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Case Study

Mohammad Al-Mojil Group (MMG) the energy behind energy

By Didier Cossin and Abraham Hongze Lu

10 pages

December 2015

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Reference: IMD-7-1693

Trading in Mohammad Al-Mojil (MMG)’s shares was suspended in July 2012. The company did not fulfil the losses triggered mandatory reporting rules. In a related case, MMG’s auditor Deloitt & Touche was suspended by the Capital Market Authority (CMA), to be effective beginning 1 June 2015. MMG went public in 2008 after years of phenomenal growth. The company pursued an aggressive growth strategy by out-pricing competitors. However, the strategy failed miserably when additional costs eroded its profit. The company lost significance amount of money which led to constant management and board reshuffle. A number of MMG board members and executives might be prosecuted over possible violations of company laws.

Learning Objective

Meaningful discussion on the role of the board in firm strategy. Reflection on the follow questions: What in your view were the red flags that should have attracted attention? What was the MMG board’s working relationship with management from 2008 to 2014? Could the board have acted differently? Could the banks have acted differently during IPO process? Did MMG board have the right qualifications for the volatile environment in 2008-2009? How will regulatory expectations change going forward?

Keywords

Construction, Strategy, Failure, Auditor, Regulation, Leadership, Board, Governance, Certified Management Accountant, Investigation, Suspension

Settings

Middle East, Saudi Arabia
Mohammad Al-Mojil Group, Construction and Engineering
2008-2015

Type

Published Sources

Available Languages

English

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