1. Dr Ridhwan Fontaine Week 6
Strategy
Dr Ridhwan Fontaine
Week 6

2. Today’s class Review the course so far Talk about internal analysis
Talk about the Ford Story
I plan to leave at 10.30pm insha Allah

3. Proposed objectives
1. Explain the difference between strategy and planning
2. Explain the conventional strategic management model
3. Explain the importance of managing risk
4. Explain the critical importance of Islamic leadership
5. Explain the importance of unintended consequences

4. The Typical Approach Definition of success: Profit Maximization
Strategic formulation
Strategic implementation (a.k.a strategic execution)
Common problem
Dysfunctional organization (people lying to another, no trust,…..)
90% failure rate

5. Our Approach: POS
Definition of success for leaders: Paradise after we die. Maximize social benefits in this life.
Definition of success for the organization: Achieve the strategic objectives
Approach:
People first – leaders must internalise Islamic values and internalise systems thinking
Operational excellence => this gives you strategic flexibility
Strategic flexibility allows you to develop effective strategies

6. Internal analysis, processes and policies & Ford case study
7th July
Internal analysis, processes and policies & Ford case study
14th July
Generic strategy and strategic decision making
21st July
Systems thinking and iceberg model
28th July
Putting it all together, POS
30th July
Final exam based heavily on Ford case study

7. Doing the Right Thing Right
Net Profit
Legal Status
Social benefit
Importing luxury cars
1 million
Halal
Minimum
Providing basic clinical services in a community where there are no other medical facility
500,000
Maximum
Providing basic clinical services to high net-worth individuals in a community where there are other medical facilities
1.5 million

8. Islamic Leadership Workshop
To develop an Islamic corporate culture is easy => everybody needs to have a shared understanding of the Qur’an and Sunnah
This can be developed at work on a weekly basis (1h every week) – HOD facilitates the process, the content is on line
In the long run, these values prevent people from lying, backbiting and playing politics inside the company

9. Conventional strategic model
External analysis (Porter 5 Forces)
Internal Analysis (policies and processes)
Generic strategy (cost or quality)
Strategic Decision Making

10. Michael Porter 5 Forces

11. Internal Analysis
Processes (time) – your speed compared to other competitors
Policies (% of sales) – guidelines from top management compared to other competitors

12. Scenario 1: Company A is a low cost provider
Core Process
Company A
Company B
Company C
Finding new employees
3 weeks
2 weeks
1 week
Finding new customers
Manufacturing
48 hours
24 hours
Collecting money from customers
40 days
30 days

13. Scenario 1: Company A is a low cost provider
Key Policies
Company A
Company B
Company C HR
3% of sales
4% of sales
Marketing
20% of sales
10% of sales
Manufacturing
30% of sales

14. Scenario 1: Company A is a low cost provider
It takes time to fix a problem
If company A invests less in marketing (e.g. reduce marketing budget from 20% to 10%) and invests more into manufacturing (e.g. increase manufacturing budget from 20% to 30%), the company might have a chance to survive in the long run.
It will take 3 years or more for the differences to show

15. Scenario 1: Company A – 3 years later
Why did the finding new customers drop from 2 weeks to 1 week even though the company reduced the marketing budget?
Core Process
Company A
Company B
Company C
Finding new employees
3 weeks
2 weeks
1 week
Finding new customers
1 weeks
Manufacturing
24 hours
Collecting money from customers
40 days
30 days

16. Scenario 1: Company A – 3 years later
Why did the finding new customers drop from 2 weeks to 1 week even though the company reduced the marketing budget?
Core Process
Company A
Company B
Company C
Finding new employees
3 weeks
2 weeks
1 week
Finding new customers
1 weeks
Manufacturing
24 hours
Collecting money from customers
40 days
30 days
The unintended consequences of investing too much in marketing and not enough in manufacturing was to increase the inefficiency of the marketing function

17. Key lessons Accepting reality Being Practical Being patient
If you are not as good as your competitors, don’t hide. Turn it into a state of urgency.
Use data to set you free
Being Practical
Top management policy has to be simple and effective (e.g. allocating more money to A and less money to B)
Strategy is about deciding what to do and what not to do
Being patient
If it takes 3 years for a new policy to show results, you cannot measure the performance of a CEO on an annual basis.

18. Someone give an example for scenario 2

19. Ford Case Study
The problem
The solution

20. Proposed objectives compared to the Ford Case
1. Explain the difference between strategy and planning
2. Explain the conventional strategic management model
3. Explain the importance of managing risk
4. Explain the critical importance of Islamic leadership
5. Explain the importance of unintended consequences

21. POS compared to the Ford Case
People first?
Operational excellence?
Strategic flexibility?