Leadership in Ethiopia

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thesis on management in ethiopia

  • Abeba Beyene Mengistu 6 &
  • Terri R. Lituchy 7  

Part of the book series: Palgrave Studies in African Leadership ((PSAL))

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The objective of this chapter is to provide vital and well-researched information on indigenous and modern leadership practices and investment opportunities in Ethiopia. Secondary data was obtained from research articles, books, newspapers, and the Internet. Semi-structured interviews were conducted with two foreign and two local leaders. Findings indicate the existence of well-established and currently exercised indigenous and modern leadership practices in the country. Ethiopians were basically described as a very hospitable and respectful people having high self-respect and self-pride. Both secondary and primary data analysis confirm the suitability of the country for investments because of the prevailing huge investment opportunity, political stability, peace and self-security, sufficiently knowledgeable and experienced human resources, and the friendly nature of the Ethiopian people.

A powerful friend becomes a powerful enemy. (Ethiopian Proverb)

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Mengistu, A.B., Lituchy, T.R. (2017). Leadership in Ethiopia. In: LEAD: Leadership Effectiveness in Africa and the African Diaspora. Palgrave Studies in African Leadership. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-59121-0_12

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ABSTRACT Analysis of the completed projects show that a significant number of projects exceed the planned time and costs and consequently reducing the benefits. Among many causes of project failure, it is widely recognized/ identified/that poor planning has an impact on project performance/success/. The main objective of the research presented in this paper was to assess the role of project planning on project performance in Ethiopia. In order to achieve the objectives, information of past/executed/ projects was collected from 43 organizations. A questionnaire survey conducted to collect data from the respondents that consisted of project manager, supervisors, and other related respondents. The study used SPSS version 20 for correlation and regression analysis, and MTS to identify the influential/important/ planning process/activities under each planning knowledge areas. The findings of the thesis indicate that the main planning input factors that affect the performance of planning processes are: - human, management, technical and organizational factors. And also the finding identifies the main problem areas in planning processes as risk, scope, quality human resource, and integration knowledge areas were inadequately/poorly/ performed in the studied project. The result of the finding also identifies 15 influential planning activities that affect the performance of project out come. This paper recommends an organization that conducts any project should improve the poor/inadequate planning performance of the identified knowledge areas. It is also important for the organization to spend more efforts in the identified planning activities to improve the performance of their project outcome.


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Bridging private equity’s value creation gap

For the past 40 years or so, private equity (PE) buyout managers largely invested capital in an environment of declining interest rates and escalating asset prices. During that period, they were able to rely on financial leverage, enhanced tax and debt structures, and increasing valuations on high-quality assets to generate outsize returns for investors and create value.

Times have changed , however. Since 2020, the cost of debt has increased and liquidity in debt markets is harder to access given current interest rates, asset valuations, and typical bank borrowing standards. Fund performance has suffered as a result: PE buyout entry multiples declined from 11.9 to 11.0 times EBITDA through the first nine months of 2023. 1 2024 Global Private Markets Review , McKinsey, March 2024.

Even as debt markets begin to bounce back, a new macroeconomic reality is setting in—one that requires more than just financial acumen to drive returns. Buyout managers now need to focus on operational value creation strategies for revenue growth, as well as margin expansion to offset compression of multiples and to deliver desired returns to investors.

Based on our years of research and experience working with a range of private-capital firms across the globe, we have identified two key principles to maximize operational value creation.

First, buyout managers should invest with operational value creation at the forefront . This means that in addition to strategic diligence, they should conduct operational diligence for new assets. Their focus should be on developing a rigorous, bespoke, and integrated approach to assessing top-line and operational efficiency. During the underwriting process, managers can also identify actions that could expand and improve EBITDA margins and growth rates during the holding period, identify the costs involved in this transformation, and create rough timelines to track the assets’ performance. And if they acquire the asset, the manager should: 1) clearly establish the value creation objectives before deal signing, 2) emphasize operational and top-line improvements after closing, and 3) pursue continual improvements in ways of working with portfolio companies. Meanwhile, for existing assets, the manager should ensure that the level of oversight and monitoring is closely aligned with the health of each asset.

Second, everyone should understand and have a hand in improving operations . Within the PE firm, the operating group and deal teams should work together to enable and hold portfolio companies accountable for the execution of the value creation plan. This begins with an explicit focus on “linking talent to value”—ensuring leaders with the right combination of skills and experience are in place and empowered to deliver the plan, improve internal processes, and build organizational capabilities.

In our experience, getting these two principles right can significantly improve PE fund performance. Our initial analysis of more than 100 PE funds with vintages after 2020 indicates that general partners that focus on creating value through asset operations achieve a higher internal rate of return—up to two to three percentage points higher, on average—compared with peers.

The case for operational efficiency

The ongoing macroeconomic uncertainty has made it difficult for buyout managers to achieve historical levels of returns in the PE buyout industry using old ways of value creation. 2 Overall, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later, and exited 2021 or before, can be attributed to market multiple expansion and leverage. See 2024 Global Private Markets Review .   And it’s not going to get any easier anytime soon, for two reasons.

Higher-for-longer rates will trigger financing issues

The US Federal Reserve projects that the federal funds rate will remain around 4.5 percent through 2024, then potentially drop to about 3.0 percent by the end of 2026. 3 “Summary of economic projections,” Federal Reserve Board, December 13, 2023.   Yet, even if rates decline by 200 basis points over the next two years, they will still be higher than they were over the past four years when PE buyout deals were underwritten.

This could create issues with recapitalization or floating interest rate resets for a portfolio company’s standing debt. Consider that the average borrower takes a leveraged loan at an interest coverage ratio of about three times EBIDTA (or 3x). 4 The interest coverage ratio is an indicator of a borrower’s ability to service debt, or potential default risk.   With rising interest expenses and additional profitability headwinds, these coverage ratios could quickly fall below 2x and get close to or trip covenant triggers around 1x. In 2023, for example, the average leveraged loan in the healthcare and software industries was already at less than a 2x interest coverage ratio. 5 James Gelfer and Stephanie Rader, “What’s the worst that could happen? Default and recovery rates in private credit,” Goldman Sachs, April 20, 2023.   To avoid a covenant breach, or (if needed) increasing recapitalization capital available without equity paydown, managers will need to rely on operational efficiency to increase EBITDA.

Valuations are mismatched

If interest rates remain high, the most recent vintage of PE assets is likely to face valuation mismatches at exit, or extended hold periods until value can be realized. Moreover, valuation of PE assets has remained high relative to their public-market equivalents, partly a result of the natural lag in how these assets are marked to market. As the CEO of Harvard University’s endowment explained in Harvard’s 2023 annual report, it will likely take more time for private valuations to fully reflect market conditions due to the continued slowdown in exits and financing rounds. 6 Message from the CEO of Harvard Management Company, September 2023.

Adapting PE’s value creation approach

Operational efficiency isn’t a new concept in the PE world. We’ve previously written  about the strategic shift among firms, increasingly notable since 2018, moving from the historical “buy smart and hold” approach to one of “acquire, align on strategy, and improve operating performance.”

However, the role of operations in creating more value is no longer just a source of competitive advantage but a competitive necessity for managers. Let’s take a closer look at the two principles that can create operational efficiency.

Invest with operational value creation at the forefront

PE fund managers can improve the profitability and exit valuations of assets by having operations-related conversations up front.

Assessing new assets. Prior to acquiring an asset, PE managers typically conduct financial and strategic diligence to refine their understanding of a given market and the asset’s position in that market. They should also undertake operational diligence—if they are not already doing so—to develop a holistic view of the asset to inform their value creation agenda.

Operational diligence involves the detailed assessment of an asset’s operations, including identification of opportunities to improve margins or accelerate organic growth. A well-executed operational-diligence process can reveal or confirm which types of initiatives could generate top-line and efficiency-driven value, the estimated cash flow improvements these initiatives could generate, the approximate timing of any cash flow improvements, and the potential costs of such initiatives.

The results of an operational-diligence process can be advantageous in other ways, too. Managers can use the findings to create a compelling value creation plan, or a detailed memo summarizing the near-term improvement opportunities available in the current profit-and-loss statement, as well as potential opportunities for expansion into adjacencies or new markets. After this step is done, they should determine, in collaboration with their operating-group colleagues, whether they have the appropriate leaders in place to successfully implement the value creation plan.

These results can also help managers resolve any potential issues up front, prior to deal signing, which in turn could increase the likelihood of receiving investment committee approval for the acquisition. Managers also can share the diligence findings with co-investors and financiers to help boost their confidence in the investment and the associated value creation thesis.

It is crucial that managers have in-depth familiarity with company operations, since operational diligence is not just an analytical-sizing exercise. If they perform operational diligence well, they can ensure that the full value creation strategy and performance improvement opportunities are embedded in the annual operating plan and the longer-term three- to five-year plan of the portfolio company’s management team.

Assessing existing assets. When it comes to existing assets, a fundamental question for PE managers is how to continue to improve performance throughout the deal life cycle. Particularly in the current macroeconomic and geopolitical environment, where uncertainty reigns, managers should focus more—and more often—on directly monitoring assets and intervening when required. They can complement this monitoring with routine touchpoints with the CEO, CFO, and chief transformation officer (CTO) of individual assets to get updates on critical initiatives driving the value creation plan, along with ensuring their operating group has full access to each portfolio company’s financials. Few PE managers currently provide this level of transparency into their assets’ performance.

To effectively monitor existing assets, managers can use key performance indicators (KPIs) directly linked to the fund’s investment thesis. For instance, if the fund’s investment thesis is centered on the availability of inventory, they may rigorously track forecasts of supply and demand and order volumes. This way, they can identify and address issues with inventory early on. Some managers pull information directly from the enterprise resource planning systems in their portfolio companies to get full visibility into operations. Others have set up specific “transformation management offices” to support performance improvements in key assets and improve transparency on key initiatives.

We’ve seen managers adopt various approaches with assets that are on track to meet return hurdles. They have frequent discussions with the portfolio company’s management team, perform quarterly credit checks on key suppliers and customers to ensure stability of their extended operations, and do a detailed review of the portfolio company’s operations and financial performance two to three years into the hold period. Managers can therefore confirm whether the management team is delivering on their value creation plans and also identify any new opportunities associated with the well-performing assets.

If existing assets are underperforming or distressed, managers’ prompt interventions to improve operations in the near term, and improve revenue over the medium term, can determine whether they should continue to own the asset or reduce their equity position through a bankruptcy proceeding. One manager implemented a cash management program to monitor and improve the cash flow for an underperforming retail asset of a portfolio company. The approach helped the portfolio company overcome a peak cash flow crisis period, avoid tripping liquidity covenants in an asset-backed loan, and get the time needed for the asset’s long-term performance to improve.

Reassess internal operations and governance

In addition to operational improvements, managers should also assess their own operations and consider shifting to an operating model that encourages increased engagement between their team and the portfolio companies. They should cultivate a stable of trusted, experienced executives within the operating group. They should empower these executives to be equal collaborators with the deal team in determining the value available in the asset to be underwritten, developing an appropriate value creation strategy, and overseeing performance of the portfolio company’s management.

Shift to a ‘just right’ operating model for operating partners. The operating model through which buyout managers engage with portfolio companies should be “just right”—that is, aligned with the fund’s overall strategy, how the fund is structured, and who sets the strategic vision for each individual portfolio company.

There are two types of engagement operating models—consultative and directive. When choosing an operating model, firms should align their hiring and internal capabilities to support their operating norms, how they add value to their portfolio companies, and the desired relationship with the management team (exhibit).

Take the example of a traditional buyout manager that acquires good companies with good management teams. In such a case, the portfolio company’s management team is likely to already have a strategic vision for the asset. These managers may therefore choose a more consultative engagement approach (for instance, providing advice and support to the portfolio company for any board-related issues or other challenges).

For value- or operations-focused funds, the manager may have higher ownership in the strategic vision for the asset, so their initial goal should be to develop a management team that can deliver on a specific investment thesis. In this case, the support required by the portfolio company could be less specialized (for example, the manager helps in hiring the right talent for key functional areas), and more integrative, to ensure a successful end-to-end transformation for the asset. As such, a more directive or oversight-focused engagement operating model may be preferred.

Successful execution of these engagement models requires the operating group to have the right talent mix and experience levels. If the manager implements a “generalist” coverage model, for example, where the focus is on monitoring and overseeing portfolio companies, the operating group will need people with the ability (and experience) to support the management in end-to-end transformations. However, a different type of skill set is required if the manager chooses a “specialist” coverage model, where the focus is on providing functional guidance and expertise (leaving transformations to the portfolio company’s management teams). Larger and more mature operating groups frequently use a mix of both talent pools.

Empower the operating group. In the past, many buyout managers did not have operating teams, so they relied on the management teams in the portfolio companies to fully identify and implement the value creation plan while running the asset’s day-to-day operations. Over time, many top PE funds began to establish internal operating groups  to provide strategic direction, coaching, and support to their portfolio companies. The operating groups, however, tended to take a back seat to deal teams, largely because legacy mindsets and governance structures placed responsibility for the performance of an asset on the deal team. In our view, while the deal team needs to remain responsible and accountable for the deal, certain tasks can be delegated to the operating group.

Some managers give their operating group members seats on portfolio company boards, hiring authority for key executives, and even decision-making rights on certain value creation strategies within the portfolio. For optimal performance, these operating groups should have leaders with prior C-suite responsibility or commensurate accountability within the PE fund and experience executing cross-functional mandates and company transformations. Certain funds with a core commitment to portfolio value creation include the leader of the operating group on the investment committee. Less-experienced members of the operating group can have consultative arrangements or peer-to-peer relationships with key portfolio company leaders.

Since the main KPIs for operating teams are financial, it is critical that their leaders understand a buyout asset’s business model, financing, and general market dynamics. The operating group should also be involved in the deal during the diligence phase, and participate in the development of the value creation thesis as well as the underwriting process. Upon deal close, the operating team should be as empowered as the deal team to serve as stewards of the asset and resolve issues concerning company operations.

Some funds also are hiring CTOs  for their portfolio companies to steer them through large transformations. Similar to the CTO in any organization , they help the organization align on a common vision, translate strategy into concrete initiatives for better performance, and create a system of continuous improvement and growth for the employees. However, when deployed by the PE fund, the CTO also often serves as a bridge between the PE fund and the portfolio company and can serve as a plug-and-play executive to fill short-term gaps in the portfolio company management team. In many instances, the CTO is given signatory, and occasionally broader, functional responsibilities. In addition, their personal incentives can be aligned with the fund’s desired outcomes. For example, funds may tie an element of the CTO’s overall compensation to EBITDA improvement or the success of the transformation.

Bring best-of-breed capabilities to portfolio companies. Buyout managers can bring a range of compelling capabilities to their portfolio companies, especially to smaller and midmarket companies and their internal operating teams. Our conversations with industry stakeholders revealed that buyout managers’ skills can be particularly useful in the following three areas:

  • Procurement. Portfolio companies can draw on a buyout manager’s long-established procurement processes, team, and negotiating support. For instance, managers often have prenegotiated rates with suppliers or group purchasing arrangements that portfolio companies can leverage to minimize their own procurement costs and reduce third-party spending.
  • Executive talent. They can also capitalize on the diverse and robust network of top talent that buyout managers have likely cultivated over time, including homegrown leaders and ones found through executive search firms (both within and outside the PE industry).
  • Partners. Similarly, they can work with the buyout manager’s roster of external experts, business partners, suppliers, and advisers to find the best solutions to their emerging business challenges (for instance, gaining access to offshore resources during a carve-out transaction).

Ongoing macroeconomic uncertainty is creating unprecedented times in the PE buyout industry. Managers should use this as an opportunity to redouble their efforts on creating operational improvements in their existing portfolio, as well as new assets. It won’t be easy to adapt and evolve value creation processes and practices, but managers that succeed have an opportunity to close the gap between the current state of value creation and historical returns and outperform their peers.

Jose Luis Blanco is a senior partner in McKinsey’s New York office, where Matthew Maloney is a partner; William Bundy is a partner in the Washington, DC, office; and Jason Phillips is a senior partner in the London office.

The authors wish to thank Louis Dufau and Bill Leigh for their contributions to this article.

This article was edited by Arshiya Khullar, an editor in McKinsey’s Gurugram office.

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  2. Thesis project on Abba Jifar place Ethiopia

  3. Thesis and Dissertation Evaluation Format in All Ethiopian Universities(በአማርኛ)

  4. MoWIE Strategy to roll out Rural Public Utility Management Model in Ethiopia

  5. Ethiopia [ታሪክ] ጓድ መንግሥቱ ባለቤታቸውን የሚያሯሩጡበት ምስጢር Wubanchi Bishaw| አዲስ አበባ

  6. Thesis Management System


  1. PDF Jimma University College of Business and Economics Department of Management

    A Thesis Submitted to the School of Graduate Studies of Jimma University in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (MBA) BY: ALEEM ABDUL-KAREEM JIMMA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF MANAGEMENT JUNE, 2017 JIMMA, ETHIOPIA

  2. (Pdf) Addis Ababa University School of Commerce Project Management

    ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE PROJECT MANAGEMENT Practices of Project Manager Selection in Ethio Telecom By: Ali Fentaw A Research Project Submitted in Partial Fulfillment of the Requirements for Obtaining the Degree of Masters of Project Management Advisor: TeklegiorgisAssefa, Ass.Prof. June, 2017 Addis Ababa, Ethiopia i ADDIS ...

  3. PDF An Assessement of Ethiopian Tourism Strategic Management Practices in

    A THESIS SUBMITTED TO DEPARTMENT OF BUSINESS ... management program at St. Mary's university, and it has not been submitted to any other ... Ethiopia is blessed with abundant natural and Man-Made tourist attractions including nine world heritage sites which include tangible and intangible attractions. From tangible attractions,


    Ethiopia A Thesis Submitted to the Department of Management, School of Graduate Studies HARAMAYA UNIVERSITY In partial Fulfillment of the Requirements for the degree of MASTER OF ARTS IN BUSINESS ADMINISTRATION Elias Orebo NOVEMBER 2019 Haramaya University, Haramaya .

  5. (PDF) The challenges of management research in Africa: A study of

    Department of Management, Facult y of Business, Economics and Social Sciences, Unity University, Addis Ababa, Ethiopia. Received 16 January, 2019; Accepted 26 June, 2019

  6. PDF Mekelle University College of Business and Economics Department ...

    A THESIS SUBMITTED TO MEKELLE UNIVERSITY DEPARTMENT OF MANAGEMENT IN PARTIAL FULFILLMENT OF MASTER OF ARTS IN BUSINESS ... KIBIRET DESSALEGN (MBA) JUNE 2014 MEKELLE, ETHIOPIA View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by IDS OpenDocs. ii Mekelle University College of Business and Economics

  7. Addis Ababa University Assessment on Practices and Challenges of

    Government and organizations spent huge money on management consultancy. For example, In Uk from 1979 to 2006 the central government has spent £ 20 billion for management consultants (kipping and Martin, 2005). By the same token, constancy service has become buzzy word in Africa and Ethiopia, under the name of public service reform.

  8. Project Management : [491] Collection home page


  9. Ethiopian Construction Project Management Maturity Model Determination

    Ethiopian Construction Project Management Maturity Model Determination and Correlational Prediction of Project Success by Hailemeskel T. Hailemarkos MPhil, Walden University, 2019 MA, IGNOU, India New Delhi 2019 MBA, IGNOU, India New Delhi, 2013 BsC Civil Engineering, Addis Ababa University Ethiopia, 1998


    A Thesis Submitted to St. Mary's University School of Graduate Studies In Partial Fulfillment of the Requirements for the Award of Degree of Master of Business Administration (MBA) By: Shimeles Asaminew Advisor: Zemenu Aynadis (Assis. Prof.) June, 2021 Addis Ababa, Ethiopia


    the case of bibugn district, amhara regional state, ethiopia. lakachew limenih yizenegaw main advisor: alemayehu muluneh /phd/ co-advisor: fantaw yimer /professor/ a thesis proposal submitted to the department of agro forestry, wondogenet college of forestry and natural resources school of graduate studies hawassa university, wondogenet, ethiopia

  12. PDF By Firehiwot Animaw July, 2019 Addis Ababa. Ethiopia

    a thesis submited to st.mary's university, school of graduate studies in partial fulfillment of the requirements for the degree of masters of project management july, 2019 addis ababa. ethiopia. st.mary's university school of graduate studies faculty of business project management practices: a case study of addis ababaw ater and sew earage

  13. Leadership in Ethiopia

    The vision has been backed by prudent macro-policy management and significant investments in infrastructure. Ethiopia holds a long record of steady economic growth" (Ministry for Foreign Affairs of Finland, 2014). A recent research by Ekor, Adeniyi, and Saka (2015, p. 1) stated, "The country is considered to have huge but untapped ...

  14. Challenges of Financial Management System in Some Selected Ethiopian

    relationship, politically and an instrument to build national images. The purpose of this thesis was to study Challenges of financial management system in some selected Ethiopian primer league Football clubs (Adama city FC, Ethiopia Coffee SC, Hawassa Kenema SC, Saint George SC and Sebeta City FC.

  15. The Role of Project Planning on Project Performance in Ethiopia

    The findings of the thesis indicate that the main planning input factors that affect the performance of planning processes are: - human, management, technical and organizational factors. And also the finding identifies the main problem areas in planning processes as risk, scope, quality human resource, and integration knowledge areas were ...

  16. PDF St. Mary's University marketing management Master's Thesis Proposal

    users in addis ababa, ethiopia by getnet endazenaw a thesis submitted to st. mary university; school of graduate studies in partial fulfilement of the requerements for the award of the degree of master of marketing management may, 2019 addis ababa, ethiopia

  17. PDF The Practices, Challenges and Opportunities of School Based Management

    As members of Board of examiners the final MA thesis open defense, we certify that we have read and evaluated the thesis prepared by Gudisa Giragn titled, "Practices, Challenges and Opportunities of School Based Management in Government Secondary Schools of Jimma Zone" and recommended that the thesis be accepted as fulfilling the thesis

  18. PDF St. Mary'S University


  19. (PDF) Quality management practice in Ethiopia

    Quality management practice in Ethiopia. September 2014. AFRICAN JOURNAL OF BUSINESS MANAGEMENT 8 (17):689-699. DOI: 10.5897/AJBM2013.1624. Authors: Birhanu Beshah. Addis Ababa University. Daniel ...

  20. PDF School of Graduate Studies Department of Project Management

    department of project management analysis of success factors for enterprise resource planning project implementation: the case of ethio telecom by: tsegaye bekele tekle advisor: wubshet bekalu (phd) a thesis submitted in partial fulfillment of the requirements for the award of master of art in project management.

  21. Bridging private equity's value creation gap

    As the CEO of Harvard University's endowment explained in Harvard's 2023 annual report, it will likely take more time for private valuations to fully reflect market conditions due to the continued slowdown in exits and financing rounds. 6 Message from the CEO of Harvard Management Company, September 2023. Adapting PE's value creation approach

  22. Maximilian Löffel successfully defends his doctoral thesis

    On April 17th, Maximilian Löffel successfully defended his doctorate thesis at the Chair of Logistics Management. Congratulations! ... Since starting his doctorate at the Department of Management, Technology, and Economics in 2020, Maximilian has collaborated with various nonprofit partners, particularly through the HumOSCM Lab at the Chair of ...