals new strategy was announced

after Avrils equity acquisition (41%).

Our brands success is due to our responsiveness to our customers expectations. As so,
we align our HR, Industrials and our agricultural upstream ambitions to fulfill this aim.

M. Samir Oudghiri Idrissi

During a press conference held on December 10th, 2013. The groups general

manager introduced the launch of new products such as condiments, Taous new

soap forms and Al Horra olive oil:

103
 Today, Lesieur Cristal lifts up its ambitions and position innovation as its leading track.

Lesieur Cristal becomes consequently a brand maker in a constant-evolving market.

Means
As a strategy requiring multi-departmental input, Lesieur Cristals new ambition is

achievable through:

The PMV: Plan Maroc Vert, to develop an upstream value chain.

Internal management: Adaption of QSE (Quality, Safety & Environment). In reaction to

current and potential threats (Competition, RM volatility, Social and Environmental

constraints ) Lesieur Cristal has included three strategic axis to its processes: Brand,

innovation & operational excellence (Lesieur Cristals Official Website).

1. Quality/Safety: Customers satisfaction, human and livestocks foods quality

control, operational performance improvement, in-sites hygiene control,

external partners quality control.

2. Environment: Environmental impact management, performance & pollution

prevention alignment, resources optimization, waste & by-products

valorization, emergency management strengthening.

Results & Achievements

Lesieur Cristal was awarded 2015 Innovation trophy by the jury of the 6 th edition of

the Moroccan Award. At the OMPIC (Office Marocain de la Proprit Industrielle et

Commerciale) headquarters, Lesieur Cristal was selected amongst the 400 competing

companies. Criteria of selection: Brand Development Strategy, Marketing Policy,

Innovation and Product/Service Quality. From 2012 to 2015, Lesieur Cristal has

launched 11 new innovative products (averagely, 3 products per year). Tremendous

growths were registered in its performance indicators as indicated throughout

financials analysis.

104
105
First Strategy: Product Development
Attractiveness of the strategy
We decided to launch a new product line of flavored olive oil in Morocco in order to take

advantage from the opportunity of the growing global consumption of olive oil estimated to

3 million metric tons per year as well as to overcome our weakness of relative low market

share in olive oil market with only 22%. In fact, Morocco is ranked as the 5 th worldwide

consumer of olive oil with on average 118,500 metric tons per year representing 3.9% of

worldwide consumption preceded respectively by Turkey (4 th), Syria (3th), Japan (2nd), and

European Union (1st) with mainly Spain, Greece, and Italy (International Olive Oil Council,

November 2016).

Although Morocco is ranked 5th, we decided to implement our strategy in Morocco because

we believe we will not be able to be competitive in the European market due to the strong

competition from Spain, Italy, and Greece. Furthermore, we have more expertise to be

competitive in the Moroccan market compared to the Japanese one since the culture, taste,

consumption profile, and many other factors are different from the Moroccan context. Last

but not least, we think it is better to avoid any investment in Turkey and Syria since they are

both politically unstable countries for the past years. For all these reasons, we strongly believe

Morocco is our best choice for implementing our strategy. We found out our strategic

decision goes along with Lesieur Cristals policy explained by its General Director - Samir

Oudghiri : (STRATEGIE: Comment le groupe a rinvent ses marques, LEconomiste, 2016)

"The rule is always the same, domicile our innovations in our leading brands to ensure their
success, meet the needs of consumers and break through the top of the range"

It is important to note our strategy goes along with the long-term objective of Lesieur Cristal

explained by Youssef Barradi Head of Marketing and Strategic Development and Member

of Executive Committee: (Huile dolive: Lesieur Cristal affue ses armes, Medias24, 2013)

Our goal is to strengthen our competitive position and be a major player in the olive oil
market as we are on edible oil market

106
In order to reach its objective, Lesieur Cristal has already introduced pure olive oil with Al

Horra as well as premium olive oil with Al Jawhara and Al Horra Extra Vierge. However, we

believe its olive oil portfolio needs to be more diversified that is why we came up with the

following strategy: Product Development in Morocco Flavored Olive Oil Product Line named

Al Asslia.

Al Asslia will present a pure product of innovation launched with the objective to offer an

authentic olive oil promoting the taste of spices and flavored herbs or plants strongly found

in the Moroccan cuisine such as thyme (Zaatar), garlic (Tuma), cayenne pepper (Soudania),

harissa, coriander (Kasbar), basil (Hbeq Zhiri), etc. Another objective of our new product line

is to offer convenience to our customers who do not have time to prepare food due to their

busy life style since Moroccans are going towards adopting the Occidents life style. This new

trend is noticed by the growing demand for packaged food in Morocco estimated to 21% in

2013. (Euromonitor, 2013)

Objectives
Throughout this product development strategy, Lesieur Cristal will be the first agro-industry

company in the country to launch a flavored olive oil at a very reasonable price which is

aligned with the companys main objective summarized in the following statement:

The idea is to provide a quality product to the largest number of people regardless of their

social class in order to democratize the good taste

The Moroccan cuisine is known for its various combinations of spices and flavored herbs or

plants, thus we believe while our customers will eat our flavored olive oil, they will recognize

the unique and authentic tastes and flavors of our savory traditional Moroccan dishes.

Therefore, the launch of the new olive oil product line that we named Al Asslia will have a

significant added value for both Lesieur Cristal and its customers.

The strategy will generate a positive net present value of approximately 40,479,486 MAD

which will lead to a raise in shareholders value given they will collect a higher dividend from

the additional earning generated by this strategy.

107
Last but not least, this strategy will increase the total revenues of Lesieur Cristal 52,267,937

MAD by the end of 2022 as well as current asset by 15,399,611 MAD by the end of the same

period.

Target Segment/TAM
The target segment of Al Asslia product line can be defined as men and women with medium

to high income located in urban areas across Morocco. They are consuming olive oil either

for eating, cooking, or seasoning for its taste and health benefits in order to ensure their well-

being and the one of their surroundings. They are willing to pay a higher price for flavored

olive oil compared to the regular one in order to find the taste of what characterizes the

traditional Moroccan cuisine its wide range of spices and flavored herbs or plants. They are

also adopting a very busy life style; thus, they are not able to spend a lot of time in cooking

and preparing food.

Total Available Market (TAM) is the total demand for a specific product or service that can be

evaluated based on the combined units sold or the total revenues generated by all companies

operating in the same industry as a proxy. In the case of our strategy, we selected the total

revenues approach as follows:

TAM = total olive oil consumption (in L) x average price (in MAD) x Lesieur Cristals market

share in olive oil market x variable differentiating the three scenarios*

TAM 43,560,000

Expected Average Olive Oil

Consumption in Morocco in 100,000

Tons

Convertion to kg 100,000,000

Convertion to L 110,000,000

Convertion to MAD 4,950,000,000

108
 2015 (the most recent data)
0.22
olive oil market share

Share of olive oil sales revenues

from the companys total 0.04

revenues (Realistic)

*Note: We selected the share of olive oil sales revenues from the companys total revenues

(Lesieur Cristals annual reports)

Olive oil sales revenues represented 3% in 2012 (Pessimistic scenario)

Olive oil sales revenues represented 5% in 2013 (Optimistic scenario)

Olive oil sales revenues represented 4% (Realistic scenario)

TAM = 4* x 5* x 6 *

Note: 2 = 1*1,000 because 1 ton = 1,000 kg

3 = 2*1.1 because 1 kg olive oil = 1.1 L olive oil

4 = 3*45 because the price of 1 L plastic bottle of olive oil is on average 45 MAD

We evaluated our realistic TAM at 43,560,000 MAD

Marketing Mix

109
Product: Al Asslia is a product line that will offer a wide range of flavored olive oil targeting the

middle class (with plastic bottle flavored olive oil) as well as the upper middle class (with glass

bottle extra virgin flavored oil). However, we assumed Lesieur Cristal will start by launching

one product: a 0.5 L plastic bottle flavored olive with garlic and thyme named Al Asslia

Tuma/Zaater targeting the Moroccan middle class.

Price: Al Asslia Tuma/Zaater will be priced at 30 MAD and will be launched under the form of

a 0.5 L plastic bottle. While pricing our product, we took into consideration the average price

Moroccans are willing to pay for a 0.5 L plastic bottle of regular olive oil (25 MAD) as well as

the average competitor price (70 MAD). (Huile dolive et huile de table : Profile du

consommateur Marocain, Interpolive, 2010). We believe we can be competitive in the market

by targeting the mass.

Place: Al Asslia Tuma/Zaater will be introduced in all selling places where other Lesieur

Crisitals olive oil products such Al Mabrouka and Al Horra are already sold meaning it will be

present in 1,500 wholesalers and semi-wholesalers as well as in 55,000 traditional retailers.

Product: Al Asslia Tuma/Zaater is a flavored olive oil at a reasonable price offering to our

customers an authentic olive oil with the taste of typical Moroccan spices and flavored herbs

such as thyme (Zaatar) and garlic (Tuma). In fact, we gave the name of Al Asslia to this new

product line because it combines between olive oil, spices and flavored herbs that are all

considered authentic components of our traditional Moroccan cuisine. We believe our

product will perfectly correspond to our customers needs who care most about taste (26.8%),

quality (16.5%), and price (14.2%). Our product is packaged in a very nice dark 0.5 L plastic

bottle since it is their preferable mode of purchasing (51.4%) compared to glass bottle (25.7%)

or bulk (16.2%). Our product can be used mainly for cooking and seasoning which perfectly

matches their preferable form of olive oil consumption (50.5% for eating, 15.1% for cooking,

and 31.7% for seasoning). (Huile dolive et huile de table : Profile du consommateur Marocain,

Interpolive, 2010)

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Promotion: Lesieur Cristal will advertise for Al Asslia Tuma/Zaater through the two major

Moroccan TV channels 2M and SNRT (Oula) and it will be added to the companys online

catalog.

Advertising
Lesieur Cristal will advertise the new product line Al Asslia through 2M and SNRT (mainly Oula)

-the two favorite TV channels of Moroccan throughout the year. It is important to note the

company will go for a heavy promotion campaign during the holy month Ramadan 2018 by

advertising the product during the ftoor time (7:45 pm 9:30 pm) in order to reach the

maximum number of people since the majority of Moroccans are having their ftoor while

watching TV.

Cost Estimation
Initial Investment
Lesieur Cristal needs to allocate 24,492,830 MAD as an initial investment in order to develop

the product development strategy including the following costs:

Research & Development: Lesieur Cristal has been allocating an annual budget of

80,000,000 MAD for research and development since 2013 in order to launch on

average 4 major products of innovation per year. We estimated our R&D cost at 20,

000,000 MAD.

R&D Cost = 80, 000,000/4

Marketing and advertising: We assumed Lesieur Cristal will advertise the new product

line for one month through the two Moroccan leaders of TV media called 2M and

SNRT. We selected the holy month Ramadan (on average 29 days). The cost of a 30

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 seconds advertising during the ftoor time on 2M is 91,400 MAD while it is 50,000 MAD

in SNRT (Oula). We estimated our Marketing & Advertising cost at 4,100,600 MAD.

M&A Cost =29 x (91,400+50,000)

Machine 1, 2, and 3: We assumed Lesieur Cristal will need a new automatic filling and

packaging machine, crusher machine, and pressing machine since we are introducing

a new product line, thus we expected the total olive oil products will grow in the future.

The machine has the following characteristics (Alibaba website)

Machine 1 Automatic Filling & Packaging

Machine price 281,680 MAD = $28,000*10.06 (exchange rate)

Purpose 2-in-1 filling and packaging

Number of nozzles 10

Filling 0.5 L

capacity/nozzle
Type of container Plastic bottle, glass bottle, and cans

Machine capacity 3,000 BPH (bottle per hour)

Transportation 12,001 MAD =$1,193 (port fees and insurance cost) *10.06

cost* (exchange rate)

Company name Zhangjiagang Worldsun Machinery Co.,Ltd from China

Machine 2 Crusher

Machine price 24,144 MAD = $2,400*10.06 (exchange rate)

Purpose Crushing food

Machine capacity 475 KGH (kg per hour)

Transportation cost* 12,122 MAD =$1,205 (port fees and insurance cost) *10.06
(exchange rate)

Company name Jiangyin Wantong Co, Ltf in China

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 Machine 3 Olive Oil Pressing

Machine price 80,480 MAD = $8,000*10.06 (exchange rate)

Purpose Pressing olive oil

Machine capacity 10 TPD (metric ton per day)

Transportation 12,122 MAD =$1,205 (port fees and insurance cost) *10.06

cost* (exchange rate)

Company name Henan Dinter Heavy Industry Machinery Co Ltd in China

* Note: Port fees including insurance cost was calculated using a very known website called
World Freight Rates website.

COGS
Al Asslia will be the new Lesieur Cristals product line of flavored olive oil. In order to make

flavored olive oil, put 0.5 cup olive oil into a bottle, and then crush 4 medium garlic cloves to

be directly added into the olive oil bottle. Last but not least, add 1.5 tablespoon of a single or

a combination of flavored herb or spice.

As we mentioned before, we assumed the company will launch first a flavored olive oil with

garlic and thyme called Al Asslia Tuma/Zaater, thus we will need the following:

0.5 cup olive oil = 0.12 L where 1 L olive oil = 1.1 kg olive oil

4 medium garlic cloves

1.5 tablespoon of crushed thyme = 11.25 g crushed thyme

1 kg olive oil costs 19 MAD (raw material, operating expenses, insurance, employees

payroll)

1 garlic head (8 medium garlic cloves) costs 2 MAD

350 g crushed thyme costs 3 MAD

0.5 L plastic bottle costs 6 MAD

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 1 garlic clove costs 0.25 MAD thus 4 garlic cloves cost 1 MAD

1 g crushed thyme cost 0.01 MAD thus 11.25 g crushed thyme cost 0.1 MAD

1 kg olive oil costs 21 MAD, thus 1 L olive oil costs 19 MAD, thus 0.12 L costs 2.28 MAD

0.5 L plastic bottle cost 6 MAD, thus 0.12 L plastic bottle costs 1.44 MAD

We conclude 0.12 L flavored olive oil plastic bottle costs 4.82 MAD = 2.28 + 1 + 0.1 +

1.44 thus 0.5 L flavored olive oil costs 20 MAD

o The total cost of our 0.5 L flavored olive oil is 20 MAD

o Retail margin is 30%

o Profit margin is 20%

o TVA is 20%

We added depreciation expense of the purchased machines (filling and packaging, crusher,

and pressing machine) to the cost of goods sold each year.

We assumed Lesieur Cristal will depreciate the 3 purchased machines over a period of 10

years and the salvage value will be 10% of the machine cost.

Total Unit Cost Unit Price TTC Unit Profit

20 30 9

DE = Machine Cost (10%*Machine Cost)/10

Depreciation expense machine 1 is 23,670 MAD

Depreciation expense machine 2 is 3,264 MAD

Depreciation expense machine 3 is 8,376 MAD

We conclude total depreciation expense is 35,301 MAD

COGS = TAM/Unit Price TTC* x Total Unit Cost + Depreciation Expense

*Note: to calculate the number of flavored olive oil bottles sold

Concerning the forecast of COGS over the 5-years period, we considered the Moroccan

population growth (1.22%) and the forecasted inflation rate (2%).

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The first-year realistic COGS is estimated to 30,282,037 MAD

Operating expenses
Selling/General/Administrative Expense: We calculated on average how much does

the selling/general/administrative expense represent from total operating expenses

and we found out 0.22%

Labor/Related Expense: We calculated on average how much does the labor/related

expenses represent from total operating expenses and we found out 6.39%

Advertising Expense: We assumed Lesieur Cristal will advertise the new product

through 2M and SNRT (Oula) TV channels 4 days a week during one year. We

estimated this cost at 208,000 MAD

AE = 1,000 x 4 x 52

Interest expenses
We estimated interest expense at 31,129 MAD and we assumed it will remain constant for 5

the next 5 years. We followed the same capital structure of Lesieur Cristal, thus it will pay

0.52% (representing the companys debt ratio) of the total initial investment by debt. We

decided to respect the current capital structure of the company since the cost of debt (7.08%)

is higher than the cost of equity (3.52%). We used MS Excel formula PMT while:

Present value is portion of initial investment paid by debt: 24,492,830*0.52% =

127,363 MAD

Number of periods is 5 years

Rate is interest expense ratio: 7.08% calculated as average ratio of total debt over total

expense

Interest payment is 31,129 MAD

IE = PMT (7.08%, 5, 127,363)

Income Tax
We estimated income tax for the first year at 3,515,243 MAD calculated as income before tax

for the first year multiplied by corporate tax of 33%:

IT = 10,652,251 x 33%

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The same formula is applied for the next 4 periods.

Revenues Estimation
We estimated our first-year revenues as:

TAM (in MAD) x variable differentiating the three scenarios*

*Note: As explained in the section titled Target Segment.

Concerning the forecast of revenues, we considered the estimated Moroccan population

growth (1.22%) and the percentage of olive oil consumption in Morocco under 3 scenarios:

2.3% for the pessimistic one, 3.4% for the realistic one, and 4.9% for the optimistic one

(International Olive Oil Council, November 2016).

The first-year realistic revenues is estimated to 43,560,000 MAD

WACC Estimation
For the purpose of determining the profitability of this strategy, we discounted the

cash flows generated from the three scenarios by the weighted average cost of capital

which we computed using the same capital structure of the company.

Concerning Lesieur-Cristals capital structure, it is composed of 99.5% equity and

0.5% debt where:

V (Value of the firm) = D (Debt) + E (Equity)

The portion of Debt is D/V = 0.52%

The portion of Equity is E/V = 99.48%

Cost of Debt

When calculating our cost of debt we took into consideration the average interest

expense the company has been paying during the last 17 years. When making our

calculations, we came up with cost of debt of 7.08%.

Cost of Equity

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When calculating the cost of equity we used the CAPM model, which is as follows:

Cost of equity = risk free + Beta (market return risk free)

According to Lavieeco, the yield of a 10 year treasury bond is 3.54%. In addition, we

have calculated the market return of MADEX to be at 2.25%. Concerning the Beta, we

run a regression analysis by using the companys stock price, and the market return

for a period of 10 years. The regression resulted in a Beta of 0.13. Therefore, the cost

of equity is 3.532%.

This being said, our calculations resulted in a WACC of 3.534%.

Sensitivity Analysis

SCENARIO NPV IRR PAYBACK PERIOD

Pessimistic 44,663,590 23% 2 years 11 months

Realistic 40,479,486 41% 2 years and 2 months

Optimistic 66,801,075 60% 1 year and 8 months

Pro Forma Financial Statements: Balance Sheet and Income Statement

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 Realistic 2018 2019 2020 2021 2022
Assets
Current Asset 7,128,031 8,030,731 8,706,451 9,424,272 10,186,500
Non Current Asset 323,927 291,890 259,854 227,817 195,780
Total Assets 7,451,958 8,322,622 8,966,305 9,652,089 10,382,280
Liabilities and Stockholder's Equity
Liabilities 38,750 43,278 46,625 50,191 53,988
Equity 7,413,208 8,279,344 8,919,680 9,601,898 10,328,292
Total Liabilities and Stockholder's Equity 7,451,958 8,322,622 8,966,305 9,652,089 10,382,280

Realistic 2018 2019 2020 2021 2022

Revenues 43,560,000 45,590,540.69 47,715,735 49,939,994.05 52,267,937
COGS 30,282,037 31,296,544 32,343,966 33,425,370 34,541,860
Gross Profit 12,879,624 14,293,997 15,371,769 16,514,624 17,726,077
Operating Expenses
Selling/General/Administrative Expenses 66,620 68,852 71,157 73,536 75,992
Labor/Related Expenses 1,935,022 1,999,849 2,066,779 2,135,881 2,207,225
Advertising Expenses 208,000 208,000 208,000 208,000 208,000
Total Expenses 2,209,643 2,276,702 2,345,936 2,417,417 2,491,217
Income from Operating Expenses (EBIT) 10,669,982 12,017,295 13,025,833 14,097,207 15,234,860
Other expenses (Interest) 31,129 31,129 31,129 31,129 31,129
Income Before Taxe 10,638,853 11,986,166 12,994,704 14,066,078 15,203,731
Provision from Income Taxe 3,510,821 3,955,435 4,288,252 4,641,806 5,017,231
Incone after Taxe 7,128,031 8,030,731 8,706,451 9,424,272 10,186,500

Limitations
Through Al Asslia Thuma/Zaater, we targeted consumers from middle class and we priced it

at 30 MAD. It is true the middle class represents 50% of the Moroccan population, but we are

aiming to launch an extra virgin flavored olive oil in order also target the Moroccan upper-

middle class representing 13% (HCP, 2014).

We will introduce first a flavored olive oil with garlic and thyme, thus it might reduce our

market size. However, Al Assila is a product line of flavored olive oil meaning it is already

planned to add more flavors according to the preferable spices and flavored herbs of

Moroccans.

We assumed olive oil production of Lesieur Cristal will be enough to satisfy the future demand

of our new product land. Thus, the estimation of initial investment does not include any

acquisition of olive oil land or any aggregation.

Contingency Plan
Lesieur Cristal will continuously invest in marketing research in order to follow-up with its

customers needs in terms of size (introducing 1L, 10L, or even 20L flavored olive oil), taste

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(introducing new combinations of olive oil and flavored herbs), packaging (introducing glass

bottle), convenience, price, quality (introducing extra virgin flavored olive oil), etc. as well as to

remain updated about the future trends concerning olive oil consumption, production,

technology, etc.

Since Al Asslia will be the new Lesieur Cristals product line of flavored olive oil, after launching

Al Asslia Tuma/Zaater, the company will invest in research and development in order to

introduce other combinations of olive oil and typical spices or flavored herbs based on the

Moroccan consumers preferences. For example, we imagined a flavored olive oil with

cayenne pepper and coriander named Al Asslia Soudania/Kasbor, with lemon and basil

named Al Asslia Hamed/Hbeq Zhiri.

By investing in marketing research as well as in research and development, Lesieur Cristal will

remain proactive and innovative in order to face the potential competition in case of

launching similar product line.

Last but not least, if the demand of Al Asslia product line exceeds our expectations, Lesieur

Cristal will have to extend its aggregation contract to fully meet its needs.

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120
Second Strategy: Innovation
Attractiveness
The Moroccan forecasts show that the strongest consumer spending category

through to 2030 is expected to be hotels and catering, explained by a rising of tourist

arrivals and the growing trend of dining out among affluent Moroccans.

Moreover, due to Moroccos lifestyles evolution into a westernized pace (leseco),we

judged that food industry will be the first impacted. Consequently, the more

convenient the food is, the more attractive it is. Individual portions started to replace

collective meal as an expression of independence, individualism and guarantee of

hygiene and standards. Besides, Lesieur Cristal would according to this strategy

launch a convenient, customized, customer-friendly pods aimed for professionals.

The first targeted sector, catering, shows an important growth

reported through the current ambitions of the market actors such

as Newrest, Sodexo and Ansamble. A market estimated at 700

Million MAD (La vie co). From corporations, hospitals, university

campuses, penitentiaries as well as aviation companies, the latter companies

cumulate significant growth in market share. Newrest, the market leader with 75%

market share exploits more than 97,000 meals per day and generate a 495 million

dirham revenues. In the recent years Newrest has been able to gain more market

share thanks to CheikhKhalifa hospital, Casablanca and Marrakesh University Hospital

as well as penitentiaries. Regardless of Al Akhawayn University, Newrest is supplying

university campuses in Settat, Oujda, Agadir, and Fes. According to Lavieeco,

Moroccan catering is a flourishing industry. In fact, according to the same source, the

catering industry is expecting to double in size thanks to the penitentiary market. The

number of penitentiary institutions that are calling for bids is 75. This is a key

information which will enable catering companies to gain market share.

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 The second targeted sector, hospitality industry, is represented

through AccorHotels Group. The Group has reinforced its

presence across Morocco since 1996 which marks the signature of

a governmental convention. Moreover, AccorHotels is dispatched

through 38 hotels in 14 cities and employ 2300 people (TRN). Amongst AccorHotels

seven brands, we have chosen Ibis hotels as business partner to strategic

implementation. Motives are related to Ibis networks as it ruins 17 hotels including

2150 rooms present over 12 cities. In 2017, Rismas top management announced Ibis

new repositioning strategy (le matin). Partnering with Ibis hotels to accompany the

new strategy will reveal future advantageous benefits that will be depicted in more

details through financials.

As a third targeted partner, Paul Maroc, specifically its

restaurants. In 2013, Paul has announced several brand

development projects. The first axe, consisted of reinforcing

current Pauls position in cities such as Rabat, Casablanca and

Fs. Promise kept, in 2017, Paul Maroc manages more than 10 flag-ships. Other axes

regard Pauls settlement in Malls and through Satellite-selling points to bring more

convenience to its customers. Through its national chain, Paul Maroc manages to

satisfy its 6,000 daily customers. Interestingly, M. Mehdi Bahraoui, Paul Marocs

general manager and holder of Pauls exclusive franchise across the Maghreb

expressed its intentions to expand Pauls presence to Tunisia (lconomiste).

Objectives
Through this strategy, Lesieur Cristal will not only add value to its olive oil but enlarge

its horizons. Business-to-business ensures an additional target sector to Lesieur

Cristals activity. Chosen Business-to-Business activities have shown present and

future growth that Lesieur Cristal is going to capture through oil pods launch. A step

forward, Lesieur Cristal Pods strategy will generate Net Present Value (Realistic) of

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46,427,152 MAD. Guarantee of LCs success, financial achievements attest of the

Groups ability to stay committed to its shareholders vision. By 2022, Cash generated

from this strategy will reach 12,145,152 MAD.

Target Segment
The TAM for both Olive oil and Vinegar dressing pods is mainly concerned with the B

to B sector in the country. This being said, we will primarily target Catering companies

especially Newrest, Paul, which is a French bakery chain, and Accorhotels especially

the IBIS chain.

Newrest

Paul

IBIS Chain

When conducting our research, we included all of the meals per

day offered by Newrest, the number of hotel rooms of IBIS

hotels including the occupancy rate, and the total daily number

of customers of PAUL. The product that Lesieur Cristal is going

to be offering is perfectly adapted to the culinary habits of the

customers that eat via catering companies, PAUL, and Hotels.

The idea behind offering pods, just like the one behind honey

and jam pods, is to adjust the product quantity offered to the

limited need of one customers.

TAM = 6,740,891

Marketing Mix
Price

Olive oil and Vinegar Dressing will be priced at 2.54 MAD and 3.09 respectively for a

quantity of 1.7 cl. The final price of both products includes the cost of production of

one olive oil liter converted in cl to get the unit cost of 1.7 cl, the unit cost pod

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packaging, the intermediary catering profit margin, the companys profit margin as

well as the TVA.

Product

Olive and vinegar dressing will be

presented under two tactical pods

that are designed to facilitate the

use of our customers customers.

Benchmarking strategys core

product with Lesieur (GAs

subsidiary)s olive oil-based

product portfolio Lesieurs Sauce

Salade Lgre Huile dOlive&

Citron

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Promotion

Dealing with other businesses as our customers, promotion of the B2B will mainly be

made through trade fairs. The targeted event will be Cremai (Carrefour International

Des Professionnels de La Restauration de lAlimentaire & de lIndustrie

Htelire)thattakes place in Cassablanca. It will be a 14000 m2 surface gathering
professionals operating in hospitality market. To capture and attract professionals

attention on LCs B2B pods, stands of 50m2 will be installed at the center of the facility.

Building Strategic Alliances

The typical actions, and activities that Lesieur Cristal needs to take into consideration

when building strategic alliances for the implementation of this strategy are as follows:

Increasing both the professional and personal networks, which will be needed when

looking for potential strategic partners. Taking into consideration the method that will

be used to respond to the questions, and inquiries as well as new possibilities. In

addition, the company must not neglect an important aspect, which is creating a

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shared vision for both Lesieur-Cristal and the strategic partner, but also involving

senior management. Also, trust creation between both partners is very important for

the prosperity of a long lasting strategic alliance. The latter step can be done through

face to face meetings. Next comes the creation of private relationships at different

levels as well as the engagement in scientific and practical conversations. Moreover,

Lesieur-Cristals managers must merge both social and business time and

demonstrate that they are fully devoted and pledged to the progress of the alliance.

Furthermore, manager of the two companies must be aware of the hard decision

making they will need to make when managing conflict. This being said, managers

must accept the reality of the strategic alliance, and rely on mature association in

order to facilitate collaboration with the future followers.

Cost Estimation
The company needs a 10,796,636 MAD allocation for the financing of this strategy.

As you can see above the initial investment includes:

Research and Development 10,000,000: As you may have come across during the

cost estimation of the previous strategies, Lesieur Cristal Allocates an 80

, 000,000 MAD of research and development. This amount has been adjusted to the

average number of products developed with these two products during the same

period. Therefore, we estimated our Research and Development investment to be at

10,000,000 MAD.

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Machines
When conducting research, we assumed that two machines will be necessary for the

implementation of this strategy. An Automatic and Filling Machine, and a Pressing

machine. Both of the machine are the same ones that are going to be used in the

Flavored Oil strategy; therefore, the costs are going to be similar. You may refer to the

tables below for further details.

Operating Expenses
Selling/General/Administrative Expense: Based on our research, we found out that

these latter expenses should be 0.22%. This was done by calculating the average

general and administrative expenses from the operating expenses.

Labor/related Expense: Labor and related expenses are believed to be 6.39% of the

total operating expenses. Here, we followed the logic behind calculating the

administrative expenses.

Advertising Expense:

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Depreciation expense: We believe that the depreciation of the two machines must

done over a 10 year period and the salvage value to be 10% of cost.

Depreciation expense machine 1 is 10,145 MAD

Depreciation expense machine 2 is 8,367 MAD

Therefore, the total depreciation expense is 18,512 MAD.

Interest Expenses
The interest expense of this strategy is at 13,722 MAD for the next five years. When

calculating the interest expense, we assumed that the company will follow the same

capital structure that it currently has, which is 0.52% debt. Therefore, 0.52% of the

total investment will be financed by debt, and using PMT in MS Excel we came up with

the following:

PV is initial investment*0.52% = 10,796,636*0.52% = 56,143 MAD

Number of Periods = 5 years

Rate is the interest expense percentage: 7.08%, which is the average percentage of

the interest expense that company has been using.

Interest Payment = 13,722 MAD

IE = PMT (7.08%, 5, 57,143)

Income Tax
We estimated income tax for the year to be at 1,786,777 MAD for the realistic

scenario. This was calculated as income before tax for the first year multiplied by the

average corporate tax the company has been incurring, which is 33%:

IT =5,414,476 *33%

The same formula is applied for the next 4 years.

Revenues Estimation
We estimated our first year revenues in 2018 as:

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TAM * the price of both olive oil and vinegar dressing pods.

We forecasted the revenues of this strategy

WACC Estimation
We followed the same logic used to compute the WACC in the previous strategy. Since

all our strategies are a product development in Morocco, thus we will operate in the

same industry within the same country. Therefore, we will use a WACC of 3.534%to

discount cash flows to calculate our net present value.

Sensitivity Analysis

SCENARIO NPV IRR PAYBACK PERIOD

Pessimistic 29 ,442,469 37% 1 years 4 months

Realistic 46,427,152 84% 1 years and 3 months

Optimistic 53,308,616 91% 1 year and 2 months

Pro Forma Financial Statements: Balance Sheet and Income Statement

Realistic 2018 2019 2020 2021 2022
Assets
Current Asset 5 407 395 6 895 240 8 491 127 10 201 226 12 032 026
Non Current Asset 187 173 168 661 150 150 131 638 113 126
Total Assets 5 594 567 7 063 901 8 641 277 10 332 864 12 145 152
Liabilities and Stockholder'd Equity
Liabilities 29 092 36 732 44 935 53 731 63 155
Equity 5 565 476 7 027 169 8 596 342 10 279 133 12 081 997
Total Liabilities and Stockholder's Equity 5 594 567 7 063 901 8 641 277 10 332 864 12 145 152

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 Realistic 2018 2019 2020 2021 2022
Revenues 164 708 872 172 053 306 179 725 232 187 739 252 196 110 621
COGS 137 257 393 141 747 595 146 383 478 151 169 766 156 111 341
Gross Profit 27 451 479 30 305 711 33 341 755 36 569 486 39 999 279
Operating Expenses
Selling/General/Administrative Expenses 301 966 311 845 322 044 332 573 343 445
Labor/Related Expenses 8 770 747 9 057 671 9 353 904 9 659 748 9 975 515
Advertising Expenses 10 294 304 10 631 070 10 978 761 11 337 732 11 708 351
Total Expenses 19 367 018 20 000 586 20 654 709 21 330 054 22 027 310

Income from Operating Expenses 8 084 460 10 305 125 12 687 046 15 239 432 17 971 969

Other expenses (Interest) 13 722 13 722 13 722 13 722 13 722

Income Before Taxes 8 070 738 10 291 403 12 673 324 15 225 710 17 958 247

Provision from Income Taxes 2 663 344 3 396 163 4 182 197 5 024 484 5 926 222
Incone after Taxez 5 407 395 6 895 240 8 491 127 10 201 226 12 032 026
Net Income 5 407 395 6 895 240 8 491 127 10 201 226 12 032 026

Limitations
Despite the fact that this strategy is innovative and efficient in terms of

feasibility, several limitations must be taken into consideration.

Lesieur, by aligning with other companies and building strategic alliance loses

some degree of control over its products and the way its business is perceived.

In B2B, buyers generally hold more power than sellers. Therefore, a B2B can

demand certain customizations, imposing exact specifications and pricings.

Contingency
In order to overcome these limitations, Lesieur must make sure that the alliance

remains beneficial to the same extend to both parties, and keep being proactive

within the competitive environment (VMM, VCR) of the oil pods industry. Lesieur must

keep leading research in order to keep its product aligned to what the market

demands. Lesieur must expand its portfolio of customers in there market, and

implement its sales to the foreign market.

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131
Strategy three: Related Diversification

Attractiveness

Lesieurs aspirations and future objectives to increase its condiments Market

share

This strategy directly answers to the objective settled by Lesieurs Crystal in the

domain of condiments. In 2013, M. Samir Oudghiri Idrissi openly announces Lesieurs

desire to position itself as a taste reference to the Moroccan Customer regardless of

its social class. (Media 24 ,2013).

Moreover, it has been stated that Lesieur Crystal targets first a market share of 4%

on its entry with the idea to expand as it sets the objective to fulfill a market share of

20 % in the following years. It is also important to note, that Lesieur is aware of the

fierce competition available in this market, which doesnt prevent Mr. Oudghiri to

assert its eventual future market share in the industry of condiments.

Lesieurs aspirations to grow within the different segments are strongly evidenced by

its heavy investment in Research and Development that approximates a number of

80 million of dirhams every year, which makes of this strategy a doable and realistic

mean to expand its market share within both the Lesieurs olives and condiments

sales.

A favorable forecast of the Moroccan Production/Consumption of olives allied

to an enthusiastic perception of olives as a condiment and an increase of

demand in the condiment sector

Merging Lesieurs desire to grow with the aspirational objectives of the Moroccan

Green Plan (Plan MarocVert), Lesieur Crystal expects its olives production to at least

double starting 2015 thanks to the improvement of its upstream olive based activities.

Moreover, the Moroccan Profile Customer is defined to consume an average of 1.3kg

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of olives per year and per capita. This also appears as an opportunity to develop a

condiment mainly composed of olives. Looking at it from another perspective, a

research led in 2010 has shown that 43% of Moroccans who consume olives use them

as a condiment, following the definition of condiment which is to add taste to another

aliment.

An advantageous growing trend of convenience and prepared products

A study led by euromonitor in 2016, presented a positive forecast growth within the

Moroccan consumption of sauces and condiments. Indeed, two main trends start to

dominate the Moroccan customer habits: convenience and hygiene. In numbers 21%

of what a Moroccan consumes comes from a packaged and processed product. This

had generated a total revenue of 1.19 billion of Moroccan dirhams, leaving room for

an olive-based condiment in the Moroccan market. This growing trend is directly

related to the emancipation of women within the Moroccan culture that start seeking

more efficiency and saving-time products. (2016)

Combining those three statements to an extra real example of the tapenade

launching in Morocco makes the implementation of this strategy even more realistic.

Cartier Saada has been the only one to launch the Tapenade product in the Moroccan

market in 2013. However, even if it was 100% foreign market oriented, the local

market has unexpectedly captured 35% of the sales product market share, illustrating

the strong local demand.

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 Forecast Sales of Sauces, Dressings and Condiments by
700
Category: % Volume Growth 2016-2021
600

500
Cooking ingredients
400 Bouillon
Table Sauces
300
Barbecue Sauces (also TS)

200 Tomato Pastes and Pures

100

0
2016 2017 2018 2019 2020 2021
Objectives

Increase the condiments market share to reach 20%.

The strategy will generate a positive net present value of approximately

6,755,946 MAD which will lead to an increase in shareholders value given they

will collect higher dividends from the additional earning generated by this

strategy.

Allocate more marketing investments in the olive industry in order to sell better

the Moroccan Picholine that is world widely known by its good quality

standards25 within the perspective of the Plan Maroc Vert.

Strategy Presentation
In order to take advantage of these opportunities, Lesieur Crystal should follow an

Innovation and Direct Diversification strategy, that would not only allow LC to make

use of the opportunity presented by the olive market but would also contribute to

25
https://www.oliveoiltimes.com/olive-oil-business/africa-middle-east/tracking-the-quality-of-moroccan-olive-
oils/47386

134
establish LC within a strategic position in the market by being the first one to sell an

olive based condiment at the Moroccan retails.

This strategy appears as an innovation to increase and diversify the Moroccan tastes

through a Tapenade that will be of additional value and ease of use to the Upper-

Middle modern class of Moroccans that also seek convenience and taste quality.

Our strategy also aims to provide an innovative modern way of savoring the traditional

famous Moroccan olive.

Methodology: Market Segmentation

Market segmentation of LC

LCs willingness to target all categories of customers regardless of their social class,

make of its market a diversified and large scale of customer profiles.

Thanks to its website we can identify a large psychographic segment of Women

Households that are relatively well targeted by directly answering to their need of

developing their culinary skills, thanks to several home recipes posted on their

website.

Another demographic segment of customers that Lesieur presents is a segment who

cares about eating healthy, and consuming the right nutriments. A complete section

of their website directly addresses this segment. Income segmentation is also

available within this market since it is composed of loyal customers that are currently

willing to pay more for a better quality product. (cf. Jawhara and Mabrouka). A last

example of segment that LC already targets well is the middle class households

segment which represents the majority of the kingdom. Through its kizitek campaign

that seems to be mostly addressed to children, LC communicates with families to

share advices about health and hygiene tips.

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As shown by its reactive marketing strategies, LC seems to be by the side of the typical

Moroccan consumer who is educated and willing to maintain a balanced healthy

lifestyle.

Our Target Segment for this strategy

LC is mostly known for its edible oil, therefore throughout its journey, it had acquired

loyal customers whom profile was mostly related to all classes of women that enjoy

cooking and became familiar to LC oil tastes within their culinary activities.

Although, LC seems to have a broad target segment that goes from the bottom class

to the top, this strategy will mainly focus to target upper-middle class of urban, young

adults who already consume olives as a condiment. It is also about targeting a working

population, quality sensitive that may be too busy to prepare a homemade

tapenade26 and would rather get a prepared one from a trusted brand.

We computed the TAM for this strategy and found the following results:

While calculating our total addressable we encountered several limitations that we

overcame using some smart and well-defined assumptions. First, we had to

determine the potential consumption of tapenade in grams per consumer. Knowing

that the product is still new in the market and that the only supply is either coming

from importation or informal competition, we decided to forecast the demand based

on the analogy with France. The choice of France was not made random and is based

on two facts. First, the olive consumption in France and Morocco are very similar 1,7kg

in France and 1,3 in Morocco with 60% of the olives consumed throughout the

condiments. Moreover the growth of the consumption of condiments is expected to

be very similar in both countries reaching 5,1% in Morocco and 4,5% in France. Our

26
21% of the goods consumed by Moroccans ara packaged foods, which illustrates an Occidentalized
orientation of the Moroccan customer.

136
analogy is based also on qualitative arguments that are the fact that both cuisines are

fond of olive based appetizer and cold starter.

Methodology
Characteristics France Morocco

Olive Consumption in kg/

capita 1,7 1,3

Population in million 66,03 34,3

% Of PCO 73% 71%

TAP Cons/Y in tons 400000

Ratio Tapenade /Olive

consumption 0,5%

Consumption of Tapenade

per Capita in grams 8,3(grams) 7,3 grams

We find that 0,5 % of the total consumption of olive by a French consumer is done

through tapenade. Since we have the average consumption of olive per Moroccan,

we just need to calculate the population targeted by this strategy.

TAM
Potential Customers Percentage

Mor POP 34,5

Upper/ Middle class 63%

Urban Population 60%

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 Age pop 15- 90%

Potential Target in

millions 11,7369

We multiply: The targeted population * average consumption tapenade per capita

= 86 218 tons of tapenade sold every year in Morocco Potentially.

Considering that every pot will have a weight of 90g we end up with a 957973 pots

sold in Morocco.

Product Differentiation
Our product competitive advantage is its multiuse aspect. LCs Tapenade is not only

a simple product added to the condiments shelves. It is a condiment that can be used

to enhance the Mediterranean tastes to any plate, but it can also be used as an

appetizer during casual occasions. Regardless of the use chosen, a clear thing is that

it aims to facilitate our customers daily life.

Product positioning
Positioning is a primordial skill to increase awareness of how the product stands

within the market. La tapenade doesnt have any direct competitors in the market,

except some international brands that sell the product at a relatively high price and

rural cooperatives with a distribution channel that remains relatively low.

Moreover, other condiments may be substitute to this product and therefore indirect

competitors. Packaged seasoned olives and pickles are the closest indirect

competitors Lesieurs Tapenade may have at the Moroccan retail market within the

condiments shelf. Although the Tapenade appears as being lighter than other pre-

packed convenient food that may be present at the supermarket, Lesieurs Tapenade

must be perceived as being more consistent than the two others, since it will be

conceptualized following a traditional Moroccan recipe.

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Therefore, because of the quality and higher cost of production of Lesieurs

Tapenade, the product must be perceived as a well-processed and trustworthy

condiment that will make our customers life easier and their plates tastier.

Marketing Mix
Product (VIEW MODEL)

The Tapenade will be presented under a 90g pot of black Moroccan Picholine olives27.

Following the VIEW model, our packaging will be as follows:

Visibility: our product will sell the Moroccan black olive. Therefore, the black color is

used to reinforce this idea along with the title Tapenade du Maroc that is also written

in Arabic.

Information: our product will be addressed in Arabic and French to target the upper-

middle class. According to the decree n 2-12-38928, the packaging must contain the

time of validity, conditions of conservation and utilization, the list of ingredients, the

exact weigh of the product and the address of the producer.

27
category of olives that split from green to ripe black. On average 56% of the olives collected are black olives (COI, 2013)
28
http://aujourdhui.ma/societe/produits-alimentaires-de-nouvelles-regles-en-matiere-d-etiquetage-99630

139
 Black olives, parsley, black pepper, salt, olive oil,

garlic , lemon juice and capers

Our packaging etiquette which will be easily removable will also present typed recipe

instructions in the back, in order to provide a mode of use of the Tapenade to our

customers cuisine.

Emotional Appeal: The Packaging will be designed for the attempt to arouse specific

feelings: the mixture of modernity and tradition, along with the quality performance

and trustworthiness of Lesieur, because it remains a brand that has always

maintained its positive image during 70 years of History. La Tapenade du Maroc also

brings a feeling of nationalism and belonging to Morocco.

Workability: our packaging will be closable and made of glass. It can also be reused

which extends the products lifetime value to four days after it is opened.

Price
Maintaining LC willingness to keep its product attainable and reachable to a wide

variety of customers, we will establish our product at a price of 14 MAD, which is

relatively low to our competitors that hold it at 15MAD.

Recipe

Quantity Ingredients Cost in MAD

1 Garlic 2

1 Lemon 1,2

3 Capers 1,5

250 Green olives 5

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 Small bunch Parsley 1

- Black pepper 0,1

4 Olive oil 1,14

Total

250 TAPENADE 11,94

1 unit of TAP

90 TAPENADE 4,2984

1 Packaging 3

Final unit cost 7,2984

Retail margin 3% 7,517352

Company's margin 30% 9,7725576

TVA 20% 11,72706912

Final Price 14,00

Place
Lesieur holds a really well developed distribution channel that we are planning on

implementing even for this strategy. Therefore, the distribution of this product will

follow the same means than its family products.

For our cost assessment, we aim to target the most frequented retails of the country.

Thanks to a study lead by Euromonitor, we know that supermarkets are an important

place for the Moroccan consumption. Therefore, we will assume that our product will

141
mostly be presented at Carrefour and Marjane Holding SA, which represent the

biggest market shares of retail, respectively of 2.1 %, and 1.4 %

Promotion
Several strategies are established to develop a Marketing campaign in order to

favorably introduce this product to our customers lives. First impressions are lasting

forever so as marketers, we should be careful on how to advertise this new product.

Those are the three strategies we have chosen:

Establishing billboards on the most crowded sites of the kingdoms biggest

metropolises: Rabat, Casablanca, Tangier and Marrakech.

Billboard is generally defined as an advertising tool that is fixed in a strategic

place and remains visible during a whole day for several months. Choosing the

right location will directly target the customer needed. Therefore, we have

decided to target industrial zones with billboards next working areas since

people in these location are the primary target market of our Tapenade.

Impact of Billboard Advertisement on Customer Buying Behavior29 , a study

lead by the University of Bahawalpur (Rizwana Iqbal, 2016) shows the direct

correlation between the billboards on the streets and its positive impact on

29
http://www.srpublishers.org/uploads/4/3/6/9/43696183/impact_of_billboard_advertisement_on_customer
_buying_behavior_a_study_on_islamia_university_of_bahawalpur__iub_.pdf

142
 the customers behaviors and decision making at the moment of the products

purchasing.

Social Media: Facebook and Twitter are two primordial places where LC needs

to operate since it became a major platform to specifically target our market.

A new Facebook page, that will be introducing our product, but also updating

the website with the main recipes and ways to use LC products, is a strategic

way to reposition LC within the daily life of our customer. Also, allowing open

discussion groups through social media sites such as Facebook and Twitter

may be a tactical mean to keep in touch with our consumers and be aware of

their feedback to keep continuously improving the product and the experience

that goes with it.

143
 Free Product tasting in supermarkets: Establishing small stands in

supermarkets in order to share our products experience for free is an

interesting way to build long-term relationships with loyal customers. Indeed,

customers may be reticent to spending money in a product they have never

tasted, therefore by offering them the possibility to do it for free, we gain their

trust. Choosing strategic timeslots for specific targeting may shift the

perception of our product from a simple Tapenade to a fully and shared

experience of taste and discovery.

Time of implementation
Before implementing the strategy a 1 year research and development effort is

allocated in order to test the product on sample individuals in order to adapt the

taste.

Potential Limitations
Even if our strategy follows an increasing trend in the Moroccan market, several

limitations must be taken into consideration. First of all, as any other arriving

product to the market, there is a risk that it fails. Promotion is a mean to reduce this

risk, but LC doesnt invest enough in Upper-Middle class Marketing Research, and

therefore the investment on return for this project may be very delicate and difficult

to measure.

Moreover, we have decided to settle for a low price, since Lesieurs philosophy aligns

with the idea of democratizing the quality of its products. However, perception of

price may be a limitation in this case, since some customers may perceive the product

as low quality because of its low price.

Morocco remains a small country that may get easily and quickly saturated

144
Finally, external factors beyond the companys control may occasionally make our

goods difficult to produce. The strong dependence on the weather, and the presence

of bacteria such as xylella fastidiosa can reach the Moroccan olive trees at an

unexpected time and infest plantations, which would loosen a large part of the olives

supply.

Contingency Plans

Develop marketing research methods in order to implement a better

measurement of the investment in marketing return thanks to tactics such as

buzz mining, online community and crowd-sourcing. This will allow reducing

the risk and facilitating the measurement of the investment on marketing

return.

Investing in further plantations of olives and diversifying the geographic areas

of plantations in order to reduce risks of external factors such as weather and

bacterias.

Start planning on expanding to further market, when Moroccans gets

saturated

Increase promotional skills and logistics to enhance our products chances to

get tasted for the first time by our customer

Cost Estimation
Initial Investment
Lesieur Cristal needs to allocate 3,904,388 MAD as an initial investment in order to

develop the Related Diversification strategy including the following costs:

Research & Development: Lesieur Cristal has been allocating an annual budget

of 80,000,000 MAD for research and development since 2013 in order to

launch on average 4 major products of innovation per year. We estimated our

R&D cost at 4,000,000 MAD. Representing less than 4% of the budget which is

145
 also the part of the revenues that the condiments represents on the overall

revenues

R&D Cost = 80,000,000* 4% = 3,000,000

Marketing and advertising: We assumed Lesieur Cristal will advertise the new

product line for 6 month through the display of the advertising in billboards in

Rabat, Casablanca, Tangier and Marrakech. We selected this media for the

reasons developed in the promotion side. We estimated our Marketing &

Advertising cost at 588 000 MAD.

2 per cities, 4 cities : Casablanca, Rabat, Marrakech, Tanger for six months

26000 for Rabat and Casablanca

23000 for Tangier and Marrakech

Machine 1, and 2 We assumed Lesieur Cristal will need a new automatic filling

and packaging machine, and a crusher machine, since we are introducing a

new product line, thus we expected the total olive oil products will grow in the

future. The machine has the following characteristics (Alibaba website)

Machine 1 Automatic Filling & Packaging

Machine price 256,680 MAD = $24,251*10.06 (exchange rate)

Purpose 2-in-1 filling and packaging

Number of nozzles 10

Filling 0.09 kg

capacity/nozzle
Type of container pots

Machine capacity 3,000 BPH (bottle per hour)

Transportation 12,001 MAD =$1,193 (port fees and insurance cost) *10.06

cost* (exchange rate)

Company name Zhangjiagang Worldsun Machinery Co.,Ltd from China

146
 Machine 2 Crusher

Machine price 36,266 MAD = $3,421*10.06 (exchange rate)

Purpose Crushing food

Machine capacity 475 KGH (kg per hour)

Transportation cost* 12,122 MAD =$1,205 (port fees and insurance cost) *10.06
(exchange rate)

Company name Jiangyin Wantong Co, Ltf in China

Interest Expenses

We estimated interest expense at 6107 MAD and we assumed it will remain constant

for 5 the next 5 years. We followed the same capital structure of Lesieur Cristal, thus

it will pay 0.52% (representing the companys debt ratio) of the total initial investment

by debt. We decided to respect the current capital structure of the company since the

cost of debt (7.08%) is higher than the cost of equity (3.52%).We used MS Excel

formula PMT while:

Present value is portion of initial investment paid by debt: 3,904,388*0.52% =

24,988 MAD

Number of periods is 5 years

Rate is interest expense ratio: 7.08% calculated as average ratio of total debt
over total expense

Interest payment is 6107 MAD

IE = PMT (7.08%, 5, 127,363)

147
Assumptions: In order to forecast the revenues and the number of products sold

during the next four years we had to determine what is called the CAGR (compound

annual growth rate). The rates chosen for each scenario are as follow:

Pessimistic scenario: the CAGR of 1.22% for this scenario was chosen as

following the demographic growth of Morocco for the next three years.

Realistic scenario: The CAGR of 4.9% is the expected growth for the olive

industry in Morocco

Optimistic scenario: The CAGR of 5.1% is the expected growth for the

condiments industry in Morocco.

Sensitivity Analysis
Scenario NPV IRR Payback period

Pessimistic 2,348,555 18% 3 years 1 month

Realistic 6,755,946 43% 2 years 1 month

Optimistic 10,162,117 60% 1 year 5 months

Balance sheet pro format

148
Income statement

Leadership & Culture

Structure
Culture

Strategy

Moving forward through our strategy implementation, the three strategies described

above figure amongst Lesieur Cristals Innovations High-Speed Train. These will

impact dramatically the organizational culture. Helping agents to achieve Lesieur

Cristals new strategy will be in fit with adaptive culture that promotes risk-taking and

encourages personal initiative. In this fashion, this new culture will encourage

organizational behavior through clear guidance. A deeply rooted culture will converge

149
the firms energy towards Innovation strategy implementation. Further, the culture

will redefine employees priorities. The most appropriate supporting structure for

innovation stays as the matrix structure. At the midst of a functional structure and

projectized organization, the matrix structure allows more flexibility and focus on

product development and diversification. As so, each division is assigned a project

manager that reports on daily basis the advancement on a specific project. Cross-

departmental authority and intra-departmental are also modes of results

communication.

What is next?
Lesieur Cristal, the leader company in the agro-industry has been a brand maker for

several decades in the Moroccan kingdom. Now a subsidiary of the French group

named Avril, Lesieur-Cristal is ripening its expertise in all of edible oil, olive oil, and

soap industry through the strong focus on innovation. Since 2013, Lesieur Cristal has

been able to launch on average 4 new products on a yearly basis. In order to remain

coherent with the companys current strategies as well as mission and vision, we came

up with three innovative strategies which will primarily promote not only the

companys values, but also go hand in and with its long-term objectives.

In fact, the Moroccan context includes several opportunities that encourage the

companies operating in the agro-food industry such as Lesieur Cristal to prosper

within the upcoming years. Among those opportunities is Plan Maroc Vert, which aims

to provide a win-win situation to the Moroccos agricultural ecosystem thanks to

aggregation. The logic behind is to join up local farmers with local operators for the

purpose of generating a synergy effect with both the upstream (agriculture) and

downstream (commercial). In 2013, Lesieur Cristal launched a new campaign named

TGV de linnovation which major objective is to allow the company to sustain its

leadership in a slow-growth mature market through looking for new sources of profit.

150
The strategies we came up with are aligned with the Moroccan opportunities and

coherent with the companys current mission and vision. The strategies which is one

product development in Morocco with flavored olive oil and a related diversification

olive tapenade as well as the innovation in Morocco with olive oil and vinaigrette pods

represent a significant backfire to the companys current weakness. The latter is about

the weak market share in the national olive oil market. We believe that Lesieur Cristal

needs to take corrective actions as well as aggressive strategies in order to capture

more than 22% market share.

The first strategy, which is about flavored olive oil is taking advantage of the

opportunity of the increasing global olive oil consumption by launching a new product

line of flavored olive oil that will provide to its customers with a wide range of unique

products adapted to culinary habits of the Moroccan cuisine.

The second strategy, which is about olive oil and vinaigrette pods will also help the

company gain market share through catering companies like NEWREST, pastry chain

such PAUL as well as hotels such as IBIS at the national level by offering unique pods

adjusted to the sole consumption of individuals.

The third strategy, which is about olive tapenade is taking advantage of the

opportunity of the growing market of condiments by introducing a new product line

of olive tapenade that will provide to its customers with a large selection of unique

products adapted to growing trends of the Moroccan consumers who are looking for

convenience to facilitate their daily life.

We hope that by implementing our three strategies, Lesieur Cristal will be able to

diversify its portfolio, gain significant market share, and strengthen its presence in the

Moroccan kingdom. In the meantime, such innovation orientation will necessarily

impact Lesieur Cristals organizational culture. Lesieur Cristal defines itself as an actor

serving national economy, how is its role going change across the coming years?

151
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