For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left, how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 4 – Now could be the best time to create a strategic rift

No one likes a crisis, expects a crisis, looks forward to a crisis and life is better if it does not happen. However, crisis do happen and how you react is key. The first aspect is to know your CSF or Critical Success Factors and ensure they stay in place.

BBSF was similar to most banks in operation, everyone had the same goal to be liquid and meet the government regulations. In normal times, it is not hard. When there is a crisis or a series of events that cascade through the country, suddenly a routine aspect can be a competitive advantage.

Mr. Roumani studied for his MBA at Harvard and was exposed to Michael Porter’s 5 Forces Model and he likes it. Competitive Rivalry is impacted by Threat of New Entry, Buyer Power, Threat of Substitution and Supplier Power.

Competitive Rivalry

What cost does my client incur to switch from my product/service to another? If low, how can I make in higher?

In banking, the switching cost for depositors is almost nil. The way a bank makes it more difficult is add products and services. If they are reasonably happy, they are more likely to be anchored.

In banking, there is very little differentiation when it comes to loans. The money comes from Bank A or B and the rate is the only determinant for differentiation. The CSF is to price competitively. During the crisis, the liquidity of banks was different. Analyzing other banks for liquidity, made rate setting a more important CSF.

Threat of New Entry

In every stable economy, there are always plans to add more competition. In times of conflict, those who wanted to come into the market hold their plans.

What is different can be technology. Prior to the conflict, the main servers would be located centrally because it made logical sense to do so. In Syria the center of the country was where the fighting started, how does the company change to a star system to allow greater independence in the network? For a bank, do the ATMs work?

Supplier Power

Who are your main suppliers? Who is at risk of going out of business? Do you have alternative suppliers? At BSF, they stockpiled things banks used such as ATM paper rolls, printer ink. During a war, the basics of water and diesel are more important, can the business be supplied?

Threat of Substitution

What products/services were usually substituted for yours before the crisis? are there emerging substitutes in the market? One area, BBSF saw as an opportunity, when people moved their money from the bank, where was it going? Some went into gold, BBSF offered safe deposit boxes.

Buyer Power

How powerful is your client in deciding to choose your product over another? Has the crisis changed this? Is the buyer more in demand?

What to do with the competitive analysis: Focus on what matters

In times of crisis, having a clear vision of what your company aspires to achieve is fundamental; it provides clarity, purpose and direction. In unsettled times, the room for misunderstanding, miscommunication and disorientation grows.

A corporate strategy relates to the overall direction of the company. A company should have corporate strategic objectives it wishes to fulfill. At BBSF, the vision is to be the number one bank of all Syrians. One of the strategic objectives was to be a great employer.

Achieving this requires several tactics. A one page strategy map is laid out. The next aspect is a SWOT or Strentgths, Weaknesses, Opportunities, Threats is clearly laid out.

Your vision should be one sentence. Keep it simple.

The strategic objectives should in principle work towards satisfying the vision. The tactics explain the how to element. They help explain the actions to be taken. No more than 5 tactics for each strategic objectives.

Finally, a set of 5 overriding values and business principles that govern the overall ethics and code of conduct expected from your company. Setting the ethical compass is important.

Linking to dividend paying stocks, when you buy these types of companies, it should be easy to see the vision and values of the company. There are many voices and consultants to ensure they exist and the company lives the vision. As an investor, if you agree you can invest your money into the company, understanding you want to see a profit to pay dividends. The company can do other things, but as an investor you have your priorities.

There are more questions than answers, till the next time – to raising questions.