Edita Food Industries belongs to Egypt, selling a range of bakery related items and sweets under 11 different brands. The company has expanded its operations beyond Egyptian market, venturing in other North African regions and Middle East. The PESTLE analysis of Edita below gives an overview of the industry dynamics that company is dealing with and the effect.

PESTLE Analysis of Edita

The below section covers the external analysis of Edita using the PESTLE analysis framework. The external factors include political, economic, social, technological, Legal and environmental forces which could have positive or negative impact on food industry.

Political Factors

Egypt has faced political issues in the form of major political upheaval in 2013, followed by instances of attacks on security personnel, creating a volatile situation for Edita. The continuation of violent activities in the country threatens the smooth operations of the company as the management has to navigate through the high level of uncertainty.
Another challenge was in the form of Russia and Ukraine war that created disruption in the food supply, which effected the business’s ability to manage its supply chain. Edita has to deal with the disrupted supply of raw materials, specifically supply of and oil from Russia, along with the internal food supply issues in the country.

Furthermore, major political factor is the presence of food cartels that disrupt the food industry. Companies such as Edita are likely to be effected by the supply chain instability instigated by the actions of such entities. In one instance, the sugar stock of the company has been seized to address the issue of hoarding of the commodity which led to temporary suspension of production (Knecht, 2016).

Political factors for the company also include laws related to tax which need to be diligently followed by the organization. Another aspect of government’s point of view is reflected in the form of trading regulations which have a direct effect on the performance of Edita Food. Favorable trading ties facilitate the company in gaining access to the required material with ease.

Economic Factors

Poor economic performance of a country effects different sectors of the region, as the uncertainty impacts the cash flow as well as the ratio of generated revenue. The economy of Egypt has been performing well, having a high growth rate of GDP, which is a positive indicator for Edita. There has been some disruption in the economic stability though.

However, the recent economic disruption in the form of inflation and the hike in prices of raw materials such as wheat and oil has negatively affected the company. Inflation does not lead to high prices of material required for manufacturing of the range of products but also lead to increased prices of bakery items and sweets which are being supplied by the organization.

An evident example of the effect of inflation is the significant decrease in the profits earned by the company, which was estimated to be around 80% (Farouk, 2017). The current economic situation is further complicated by the devaluation of currency, which adds to the financial crunch being experienced by Edita, as some of the raw materials are bought from the US.

Social Factors

The growing population is one of the social factors of Egypt provides a positive environment for the business as the increase in young population is linked with higher demand of the bakery items (Edita, 2022). The company has tapped the potential of the young target market by managing direct supply of its products to the educational institutions.

The preference of the target market is the driving force behind the business decisions of Edita, which effects different components ranging from product packaging to taste. An example of focusing on consumer need, is using creative packaging to appeal to the consumer taste by offering croissants in packaged form. This product design was favorably viewed by the people.

Edita has faced a shift in buying pattern of its target market during the pandemic which has caused a lower profitability. In response to the lower sales during Covid-19, the management has decided to bring in some new products in the market, which were at a higher price to deal with the financial pressure of low sales across its existing product ranges.

Technological Factors

The use of up-to-date technology is essential for the business operations of the company. It enables the personnel to fulfil the quality standards while maintaining efficient production process. The company has expanded its operations by including latest technology which helps in producing larger batches of products, enhancing the production of bakery goods up to 20%.

The use of digitizing has been particularly useful for the company as it was able to gather real time information and use it for decision making, along with the implementation of SAP. Edita has also included digital payment option and e-invoice, bringing ease to the purchase experience and converting these processes to digital version (Edita, 2022).

Legal Factors

There are various laws that are applicable on Edita Foods, which needs to be focused upon by the management. Occupational health and safety laws are one such example, and the company has made significant reduction in workplace related injuries by offering training to its personnel. Moreover, firefighting systems have been put in place in accordance to the legal framework.

The management also needs to follow the labor laws including worker wages, benefits, payment of taxes etc. are implemented across the organization. The contracts with the suppliers, lease agreements and acquisition processes are also managed under the legal framework. For instance, the acquisition of Fancy Foods has been carried out following the related legal requisites.

Environmental Factors

The notion of environmental protection is one of the focal points for the management, which is evident through the different eco-friendly measured adopted in the organization. Efforts have been made to reduce GHG emissions, along with emphasis on improving the water management system at the company. The management also intends to bring a 10% decrease in water wastage (Edita, 2021).

Conclusion

Edita is operation in a moderate favorable environment, as its macro-environment factors create a blend of positive and negative forces. The political and economic pressures create challenges for the company, while the developing market, expanding youth segment and implementation of technology are variables that support the company in achieving high sales and revenues.

References

• Edita (2021). Sustainability Report. Retrieved from https://edita.com.eg/wp-content/uploads/2022/03/Edita-SR20-21-1.pdf
• Edita (2022). Annual Report. Retrieved from https://s3.amazonaws.com/resources.inktankir.com/efid/Edita-AR22.pdf
• Farouk, E. (2017). Egypt’s soaring inflation hits food and drinks companies’ profits. Reuters. Retrieved from https://www.reuters.com/article/egypt-food-companies-results-idUSL5N1KN4TP
• Knecht, E. (2016). Egypt’s Edita, maker of Twinkies, shuts sweet factory after sugar seized. Reuters. Retrieved from https://www.reuters.com/article/us-edita-sugar-idUSKCN12O1PR