Chapter 9.2, Problem 1.1CQ

Explanation of Solution

Management, organization, and technology factors contributed to the problem:

Management factors:

• The Soma Bay development company’s profitability has been affected enormously by the political conditions and economic changes.
• Political upheaval of President Mubarak in 2011 during Egyptian revolution resulted in devaluation of the Egyptian currency.
• The downing of commercial airlines in 2015 in the area of Sinai Desert, has taken a hit on the tourism industry, a loss of 1.3 billion US dollars since that incident.
• Particularly to Soma Bay development company, occupancy rates reduced from 50% in 2015 to a low of 25% in beginning of 2016.
• Even though, currency fluctuations and political instability are factors beyond the company’s control, the company’s management should do risk management and strategically monitor the operation costs to recover from the losses...