How to Analyze a Case Study

Hands-on Guide: How to Analyze a Case Study

This Hands-on Guide presents a structured framework to

help you analyze such cases as well as the case studies in
this text. Knowing how to analyze a case will help you
attack virtually any business problem.
A case study helps students learn by immersing them in a
real-world business scenario where they can act as
problem-solvers and decision-makers. The case presents
facts about a particular organization. Students are asked to
analyze the case by focusing on the most important facts
and using this information to determine the opportunities
and problems facing that organization. Students are then
asked to identify alternative courses of action to deal with
the problems they identify.
A case study analysis must not merely summarize the
case. It should identify key issues and problems, outline
and assess alternative courses of action, and draw
appropriate conclusions. The case study analysis can be
broken down into the following steps:

1. Identify the most important facts surrounding

the case.
2. Identify the key issue or issues.
3. Specify alternative courses of action.
4. Evaluate each course of action.
5. Recommend the best course of action.

Let’s look at what each step involves.

1. Identify the most important facts surrounding

the case. Read the case several times to become
familiar with the information it contains. Pay
attention to the information in any accompanying
exhibits, tables, or figures. Many case scenarios, as
in real life, present a great deal of detailed
information. Some of these facts are more relevant
that others for problem identification. One can
assume the facts and figures in the case are true, but
statements, judgments, or decisions made by
individuals should be questioned. Underline and then
list the most important facts and figures that would
help you define the central problem or issue. If key
facts and numbers are not available, you can make
assumptions, but these assumptions should be
reasonable given the situation. The “correctness” of
your conclusions may depend on the assumptions
you make.
2. Identify the key issue or issues.
Use the facts provided by the case to identify the key
issue or issues facing the company you are studying.
Many cases present multiple issues or problems.
Identify the most important and separate them from
more trivial issues. State the major problem or
challenge facing the company. You should be able to
describe the problem or challenge in one or two
sentences. You should be able to explain how this
problem affects the strategy or performance of the
organization.

You will need to explain why the problem occurred.

Does the problem or challenge facing the company
come from a changing environment, new
opportunities, a declining market share, or inefficient
internal or external business processes? In the case
of information systems-related problems, you need
to pay special attention to the role of technology as
well as the behavior of the organization and its
management.

Information system problems in the business world

typically present a combination of management,
technology, and organizational issues. When
identifying the key issue or problem, ask what kind of
problem it is: Is it a management problem, a
technology problem, an organizational problem, or a
combination of these? What management,
organizational and technology factors contributed to
the problem?

o To determine if a problem stems from

management factors, consider whether
managers are exerting appropriate leadership
 over the organization and monitoring
organizational performance. Consider also the
nature of management decision-making: Do
managers have sufficient information for
performing this role, or do they fail to take
advantage of the information that is available?
o To determine if a problem stems from
technology factors, examine any issues arising
from the organization’s information technology
infrastructure: its hardware, software,
networks and telecommunications
infrastructure, and the management of data in
databases or traditional files. Consider also the
whether the appropriate management and
organizational assets are in place to use this
technology effectively.
o To determine the role of organizational
factors, examine any issues arising from the
organization’s structure, culture, business
processes, work groups, divisions among
interest groups, relationships with other
organizations, as well as the impact of changes
in the organization’s external environment-
changes in government regulations, economic
conditions, or the actions of competitors,
customers, and suppliers.

You will have to decide which of these factors-or a

combination of factors-- is most important in
explaining why the problem occurred.

3. Specify alternative courses of action. List the

courses of action the company can take to solve its
problem or meet the challenge it faces. For
information system-related problems, do these
alternatives require a new information system or the
modification of an existing system? Are new
technologies, business processes, organizational
structures, or management behavior required? What
changes to organizational processes would be
required by each alternative? What management
policy would be required to implement each
alternative?
Remember, there is a difference between what an
organization “should do” and what that organization
actually “can do.” Some solutions are too expensive
or operationally difficult to implement, and you
should avoid solutions that are beyond the
organization’s resources. Identify the constraints that
will limit the solutions available. Is each alternative
executable given these constraints?

4. Evaluate each course of action. Evaluate each

alternative using the facts and issues you identified
earlier, given the conditions and information
available. Identify the costs and benefits of each
alternative. Ask yourself “What would be the likely
outcome of this course of action? State the risks as
well as the rewards associated with each course of
action. Is your recommendation feasible from a
technical, operational, and financial standpoint? Be
sure to state any assumptions on which you have
based your decision.
5. Recommend the best course of action. State
your choice for the best course of action and provide
a detailed explanation of why you made this
selection. You may also want to provide an
explanation of why other alternatives were not
selected. Your final recommendation should flow
logically from the rest of your case analysis and
should clearly specify what assumptions were used to
shape your conclusion. There is often no single
“right” answer, and each option is likely to have risks
as well as rewards.
 United Parcel Service International Distribution

Case Summary:United Parcel Service's operations are

driven by its information systems technology. Beginning as
a local delivery service in 1907, UPS expanded on the West
coast initially, reached New York in the 1930s, and went
international in the 1970s. Today, UPS delivers over 14
million packages daily to 200 countries and territories. A
$1.5 billion technology investment in the 1980s buoyed the
growth of UPS. The investment enabled the development of
the International Shipments Processing System (ISPS),
which is the key to the company's overseas operations. The
technology infrastructure enables UPS to offer its
customers services in addition to the basic shipment of
packages. UPS drivers play an important role in the
company's services by capturing information at the
endpoints of each delivery segment. Volume, cultural
differences, and hardware readiness all impact the
development and continued growth of UPS.

What external factors affect international operations at

UPS? How do these factors cause UPS to adjust its
operations?
Explain how ISPS facilitates the ability of UPS to ship
packages internationally.

How important is information to the global expansion of

UPS? What advantages does UPS gain by carefully
capturing information?
Case Study: Mis-selling of ULIPs

Cases of ULIPs being mis-sold never cease to amaze us. At Personalfn, we come
across cases where clients have been mis-sold a ULIP at disturbingly regular
intervals. One such case involved a 55-Yr old client who was sold a Rs 500,000 pa
premium ULIP by a private sector bank.

Even though we have seen several cases of ULIPs (unit-linked insurance plans)
being sold to the most improbable of investors, this case had us completely taken
aback. One look at the facts of the case and we are sure that even our visitors will
be left with a similar feeling.

Facts of the case:

 The client is 55 years old

 She does not have a regular source of income, so investing for a regular income
was her top priority

 Her only investments are in fixed deposits (FDs)

 She will inherit a huge sum of money at the age of 60 years

 She is not very literate in matters of investment and finance

 She is not very liquid (i.e. has less cash)

It is apparent from the client’s age and investment profile that a Rs 500,000 ULIP,
which was invested completely in equities, was the last thing she needed. In fact,
there was no reason to recommend anything even remotely risky. While ULIPs could
be suitable to individuals based on their risk profile and investment objectives (your
financial planner is best placed to assess the suitability of a ULIP), in our client’s
case there was little scope for a ULIP to add any significant value to her portfolio.
Add to this the fact, that being relatively illiquid, she could not afford to pay the
premiums for the following years.

Let us examine why ULIPs were unsuitable for her.

1. To begin with, she was not explained what ULIPs are all about; this is not
surprising since a lot of clients we know have bought ULIPs without appreciating
how they can contribute to their investment/insurance objectives. Given that she
was not very well versed even with the basics of investment and insurance, we
believe selling her a Rs 500,000 ULIP amounted to professional misconduct of the
highest order and coming from a reputed bank, this is even more alarming.

2. Now selling a ULIP to someone who does not need it is one thing, and selling her
a Rs 500,000 ULIP is another thing that ranks as even more atrocious. We fail to
understand how a Rs 500,000 ULIP could be of any assistance to a 55-Yr old lady,
who has no source of income and who is just looking to remain invested in a low risk
avenue that provides a regular income until she turns 60 years when her father’s
sizeable inheritance will come her way.

3. While ULIPs can add value to the individual’s investment/insurance portfolio, two
points are necessary to achieve this; a) the ULIP should be for a long enough tenure
and b) ULIP expenses should be competitive, else for someone who does not need
the life cover, mutual funds are a better option.

It is apparent from our client’s details that she did not qualify on the tenure
parameter to justify a ULIP. With a 5-Yr time frame before she inherited her father’s
wealth, she just did not have the minimum number of years necessary to wipe out
the heavy initial expenses on the ULIP. ULIPs incur high expenses (sometimes as
high as 60% of the premiums) in the initial years; so an investor is not going to earn
a (significant) return on the ULIP in the initial years until the high expenses are
recovered. Performance of stock markets (in the case of equity-heavy ULIPs) play a
critical role in recovering the expenses, but at the time of opting for a ULIP there is
no way to ascertain how stock markets are going to fare over the short-to-medium
term (don’t believe your agent if he claims to know better, he is lying).

So for our client, a high-expense investment like ULIP, which is a suitable

proposition over the long-term, was a loss-making proposition from day one,
because she was not interested in an investment that was longer than 5 years (i.e.
until she turned 60 years old). She simply needed a one-time low-risk interval
investment (providing an income) that would serve her well over a 5-Yr tenure. And
since she was not in a position to pay the premium even in the second year,
effectively she lost out on her capital as well. Not to mention that there was no
monthly income being generated by the product!

Bank washes hands off the mis-selling

When Personalfn met the client and learnt about the mis-selling of the ULIP, we
urged her to take this up strongly with the bank, which sold her the ULIP. To her
dismay, the bank shirked responsibility over the mis-selling and professed
helplessness in view of the fact that the agent (who mis-sold the ULIP) had been
transferred to another city! To those who agree with the bank’s excuse, we would
like to state that any selling (or mis-selling) that happens on the bank’s premise is
the bank’s business whether that person is the bank’s employee or a third-party
employee or whether he is still with the bank or has been transferred or has quit the
bank altogether. If the bank disagrees with what we have said, then they should put
up a notice to that effect in the branch.

How Personalfn would have done it differently?

As financial planners, a big advantage with this particular case was the clear-cut
time frame (i.e. 5 years) that the client had in mind. She just wished to be invested
in an avenue for 5 years that would generate regular income; after 5 years she
would inherit her father’s money. Also it was abundantly clear to us from our
interaction with the client that she had a lower risk appetite. In view of these two
points, we would have recommended that:

1. the client invest in an FMP (fixed maturity plan) over shorter tenures and roll over
at the end of the tenure. To provide for a source of income she could opt for the
dividend option. Being market-linked FMPs provide an opportunity to generate
higher returns (than FDs) depending on how debt markets are placed at a point in
time.

2. A structured mutual fund product would have been suitable for the client. These
mutual funds are predominantly invested in debt to provide capital preservation;
the smaller equity component (usually 15%-20% of assets) provides for capital
appreciation. These funds, although not capital-guaranteed investments, offer low-
risk investors the opportunity to clock higher returns than debt funds at marginally
higher risk. Again, she could opt for the dividend option.

3. The Post Office Monthly Income Scheme (POMIS) is an option for investors looking
for regular income. Among all fixed income investment options, POMIS is one of rare
avenues that assures a monthly income. We would have recommended that the
client make the most of this opportunity to earn an assured monthly income.

4. She could enhance her investments in FDs. Many companies (like HDFC for
instance), have a monthly income option on their FDs. The client could invest in FDs
of such companies to avail of the monthly income option.

In our view, investing in ULIPs was a pointless exercise that should never have been
recommended to the client. It neither fulfilled her investment objective nor
coincided with her investment tenure. As we have shown, both these critical
parameters could have been fulfilled better by low-risk FMPs, debt funds, FDs and
POMIS.