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Key Elements in Strategic Planning: Cases from the Middle East Andrew Ashwin � Content Developer, Biz/ed, Cengage Learning EMEA

LEARNING OBJECTIVES After reading this case study and completing the questions, students should be able to do the following:

• Define the essential characteristic of the term strategy • Explain some of the key issues to consider in strategic planning • Explain how short-term investment decisions can help deliver long-term

strategic goals • Explain how strategic planning can help generate competitive advantage

This case was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. Information was gathered from corporate as well as public sources.

INTRODUCTION Strategic planning involves various elements. In many cases, decision-making with regard to strategic planning is not about immediate results to the bottom line; instead, managers may have to consider spending big on investment projects that will build future capacity and flexibility. Doing so requires managers and leaders to see into the future, not an easy task by any means. Some of their decisions are made with the intention of building some competence that will allow the firm to exploit a possible competitive advantage at some point in the future. These decisions may not see bottom-line results for many years, but the skill of the leader is seeing that investment made now can build the potential of the business to better meet the market demands and the needs of its customers and other stakeholders.

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This case study presents some examples and attempts to explain the decision-making involved in each. The definition of strategy must be kept at the forefront of the mind as we move through this case study; strategy is a comprehensive plan for accomplishing an organization’s goals. The manage- ment role is to identify the “alignment between the organization and its environment and the achievement of strategic goals.” (Griffin)

ETIHAD AIRWAYS Etihad Airways, the national airline of the United Arab Emirates (UAE), is an expanding business. The popularity of the UAE with its businesses and tourism industry is set to increase in the coming years, and Etihad is planning on being a major player in this expansion. The chief operations officer of Etihad, Richard Hill, has commented that the company expects its flight numbers to triple in the next ten years, and as a result it has to plan ahead for this anticipated expansion. The anticipated expansion requires Etihad to have sufficient aircraft to handle the increased number of flights and also sufficient staff. Even if planes and staff are in place, other major logistical management issues need to be considered, and investment in such capacity is vital to the long-term success of the airline and its strategic aims.

To help it achieve its aims, Etihad invested in workforce management software. The software was developed by KronosR. Operating an airline requires planes and crew to be available, a major logistical challenge. The airline has to make sure that it has the planes and the crew in the right locations to meet its flight schedules, and management of this process has to be optimized for the company to be efficient, keep costs under control, meet customer needs, and maintain employee morale.

KRONOSR KronosR provides software that takes into consideration all variables involved in such planning and delivers optimal solutions thatmeet the aims of the business (i.e., managing costs). The process is automated to make sure that employees are deployed effectively and that they get sufficient periods of rest to recover from the rigors of flying across the globe. Richard Hill has said: “The adoption of the KronosR solutions will enable us to increase operational efficiency and improve our strategic resource planning processes to sustain our long-term business strategies.”

Many businesses rely on information as a key part of their business, and in order for information to flow, communication networks have to be in place. Construction planners must ensure that buildings are outfitted with networks for transmitting information. These communication networks have to be capable of carrying increasing amounts of data, including voice, video, and other content, and these have to be carried across both fixed and mobile networks. The services will be used by businesses and individuals and by network providers and carriers; therefore, each system has to be robust and capable of meeting growing needs.

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WIRELESS SERVERS In the UAE, the expansion in construction, especially the growth of high-rise buildings, brought new challenges for meeting communications requirements. To this end, du, one of the leading providers of broadband connectivity and fixed and mobile telephony in the UAE, signed an agreement with iBwave Solutions, an in-building design and planning software provider, to produce hi- tech indoor wireless networks for high-rise buildings in the Emirates.

Users of these buildings will require fast and reliable data access to support the ever-increasing range of mobile technologies. For both companies, the agreement represented an important step in meeting strategic aims. du wanted to become the telecom service of choice in the UAE, and to do this its services had to be efficient and reliable, wherever the customer is. For iBwave, forging a link with du showed that its services offer value added and that both can share a vision for the future of communications technology. In terms of future growth, this sort of tie-up is important to both businesses. For iBwave, the agreement offers an opportunity to expand in the UAE.

Hatem Bamatraf, senior vice president for network development for du said:

du and iBwave share a common goal to provide customers with state-of- the-art wireless mobility services in the UAE. [The new product] will enable us to optimize network efficiency to deliver reliable and innovative services that fulfil our promise to enable better user experience of various services for our customers. We are confident that [the new product] will ensure us long-term sustainability within our operational structure through secured documentation and flexible designs, allowing us to support current and future technologies and deliver on our promise of product and service excellence

ELECTRONIC PAYMENT NETWORKS Iraq faced considerable problems in the early 2000s, but as the country emerged from the chaos of war, steps were being taken to return to some sort of normalcy. Part of this process involved developing the systems that are needed to enable ordinary people to go about their business, which includes being able to use credit and debit cards across the country. Visa, one of the major electronic payments networks, announced in 2009 a deal with Al Amwal, an electronic banking services company, a group of 13 Iraqi banks and the Bank of Baghdad, to expand the network of Visa acceptance points in the country. The deal will enable more Iraqis to have and use a Visa card.

The agreement means that many more people and business in Iraq will be able to use the Visa network. Doing so will help speed up payments, encourage spending, make spending more convenient, encourage businesses to expand, and increase the choice of credit and debit cards in the country. It also means that visitors to Iraq, whether on business or as tourists, can use their cards in a wider variety of outlets, which again makes traveling much easier. Hotels, restaurants, travel agencies, and duty-free shops are expected to take advantage of the agreement to provide these services. The move promotes the transition

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from a cash-based economy, which inherently limits the potential for growth, to a cash-and-credit based one.

This arrangement with Visa is good news for businesses, individuals who use these services, and the economy as a whole. The improvement in payment services encourages additional spending, which in turn helps to provide a boost to the economy as a whole and generates economic growth. Tony Gougassian, Visa’s area manager for Iraq, Levant, and Qatar, said:

We are delighted to extend our global payment services in Iraq and help bring the social and economic benefits which come with electronic payment acceptance. These include stimulating economic growth, promoting transparency and accountability, while also increasing the number of people with access to the formal banking system. Our partnership with Al Amwal and Bank of Baghdad means that Iraqi consumers will be able to take advantage of the increased security, flexibility and convenience that a Visa card offers. Visa debit and credit cards will provide Iraqis and those visiting the country, with a safe and convenient way to shop and access funds, both at home and abroad. (Visa Expands)

For the companies involved, the agreement represents an important opportunity for expanding and providing improved services. As the country rebuilds, services such as banking have to be rebuilt also. Al Amwal has operations in all the Iraqi governorates but wants to expand the number and increase the convenience of its services. As a first step, it hoped to increase the number of point-of-sale (POS) devices in the country from 200 to 400 by the end of 2009, and the link with Visa was anticipated to enable it to meet its strategic aim of increasing the opportunities for Iraqis to make electronic payments.

The Bank of Baghdad aspires to being the leading financial services provider in Iraq. To this end, it aims to make the business and individual customers’ experience with the bank much easier and more convenient, and the agreement with Visa will help in this endeavor. The Bank of Baghdad hoped in 2009 to increase the number of its branches from 25 in the middle of 2009 to 35 by the end of that year. In early 2011, it had managed to open 34 branches.

HUMAN RESOURCES MANAGEMENT Sage Software is a supplier of human resources management (HRM), customer relationship management (CRM), and enterprise resource planning (ERP) software to businesses. ERP allows businesses to plan and manage their resources, both internal and external. These resources might include capital assets and human and financial resources. In seeking out new business, Sage looked for countries where spending on these types of software solutions is increasing, and one market where this is happening is Kuwait, where spending on ERP solutions was forecast to increase by 25% in 2010.

Sage hoped to take advantage of this expansion by working with two partners based in Kuwait to expand its presence in the country. Eastern Solutions and the Arabesque Group launched new products in conjunction

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with Sage at a February 2010 roadshow held in the JW Marriot Hotel in Kuwait. Users of the software were able to see their cash position easily, monitor cash flow, and enable managers to make decisions faster and more accurately based on reliable information generated from the business, by the software.

Sage and its partners in Kuwait hoped to develop their own businesses but also facilitate the development of other businesses in Kuwait. Those businesses that are using the services provided by Sage and its partners have the opportunity to position themselves favorably for the upturn in the global economy following the recession of 2008 and 2009. These companies have their own individual strategic aims but need the sort of solutions provided by Sage to be better able to meet their goals.

Sage’s sales manager for the Gulf region, Reggie Fernandes, summed up the benefits to the group’s clients:

These new solutions will provide tremendous help to organisations who are seeking to strategically position themselves and gain the lead in the impending upturn. We have packed them with multi-national and multi-company capabilities that will simplify management of data from multiple companies, in addition to technologies to secure business integrity. Our plan is to aggressively address the needs of the Kuwaiti market by developing solutions that will add value to our customers’ operations, so that our local clients, which include NBK Capital, Bader Al Sultan, Al Ghanim Industries, Gulf University of Science & Technology, Hits Telecom, Al Fanar Investment Company and Al Manar Financing & Leasing will be the first to benefit from the latest innovations in IT solutions.

These examples highlight the importance of having the right infrastructure to enable businesses to operate effectively. Strategic aims are not always simplymet by increasing sales; gaining competitive advantage may derive from improving the internal operations of the business to enable it to reduce its costs, improve efficiency, and productivity, and thus be in a more competitive position. The complexity of global business requires that more and more companies rely on solutions providers who are specialists in particular fields to give them the edge they need to achieve these aims. The strategy may be, therefore, to improve the inner workings and efficiency of the firm so that it can better compete, and such software solutions can be an important part of this strategy.

QUESTIONS FOR DISCUSSION

1. Using appropriate examples, distinguish between strategy and tactics. 2. Using an example to provide context, identify and explain three key

considerations in formulating any strategic plan. 3. “The adoption of the KronosR solutions will enable us to increase

operational efficiency and improve our strategic resource planning processes to sustain our long-term business strategies.” What do you think Richard Hill meant by this statement? Explain your answer.

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4. Using an example, analyze the importance of having high quality infrastructure in successful strategic planning.

5. To what extent is strategic planning the key to building competitive advantage? Illustrate your answer with examples.

REFERENCES/BIBLIOGRAPHY

“Etihad Airways Selects KronosR to Improve Operational Efficiency” Al Bawaba. 18 November 2009. Retrieved Apr. 2010 from http://www1. albawaba.com/en/business/etihad-airways-selects-kronosr-improve-opera- tional-efficiency

Griffin, R.W. Management (ME Edition). Andover, Hampshire: Cengage Learning, 2008. Print.

Ortiz, Victor Philip. “Kuwait Spending on ERP to Increase by 25 per cent in 2010, says Sage Software.” Pcmag-mideast.com. 14 Feb. 2010. Retrieved Apr. 2010 from http://www.pcmag-mideast.com/2010/02/14/kuwait- spending-on-erp-to-increase-by-25-per-cent-in-2010-says-sage-software/<

“Visa Expands Presence in Iraq.” AMEinfo.com. 2 Aug. 2009. Retrieved 29 January 2011 from http://www.ameinfo.com/205413.html

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