Moderna Textiles 2010

Case Notes Prepared by: Dr. Victor Sohmen

Case Authors: Marina Apaydin, Nada El Marsafy,
Mohamed El Tannir, Ali Khadr, and Marina Zikry

A.

Case Abstract

Moderna Textiles (www.newmoderna-eg.com) is a Syrian-origin, century-old

company started by the Kabbani family. Its factory located in Egypt is equipped with
fully automated jacquard, dobby and velvet looms that are part of an efficient and
high-quality production process. The company, under the leadership of Marwan
Kabbani, Sales and Marketing Director, is planning to expand abroad into Syria and
Jordan, as well as to update and improve the existing outlets and factory. Moderna
and all its competitors lie in the high-end segment, providing high-quality textiles to
high-income families and luxury hotels. Most of the companies in this segment
manufacture, promote, and sell their products without intermediaries.

B.

Vision Statement (Actual)

Moderna Textiles seeks to be a high-quality, higher-end industrial textile producer at

competitive prices in the Middle Eastern market.

C.

Mission Statement (Actual)

Moderna Textiles is a high-quality producer of jacquard, dobby, and velvet textile

products, seeking expansion into Syria and Jordan from its present manufacturing
and marketing base in Egypt.

Mission Statement (Proposed)

Moderna Textiles with its skilled workforce (9) is a high-quality (4) producer of
industrial and home usage textiles (2) directly targeted without intermediaries (6), to
high-income customers (1) in the Middle East (3, 5) who value quality, prestige, and
reliability (8), at reasonable prices well below that of European imports (8) without
compromising our century-old reputation for high quality (9).
1.
2.
3.
4.
5.
6.
7.
8.
9.

Customer
Products or services
Markets
Technology
Concern for survival, profitability, and growth
Philosophy
Self-concept
Concern for public image
Concern for employees

D.

External Audit

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CPM Competitive Profile Matrix

The Competitive Profile Matrix (CPM) identifies a firms major competitor(s) and its
particular strengths and weaknesses in relation to the firms strategic position.
Modernas relative strengths and weaknesses based on the case details are portrayed
in the weighted scores. Wardas weighted scores are educated estimates based on its
aggressive marketing posture, low price advantage, and international expansion
mode. Overall, it is seen that Warda would be a serious competitor to Moderna
unless the latter eliminates its weak areas, capitalizes on its strengths and
opportunities, and embarks on a market expansion drive as a price leader with a lowcost advantage.

Critical Success Factors

Weight

Moderna
Weighted
Rating
Score

Warda*
Weighted
Rating
Score

Price Competitiveness

0.14

0.42

0.28

Global Expansion

0.03

0.03

0.12

Organization/Management

0.07

0.21

0.14

Technology

0.09

0.27

0.18

Product Lines

0.06

0.12

0.24

Customer Loyalty

0.08

0.24

0.16

Market Share

0.12

0.36

0.48

Advertising

0.06

0.12

0.18

Product Quality

0.13

0.52

0.13

Product Image

0.12

0.48

0.24

Financial Position

0.10

0.40

0.20

Total
1.00
3.17
2.35
*Other direct competitors to Moderna also operate without intermediaries, and target
high-end customers with quality fabrics; however, none of them are expressly
identified in the case.
Opportunities
1. There is continued demand for high-quality industrial and high-income home
fabrics such as curtains and upholstery
2. The existing prices for European imports of upholstery and curtains into the
Middle East are much higher than the prices for similar products by Moderna
3. Prices in Jordan are much higher for the same quality products as in Egypt,
which is Modernas manufacturing and distribution base
4. Syria is as labor-intensive as Egypt, the original manufacturing base of
Moderna
5. Potential Syrian customers place high value on quality

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6. The Jordanian government encourages exports to U.S. firms through QIZ and
FTA
7. The textile industry in Syria accounts for 30 percent of industrial employment
8. The industry in Egypt constitutes 25 percent of the countrys non-oil exports
9. The textile industry in Jordan is focused on apparel, and imports upholstery
10. There is scope for expansion of the business and for improving production
efficiency
Threats
1. Global economic conditions are worsening
2. Regional geopolitical instabilities prevail in Jordan and Syria
3. There is real risk of imitations and trademark violations due to slack copyright
laws in Syria
4. Substandard factories exist for local manufacture in Syria
5. There is serious competition from Warda, an expanding Lebanese multinational textile manufacturer
6. There is competitive threat of economical production and export by China and
India
7. Italy is entering the luxury textile segment with high pricing
8. There is a trend towards modern fabrics, rather than classic, in Jordan and
Syria
9. Warda has already captured high-profile U.S. customers (Target, Liz
Claiborne, JC Penney, etc.)
10. Eastern European nations are poised to compete in the high-end textiles
market
External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and
evaluate economic, social, cultural, demographic, environmental, political,
governmental, legal, technological, and competitive information. The socio-political
environment of Jordon and Syria are portrayed as somewhat unstable and this is a
challenge to expansion plans by Moderna into these otherwise promising markets
from the companys present moorings in Egypt, which appears to approach
saturation for the high-income segment.
Key External Factors

Weight

Rating

Weighted
Score

0.08

0.24

0.05

0.10

0.04

0.12

Opportunities
1. There is continued demand for high-quality
industrial and high-income home fabrics such as
curtains and upholstery
2. The existing prices for European imports of
upholstery and curtains into the Middle East are
much higher than the prices for similar products by
Moderna
3. Prices in Jordan are much higher for the same
quality products as in Egypt, which is Modernas
manufacturing and distribution base

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4. Syria is as labor-intensive as Egypt, the original

manufacturing base of Moderna

0.03

0.03

5. Potential Syrian customers place high value on

quality

0.05

0.15

6. The Jordanian government encourages exports to

U.S. firms through QIZ and FTA

0.07

0.14

7. The textile industry in Syria accounts for 30

percent of industrial employment

0.04

0.08

8. The textile industry in Egypt constitutes 25

percent of the countrys non-oil exports

0.06

0.24

9. The textile industry in Jordan is focused on

apparel, and also imports upholstery

0.03

0.09

10. There is scope for expansion of the business and

for improving production efficiency

0.10

0.40

0.03

0.06

2. Regional geopolitical instabilities prevail in Jordan

and Syria

0.05

0.15

3. There is real risk of imitations and trademark

violations due to slack copyright laws in Syria

0.05

0.10

4. Substandard factories exist for local manufacture

in Syria

0.04

0.08

0.08

0.32

0.08

0.16

7. Italy is entering the luxury textile segment with

high pricing.

0.03

0.06

8. There is a trend towards modern fabrics, rather

than classic and traditional, in Jordan and Syria

0.04

0.12

9. Warda has already captured high-profile U.S.

customers (Target, Liz Claiborne, JC Penney, etc.)

0.03

0.06

10. Eastern European nations are poised to compete

in the high-end textiles market

0.02

0.02

Total

1.00

Threats
1. Global economic conditions are worsening

5. There is serious competition from Warda, an

expanding Lebanese multinational textile
manufacturer
6. There is competitive threat of economical
production and export by China and India

2.72

The average total weighted score is 2.5. A total weighted score of 4.0 indicates that
an organization is responding in an outstanding way to existing opportunities and
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threats in its industry. In other words, the firms strategies effectively take advantage
of existing opportunities and minimize the potential adverse effects of external
threats. A total score of 1.0 indicates that the firms strategies are not capitalizing on
opportunities or avoiding external threats. The total weighted score of 2.72 suggests
that Moderna is aware of the opportunities and threats it faces, and has embarked on
a serious review of its potential for growth, its capabilities, and its limitations.
However, the response is still tentative, and firm action is needed.
Product Positioning Matrix
After markets have been segmented so that a firm can target particular customer
groups, the next step is to find out what customers want and expect. A serious
mistake is to assume that the firms know what customers want and expect.
Countless research studies reveal large differences between how customers define
service, and how producers view services. Many firms have become successful by
filling the gap between what producers see, and customers perceive, as good
service. Product positioning entails developing schematic representations that reflect
how a firms products or services compare to their competitors regarding dimensions
most important to success in the industry.
Two such matrices are presented below for Moderna and its rival, Warda.

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Positioning Matrix for Price and Product Image

Product Image
(High)

Moderna

Price (low)

Price (High)

Warda

Product Image
(Low)

As depicted in the Product Positioning Matrix above for Price vs. Product Image,
Moderna has an advantage over Warda in terms of product image, as their products
are reputed for traditional and classic designs, quality, reliability, and direct access
without intermediaries. For Warda, its low-cost production in China does not
guarantee quality which has been the hallmark of Modernas products. Further,
Wardas products are sold at high prices to harvest high profit margins through
transatlantic sales to customers in the United States. Even allowing for distribution
and logistics costs, Warda has a price advantage over Moderna as a result of
garnering high profit margins, which Moderna would like to emulate without
compromising on quality. The challenge for Moderna is to relocate its manufacturing
base to countries such as China to effect low-cost production, yet maintain its
enviable product image at reasonable costs in order to enable market penetration
and expansion to Europe and North America.

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Product Positioning Matrix for Price and Quality

Quality (High)

Moderna

Price (low)

Price (High)

Warda

Quality (Low)

It can be seen from the above Product Positioning Matrix for Price vs. Quality, that
Moderna has an advantage over Warda, as their products are traditionally focused on
high quality to meet discerning customer needs in the high-income market. Warda,
on the other hand, is able to produce at very low cost, in labor- and technologyintensive countries such as China, and sell at very high profit margins to customers
in the United States. The challenge for Moderna is to relocate its manufacturing base
to countries such as China to effect low-cost production, yet maintain reasonable
prices for the premium market segments in Egypt, Syria, and Jordan. This would also
help them to compete favorably against Italy and other European countries which
sell at higher prices for similar products that Moderna markets in the Middle East.

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E.

Internal Audit
Strengths
1.
2.
3.
4.
5.
6.
7.

Moderna is a well-established company with 70 years experience

The company has a stable and well-trained workforce of 150
Sales are made directly to customers without intermediaries
Customers include five-star hotels and prominent personalities
It is one of the leading manufacturers of textiles, upholstery, and curtains
It is a price leader producing quality fabrics at a quarter of prices in Jordan
It enjoys unique strength in French-style fabrics, especially Damasks

Weaknesses
1. Production efficiency needs to be improved to combat competition
2. Current market is limited to Egypt with over 50 percent living below the
poverty line
3. Moderna, despite its name, is a traditional and classic textile manufacturer
4. The company caters only to premium customers, neglecting middle- and lowincome customers
5. Moderna is narrowly rooted in the Middle Eastern culture and economy
6. The company may be lacking in possible intermediaries to expand the market
7. Modernas production costs are not competitive with Warda
Financial Information (Income Statement only)
Summary Income & Expenditure of Moderna

(Million US$)

Sales

13.952

Cost of goods sold

-5.581

Gross Profit

8.371

Administrative Expenses

-2.958

Exhibitions & Advertising

-0.175

Utilities

-0.089

Net Income

5.148

Profit Margins %
Gross Margin %

60%

Net Profit Margin %

37%

It is evident from the Income Statement results of Moderna that net profit is at a
healthy 37 percent due to conservative administrative, advertising, and utilities
expenditures. Distribution channels have also been conservative, with direct sales to
customers without intermediaries. However, with market expansion accompanied by
production and distribution efficiencies on the cards, these expenses can be expected
to increase considerably. To maintain a healthy net profit margin, Moderna needs to
increase sales by expanding its market geographically in the Middle East, Europe,
and in the USA, and across market segments to include middle- and lower-income
customers, while continuing to keep prices attractive.
Internal Factor Evaluation (IFE) Matrix
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A summary step in conducting an internal strategic-management analysis is to

construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool
summarizes and evaluates the major strengths and weaknesses in the functional
areas of a business, and it also provides a basis for identifying and evaluating
relationships among them.
Key Internal Factors

Weight

Rating

Weighted
Score

1. Moderna is a well-established company with 70

years experience
2. The company has a stable and well-trained
workforce of 150
3. Sales are made directly to customers without
intermediaries
4. Customers include five-star hotels and
prominent personalities

0.12

0.48

0.06

0.18

0.06

0.12

0.08

0.24

5. It is one of the leading manufacturers of

textiles, upholstery, and curtains
6. It is a price leader producing quality fabrics at
a quarter of the prices in Jordan
7. It enjoys unique strength in French-style
fabrics, especially Damasks
Weaknesses

0.09

0.36

0.10

0.40

0.09

0.18

1. Production efficiency needs to be improved to

combat competition
2. Current market is limited to Egypt with over 50
percent living below the poverty line
3. Moderna, despite its name, is a traditional and
classic textile manufacturer
4. The company caters only to premium
customers, neglecting middle- and low-income
customers
5. Moderna is narrowly rooted in the Middle
Eastern culture and economy
6. The company may be lacking in possible
intermediaries to expand the market
7. Modernas production costs are not competitive
with its main competitor Warda
Total

0.10

0.40

0.04

0.08

0.03

0.03

0.06

0.12

0.04

0.04

0.08

0.24

0.05

0.20

Strengths

1.00

3.07

Regardless of how many factors are included in an IFE Matrix, the total weighted
score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5.
Total weighted scores well below 2.5 characterize organizations that are weak
internally, whereas scores significantly above 2.5 indicate a strong internal position.
In light of this, Modernas position with a score of 3.07 is stable and even strong
within its geographical market limitations which are confined largely to Egypt.

F.

SWOT Strategies
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Any
organization,
whether
military,
product-oriented,
service-oriented,
governmental, or even athletic, must develop and execute good strategies to win. A
good offense without a good defense, or vice versa, usually leads to defeat.
Developing strategies that use strengths to capitalize on opportunities could be
considered an offense, whereas strategies designed to improve upon weaknesses
while avoiding threats could be termed defensive. Taking into consideration the
above identified External Audit of the Opportunities and Threats (OT) and the
Internal Audit of Strengths and Weaknesses (ST), a SWOT Matrix can be compiled
and is presented below as: SO (strengths-opportunities) Strategies; WO
(weaknesses-opportunities) Strategies; ST (strengths-threats) Strategies; and, WT
(weaknesses-threats) Strategies. Matching key external and internal factors is the
most difficult part of developing a SWOT Matrix, requiring good judgment and
there is no one best set of matches.

Strengths
1. Moderna is a wellestablished company
with 70 years
experience
2. The company has a
stable and well-trained
workforce of 150
3. Sales are made directly
to customers without
intermediaries
4. Customers include fivestar hotels and
prominent personalities
5. It is one of the leading
manufacturers of
textiles, upholstery, and
curtains
6. It is a price leader
producing quality
fabrics at a quarter of
the prices in Jordan
7. It enjoys unique
strength in French-style
fabrics, especially
Damasks

Opportunities
1. There is continued
demand for high-quality
industrial and highincome home fabrics
such as curtains and
upholstery

S-O Strategies
1. Promote Modernas
high reputation over 70
years as a strength to
enhance customer
awareness of its
products

Weaknesses
1. Production efficiency
needs to be improved to
combat competition
2. Current market is
limited to Egypt with
over 50 percent living
below the poverty line
3. Moderna, despite its
name, is a traditional
and classic textile
manufacturer
4. The company caters
only to premium
customers, neglecting
middle- and low-income
customers
5. Moderna is narrowly
rooted in the Middle
Eastern culture and
economy
6. The company may be
lacking in possible
intermediaries to
expand the market
7. Modernas production
costs are not
competitive with its
main competitor Warda
W-O Strategies
1. Market expansion,
particularly within the
familiar Egyptian base,
could widen the scope
to target all three
market segments

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2. The existing prices for

European imports of
upholstery and curtains
into the Middle East are
much higher than the
prices for similar
products by Moderna
3. Prices in Jordan are
much higher for the
same quality products
as in Egypt, which is
Modernas
manufacturing and
distribution base
4. Syria is as laborintensive as Egypt, the
original manufacturing
base of Moderna
5. Potential Syrian
customers place high
value on quality
6. The Jordanian
government encourages
exports to U.S. firms
through QIZ and FTA
7. The textile industry in
Syria accounts for 30
percent of industrial
employment.
8. The textile industry in
Egypt constitutes 25
percent of the countrys
non-oil exports
9. The textile industry in
Jordan is focused on
apparel, and imports
upholstery
10.
There is scope for
expansion of the
business and for
improving production
efficiency
Threats
1. Global economic
conditions are
worsening
2. Regional geopolitical
instabilities prevail in
Jordan and Syria
3. There is real risk of
imitations and
trademark violations
due to slack copyright

2. Continue to be price
leader in each market
segment
geographically and
structurally
3. Establish and focus
manufacturing of high
quality fabrics to
Syrians who value
quality, and have a
labor-intensive,
industrial workforce
4. Establish manufacturing
and overseas
distribution presence in
Jordan to benefit from
the Jordanian
governments liberal
policies for exports to
U.S. firms through QIZ
and FTA (Free Trade
Zones)

premium, middle-class,
and low-income
especially as more than
50 percent of the
Egyptian population is
below the poverty line
2. Moderna could
advertise its name to
market modern fabrics
that are increasing in
demand in the Middle
East
3. Moderna could use
intermediaries to
expand the local
Egyptian market, as
well as regional and
overseas markets
4. Production costs need
to be minimized
consistent with quality
and competitive pricing
by outsourcing fabrics
for the lower-income
customer base, to
China

S-T Strategies
1. To combat instability in
global economic
conditions and political
situation in Jordan and
Syria, establish a small
but skilled and stable
labor force composed
mostly of locals in
these countries
2. Due to the risk of cheap

W-T Strategies
1. Production
methodologies need to
be revamped in tune
with modern technology
2. Use only trustworthy
manufacturing
locations,
intermediaries, and
legal environments for
manufacture,

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laws in Syria
4. Untrustworthy factories
exist for local
manufacture in Syria
5. There is serious
competition from
Warda, an expanding
Lebanese multinational
textile manufacturer
6. There is competitive
threat of economical
production and export
by China and India
7. Italy is entering the
luxury textile segment
with high pricing
8. There is a trend
towards modern fabrics,
rather than classic and
traditional, in Jordan
and Syria
9. Warda has already
captured high-profile
U.S. customers (Target,
Liz Claiborne, JC Penny,
etc.)
10.
Eastern European
nations are poised to
compete in the highend textiles market

duplicates, slack
trademark and
copyright laws, and
untrustworthy factories
in Syria, avoid
manufacture of highquality products in
Syria, and do not use
intermediaries in Syria
by selling directly to
premium customers
3. Target high-profile
customers in Europe
and U.S., to compete
with Warda
4. Export high-quality
fabrics at lower prices
to Europe to compete
with similar products
sold at much higher
prices from Italy and
other European
countries

distribution, and
marketing
3. Advertise Modernas
unique strengths
widely, especially in
new markets to
minimize imitation
4. Consolidate Modernas
position in at least
Egypt, Jordan, and
Syria, before venturing
to Europe or U.S.

SO Strategies use a firms internal strengths to take advantage of external

opportunities. Moderna can capitalize on its high reputation for stability as a price
leader with high-quality products, and make concerted efforts to expand into
overseas markets.
WO Strategies aim at improving internal weaknesses by taking advantage of
external opportunities. Consistent with streamlining production costs and efficiencies,
Moderna could diversify and expand, starting from within Egypt to include all three
market segments (Al Azhar, Wekalet El Balah, and Premium), using efficient
intermediaries.
ST Strategies use a firms strengths to avoid or reduce the impact of external
threats. Moderna could use its strength in selling high-quality fabrics at relatively
lower prices to expand into Europe and within the Middle East against competitors
from Italy and other parts of Europe. Production and distribution in Syria needs to
have checks and balances to protect against infringement of trademarks and
copyrights, and from cheap imitations. Direct marketing to genuine customers, thus
avoiding intermediaries, could be ideal.
WT Strategies are defensive tactics directed at reducing internal weaknesses and
avoiding external threats. Moderna could take a defensive stance by consolidating its
position in the home turf (Egypt), whilst obviating illegal duplication and
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infringement of trademark laws and copyright violations through legal, political, and
strategic efforts.

G.

SPACE Matrix

The Strategic Position and Action Evaluation (SPACE) Matrix indicates whether
aggressive, conservative, defensive, or competitive strategies are most appropriate
for a given organization. The axes of the SPACE Matrix represent two internal
dimensions (Financial Strength [FS] and Competitive Advantage [CA]) and two
external dimensions (Environmental Stability [ES] and Industry Strength [IS]).
These four factors are perhaps the most important determinants of an organizations
overall strategic position.

FS
Conservative

Aggressive

+7
+6
+5
+4
+3
+2
+1

CA

IS
-7

-6

-5

-4

-3

-2

-1

+1

+2

+3

+4

+5

+6

+7

-1

Competitive

-2
-3
-4
-5
-6

MODERNA

-7

Defensive

Financial Strength (FS)

Return on Investment
Leverage
Liquidity
Working Capital
Cash Flow

ES

4
5
4
4
5

Environmental Stability (ES)

Unemployment
Technological Changes
Price Elasticity of Demand
Competitive Pressure
Barriers to Entry
Price range of competing products

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-4
-4
-3
-4
-3
-4

Financial Strength (FS) Average

4.5

Competitive Advantage (CA)

Market Share
Product Quality
Customer Loyalty
Competitions Capacity Utilization
Technological Know-How
Product Life Cycle

-1
-1
-3
-3
-4
-3

Competitive Advantage (CA)

Average
Y-axis: FS + ES = 4.5 + (-3.6)
X-axis: CA + IS = (-2.5) + (3.9)

-2.5

Environmental Stability (ES) Average

Industry Strength (IS)
Growth Potential
Financial Stability
Ease of Market Entry
Resource Utilization
Profit Potential
Technological know-how
Productivity, capacity utilization
Industry Strength (IS) Average

= - 0.9
= +1.4

The directional vector of the SPACE Matrix above indicates that Moderna is in a highgrowth and reasonably stable industry. According to the results of the SPACE Matrix,
it is recommended that Moderna embark on a Competitive Strategy that balances all
extant external and internal realities impinging on the company. This could involve
backward integration (acquiring raw material for production of textiles); forward
integration (taking ownership of distribution channels and nodes such as warehouses
and retail store chains); or, horizontal integration (acquiring similar firms towards
oligopoly or monopoly). It appears from the overall strategic thrust of the various
analyses including the CPM, EFE, IFE, SWOT, Financial Information, and Product
Positioning Matrix, that Moderna is likely to adopt a backward integration strategy to
acquire raw materials for manufacture at competitive prices, rather than horizontal
or forward integration. Moderna will also need to embark on a market penetration
and market development strategy, together with product development to meet
quality, price, and demand for various market segments it could target in the Middle
East and overseas.

H.

Grand Strategy Matrix

All organizations can be positioned in one of the Grand Strategy Matrixs four
strategy quadrants. The Grand Strategy Matrix is based on two evaluative
dimensions: competitive position and market (industry) growth. Any industry whose
annual growth in sales exceeds 5 percent could be considered to have rapid growth.
Appropriate strategies for an organization to consider are listed in sequential order of
attractiveness in each quadrant of the matrix. Firms located in Quadrant I of the
Grand Strategy Matrix are in an excellent strategic position. For these firms,
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-3.6

6
3
3
3
5
4
3
3.9

continued concentration on current markets (market penetration and market

development) and products (product development) is an appropriate strategy (see
SPACE Matrix above). It is unwise for a Quadrant I firm to shift notably from its
established competitive advantage(s). When a Quadrant I organization has excessive
resources, then backward, forward, or horizontal integration may be effective
strategies. When a Quadrant I firm is too heavily committed to a single product, then
related diversification may reduce the risks associated with a narrow product line.
Quadrant I firms can afford to take advantage of external opportunities in several
areas. They can take risks aggressively when necessary.

QuadrantII

Rapid Market
Growth

Quadrant I

MODERNA

Strong
Competitive
Position

Weak
Competitive
Position

Quadrant III

Quadrant IV
Slow Market Growth

1.
2.
3.
4.
5.
6.
7.

Market development
Market penetration
Product development
Backward integration
Related diversification
Forward integration
Horizontal integration

According to its Quadrant I location in the Grand Matrix, Moderna is in a strong

competitive position, and underscores the competitive stance reflected in the SPACE
Matrix, with the possible addition of Related Diversification by branching into various
strategic business units located in various countries to optimize production, market
expansion, product diversification, and overall profits. When a Quadrant I firm is too
heavily committed to a single product, then related diversification may reduce the
risks associated with a narrow product line. Quadrant I firms can afford to take
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advantage of external opportunities

aggressively when necessary.

I.

in several areas. They can take

risks

The Quantitative Strategic Planning Matrix (QSPM)

The only analytical technique in the literature designed to determine the relative
attractiveness of feasible alternative actions is the Quantitative Strategic Planning
Matrix (QSPM), which comprises Stage 3 of the strategy-formulation analytical
framework. This technique objectively indicates which alternative strategies are best.
The QSPM uses input from Stage 1 analyses and matching results from Stage 2
analyses to decide objectively among alternative strategies. That is, the EFE Matrix,
IFE Matrix, and Competitive Profile Matrix that make up Stage 1, coupled with the
SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix that
make up Stage 2, provide the needed information for setting up the QSPM (Stage 3).
The QSPM is a tool that allows strategists to evaluate alternative strategies
objectively, based on previously identified external and internal critical success
factors. Like other strategy-formulation analytical tools, the QSPM requires good
intuitive judgment.
The left column of a QSPM consists of key external and internal factors (from Stage
1), and the top row consists of feasible alternative strategies (from Stage 2).
Specifically, the left column of a QSPM consists of information obtained directly from
the EFE Matrix and IFE Matrix. In a column adjacent to the critical success factors,
the respective weights received by each factor in the EFE Matrix and the IFE Matrix
are recorded. The top row of a QSPM consists of alternative strategies derived from
the SWOT Matrix, SPACE Matrix, and Grand Strategy Matrix. These matching tools
usually generate similar feasible alternatives. However, not every strategy suggested
by the matching techniques has to be evaluated in a QSPM. Strategists should use
good intuitive judgment in selecting strategies to include in a QSPM.

Strategy 1
Expand
regionally
into all
three
market
segments:
premium,
middleclass, lowincome.

Strategy 2
Consolidate
Modernas
position in
Egypt,
Jordan,
and Syria,
before
venturing
to Europe
or U.S.

Copyright 2011 Pearson Education Limited

Strategy 3
Compete
with
Warda by
targeting
highprofile
customers
in Europe
and U.S.

Key Factors
Opportunities
1. There is continued demand for
high-quality industrial and highincome home fabrics such as
curtains and upholstery
2. The existing prices for European
imports of upholstery and
curtains into the Middle East are
much higher than the prices for
similar products by Moderna
3. Prices in Jordan are much higher
for the same quality products as
in Egypt, which is Modernas
manufacturing and distribution
base
4. Syria is as labor-intensive as
Egypt, the original
manufacturing base of Moderna
5. Potential Syrian customers place
high value on quality
6. The Jordanian government
encourages exports to US firms
through QIZ and FTA
7. The textile industry in Syria
accounts for 30 percent of
industrial employment
8. The textile industry in Egypt
constitutes 25 percent of the
countrys non-oil exports
9. The textile industry in Jordan is
focused on apparel, and imports
upholstery
10.
There is scope for expansion
of
the
business
and
for
improving production efficiency
Threats
1. Global economic conditions are
worsening
2. Regional geopolitical instabilities
prevail in Jordan and Syria
3. There is real risk of imitations
and trademark violations due to
slack copyright laws in Syria
4. Untrustworthy factories exist for
local manufacture in Syria
5. There is serious competition
from Warda, an expanding
Lebanese multinational textile
manufacturer

Weight

AS

TAS

AS

TAS

AS

TAS

0.08

0.08

0.24

0.32

0.05

0.05

0.15

0.15

0.04

0.08

0.16

0.04

0.03

0.06

0.09

0.03

0.05

0.10

0.15

0.05

0.07

0.07

0.21

0.28

0.04

0.08

0.12

0.04

0.06

0.24

0.18

0.06

0.03

0.09

0.09

0.03

0.10

0.40

0.40

0.40

0.03

--

--

--

--

--

--

0.05

--

--

--

--

--

--

0.05

--

--

--

--

--

--

0.04

--

--

--

--

--

--

0.08

0.16

0.08

0.32

Copyright 2011 Pearson Education Limited

6. There is competitive threat of

economical production and
export by China and India
7. Italy is entering the luxury
textile segment with high pricing
8. There is a trend towards modern
fabrics, rather than classic and
traditional, in Jordan and Syria
9. Warda has already captured
high-profile U.S. customers
(Target, Liz Claiborne, JC Penny,
etc.)
10.
Eastern European nations
are poised to compete in the
high-end textiles market
TOTAL
Strengths
1. Moderna is a well-established
company with 70 years
experience
2. The company has a stable and
well-trained workforce of 150
3. Sales are made directly to
customers without
intermediaries
4. Customers include five-star
hotels and prominent
personalities
5. It is one of the leading
manufacturers of textiles,
upholstery, and curtains
6. It is a price leader producing
quality fabrics at a quarter of the
prices in Jordan
7. It enjoys unique strength in
French-style fabrics, especially
Damasks
Weaknesses
1. Production efficiency needs to be
improved to combat competition
2. Current market is limited to
Egypt with over 50 percent living
below the poverty line
3. Moderna, despite its name, is a
traditional and classic textile
manufacturer
4. The company caters only to
premium customers, neglecting
middle- and low-income
customers
5. Moderna is narrowly rooted in

0.08

0.16

0.16

0.24

0.03

0.06

0.09

0.09

0.04

0.12

0.12

0.12

0.03

0.03

0.06

0.12

0.02

0.06

0.06

0.04

1.0

1.84

2.36

2.33

0.12

0.48

0.48

0.48

0.06

0.18

0.12

0.12

0.06

0.12

0.12

0.12

0.08

--

--

--

--

--

--

0.09

0.27

0.27

0.36

0.10

0.40

0.40

0.30

0.09

0.18

0.27

0.36

0.10

0.10

0.20

0.40

0.04

0.16

0.12

0.04

0.03

--

--

--

--

--

--

0.06

0.06

0.12

0.18

0.04

--

--

--

--

--

--

Copyright 2011 Pearson Education Limited

the Middle Eastern culture and

economy
6. The company may be lacking in
possible intermediaries to
expand the market
7. Modernas production costs are
not competitive with its main
competitor Warda
SUBTOTAL
SUM TOTAL ATTRACTIVENESS
SCORE

J.

0.08

0.32

0.32

0.32

0.05

0.10

0.15

0.20

1.00

2.37
4.21

2.57
4.93

2.88
5.21

Recommendations

Strategy #3: Moderna should compete aggressively with its Lebanese rival, Warda,
targeting high-profile customers in Europe and the U.S. by utilizing its high-quality
image and attractive pricing, with low-cost production based in China, and marketing
through Jordan with the benefit of the QIZ and FTA.

K.

Epilogue

Moderna, a highly-regarded Egyptian textile manufacturer with Syrian roots, has

established a respectable base targeting the premium textile market with some
exclusive brands including the French-style Damasks, as well as Jacquard, Dobby,
and velvet products. Even though Egypt has a historically strong textile industry
blessed with cotton as well as high-quality silk and wool with Egyptian cotton vying
for fame with its pyramids it is haunted by over 50 percent of the population living
below the poverty line. Moderna has thus denied itself a massive low-to-middle
income market where volume of sales at low cost to the consumer would have made
the company a household name in Egypt across the spectrum of the economy.
However, with its well-earned reputation for quality at reasonable prices, Moderna
stands poised to capture opportunities to consolidate its position and expand into
promising arenas where it can penetrate both the Middle Eastern and European
Copyright 2011 Pearson Education Limited

markets as a price leader. Alternatively, or in conjunction with this ambitious

potential, Moderna could also take a page from the success of its Lebanese rival
Warda by seeking to produce at the lowest possible cost in a labor-intensive offshore
country such as China yet maintaining quality standards to safeguard its
reputation. This would yield the necessary economies of scale and a generous
cushion of gross margin. To tackle the complex logistics and tax regime of the
promising, transatlantic U.S. market, the Qualifying Industrial Zone (QIZ) and Free
Trade Agreement (FTA) provisions would be highly facilitative. With a population of
over 260 million, the U.S. market itself is vast and lucrative as demonstrated by
Warda that has already captured high-profile U.S. corporate customers such as Liz
Claiborne, Target, and JC Penney.
Following a multi-pronged analysis using judgment and reasoning coupled with
numerical and graphical outputs, three strategic choices were presented:
(1) Expand regionally into all three market segments: premium, middle-class, lowincome.
(2) Consolidate Modernas position in Egypt, Jordan, and Syria, before venturing to
Europe or U.S.
(3) Compete with Warda by targeting high-profile customers in Europe and the U.S.
According to the comprehensive and decisive Quantitative Strategic Planning Matrix
(QSPM), the third choice, with the highest weighted score of 5.21, has emerged as
the best option among the three promising alternatives. It is therefore recommended
that Moderna embark on expanding its operations overseas to the USA, and in the
process, continue to market high-quality textiles at reasonable prices for the
currently high-priced Middle Eastern and European markets.

Copyright 2011 Pearson Education Limited