IMES undertakes four main types of consultancy project:
Feasibility Study: “Is this a viable business venture?”
An IMES feasibility study outlines and analyzes between one and several alternatives or methods of achieving business success proposed by a client. It is used to narrow the scope of the project in order to identify the best business alternative for the client’s situation. This becomes the basis for a business plan.
However, we do not hesitate to tell a client if a proposed venture is deemed not to be feasible. In this case, efforts may be made to correct its deficiencies, other alternatives may be explored, or the idea is dropped.
Conducting a feasibility study is a good business practice and there are many reasons to do so:
Gives focus to the project and outline alternatives
Narrows business alternatives
Surfaces new opportunities through the investigative process
Identifies reasons not to proceed
Enhances the probability of success by addressing and mitigating factors early on that could affect the project
Provides quality information for decision making
Helps to increase investment in the company
Provides documentation that the business venture was thoroughly investigated
Helps in securing funding from lending institutions and other sources
A feasibility study is a critical step in the business assessment process and results in a “go/no go” decision. More
Business Plan: “How do we turn this idea into reality?”
A business plan usually follows a feasibility study and deals with only with the alternative or model shown by the feasibility study to be the most attractive. The business plan provides a roadmap of how the business will be created and developed.
The business plan addresses two fundamental issues:
The revenues that may reasonably be generated by the project, and how these are to be achieved
The costs associated with this in terms of the resources that will be needed and how they will be used.
The business plan typically consists of:
Quantified sales objectives, based on achievement of a target market share or another appropriate measure
A description of the business structure necessary to achieve these sales – facilities, equipment, people, vehicles, raw materials, marketing etc.
Costings for these resources
Planned income statements (profit and loss accounts), balance sheets and cash flow statements for three, five or ten years of operation.
IMES business plans are prepared by a multi-disciplinary team consisting of both business consultants and professionally qualified accountants. More
Performance Improvement: “How can our marketing and sales functions work more effectively?”
Helping Arab-world companies perform to global standards in marketing and sales is a key part of IMES mission.
Diagnostic – an examination of current people, processes and systems to determine what is working well, and what isn’t
Priority Area Action Plan – working closely with client management, we develop a plan to address the deficiencies identified, however large or small
Change Implementation – we support client management in making the improvements needed, whether through training, introduction of new processes or design of new systems.
On some occasions, we may identify the need for specific knowledge or skills beyond those of IMES own team. In these cases, we can call on a roster of proven and experienced independent professionals able to provide these skills. More
IPO Support: “Independent assessment of a company’s future prospects to support the sale of shares”
Increasingly, companies in the region are raising cash by making ‘Initial Public Offerings’ of their shares. To ensure that the public is protected, the market regulators (e.g. Saudi Arabia’s Capital Market Authority) require a strict process to be followed before shares can be valued and issued. This process includes an assessment of the company’s current market status and future prospects carried out by a recognised, independent, professional Market Consultant. IMES has now taken this role in numerous regional IPO’s, and is a preferred adviser to several of the region’s main investment banks.
IMES has also acted in this capacity in support of several ‘private placements’ of shares. More
“Is this a viable business venture?”
Case Study 1:
Leading investment company Al Faisaliah Group distributes electronic products in Saudi Arabia through its subsidiary Modern Electronics. A review of business opportunities had suggested that the company should become more widely involved in the retailing of consumer electronics, and so IMES was called in to carry out a feasibility study for the proposed venture, examining several alternative models, with an ‘electronics megastore’ the company’s initially preferred option.
The IMES team visited the Kingdom’s main commercial centres (Riyadh, Jeddah, Dammam) and interviewed a cross-section of over 30 key electronics market participants such as importers, distributors and retailers of different sizes. The insights obtained from them were fed into several alternative scenarios, such as a chain of smaller stores or a small number of megastores, in order to estimate potential Return On Investment.
The conclusion of the study was that the existing intense competition for business was resulting in low net margins for retailers, and that this was likely to become even worse with several new entrants already in preparation. Under the circumstances, it was highly unlikely that a venture into the sector could meet the client’s internal ROI requirements. The client was advised to drop the idea, which it did.
Case Study 2:
A member of the Saudi Royal family wished to contribute to the country’s development by building a private hospital. However, there remained a number of key questions such as the optimum location (Jeddah, Riyadh etc.), the services to be offered (e.g. general medicine, cardiac specialisation etc.) and the optimum size (number of beds). Advisers approached IMES to conduct a feasibility study.
The IMES consultants began by mapping current hospital provision in the major cities. Detailed statistical analysis was then conducted to determine the frequency of different types of medical intervention and compare these with availability. Finally, interviews were held with healthcare professionals and the Ministry of Health to obtain views on the gap between available and required coverage.
It was initially concluded that Riyadh was the preferred location from a feasibility perspective, although for external reasons the client then lent towards Jeddah. Working within this parameter, IMES was able to recommend a 150 bed general surgical and medical facility with additional specialisations in orthopaedics and rehabilitation therapy.
“How do we turn this idea into reality?”
Case Study 1:
Saudi Economic Development Company (SEDCO) determined the need to invest in a cash generating business to complement its holdings in long-term growth areas such as real estate. With IMES’ help, the company generated a long-list of 11 possible businesses for investment. IMES then undertook pre-feasibility studies into all 11 areas, eliminating five, before carrying out feasibility studies on the remaining six. It was concluded that an entry into the retail pharmacy sector most closely matched SEDCO’s requirements. IMES was then asked to prepare a business plan for entering the retail pharmacy market. Building on information collected during the feasibility study with additional field research, IMES defined realistic financial objectives for the proposed pharmacy chain and described how these could be realised in terms of number and location of stores, operational requirements, branding and USP etc. Each element of the plan was carefully costed and forecast financial statements were prepared. Scenarios for ‘likely case’, ‘best case’ and ‘worst case’ were submitted. The plan was presented to and discussed in depth with SEDCO’s executive committee. Convinced of the merits, SEDCO decided to proceed with the plan. However, rather than develop the business from scratch, SEDCO approached the owners of the Al Nahdi pharmacy chain (identified during research as among the most professionally run in the Kingdom) and acquired a 50% shareholding.
Case Study 2:
A group of Arab investors identified the worldwide growth in health spas as a potential area for investment. Both for cultural reasons and in order to diversify their holdings it was felt that a European location was preferred for the planned venture, and initial analysis by IMES suggested targeting London. IMES was then commissioned to develop the business plan. We began with a competitive analysis of existing health spas in the city, noting their exact locations and the range of treatments offered. Comparison of this information with international trends in spas enabled us to recommend both a location and service range for the new spa, even down to identification of a preferred street. A full plan for realisation of the spa was then developed, covering details such as the size, facilities, customer capacity, range of services, staffing requirements, USP, etc. as well as a critical path analysis for the spas construction and launch, with recommendations for specific contractors. All of IMES’ recommendations were accepted by the clients. Unfortunately, in light of terrorist attacks the decision was taken to put the project on hold.
“How can our marketing and sales functions work more effectively?”
Case study 1:
United Industries Company (UIC) in Kuwait was concerned at under-performance by its loss-making subsidiary United Fisheries of Kuwait (UFK), a company active in the catching, purchasing, processing and marketing of shrimp and fish.
Over a period of several weeks, the IMES team conducted an audit of each of the four major aspects of UFK’s operation. This diagnostic exercise identified both positives and negatives, with the latter further divided according to whether they were within UFK’s control or not. A significant number of controllable negatives were identified.
A Priority Area Action Plan was then developed with UFK management for addressing these controllable negatives (i.e. areas of weak performance). These included:
- Securing supply to reduce risk
- Widespread revision of the product range, and in particular a focus on higher margin items
- Restructuring of management, and replacement of individuals in certain key positions
- Introduction of new Management Information Systems and controls.
IMES then provided direct support to the implementation of several of the recommendation in the marketing and sales area. In addition, we assisted in other areas, in particular by identifying an experienced change management professional to manage the process on a short-term contract. Within a year, UFK returned to profitability and has since been successfully divested.
Case study 2:
Saudi Arabia’s Dallah Group was unhappy with the declining performance of its fast-food chain Express Shish Kebab (ESK). IMES was asked to assist.
The approach adopted was to benchmark ESK against a selection of competitive fast-food chains across a range of criteria range from the quantifiable (e.g. sales per outlet) through other factors such as outlet location and on to ‘softer’ measures such as store appearance. This exercise both confirmed the degree of ESK’s underperformance and identified some of the key reasons for it.
Based on the findings of the diagnostic exercise, a Priority Area Action Plan was developed, focused on re-positioning ESK and improving execution of the basics (product quality and service). Responsibility for implementation of the plan was taken on by new management for the chain in coordination with Dallah’s in-house training department.
“Independent assessment of a company’s future prospects to support the sale of shares”
Case study 1:
Al Akhawain, one of the largest companies in Saudi Arabia’s poultry sector, appointed SAMBA Financial Group as lead manager for its IPO. SAMBA in turn asked IMES to act as Market Consultant for the transaction. The task was to describe and analyse the Saudi poultry market, and most importantly define Al Akhawain’s current status and future prospects within it.
IMES researched the market through both analysis of published data and a series of interviews with active market participants (importers, local suppliers, retailers). Particular emphasis was placed on the market segmentation, since Al-Akhawain is primarily active in chilled chicken, not the bulk business of frozen chicken. Unusually, Al-Akhawain is vertically integrated and makes the majority of sales through its own stores. An additional layer of complexity was added by the need to take into account the likely impact of any possible outbreak of the H5N1 bird flu virus. All of these factors needed to be taken into account.
The study, covering all the necessary requirements, was completed within the required time frame and minor queries raised by the Capital Market Authority were addressed. IMES has since worked on several other IPO’s with SAMBA Financial Group.
Case study 2:
Jarir Group, consisting of Jarir Bookstores and Jarir Marketing, a Saudi market leader in bookstores and school and office supplies, wished to make a private placement of shares in order to help fund its expansion both in the Kingdom and outside. In support of this, IMES was commissioned to provide independent data on these sectors in Saudi Arabia, Egypt and the United Arab Emirates, and assess Jarir’s potential for success in each of these markets.
Field research was undertaken in all three countries. The task was complicated by the need to consider both the retail market and the wholesale market for the target products. Nevertheless, opportunities were identified in all three markets. This data and information was used as the basis for a successful private placement.
Founded in London in 1972, the company originally known as International Marketing and Economic Services was the brainchild of Don Moore, a management consultant with extensive experience in both the private sector and with international agencies.