What Is Ecolab's Rapid Growth?

The Northern part of Africa has been experiencing a constant growth rate in GDP, and therefore an increase in disposable income. As this area further develops, there is an increase in home sales as well. Both of these factors were key economic drivers mentioned previously that help to promote the pest elimination industry. For these reasons, Ecolab would benefit greatly from entering one of the countries shown in exhibit (MAP). These countries consist of Algeria, Egypt, and Nigeria. After careful analysis it is believed that Ecolab will substantially benefit from an entry into Egypt, which has experienced a 4.2% rise in GDP, the highest of the available countries according to The World Bank. Currently Ecolab already holds an office in Egypt
for water treatment; therefore, since Ecolab is already established in Egypt, they have an established knowledge of the company. With that being said, it is believed that a joint venture would be beneficial because it is still a new industry in that area, and Ecolab places customer service at the forefront of their operations. After further examination, it was found that Egypt has an Agricultural Pesticides committee within their government. According to their website, the council has seven guiding principles, all of which align extremely well with the ethics and culture of Ecolab. It should be noted that two of their top seven principles are to serve with honesty, integrity, and quality, and to promote innovation and creativity to improve the pesticide regulatory system. As previously mentioned, Ecolab has been named The Most Ethical Company nine years in a row; this competency can easily be leveraged to work with the Egyptian government concerning the first principle mentioned. For the second guiding principle, Ecolab continues to strive to create innovative products with new technologies, which is also a key focus area for the Egyptian government. A more detailed description of the Agricultural Pesticides Committee’s guiding principles can be found in exhibit (AGRICULTURAL PRINCIPLES). A potential partner that Ecolab could join would be Bug Busters, a local Egyptian company well established in the area. A core competency of Bug Busters that aligns with Ecolab’s culture is their usage of an IPM-Integrated Pest Management System. Essentially, this system ensures that their products successfully eliminate the pests, while also reducing the hazards to people, property, and the local environments.
Additionally, Bug Busters places customer service on top of their priorities, something that Ecolab values greatly. This joint venture options creates multiple benefits for Ecolab. Pursuing this option will help marginalize their seasonal revenues, a problem in which Ecolab has struggles to combat in recent years. Since the weather patterns in Egypt are more consistent, the pest populations do not vary according to the time of year as dramatically as in other areas. Additionally, the joint venture option allows Ecolab to enter the area with assistance in the areas of culture, trust, and the types of pests needed to be eliminated. After completing a thorough financial evaluation, it was found that the opportunity cost of capital is approximately 9.17%, assuming an initial investment of $10,000,000, Ecolab’s breakeven point would be a revenue of at least $917,000 a year. This allows for a payback period of roughly 10.97 years. Overall, taking all of the above into consideration, it is believed that this option would greatly benefit Ecolab, and align with their core principles
excellently.