This business proposal outlines a training and human resources development venture called Takween that will provide customized training courses to state-owned organizations in Libya.
The proposal conducts a feasibility study that finds a gap between the skills produced by Libya's education system and the skills demanded by the labor market. Takween will aim to bridge this gap by designing and delivering high-quality, certified training programs in areas like English, IT, and business skills.
Takween will target ministries, oil and gas companies, and banks with common training needs. It will differentiate itself by offering free HR assessments and tailored courses. Financial projections estimate Takween will break even within 13 months, achieve a 92% return on investment after 5 years
1. Business Development Proposal
TRAINING AND HR DEVELOPMENT
TAKWEEN
Yousef Hamad
L0009SBSB0913
Submitted in fulfilment of the requirements of the Masters’ degree to the Cardiff
Metropolitan University, for the degree of Master of Business Administration (MBA)
Supervisor: Dr K. V. Shenai
March 2015
3. 2
Contents
Executive Summary....................................................................................................... 3
Chapter 1: Introduction................................................................................................ 5
1.1 Rationale for the business concept......................................................................... 5
1.2 Scenario chosen...................................................................................................... 6
1.3 Aim......................................................................................................................... 6
1.4 Report structure...................................................................................................... 6
Chapter 2: Business Concept........................................................................................ 7
2.1 Mission................................................................................................................... 7
2.2 Vision..................................................................................................................... 8
2.3 Product/Service ...................................................................................................... 8
2.4 Positioning.............................................................................................................. 8
2.5 Name, logo and slogan........................................................................................... 8
2.6 Scale and anticipation of growth............................................................................ 9
Chapter 3: Feasibility Study....................................................................................... 10
3.1 Research methodology......................................................................................... 10
3.2 Market research.................................................................................................... 13
3.3 Industry and market analysis................................................................................ 17
3.4 Organisational feasibility ..................................................................................... 23
3.5 Financial feasibility.............................................................................................. 24
3.6 Resources requirement evaluation ....................................................................... 29
Chapter 4: Strategic Analysis and Business Model.................................................. 30
4.1 Strategic analysis.................................................................................................. 30
4.2 Source of competitive advantage and sustainability............................................ 32
4.3 Strategies selection for success ............................................................................ 34
4.4 Business model..................................................................................................... 36
Chapter 5: Business Plan ............................................................................................ 40
5.1 Overall assessment of the business plan .............................................................. 40
5.2 Business plan schedule......................................................................................... 44
5.3 Discussion of critical success and failure factors................................................. 46
Appendixes ................................................................................................................... 51
References..................................................................................................................... 56
Bibliography................................................................................................................. 61
4. 3
Executive Summary
With adopting the business model canvas, this business to business (B2B) venture will
deliver training service to develop the occupational skills and prepare graduates for the
labour market. Since decades, Libya has been suffering from the low quality and poor
output of education and vocational training institutions those failed in satisfying the
labour market needs and bridging the gap between the produced and demanded
qualification and skills. Takween aspires to contribute in the Libyan human capital
rehabilitation and development programmes, designs, and implements appropriate
training courses those help the state-owned organisations in developing their HR and
narrowing the gap between the people knowledge and the required skills. Takween
emphasises offering high quality service and certified and customised courses delivered
at its premises and customer different locations as well as free HR assessment which
helps in accessing to information and tailoring programmes meet the customer needs.
The feasibility study confirmed the existence of the above mentioned gap in the market
and identified the market and industry attractiveness and consequently identified the
market in that gap. Takween targets to offer its service to a group of state-owned
organisations based in the capital Tripoli and share several common characteristics -
they are ministries, oil and gas companies, and banks. Due to their common problem,
these potential customers demand almost the same product/service, for example
English language, computer and soft skills among other more specific courses. They
also aspire to receive high quality service which is rear in the market. The venture will
steadily grow to become an integrated service provider delivering long term service
agreements (LTSA) and operating couple of the customers’ training centres.
Takween will avoid entering the ‘red ocean’ market which is dominated by the business
to customer (B2C) providers and where a price war exists. Instead, it will adopt the
Porter’s focused differentiation strategy where a differentiated service that is of high
quality and certified and tailored is offered to a focused group of customers from the
public sector. Ansoff strategy could also be promoted later for business growth by
developing a new service to the existing market and/or the existent service to a new
market. Takween will build a sustainable competitive advantage mainly through a set
of values, for instance quality, customisation, certification, videoconferencing (virtual
training), and free HR assessment. It will also deliver a superior value proposition
which is represented in delivering the aforesaid values in one package that is LTSA.
5. 4
Takween will be registered as a private limited liability company that is owned by five
people each owns 20% of shares. Part of the business owners will form the
management team. As some of them used to be seniors in some public and private
training institutions and companies’ HR managers, they understand well the market and
industry. Most of the owners have good social and professional networks and good
relationships with former co-workers in the target sectors.
The financial forecast has been done with a projection for five years. In order to avoid
falling into the chasm between entrepreneurial dreams and reality, the forecasts have
been done based on the worst case scenarios. The firm needs an initial capital of
LD76.2k adequate to run its business for about three months before getting paid. The
business has 51% contribution margin and will generate revenues of LD474.75k in
year-1 which will grow yearly by 10% realising breakeven in month-13, payback in
about three years, and 92% return on investment (ROI) by year-5. As it is a profitability
ration, operating margin or return on revenues will be increasing along the projected
period starting with 1% and reaching 20% in year-5. The preparation for startup will
take minimum 5 weeks, while the first service delivery will take place within 7 weeks
maximum from the venture launching date.
Word count: 11338 words excluding tables, appendixes, and reference and
bibliography lists
6. 5
Chapter 1: Introduction
1.1 Rationale for the business concept
After the Libyan revolution in year 2011, transitional government has embarked on a
comprehensive restructuring of all sectors. Having the appropriate manpower with the
right knowledge and skills is required for such programme. Due to the quantitative
increase of graduates which qualitatively does not meet the labour market demand,
migrants, especially from the neighbour counties, have been acquiring millions of jobs.
These issues are still contributing to raising the unemployment level which is in turn
creating social and economical problems. Consequently, the Libyan transitional
government has announced some rehabilitation programmes to develop its workforce to
meet the reforming dues and job market needs. Training is not just a business, but a
supreme value that contributes to enhancing the human knowledge and skills.
The training business does not require large infrastructure, big inventory, big fleet of
machinery and equipment, and large organisational structure - the factors which reduce
risk, cost, and time and avoid depreciation. Most of the private training providers in
Libya offer business to customer (B2C) rather than business to business (B2B). Apart
from his work for the Oil and Gas and Investment state-owned sectors for more than
two decades and after the revolution 2011/2012, the author joined a volunteering team
that worked for the governmental Capacity Building Unit (CBU). This unit functions to
build up and develop Libya’s human capital through training and development
programmes.
International bodies such as United Nation (UN), European Union (EU), and European
Training Foundation (EFT) have assisted the CBU in promoting training and
developing relevant strategies. The majority of programmes those implemented locally
are training courses in foreign languages, computer, and soft skills. According to UK
Trade and Investment UKTI (2013), the government plans to develop English language
and ICT infrastructure and incorporate them in all sectors as these are core for the
future economic development. Moreover, Porter and Yergin (2006) -through their
empirical study on the Libyan economy- strongly recommended organisations to train
and develop their human capital concentrating on skills, ICT and languages.
7. 6
1.2 Scenario chosen
Based on the above, author believes that developing a ‘New Company Start-up as
Entrepreneur’ of providing training is a good idea, participating in the Libyan human
resource development (HRD), bridging the gap between the supplied and demanded
competencies. Moreover, continual change, transforming economy, and evolving
technology will keep the government and organisations developing and training their
workforces and, as a result, sustaining the training business.
1.3 Aim
This work fundamentally aims to develop and solicit a business opportunity through a
market research to gather appropriate data that are analyzed to generate adequate
information helps in understanding the feasibility of such opportunity and in defining if
there is a gap in the target market and consequently a market in that gap. It also aims to
define the appropriate strategies, target market, potential customers, right
product/service, competition, and proper business model thus the required finance from
partners that releases the business and keeps it running till it breaks even.
1.4 Report structure
Following this chapter, Chapter 2 comes next where the business concept is outlined
for which the author believes that there is an opportunity window including the venture
vision and mission, the proposed service, positioning, and scale/growth anticipation;
Chapter 3 outlines the market research and the feasibility study; Chapter 4 exhibits the
business strategic analysis, competitive advantage sources, and the business model; and
finally Chapter 5 explains the business plan including the project action plan and the
critical success and failure factors.
8. 7
Chapter 2: Business Concept
This B2B venture delivers training to develop the occupational skills and prepare
graduates for the labour market. The firm designs and implements training courses
those help the state-owned organisations in developing their HR and bridge the gap
between education outputs and labour market demand. It emphasises offering quality
service and certified courses delivered at its premises and customer locations.
The firm needs an initial capital of LD76.2k adequate to run its business for about three
months before getting paid. The business has 10% sales growth that realises breakeven
in month 13, payback in about three years, and 92% return on investment (ROI) by year
5. The enterprise targets to contribute to developing the national workforce and
resolving the HR problems. This approach credits the firm and sticks the service into
the government and organisations’ minds.
2.1 Mission
Takween wants to present with integrity high quality training and human capital
solutions to organisations. Takween believes that the human capital is the core of any
development and any civilization.
9. 8
2.2 Vision
To be the top private firm contributes to the national human capital development.
2.3 Product/Service
The venture will fundamentally support customers with resolving their HR problems.
This lies in participating in the customer HR assessment and designing the training and
development programmes so that setting the right course for the right trainee at the
right time and place. The business will accordingly deliver the appropriate courses
those customized to meet the customer needs, and standard courses those are delivered
over the year for all customers. The training will mainly cover (a) general English
language, (b) preparation for IELTS and TOEFL, (c) computer: IC3 and ICDL, (d) soft
and administration skills, (e) banking, management and finance, and (f) technical
courses.
2.4 Positioning
For state-owned institutions, Takween will provide high quality and certified training
courses. Unlike traditional providers, Takween is committed to resolve your HR
problems and bridge the gap between your workforce knowledge and job needs.
Effective service positioning arises in the customer’s mind psychologically and by
understanding how people realize service and brand which both have subjective and
objective features. From the primary market research, the priority attribute is the
quality comprising course’s curricula and effectiveness and trainer knowledge/skills.
The business will have a distinctive positioning as it offers differentiated
product/service represented in high quality, certified and tailored courses with free HR
assessment, but relatively at high prices (Lancaster and Massingham, 2011).
2.5 Name, logo and slogan
This business will be given a trade name of “Takween”
which means, idiomatically, in Arabic ‘Building up
HR’ (Almaany, 2014). The logo comprises the trade
name and a slogan reflecting the importance of
customer’s people and their priority to Takween.
10. 9
2.6 Scale and anticipation of growth
The market research shows that there is an increase demand on the English language,
IELTS, TOEFL, IC3 and ICDL apart from the Labour Ministry special programmes
those comprise English language, computer, health and safety and soft skills. Sales
growth of 10% is anticipated achieving incremental ROI that reaches 92% by year 5.
Some customers, in particular oil and gas operators, have their own training centres
managed by their Human Resources (HR) and Training departments. As the
organisations have embarked on outsourcing their non-core businesses, and with
delivering long term service agreements (LTSA) to the customers, the venture will have
the opportunity to win service contracts of operating some customers’ training centres.
11. 10
Chapter 3: Feasibility Study
3.1 Research methodology
3.1.1 Research problem
Obviously education and training are fundamentals in preparing human for work.
Keeping pace with changing trends and developing technologies in all fields needs
further knowledge and advanced skills and capabilities. For three decades, ambitions
have been suspending on education institutions to strongly provide qualified and skilled
manpower and on organisations to offer more productive job opportunities those are
appropriate for industry needs.
Unfortunately, it has been frustrating, in Libya, that these institutions failed to realise
the society needs and wants, as they could not meet the changing labour market needs
imposed by the massive and fast technological development. This situation obliged the
society to rely on millions of expats which in turn contributed to increasing the
unemployment upto 34% and generated more social problems. The Libyan government
and organisations need to adopt appropriate and effective training and development
programmes that narrow the gap between the human capital knowhow and the job
required skills and competencies.
3.1.1.1 Aim
To ascertain what type of private training business there is a gap for in the Libyan HR
development market.
3.1.1.2 Research objectives
To define the potential customers and the key competitors.
To identify the most insistent training programmes those contribute to achieving the
customer HRD goals and understand the related quantities and prices.
To define the major training attributes aspired by the organisations.
12. 11
3.1.2 Research design
The research starts with reviewing the relevant literature. The BDP objective is to
develop the proposed venture idea through a market research to a feasible market.
Exploratory research is applied to determine the ‘gap in the market’ through
secondary/desk data followed by primary qualitative and quantitative data generating
adequate information to identify if there is a ‘market in that gap’. The latter is
performed through individual phone interviews with key persons selected from the
potential customers and competitors (Saunders, 2009).
3.1.3 Literature review
Impes et al. (2014); Braun and Jones (2013); Younes (2013); IMF (2012); Almagherbi
and Alwaddan (2009); Elyagubi (2009); Porter and Yergin (2006) agreed about the gap
between the education outputs and the job market needs which raises the
unemployment level. According to an education survey by The Economist (2002) as
cited by Almagherbi and Alwaddan (2009), globalisation and market economy have
emerged in the twenty-first century with a rapid development in the technology and the
informatics with which the demand on training has increased, particularly in the
Developing Countries including Libya, to develop and improve the individual and
organisational performances.
In other words, the change, the transformations and the developments lead the
contemporary governments to consider the training as a productivity source not as
consumed goods, and gradually move from education to training hence from
universities to training institutions which became significant for reforming
programmes. To acquire the international markets, innovation and high competition
among nations encourage such nations to invest in and improve the training. That
training is one of the principal means by which Developing and Arabic countries
should enhance their efficiency and effectiveness in order to produce qualified and
highly skilled workforce for growth and sustainability. (Almagherbi and Alwaddan,
2009)
Rather and worst, the job market does not need the education output competencies, but
needs those are not produced by the education. This problem obliged the society to
employ five million foreigners in several fields and services and, as a result,
contributed to raising the unemployment level (Almagherbi and Alwaddan, 2009).
13. 12
Impes et al. (2014) has also asserted that one of the main reasons behind unemployment
and the increasing number of expats is the mismatch between the supplied and
demanded skills and competencies. Furthermore, Rad (2014) posited that Libya
according to GCI 2013/2014 ranked 148 out of 148 nations in terms of education
quality and training availability.
Elyagubi (2009) added that the problem became more exacerbating due to the fact that
parents prefer universities for their children and most of students are reluctant to join
vocational training because of cultural issues and lack of ICT and English language.
Moreover and according to Braun and Jones (2013), the Libyan job market is featured
by high unemployment (30%) and employees’ lower productivity, and has the highest
public-sector employment rate (70%) worldwide. This means fewer workforces
contribute to developing the economy and less production. The increasing number of
graduates increases the labour supply; however, the demand does not satisfy such
supply and vice-versa.
The growing gap between the supplied and demanded competent/incompetent
manpower raises the Libyans’ unemployment. Paradoxically, the numbers of jobless
Libyans and foreign workers are both increasing which means that Libyans cannot
compete with migrants. Consequently Braun and Jones (2013) recommended aligning
the education and training outputs with labour market demand by defining the
workforce requirement in all sectors can contribute to economic growth instead of just
having educational institutions of producing jobless people. The organisations should
focus on training their employees rather than relying on the education competencies in
order to create the needed skills. The Libyan government should stimulate the private
business to invest in and participate in the HR training and development.
Braun and Jones (2013) also claimed that to cope with the change, Libya must provide
specialised training programmes apart from education emphasising the quality and
bridging the gap between supplied and demanded skills hence decreasing the
joblessness. Special attention will also be paid to the courses of English, ICT,
administration and communication skills, and report witting. Furthermore, there should
be regular dialogue between the organisations and the education and the training
institutions. Also Rad (2014) asserted that training is essential in Libya’s development,
especially, in mitigating unemployment.
14. 13
3.2 Market research
3.2.1 Secondary research
Libya’s education has poor performance ranking 110 out of 111 countries; as a result
the labour force is predominantly composed by under-qualified workers. This is why
firms claim that the graduates in all disciplines need extensive retraining prior to
becoming productive. As a top priority, organisations should embark on training the
manpower concentrating on skills, ICT and languages (Porter and Yergin, 2006).
According to Braun and Jones (2013) empirical study, the majority of organisations
offer training for their staff. These short duration programmes are often specific courses
for small groups. 39% of state-owned organisations offer further overseas training,
mostly in English speaking countries. However, most of HR managers do not prefer
training abroad, as it takes long time for preparation, needs visas, and is expensive and
the trainee may not come back leaving the company for better job.
Although great efforts and many projects Libya has executed to resolve the education
and training problems, the outcome was quantitative rather than qualitative focusing on
increasing the enrolment rather than realising quality (Impes et al., 2014). Additionally,
Younes (2013) posited that Libya needs to train and develop its workforce to meet the
society needs and enforce Labyanisation approach thereby decreasing the
unemployment. Furthermore, through several incentives, Libya had attempts to attract
the foreign investment which requires HRD and enhancing the training in the
workplace (Biltayib, 2006). See Appendix-1 for further detailed secondary data.
3.2.2 Segment/Niche
Williams (2013), recommends seeking a niche in the target market (market segment)
that allows reasonable price thus secures sensible profit margins. This needs to offer
some think different from competitors (differentiation) to a group of buyers that have
common characteristics and needs. Consequently, the proposed group is composed by
state-owned organisations and governmental sector (Ministries), as they are (i)
demanding almost the same training products/services; (ii) state-owned; (iii) guaranteed
payers; (iv) frequent purchasers, (v) buying often through tenders, and (vi) based in
Tripoli. This leads to focus on the Labour Ministry, the Oil Ministry, the Warriors
Affairs Commission (WAC), the oil and gas companies, and the state-owned banks.
15. 14
3.2.3 Sample
Due to Libya’s critical political situation and the difficulties in travelling to Libya to
meet people and to make the research simple and to save time, ‘Convenience
Sampling’ has been applied (Saunders et al., 2009). As the target customers are state-
owned organisations, there are higher institutions (owners) monitor and control over
those customers. Audit Bureau monitors all ministries, HR department of National Oil
Corporation monitors training programmes of all Oil&Gas companies, and HR
department of the Central Bank monitors training programmes of all commercial banks.
Accordingly, the sample will comprise mainly key persons from those monitoring
bodies and of course other key persons from the target customers and competitors.
3.2.4 Primary research
Author pursued a fast and inexpensive way (telephone interview) to gather data
(Markman and Lesonsky, 2010) via Viber and Skype with HR and training managers
from different organisations and competitors. The primary research helped a lot to
collect data about the market prices of different courses, trainers’ hourly rates, insistent
courses, and materials. It also provides data about the service and course attributes such
as quality and others, property and equipment prices and rentals, customers buying
behaviour and the key competitors. This research let the researcher/author to
understand the customers HR problems and associated services, for instance poor
quality and visas needed for training abroad. See Appendix-2 for detailed primary data.
3.2.5 Ethics
Participants have been informed of the research scope confirming their harmless and
anonymity and assuring that (i) no deception/coercion elements; and (ii) data
safekeeping. Each participant has also been given a written consent to agree and sign.
3.2.6 Data analysis
Since the data are gathered using phone interviews, relevant answers are easily
analysed by grouping them into categories to best fit within the research (Driscoll and
Brizee, 2012). The results are assessed and interpreted in responding to the above
objectives. Many data are reinvestigated and cross-tabulated by comparing the answers
to obtain more precise results (Hisrich et al. 2008). The respondents are eight out of
twelve from customers and four out of eight from competitors.
16. 15
Respondents’ views were close -to some extent- with respect to the favourite attributes.
Quality and long term service agreement (LTSA) are more prior than price and
location. Training quality is crucial to treat the imbalance in education outputs and to
effectively prepare the graduates for work. LTSA is a contractual issue that saves time,
effort and money that is awardable to capable and efficient provider.
3.2.7 Findings
• There is a consensus that Libya is suffering from a large gap between education
outputs (supply) and the job market needs (demand);
• Customers rely on training to match between their employees’ knowledge and the
job requirement for which million of Libyan Dinars (LD) are allocated;
• There are 12 potential customers (3 governmental institutions, ministries and WAC,
5 oil and gas companies, and 4 banks);
• There is a lack of high quality and certified/accredited courses;
• Training through Videoconferencing is welcome;
• LTSA is preferred and can be awarded to capable firms.
• Demand is high on IELTS, TOEFL, IC3, and ICDL;
• Training abroad needs visa and consumes money and time;
• There is no any firm provides HR assessment service;
• Market has about 25 real competitors.
17. 16
3.2.8 Product/Service feasibility
Libya has a big gap between the education produced competencies and those required
by the job market. This is the main reason behind low performance and high
unemployment level. The research provides insights and proofs about the government
and organisations intention to invest in training and developing their workforces to
bridge such gap and introduces evidences on the most demanded training courses
(product) such as English including IELTS and TOEFL, computer including IC3 and
ICDL, and soft skills including advanced programmes. The research also shows the
most aspired product/service attributes such as course quality which can be guaranteed
even by certification and customisation. The training materials like books and
stationary are available locally at different prices.
Trainer hourly rate varies LD20-100 depending on the course topic and duration and
the trainer qualification and experience. Apart from trainers, many Libyans are UK and
US post-graduates lecturing at the universities and colleges and offering their service to
private training companies. In order for Takween to satisfy greatest demand (Williams,
2013), the priority is given to the early mentioned product/service attributes. As it is a
new established firm, Takween will offer tailored courses depending on both customer
needs and HR assessment at reasonable prices that vary from course to course. The
courses can be delivered at Takween premises and customer different locations and
sites and remotely through videoconferencing.
3.2.9 Product/Service lifecycle
18. Based on Henderson (2013)
evolves as long as technology evolves. However, the course has a certain lifecycle
depending on the lifecycle of the concern knowledge and technology. Course declines
with the obsolescence of the related
cash from the general courses (Cashcow) to pay bills and finance
development of other new services. Any unprofitable course/service (Dog) should be
terminated. Based on HR
new courses (?-Wildcat) in a high
grabbed. The best chance for (Star) position is to differentiate
customisation, and HR evaluation
3.3 Industry and market analysis
3.3.1 Industry attractiveness
According to Porter’s
meaning attractive industry. The training industry has moderate threat of entry, low
supplier bargaining power, high custo
and finally low rivalry among existing competitors.
2013), the training as a service is sustainable and endless. It
evolves as long as technology evolves. However, the course has a certain lifecycle
depending on the lifecycle of the concern knowledge and technology. Course declines
of the related knowhow and technology. Takween will generate
cash from the general courses (Cashcow) to pay bills and finance
other new services. Any unprofitable course/service (Dog) should be
terminated. Based on HR assessment and technology change, Takween will produce
Wildcat) in a high-growth market where more market
grabbed. The best chance for (Star) position is to differentiate by quality, accreditation,
evaluation.
arket analysis
3.3.1 Industry attractiveness
According to Porter’s Five Forces, the competition is relatively low to moderate
meaning attractive industry. The training industry has moderate threat of entry, low
supplier bargaining power, high customer bargaining power, low threat of substitutes,
and finally low rivalry among existing competitors.
17
raining as a service is sustainable and endless. It
evolves as long as technology evolves. However, the course has a certain lifecycle
depending on the lifecycle of the concern knowledge and technology. Course declines
technology. Takween will generate
cash from the general courses (Cashcow) to pay bills and finance the marketing and
other new services. Any unprofitable course/service (Dog) should be
ology change, Takween will produce
growth market where more market shares can be
by quality, accreditation,
Forces, the competition is relatively low to moderate
meaning attractive industry. The training industry has moderate threat of entry, low
mer bargaining power, low threat of substitutes,
19. 18
3.3.1.1 New entrant threat
Registering a private firm is comparably easy. However, many companies are
disqualified while attempting to enter into tenders, particularly, with oil and gas and
banking sectors due strict contracting policy. Cost of entry depends on the location,
facilities’ quality, and the size of business. International companies cannot enter the
market unless they enter as investors establishing partnerships with locals under the
investment law number 9 with minimum investment of LD5 million (PIB, 2010).
3.3.1.2 Suppliers power
Books and stationery suppliers have low bargaining power due the highly competitive
market which offers goods at different prices. Trainers are available in the market those
are basically university and college teachers and most of them are US/EU educated
(Abdulwahab and Hasairi, 2014). However, qualified and certified trainers are limited
(Abuhadra and Ajaali, 2014); so advance arrangement is needed.
3.3.1.3 Buyers power
Customers can apply relatively high power on the business. Some customers sign a
long term service agreements (LTSA) with fewer training firms which prevent others
from providing the service for years unless there is specific needs such as certified
courses and special services like training through videoconferencing. Some customers
in many occasions handle the training by their training centres.
3.3.1.4 Threat of substitutes
There is no real substitute for private training firms what regards local training.
Education and Vocational Training institutions have poor performance (Braun and
Jones, 2013) and rarely organise training programmes suit organisations. The new trend
is to encourage the private sector. Some of Oil&Gas organisations have their own
training facilities, even though, big portion of the training packages are outsourced to
private providers. Training abroad is confronted by visa restrictions (Hasairi, 2014).
3.3.1.5 Competitive Rivalry
The training industry is populated by tens of different providers. Most of them are B2C
offering almost the same courses, but with different qualities. This industry is
incrementally growing up hence the number of competitors is growing too. The labour
ministry secures annual contract for each provider as long as it complies with the policy
and contractual requirements.
20. 19
3.3.2 Market attractiveness
PEST analysis allows describing the market potential and measuring its attractiveness
(Apa, 2012). PEST is a framework to analyze external macro environment forces
impact an organisation those usually are beyond the control of such organisation
(Nejati, M et al., 2008). PEST analysis is just a selective checklist and reminder ends
up with results those could be misleading if every single-thinkable item is recorded.
Three to four mightily justified points can reflect useful summary (Lynch, 2009).
21. 20
3.3.2.1 Political/Legal
“Transitional government has taken steps to promote a peaceful political transition,
restore the rule of law, initiate a national reform agenda and establish a new system of
effective governance to normalise economic conditions” (Abuhadra and Ajaali, 2014,
p.2). In spite of the Libyan political situation is relatively unstable, the government and
the organisations are demanding the training service, in particular, the local training.
Visa problem (Hasairi, 2014) obstructs the overseas training and as a result increases
the demand on the local training.
Due to the high unemployment, the government imposed some restrictions to
employing expats, obliging organisations -when undertake new projects- to assure 20%
of the project workforces are Libyans and provide them with training. New laws
support private business and impose firms to outsource non-core business. The policy
dialogue among Libya, EU, and European Training Foundation (EFT) contributes to
the employment policy and employability hence improving the labour market and
training industry (Abuhadra and Ajaali, 2014).
3.3.2.2 Economical
Abuhadra and Ajaali (2014) exhibited that Libya has the largest oil and gas reserve in
Africa which will last for over 100 years. The Libyan economy heavily relies on oil
which accounts more than 70% of GDP, though employs only 2% of Libya’s labour
force. The construction workforce is mostly from expats employing only 35,000
Libyans, however, as it is one of the new national development strategy’s component,
the construction sector will secure 4000 jobs/year on the long run which can increase
more if the training schemes are capable of training Libyans to replace foreign
manpower for the forthcoming large projects. Manufacturing sector employs 50,000
Libyans and has 11% growth which could provide 3000 jobs/annum.
3.3.2.3 Socio-Cultural
Libya’s population is about 6.5 million where 30% are under 15s - the situation that
substantially impacts the State investment in education/training and job market
(Abuhadra and Ajaali, 2014). 50% population is 25s with high expected inflow of
entrants to job market next decade (IMF, 2012). Demographically Libya is a youth
society as ages 16-30 years account 27% of population which heavily contributes to
unemployment. Government employs 70% (highest worldwide) of total workforce
because Libyans favour public sector and deem it as a source of work and stability.
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As the government targets different HR development programmes including employed
and unemployed people, a pool of about 1.9 million citizens can boom the training
business. Due to the population growth rate of 2.9 (Abuhadra and Ajaali, 2014), the
young dominant labour force will increase as well. These facts with poor education and
training outputs sustain the unemployment and maintain relying on expats.
Furthermore, speaking English and using computer became part of the youth culture.
3.3.2.4 Technological
Using social-media is increasing in Libya among individuals and for business, for
example Facebook, Tweeter and YouTube played key roles in February/2011
revolution (Goodale, 2011). IT became crucial in the business environment thereof
almost each employee has a personal computer (PC). This leads organisations to train
staff on ICT. Due to the social-media attractiveness and the increasing number of
Internet users, the demand on PCs is very high and, as a result, people start demanding
computer training.
Measuring the market potentiality and situation, above PEST analysis shows a
prominent growth showing market attractiveness and business potential. Despite any
evaluation of market attractiveness is certainly subjective, just personal knowledge and
judgment can be used. Additionally understanding some key factors such as market
size, market growth, rivalry intensity, and uniqueness and differentiation can assist in
determining the market attractiveness (Olsen, 2011).
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3.3.3 Market size
According to Williams (2013), the market size is measured by aggregating money spent
on the product/service by the potential customers, the number of the potential
customers, and the number of units of such product/service. The market size is
estimated for the potential local training that is LD61 million as detailed in the
following graph.
Twelve organisations represent the potential customers: three ministries and WAC, five
oil and gas companies, and four banks. Each organisation allocates particular budget
for training based on their needs. The number of trainees and courses differs from
customer to customer depending on the allocated budget, the training needs, and the
total workforce of the organisation. The potential market size -in terms of trainees- is
29000 trainees per year.
3.3.4 Market share
Since Takween will most likely offer existent product/service, it is going to share the
market with other rivals. It is very rare to have a dominant position with 2% market
share for a new and small business (Williams, 2013). Takween market share equals its
average annual revenues divided by the potential market size (580/610); nearly 1%.
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3.3.5 Market structure
It is the process of selling the product/service to the consumer (Williams, 2013).
Takween will keep open eye on the media and continual contact with customers to
know about the training tenders and bids and participate in the appropriate ones by
submitting technical and commercial proposals. The service will be delivered at
Takween premises, customer premises, onsite (oil fields), and any place specified by
the consumer. It could be also delivered via videoconferencing (virtual training).
3.3.6 Market trend and growth
Usually determining what is going to come across later needs to know what has
happened before and then project it forwards (Williams, 2013). The market research
shows the increasing demand on HR training at least for the next five years.
Furthermore, the Libyan new trend is to support and encourage the private sector to
participate in growing the economy (Dempsey, 2013). The new governmental policies
impose the organisations to concentrate on their core business and outsource the rest
which limits the organisations from self-training internally thus increases the demand
on private training. Based on the Central Bank of Libya, the corporate tax rate before
the revolution used to be 40% which dropped to 25% since 2011 and the GDP annual
growth rate will increase to 10% in 2015.
3.4 Organisational feasibility
This analysis is carried out to define whether proposed enterprise has adequate
resources, organisational skills and competencies, and management experiences to
startup its business mainly by taking into account the management prowess and
resources adequacy (Barringer and Ireland, 2012).
3.4.1 Management prowess
Part of the business owners will form the management team. And as some of them used
to be seniors in public and private training institutions and companies’ HR managers,
they understand well the market and industry. Most of the owners have extensive social
and professional networks and good relations with former co-workers in the target
sectors. Takween will start with small structure of six people (general manager, three
officers and two workers) to reduce costs. The operations officer will handle the
business marketing and promotion and pursue tenders, contracts, and bills.
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The administration officer will take care of administration activities, whereas the
accounting officer will manage the financial activities. Takween will hire freelance
trainers and lecturers to avert permanent contracts with periodical salaries and avoid
paying their insurance, sick leaves, taxes, and holidays (Williams, 2013). Takween will
hire lawyer on call bases.
3.4.2 Business structure and legal form
A sole ownership exposes the business to high risk and it is difficult to attract
customers (Wolfe 2014; Markman and Lesonsky, 2010). It is why Takween has five
owners. Business structure is a ‘Joint stock company’ with limited liabilities which
allows less than ten shareholders whose responsibilities for the venture’s financial
liability is limited to their unpaid shares value.
3.5 Financial feasibility
3.5.1 Revenues forecast
In order to avoid falling into the chasm between entrepreneurial dreams and reality, the
estimation is based on the worst case scenario of delivering minimum courses and
losing the annual contract with labour ministry of LD225k. The spreadsheet shows total
annual sales (LD474.75k), cost of goods (LD230.73k), contribution (LD244.02k), and
total delivered units (2630hrs) for year 1.
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3.5.2 General expenses
These expenses are LD49.8k in year 1 that increases 3% each year. To avoid high
capital and depreciation, Takween should rent fixed assets rather than acquiring which,
even though, increases the overheads. Marketing expenses includes HR assessment as
this free service is deemed mainly part of the marketing activities.
3.5.3 Capital
Takween will pay LD26.23k against one-time costs and monthly expenses and secure
about LD51k cash needed as a working capital to startup and run the business
(Harward, 2009), therefrom the total forecast capital is LD76.2k.
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3.5.4 Cashflow summary
The cashflow seems to be healthy and does not need extra financing. However, if the
profitable business faces temporary cash problems due to delays in payments, extra
cash may be needed.
3.5.5 Loss and profit forecast
The project achieves losses (LD1.0285k) before breakeven. After that it attains profits
achieving incremental return on investment along the rest of the projected period. The
table shows no dividends, as this will be decided by the shareholders based on the
business needs.
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3.5.6 NPV/IRR analysis
C0 = Initial investment, C = Net cash flow of a particular year, and r = Discount rate.
Net present value at 3% interest rate
NPV = (-998.7) + 21509.5 + 39952.2 + 59515.6 + 80386.9 – 76200 = 124165.6
Net present value at 35% interest rate
NPV = (-761.8) + 12515.6 + 17746.7 + 20178.2 + 20773.3 – 76200 = (-5748)
IRR = 3% + [124165.6 ÷ (124165.6 + 5748) x 32%] = 0.34 = 34%
Both net present value (NPV) and internal rate of return (IRR) have positive values
therefore the project is acceptable. LD5250 preliminary expenses are not considered
sunk costs as they will be incurred after taking a positive investment decision.
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3.5.7 Payback-period
The project will achieve payback in a period of 3.08 years (3 years and 1 month).
3.5.8 Opportunity cost
There could be other opportunities of higher return, but more risky. The owners
consider intangible values of contributing to Libya’s HR development and, on the long
run; this could lead Takween to win contracts of operating one or more of the
customers’ training centres.
3.5.9 Breakeven
Revenue B/E is LD476.752k achieved within month 13. Unit B/E is not precise
because of the difference in courses in terms of number of hours, prices, trainer hourly
rate, and duration and as some of them are certified against high money. However, the
total number of units (hours) produced is 2630hrs. If the average sales price per unit is
474750/2630 = 180.5 LD/hr, then the number of units needed to breakeven is
476752/180.5 = 2642hrs.
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3.6 Resources requirement evaluation
Takween General Manager is one of the founders who used to be a trainer in the oil and
gas and education sectors before he had been a deputy General Manager for a well-
established private training firm. He has strong relationships with customers, and
suppliers. Another shareholder who is accountant worked for the banking sector will be
part of the venture management team. These two people have the required experience
and skills and understand the business formalities and are awareness of the business
environment with which the venture can be run efficiently. A third shareholder is
experienced in operations and logistics that will be part of the management team as
well.
Takween will hire an administration officer, most likely from one of the customers, and
two workers. It will rent a building consists of classrooms, offices, and store costing
LD36k/year and furniture, training facilities, and PCs costing LD10k/year. These leases
decrease the initial investment and save costs incurred by the depreciation. The
building is located near by a free pubic car parking which is an advantage. The
founders/stakeholders will secure the entire capital of LD76.2k in cash and will not
borrow money from banks as the interest is prohibited in Islam. In spite of the existence
of few banks those apply some Islamic banking systems; there are still doubts about the
accuracy of the application of the right Islamic banking policy. This issue will impose
the venture shareowners to prevent borrowing money from banks and rely on their own
funds in order to avoid breaking the Islamic roles.
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Chapter 4: Strategic Analysis and Business Model
4.1 Strategic analysis
4.1.1 Value chain
Takween support and primary activities are examined how they interact to understand
the costs behaviour and analyze differentiation, uniqueness, and competitive advantage
sources which can be gained by performing such strategic activities cheaper than
competitors. Takween value chain is tailored to serve a particular segment to realise
possible lower costs and differentiation compared to rivals such as narrowing the
geographic markets by concentrating on Tripoli zone (Porter, 1985). Part of values can
be added through achieving cost- advantage: (a) startup with less costly infrastructure
such as small-adequate staff, rental of optimal size building and suitable equipment, (b)
avoid buying and storing excessive inventory (books and stationary), (c)
videoconferencing delivery, (d) training delivery at customer premises/sites.
The rest of values can be added through dedifferentiation: (1) high quality, (2)
certification, (3) HR assessment, (4) customisation, and (5) LTSA. Takween can further
operate its business in efficient ways to add more values: (i) providing HR assessment
supports in customising programmes within customer budget, access to information,
and improving relationship, (ii) offering post-service evaluation and feedback enhance
customer relationship and exceed its expectations, (iii) construct effective website, (iv)
apply marketing and promote business through the activities of HR assessment, service
delivery, website, and annual open day, (v) reward trainers.
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4.1.2 SWOT analysis
The SWOT analysis is a useful framework that provides qualitative information about
internal and external factors impact Takween. It is a flexible tool that is usable with
Takween business idea and assists in determining the sources of competitive advantage
and developing strategies (Brooks, et al., 2014).
4.1.3 SWOT Strategies
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4.2 Source of competitive advantage and sustainability
Sustainability is crucial for business, especially for SMEs. Venture should improve
efficiency and performance to retain its competitive position (Jyothi and T, 2010).
4.2.1 Competitive advantage
As cited by Martins (2014), Jack Welch said “If you don’t have a competitive
advantage, don’t compete.” According to the Value chain and SWOT analyses, the
following aspects can differentiate Takween and realise competitive advantage.
• Offering certified courses differentiates Takween from its competitors. Customers
complain from courses poorness and they can pay extra for guaranteed quality.
• Videoconferencing is a superior service whereby Takween can respond rapidly to
customer needs and secure subsequent support (Martins, 2014), for instance when
cancelling overseas programmes because of visa refusal. Videoconferencing is
deemed a technological breakthrough which results in cost reduction (Zwilling,
2010) as it saves trainer mobilisation and demobilisation on the venture and saves
the customer expenses, time, and effort of sending trainees abroad.
• Onsite delivery contributes to cost reduction as it is conducted at customer sites and
premises. It is considered a dynamic service approach, rather than a single way of
training delivery (Zwilling, 2010) at provider’s premises.
• Assessing customer’s HR for free is unique that allows Takween to access to
information and customise its product to meet customer needs, and superior to
customer service (Ogbor, 2009). It helps in winning tailored LTSA which is Cash-
cow (Henderson, 2013).
• Due to their workload, some customers want to be catered during weekends - the
service which also can differentiate Takween.
4.2.2 Based resource framework (VRIN/VRIO)
Competitive advantage is not enough to maintain the business, but sustainability does
(Ogbor, 2009). BDP author argues that the training is inherently sustainable service;
however, course topic could expire with the expiry of the technology it concerns. To
achieve sustainable competitive advantage (SCA), the resources must carry four
characteristics: Valuable, Rare, Inimitable, and Non-sustainable ‘VRIN’ (Barney,
1991).
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Barney (1995) improved VRIN to four questions V.R.I.O when met, SCA is attained:
Valuable? Rare? costly to Imitate? company Organised to capture resources value?
Because VRIN ‘Inimitable’ character is not valid in the case of this BDP where all
offered courses are imitable, author argues to apply VRIO instead of VRIN.
To secure sustainable competitive advantage, Takween shall enhance and protect its
management and staff knowledge, network and relationships especially with customers
and trainers. With continuous customer HR assessment, Takween can anticipate
offering new courses matching between the technology and the customer needs. In
doing so and, with distinctive competences and due to sustainable change of technology
and knowhow, sustainable competitive advantage can be realised. Once Takween
delves into HR assessment, it isolates itself from competitors achieving a sustainable
competitive advantage (Ogbor, 2009) which can lead to win long term service
agreements (LTSA).
4.2.3 Superior value proposition
The superior value proposition that resolves the most of customers’ problems exceeds
their experience is delivering the maximum value propositions mentioned in section
4.4.8 through a service package in form of long term service agreement (LTSA)
emphasising free HR assessment.
4.2.4 Partnership network
As it is new business, Takween does not have all needed resources to carry out all
business activities. However, its entrepreneurs have existent relationships with
customers they used to work for. And as they were part of HRM and training
organisations, they built strong relationships with trainers and HR experts. Takween
should build a robust relationship with certification agents and the rest of suppliers.
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4.2.5 Strategic resources
Strategic resources are initially limited because of new business (Barringer and Ireland,
2012); however, the resources and capabilities in the figure below will be available
while starting business.
4.3 Strategies selection for success
4.3.1 Product/Market scope
The scope determines the service and market on which Takween will concentrate
(Barringer and Ireland, 2012). Takween will fundamentally support customers with
resolving their HR problems. This lies in participating, in the customer HR assessment
and designing the training and the development programmes. Takween will accordingly
deliver the appropriate high quality courses those customised to meet the customer
needs, and standard courses those are scheduled along the year. The target segment is a
small group of state-owned and governmental institutions those have common features
such as buying behaviour, secured payment, and Tripoli-based.
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4.3.2 Blue ocean strategy
Some of shareholders argued to offer business to customer (B2C) that may increase
sales. B2C market is characterised by aggressive competition, full of small, cheap and
me-too providers, and low quality. Instead of promoting Red ocean strategy to enter
this market, it is better to adopt Blue ocean strategy where there is unemployed market
space, low competition, and high demand. Takween could remain ahead of unavoidable
copying by comparably neglecting competition and promoting value innovation
strategy with which the venture and customers can gain added values, thus creating
uncontested market space (Kim and Mauborgne, 2005) that is represented in quality,
certification, customisation and HR assessment those are basis for differentiation.
4.3.2 Basis for differentiation
Based on Porter (1998) Takween can also adopt the focused differentiation strategy
part of Generic Strategy. Since Takween is a small business, a narrow-scope strategy is
adopted focusing on providing differentiated services/courses (quality, certified and
tailored) to a focused group of customers within a specific zone (Tripoli). This strategy
has lower risk and helps Takween in decreasing competition and charging premium
prices.
4.3.3 Ansoff-model
Author argues that Ansoff (1957) framework cannot be adopted for Takween startup;
however, it could be a good choice for business growth by developing -to existing
customers- new services complementing the existent service.
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Logistic-support could be a new service by directing customers to the right overseas
training programmes and institutions and providing visas and board and lodging. The
business can also extend its existing product/service to a new market through its
existing customers where Takween can approach new clients those provide other
services to the same customers. Penetration is possible via LTSA decreasing prices and
diverting rivals. There is no room for the risky diversification strategy.
4.3.4 Emergent strategy
Takween should depend on future prediction to use the above prescriptive strategies.
This is difficult according to Mintzberg and Waters (1985) in changing environments
where the plan contradicts the reality. In contrast, emergent strategy arises in uncertain
environments where no implementation based on plan and forecasts. Prescriptive
strategy imposes control to get things done, whilst emergent is more open with learning
what works. Consequently, a firm should adopt mixed strategy applying some sort of
control within its organisation and simultaneously fosters the learning notion. BDP
author argues that Takween is a small business and may not need such emergent strategy or
a complex-combined strategy; however, it could be required later when the business
becomes larger.
4.4 Business model
Takween business model is a business to business (B2B) model offering training
service to corporations. Takween will take business model canvas BMC invented by
Osterwalder and Pigneur (2010) as a blueprint to deliver values to the stakeholders and
generate profit for the stockowners, but with one more building block: the ‘Identity’.
4.4.1 Identity
Takween will be perceived as a high quality service provider and a private leader
contributes to the Libyan human capital development. This will build a brand on the
long run.
4.4.2 Customer segment
The target segment is the state-owned institutions those are Tripoli-based and have
common attributes: tenders, secured payment, and demanding similar courses. Oil and
gas companies and banks seek high quality and certified courses.
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4.4.3 Key resources
Management experience, trainers, shareholders who provide financial and technical
support and customer database built by the HR assessment all are the key resources.
4.4.4 Key partnerships
The key suppliers are (i) certification agents those certify courses thus guarantee
quality; (ii) trainers with whom Takween deals as partners as they deliver the service
and core for the business; (iii) foreign training institutions those Takween will deal with
for delivering courses via videoconferencing; and (iv) material suppliers.
4.4.5 Key channels
The best channels are those bring service and value propositions of Takween to its
customers. There are five channel phases to communicate, distribute and sell the
service through.
4.4.6 Customer relationship
Takween has already established relationships, as its leaders used to work for the
customers. Providing free HR assessment and the annual open day will build new
relationships and enhance the existing network.
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4.4.7 Key activities
HR assessment leads to better design courses suits customer needs. Providing high
quality service and solving problems are key activities that satisfy customer, enhance
relationship, expedite payment and increases demand on Takween service.
4.4.8 Value propositions
Value creation is critical task when starting new venture (Smith and Colgate, 2007).
Combining market segment and value proposition building blocks is tough task, as they
define which service is fascinating to which clients and which is better than competitive
substitutions available to such clients (Bech, 2013). NABC (Need, Approach, Benefit,
Competition) approach (Carlson and Wilmot, 2006) and Customer Value Creation
framework (Smith and Colgate, 2007) are used to create value propositions. Here are
different sets of values offered to different customers.
Considering NABC, the best compelling approach of delivering above values is
through a comprehensive package (LTSA) which is considered superior value
proposition that exceeds customer experience. Awarding LTSA realises many goals:
outsourcing customers’ non-core businesses, lower cost, integrating values, creating
jobs, less riskiness, and time/effort saving. LTSA also realises the four dimensions of
Customer Value Creation framework (Functional/instrumental, Experiential/hedonic,
Symbolic/expressive, Cost/sacrifice value) which emphasises its superiority.
Accordingly, Takween will offer those value propositions individually or as a bundle
under a single umbrella (LTSA) depending on the customer needs, wants and policies.
4.4.9 Revenue streams
Customised courses, ICDL and IC3 are the main revenue streams representing 55% of
total revenues. However, winning annual contracts with labour ministry can be the
main stream. Soft skills represent 16% and IELTS/TOEFL together represents 26%.
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4.4.10 Cost structure
The major incurred costs of year 1 come from cost of goods sold LD230.7k (trainers
incur 60%, certification 24% and training materials 17%). The wages incur LD144k
and the general expenses incur LD49.8k.
Although BMC is often stratified in numerous ways, it is adopted here to assist in
understanding the competition and in making better decision on startup investment
(Amarsy, 2015). And over 1300 BMC users and 35 firms from different industries have
been surveyed and interviewed respectively where the results showed that the largest
percentage (36%) of respondents use BMC for new business development.
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Chapter 5: Business Plan
Nevertheless, the venture is financed by its entrepreneurs/founders with a needless for
external fund, Takween needs a business plan (BP) to assist in defining and meeting its
goals and avoiding some common failures such as lack of potential market and
undercapitalization (Markman and Lesonsky, 2010). Preparing business plan takes
time, but running business consumes more time in the long run without BP (Peterson et
al., 2013). Business plan should be long enough for sufficient information provision
and, simultaneously, short enough for reader interest (Barringer and Ireland, 2012).
5.1 Overall assessment of the business plan
5.1.1 The industry
Apparently education and training are significant in preparing human for work.
Keeping pace with changing trends and developing technologies in all fields needs
evolving knowledge and advancing skills and competencies. Due to the big gap
between the Libyan education outputs and job market requirements, millions of jobs
have been acquired by foreigners increasing the unemployment hence arising economic
and social problems. The Libyan government and other state-owned organisations have
embarked on adopting training and development programmes that narrow the gap
between the Libyan labour force knowhow and the job required skills. The industry is
promising -especially B2B for the market segment of public organisations- and has
lower competition than the rest of the market which is dominated by B2C training
firms.
5.1.2 The company
The B2B training company will have a trade name of Takween. It will be registered as
a private limited liability company that is owned by five people each owns 20% of
shares. Takween rental premises are based in Tripoli where the market exists and
located nearby a free car parking. Takween will basically support customers with
resolving their HR problems. This lies in participating in the customer HR assessment
and designing the training and development programmes so that setting the right course
for the right trainee at the right time and place that is called customisation. Takween
identity will be a well-known firm of high quality product and service.
42. 41
5.1.3 Product/Service
Takween will accordingly deliver the appropriate courses those tailored to meet the
customer needs and standard courses those delivered along the year for any customer.
Courses’ topics are those demanded by the occupational training: English language,
computer, soft skills, and tailored courses. Some special courses will be delivered
onsite particularly those for engineers and technicians. The focus will be on delivering
high quality and certified courses either directly face to face or, upon request, via
videoconferencing (virtual training). The service will be delivered at Takween premises
and/or customer premises and onsite.
5.1.4 The market
Takween has identified homogeneous group of customers composed by state-owned
organisations and governmental sector (Ministries) having common characteristics and
needs. Takween seniors used to work for HR and Training departments of many target
customers. The majority of competitors provide both B2C and B2B services and none
of them focus on offering certified courses and HR evaluation. Certified courses are
either delivered abroad or locally but by foreign providers at high prices. There are
about twenty five real competitors those are well-established and deal with the target
customers. Most of them focus on courses of English and computer and some soft
skills, while ignore technical and customised courses. Market growth rate is 10%.
Takween will start with 1% market share for a total market size of about LD60 million.
Considering the market structure, Takween will keep open eye on the media and
continual contact with customers to know about and bid for training tenders. The
market research shows a market trend of increasing demand on HR training at least for
the next five years. Furthermore, the Libyan new trend is to support and encourage the
private sector to participate in growing the economy (Dempsey, 2013). The new
governmental policies impose organizations to concentrate on their core business and
outsource the rest which increases the demand on private training. Based on the Central
Bank of Libya, the corporate tax rate is 25%.
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5.1.5 Competitiveness and superior value proposition
Takween will concentrate on promoting high quality, customised and certified
programmes which realise first-mover advantage. It will provide free HR assessment to
consumers to retain them, access to information, secure more orders and help in
customising courses. Upon request, Takween can deliver service even on weekends
taking into account the customer’s seniors circumstances those cannot take training
during business days. Virtual training via videoconferencing is another advantage that
helps in resolving customer’s problems. The superior value proposition that resolves
the most of customers’ problems and exceeds their expectation is to deliver the earlier
mentioned advantages in one service package in form of long term service agreement
(LTSA) emphasising the free HR assessment.
5.1.6 Financial Analysis
The venture capital is LD76.2k including the working capital needs (LD51k), having
gross margin (gross profit/Sales) of 51%. It breaks even in month 13 with LD476.752k
revenues and 2642hrs produced units. It has monthly expenses of LD20k and payback
period of 3 years and 1 month. As it is a profitability ration, operating margin
(operating income/Sales) or return on revenues will be increasing along the projected
period starting with 1% and reaching 20% in year 5. The project fulfils incremental
ROI which reaches 92% in year 5.
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5.1.7 Marketing plan
The market will be approached through avoiding red-ocean market, adopting blue
ocean and differentiation-focus strategies. The focused group is offered differentiated
services and courses in terms of quality, customisation and accreditation.
5.1.7.1 Marketing mix
• Product: Deliver variety of quality, tailored and certified training programmes.
• Place: Training can be delivered either at Takween premises or customer’s
premises and onsite.
• Price: Takween service is not the cheapest due to quality and certification;
however, discounts may be applied in case of LTSA and through providing free HR
assessment.
• Promotion: Keep communication channel through frequent visits and calls.
Advertise in the annual diaries, public magazines, newspaper and social-media. HR
assessment is also utilised in marketing and promoting the business. Trainers and
customer word of mouth could also support in marketing the service.
• People: Takween staff will act as business ambassadors to effectively build and
maintain relations. Management should also enhance their relationships with
customers. As they are key channel, trainers will play important role in maintaining
the quality and augmenting the relationship with customers.
(Kotler and Keller, 2012)
5.1.8 Business control
General Manager will monitor and control over the business and performance through
the organisational structure. The internal activities and performance will be the
administration officer duty, while the financial activities will be the accountant duties.
Reviewing and closing the financial books might be annually outsourced to external
bookkeeper. Operation officer will monitor and control the operations and the service.
Certification agents will assure and control the quality of the certified courses
(QA/QC). Trainers will assess the programmes and give feedback on trainees and
courses’ outcomes.
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5.1.9 Management
A. Abdulazeez will lead the venture as he is one of the founders and because of his
wide experience in the field. He worked for several public and private training
institutions as manager and trainer. K. Shaikh is a shareholder and will be the
Operation officer due to his experience in managing operations and logistics. J. Koushli
is a shareholder too will handle the accounting duties. He used to work for a public
bank and a private bookkeeping firm. With these competencies and good network and
relationships with customers, suppliers, and trainers, Takween can realise good sales
with remarkable profit margins. Takween will hire an experienced administrator and
two workers.
5.2 Business plan schedule
5.2.1 Action Plan
After accomplishing the feasibility study and market survey, the implementation starts
on 01/04/2015 and the business launches on 06/06/2015, and first job commences on
25/05/2015. Once the license is released, the capital is raised, Takween is registered
with target customers, infrastructure is prepared, and recruitment is started. Customers
are then invited to attend the open day to officially release the business. Takween
introduces prequalification dossier to customers and trace RFQ’s and tenders through
media and direct contact with customers then submits commercial and technical
proposals. During this stage, trainers and certifiers are approached.
46. 45
After winning a contract, materials are purchased and then service delivery is started.
HR assessment takes place after commencing the service and courses delivery. Service
is monitored and evaluated and finally relevant feedback is submitted. The supreme
value proposition will be delivered to customer through the LTSA which comprises
bundle of values. The LTSA duration depends on the customer needs and budget,
however, it lasts minimum for one year. In case of complying with the labour ministry
requirements, an annual contract can be guaranteed which takes 22 weeks to train 60
people over the year. This contract has a pre-fixed typical amount of LD225k.
5.2.2 Objectives
Launch the business in 36 days of preparation;
Win first contract within 50 days from the venture launching date.
Increase sales steadily to breakeven by first year and payback by third year.
5.2.3 Resources
The founders will form a team work to implement the tasks from legal and commercial
registration to the venture opening day then the dedicated organisational structure will
run the routine business. To decrease the overheads, startup activities are implemented
from home and paying salaries and facilities rental start from the launching date. The
feasibility and market research cost LD3000 and the pre-startup expenses are LD2250.
5.2.4 Gantt chart
47. 46
5.3 Discussion of critical success and failure factors
Many books and journal articles wrote about these factors where they coincided in
many factors. This part focuses on the factors those are correlated to Takween venture.
5.3.1 Critical success factors
Viable business idea in growing market (Williams, 2013);
Adequate fund to cover working-capital and shortfalls (Williams, 2013);
Leadership, management experience and knowledge of market, and staff skills
(Williams, 2013; Hussain Naqvi, 2011; Jyothi and T, 2010; Chin, et al., 2008);
Competitive strategy (Jyothi and T, 2010);
Customer service (Hussain Naqvi, 2011);
Customer feedback (Jyothi and T, 2010);
Effective customer relationship (Chong, et al., 2011);
Superior value proposition (Hisrich, el al., 2008);
Sound business model (Taulli, 2009);
Access to information (Chong, et al., 2011);
Trust (Chong, et al., 2011; Chin, et al., 2008).
5.3.2 Critical failure factors
Limited access to capital (Hussain Naqvi, 2011; Jyothi and T, 2010; Porter and
Yergin, 2006);
Lack of sufficient skills, competencies and capabilities (Williams, 2013);
Poor control over cash, bookkeeping and financial planning (Williams, 2013; 2011;
Jyothi);
Inadequate market research (Williams, 2013);
Fail to adapt service to meet customer needs/wants (Williams, 2013);
Under pricing (Williams, 2013);
Loss of customers and suppliers (Williams, 2013) and lack of network (Jyothi and
T, 2010);
Corruption (Hussain Naqvi, 2011; Jyothi and T, 2010);
Lack of government structure and support (Chong, et al., 2011; Jyothi and T, 2010);
Large gap between market reality and entrepreneurial dreams (Hale, 2008);
Lack of proper cash in hand as working capital (Harward, 2009).
48. 47
5.3.3 Critical discussion
5.3.3.1 Business idea and market research
The venture idea is compelling due to the big gap between the education and vocational
training outputs and the job market needs. According to the market research and
feasibility study, there is a growing market demand on training that makes this idea
viable and key success factor. Effective and efficient market research has been
conducted to secure proper data and information thus having remarkable results of
feasibility study. Poor and inadequate market research leads to failure as improper data
mislead the forecasts and misjudge the other aspects built on them.
5.3.3.2 Business capital
Although access to capital is a major issue confronts entrepreneurs in Libya (Porter and
Yergin, 2006), Takween founders will overcome this by self-financing due to two
reasons: (i) SMEs Authority and its incubators could not reach to an agreement with the
commercial banks to provide funds to entrepreneurs (ii) banks provide limited loans
with interest which is being prohibited by Islam (Quran, 2007). Takween shareholders
will provide sufficient capital for startup and to cover the working capital and any
possible shortfalls.
5.3.3.3 Business leadership and management
As many writers asserted that business leadership and management background and
knowhow are critical success factors, Takween leaders have such skills and
competencies as they are former seniors from HR and training and financial divisions
of target customers and even from competitors. Additionally Takween will provide
training for its remaining staff. Poor management leads to failure as it means poor
management of people, money, time, and risk and looseness in dealing with customers
and suppliers.
5.3.3.4 Competitive strategy
As exhibited in chapter 4, Takween has several competitive advantages such as high
quality and accredited training, that is unique, and HR assessment. These values
differentiate Takween from its competitors. Takween will also emphasise satisfying
and retaining its customers through customer service. This service represents pre-sales
and post-sales service.
49. 48
Free HR assessment is provided to the consumers those Takween will be delivering
service to. This free service is also deemed pre-sales service and based on its outcomes
and recommendations; courses and programmes are tailored then delivered and sold.
After-sales represents post-course exams, evaluation and feedback. As Takween will
submit feedback to its customers and report their trainees’ progress, it will also receive
feedback from customers and consequently will improve and optimise the courses to
meet their needs.
5.3.3.5 Relationship
Affective relationship with customer and suppliers is significant. Due to the fact that
most of Takween leaders used to work for the potential customers and few competitors,
they have strong established relationships which will be strengthened as long as service
is delivered. Takween leaders who worked for rivals have also good relations with
different suppliers and trainers. HR assessment which gives a chance to Takween
expert to stay at customer premises will also enhance such relation and promote the
business. Takween will keep organising -at its premises- the annual open day which
augments the relationship with customers and suppliers and supports in promoting the
business and any new programmes and services.
5.3.3.6 Superior value proposition
Takween will deliver a group of values mentioned earlier in one complete package as a
superior value proposition that is LTSA. This contractual notion attains two main goals:
outsourcing the customer non-core business and supporting the private sector. Takween
will exceed customer expectation and experience by delivering a comprehensive
package that contains set of values.
5.3.3.7 Sound business model
Since developing a sound business model is CSF, Takween promotes an effective
model that links all its activities creating homogeneity among them that is business
model canvas with ten building blocks. In the sake of business, Takween will optimally
link among the business model building blocks with best utilisation.
50. 49
5.3.3.8 Access to information
Access to information is another critical factor of success without which Takween
cannot continue serving its customers effectively and competitively. As the quality and
the certification are the core values Takween aims to deliver to its customers, it needs
to have enough information mainly about the customer human resources and allocated
budget for training and development. Takween will not save any effort to gather the
required information and create and enhance the relationships and networks.
5.3.3.9 Trust
Takween should build a mutual trust with its customers by delivering quality and
reliable service at high satisfaction level without exaggerating prices. It should also
create trust among its staff by applying a fair policy and firm monitor and control
system which could also prevent internal fraud and corruption.
5.3.3.7 Effective money management
Money will be managed effectively, for instance by avoiding over stock, delaying
supplier payments and expediting getting customer payments. Because Takween will
deliver high quality and accredited courses, there is no room for under pricing.
Takween will not ignore the corruption associated with the payments and tendering.
Contractors are vulnerable to blackmail during bidding stage and after issuing bills to
get paid. Proposing and quoting unique and high quality service reduces the
competition hence weakens the blackmail. However, blackmail is stronger when
contractor claims service payment. Some clients exaggerate the payment delay which
harms the business and the relationship with contractors. As a result, contractor is
obliged to pay bribe to get paid which is forbidden by Islam and law. Takween in this
case will involve factoring firms to collect bills to avoid breaking laws and religion.
5.3.3.7 Governmental support
Takween will register with the governmental SMEs Authority and build relations with
to gain the technical support. While working on establishing the business, Takween
averts falling into the chasm between commercial reality and entrepreneurial dreams by
carrying out effectual market research, feasibility study, and realistic forecasts,
avoiding under and over pricing and market estimations, and considering the worst case
scenario. To get through cash management ‘flow and ebb’ and avoid running out of
cash during earlier period, Takween will have enough cash (LD51k) apart from the
allocated amount for the initial (one time) and monthly expenses.
51. 50
5.3.4 Risk
The expected risks are those associated with competitors adopting imitation strategy
and the decrease in market size and attractiveness (Hisrich et al., 2008); thereby
Takween could promote Ansoff strategy to develop either new services to existing
market or new services to new markets. Payment delay is another risk that could
jeopardise the business. This can be prevented by requesting irrevocable letter of credit
L/C from customers while negotiating contracts and by transferring the risk to third
party, for instance factoring company. Trainers are also source of risk through non-
commitment. This risk can be mitigated by having a database of numerous of trainers to
resort when needed. Takween will also be prepared for unexpected events. The venture
will often keep enough cash to come over those unforeseen events and other risks.
52. 51
Appendixes
Appendix-1 Secondary data
No Secondary Data
1. Libyan-Investment (2013a) announced that labour and Rehabilitation Minister stated that
Libya’s government targets to engage 675,000 graduates and job-seekers in local training
programmes, confirming that all distinguished trainees will be nominated to a further
training abroad. 300 contracts have already been awarded to private training institutions
to train graduates and job-seekers. The aim is to contribute to advancing the job-market
and create jobs (Libyan-Investment, 2013a), and according to Libya-Almostakbal (2012)
LD1.2b has already been allocated for this project. Libya-Aljadidah Magazine has
interviewed the Minister who stated that LD250 million has been allocated for youth
training programmes. The local training will focus on foreign languages, computer and
administrative skills (Libya-Aljadidah, 2013).
2. One of the HRD strategic objectives of Oil&Gas Ministry is to develop sustainable
training and development programmes for the sector workforce (Libyan-Investment,
2013b). Oil&Gas Deputy Minister stressed that a rehabilitation programme has been
approved to train 9913 graduates and prepare them to satisfy the job-market needs (BBC
Monitoring ME, 2014).
3. Warriors Affairs Commission (WAC) General Manager stated that 15% of 165,000 WAC
participants (warriors) chose to complete their postgraduate study abroad and 10% chose
to go for vocational-training, while 40% chose to go for SMEs. All of these will need
training courses in foreign languages, ICT, soft skills, and other specific courses
(Elumami, 2014).
4. Education Ministry targets to deliver vocational-training for about 41,000
warriors/revolutionaries. Education Ministry Scientific Research allocates about £130m
every year for Libyans to study in UK. Government plans to develop ICT infrastructure
and incorporate ICT in all sectors. (UKTI, 2013).
Appendix-2 Primary data
Primary Data
Respondent Qualitative Quantitative
Labour
Ministry &
WAC
(1) The labour Ministry attaches great hopes on the
private training firms to contribute to develop the
national human-capital and bridge the
knowledge/technology to Libya through
partnerships with reputable international
institutions; (2) Successful trainees will be given
advanced training and education abroad through
local firms those have international partnerships;
(3) Firms of low quality product/service are
terminated; (4) Ministry allocated budget covers
also WAC HRD programmes
Ministry secures an annual
contract for any local-private
training firm to train 60
jobseekers on English language,
Computer, Health and Safety
(H&S), and soft skills at fixed
amount (typical price) of
LD3750/trainee.
Oil&Gas (1) Oil&Gas sector policy imposes its companies to
focus on the core business and outsource the rest
including training; (2) Oil&Gas sector believes in
(1) Sector has about 14
different-sized companies those
allocate -in average-
53. 52
the role of private training firms in bridging the gap
between the education outputs and the labour-
market needs; (3) Training contract is awarded
through a tendering (Bid) process, and price and
quality are the dominant benchmark; (4); HR
managers do not prefer overseas training because it
needs IELTS/TOEFL, visa, takes time and
expensive; (5) IELTS, TOEFL, ICDL, IC3,
advanced soft skills and technical courses are
demanded; (6) Customers complain from the lack
of certified courses in local market; (7) many
customers welcomed the idea of training via
videoconferencing; (8) Customers seek services
during weekends; (9) Long-Term Service
Agreement (LTSA) can be awarded to capable
firms.
LD50m/year for training; 40%
out of which is for local
training;
(2) Strict policies minimize the
number of training providers
they deal with to 15 firms.
Banks (1) Banks complain from the obstacles of the
training abroad such as visa, high cost, and IELTS;
(2) Banks want local training firms to offer
advanced programmes such as preparation for
ACCA, forensic accounting, advanced banking,
certified courses, IELTS, TOEFL, IC3, and ICDL;
(3) Contracts are awarded through tenders; (4)
Customers seek services during weekends; (5)
LTSA can be awarded to capable firms.
(1) Sector has 9 different
commercial and investment
banks often deal with about 20
training providers.
(2) Sector usually allocates
about LD7 million on local
training.
Competitors (1) Increasing demand on English and Computer;
(2) Only two training centres organise IELTS
exams, and one organises TOEFL exams; (3)
Native speaker to teach English is a competitive
advantage; (3) Many customers complain from the
poor outcome of courses and wish providers to
apply exams by the course end; (4) It is better for
the training provider to own premises than leasing;
(5) raw materials are available locally.
(1) The market has about 25 real
competitors those provide
services to Banking and
Oil&Gas sectors.
(2) Prices/person/course of
IELTS/TOEFL 500-800 LD/,
IC3/ICDL LD750-1000, soft
skills LD700-1000,
IELTS/TOEFL exam LD250.
57. 56
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