Appendix Analyzing Cases and Preparing for Class Discussions is book, properly understood, is really about how to analyze cases. Just reading the book, however, is no more likely to fully develop one’s skills as a strategist than reading a book about golf will make one a golfer. Practice in applying the concepts and tools is essential. Cases provide the opportunity for this necessary practice. Why the Case Method? ‘The core of many strategic management courses is the case method of instruction. Under the case method, you will study and discuss the real-world challenges and dilemmas that face managers in firms. Cases are typically accounts of situations that a firm or manager has faced at a given point in time. By necessity, cases do not possess the same degree of complexity that a manager faces in the real world, but they do pro- vide a concrete set of facts that suggest challenges and opportunities that real man- agers have faced. Very few cases have cleat answers. The case method encourages you to engage problems directly and propose solutions or strategies in the face of incom plete information. To succeed at the case method, you must develop the capability to analyze and synthesize data that are sometimes ambiguous and conflicting. You must be able to prioritize issues and opportunities and make decisions in the face of ambiguous and incomplete information. Finally, you must be able to persuade others to adopt your point of view. In an applied field like strategic management, the real test of learning is how well you can apply knowledge to real-world situations. Strategic management cases offer you the opportunity to develop judgment and wisdom in applying your conceptual know!- edge. By applying the concepts you have learned to the relatively unstructured informa- tion in a case, you develop judgment in applying concepts. Alfred North Whitehead discussed the importance of application to knowledge: This discussion rejects the doctrine that students should first learn passively, and then, fuaving learned, should apply knowledge... For the very meaning of the things known is wrapped up in their relationship beyond themselves. This unapplied knowledge is knowledge shorn ofits meaning. ‘Alfred Nowth Whitehead (1947). Ema Scene nd Phisspy. New York: Philosophical Libary, Ine pp. 218-218 ‘Thus, you gain knowledge as you apply concepts. With the case method, you do not passively absorb wisdom imparted from your instructor, but actively develop it as, you wrestle with the real-world situations described in the cases. 343344 Appeadie How to Analyze Cases Before discussing how to analyze a case, it may be useful to comment on how not to prepare a case. We see two comunon failings in case preparation that often go hand-in-hand. First, students often do not apply conceptual frameworks ina Figorous and systematic manner. Second, many students do not devote suffi- cient time to reading, analyzing, and discussing a case before class. Many stu- dents succumb to the temptation to quickly read a case and latch on to the most visible issues that present themselves. Thus, they come to class prepared to make only a few superficial observations about a case. Often, they entirely miss the deeper issues around why a firm is in the situation that it is in and how it can better its performance. Applying the frameworks systematically may take more time and effort in the beginning, but it will generally lead to deeper insights about the cases and a more profound understanding of the concepts in the chapters. As you gain experience in this systematic approach to analyzing cases, many of you will find that your preparation time will decrease. This appendix offers a framework that will assist you as you analyze cases. The framework is important, but no framework can substitute for hard work. There are no great shorteuts to analyzing cases, and there is no single right method for preparing a case. The following approach, however, may help you develop ‘yout ability to analyze cases. 1. Skim through the case very quickly. Pay particular attention to the exhibits. ‘The objective in this step is to gain familiarity with the broad facts of the case. What apparent challenges or opportunities does the company face? What information is provided? You may find it especially useful to focus on the first and last few paragraphs of the case in this step, 2. Read the case more carefully and make notes, underline, etc, What appear to be important facts? The conceptual frameworks in the chapters will be essen- tial in helping you identify the key facts. Throughout the course, you will want to address central questions such as the following: 1 What is the firmn’s performance? 1 What isthe firm's mission? strategy? goals? 15 What are the resources involved in the firm’s value chain? How do they compare to competitors on cost and differentiation? Does the firm have a competitive advantage? ‘Are the firm’s advantages and disadvantages temporary or sustainable? ‘What is the value of the firm’s resources? Are the firm's resources rare? Are the firm’s resources costly to imitate? Is the firm organized sufficiently to exploit its resources? Depending on the case, you may also want to consider other frameworks and questions, where appropriate. Each chapter provides concepts and frame- ‘works that you may want to consider. For example: w What are the five forces? How do they influence industry opportunities and threats? (Chapter 2) tw What are the sources of cost differences in an industry? (Chapter 4) tm What are the bases and potential bases for product differentiation in an industry? (Chapter 5)Exch chapter suggests more specific questions and concepts than those above. ‘You will want to consider these concepts in detail. In some cases, the instructor may offer direction about which concepts to apply to a given case. In other instances, you may be left to use your judgment in choosing which concepts to focus on in analyzing a case. 3. Define the basic issues, ‘This is perhaps the most important step and also the stage of analysis that requires the most wisdom and judgment. Cases are rarely like tidy problem sets where the issues or problems are explicitly stated and the tools needed to address those issues are prescribed. Generally, you need to determine what the key issues are. In doing this, it may help for you to begin by asking: What are the fundamental issues in the case? Which concepts matter most in providing insight into those issues? One trap to avoid in defining basic issues is doing what some decision-making scholars label “plunging-in,” which is drawing conclusions without first thinking about the crux of the issues involved in a decision Many students have a tendency to seize the first issues that are prominently mentioned in a case. As an antidote to this trap, you may ‘want to consider a case from the perspective of different conceptual frames. 4, Develop and elaborate your analysis of the key issues. As with all ofthe steps, there is no substitute for painstaking work in this stage. You need to take the key issues you have defined in Step 3, examine the facts that you have noted in Step 2, and assess what are the key facts. What does quantitative analysis reveal? Here it is not just ratio analysis that we are concerned with. Just as body temperature, blood pressure, and pulse rate may teveal something about a person's health but lit le about the causes of a sickness, ratio analysis typi- cally tells us more about the health of a company than the causes of its per- formance. You should assemble facts and analysis to support your point of view, Opinions unsupported by factual evidence and analysis are generally not persuasive. This stage of the analysis involves organizing the facts in the case. You will want to develop specific hypotheses about what factors relate to success in a particular setting. Often, you will find it helpful to draw diagrams to clarify your thinking. 5. Draw conclusions and formulate a set of recommendations. You may be uncomfortable drawing conclusions and making recommendations because you do not have complete information. This is an eternal dilemma for managers. Managers who wait for complete information to do something, however, usu- ally act too late. Nevertheless, you should strive to do the most complete analy- sis that you can under reasonable time constraints. Recommendations should also flow naturally from your analysis. Too often, students formulate their rec- ommendations in an ad hoc way. In formulating recommendations, you should be clear about priorities and the sequence of actions that you recommend. 6, Prepare for class discussion. Students who diligently work through the first five steps and rigorously examine a case should be well prepared for class discussion. You may find it helpful to make some notes and bring them to class. Over the years, we have observed that many of the students who are low contributors to class discussions bring few or no notes to class. Once in class, a case discussion usually begins with a provocative question from the instructor 1), Russo and PJ. H. Schoemaker (1988) Decision Taps: The Ten Rerirs to Brit Decision-Making «and Flow lo Overcome Then. New York Fireside Append: 345