Chapter fourteen

Analyzing Strategic
Management Cases

Topics
Why?
Steps involved in conducting a case
analysis.
Better decisions from conflict-inducing
discussion techniques
How to get the most out of case
analysis.

Why Analyze Strategic Management Cases?

The process of analyzing, decision
making, and implementing strategic
actions raises many good questions
Why do some firms succeed and others fail?
Why are some companies higher performers
than others?
What information is needed in the strategic
planning process?
How do competing values and beliefs affect
strategic decision making?
What skills and capabilities are needed to
implement a strategy effectively?

Why Analyze Strategic Management Cases?

Case analysis
Simulates the real-world experience
Forces you to choose among different
options
Set forth a plan of action based on your
choices

Why Analyze Strategic Management Cases?

Cases include:
Detailed description of a challenging
situation faced by an organization
Usually includes a chronology of events
and extensive support materials
Financial statements
Product lists
Transcripts of interviews with
employees

Skills Developed from Case Analyses

Differentiate

Evaluate many different

elements of a situation at
once
Differentiating between the
factors that are influencing
the situation
Understanding that problems
are often complex and
multilayered
Dig deep
Being too quick to accept an
easy solution will probably fail to
get to the heart of the problem

Skills Developed from Case Analyses

Differentiate

Speculate

Envision explanation that

might not readily be apparent
Imagine different scenarios
Contemplate the outcome of
a decision
Deal with uncertainty and
incomplete knowledge
Missing data
Information may be
contradictory
Speculate about details and
consequences that are unknown

Skills Developed from Case Analyses

Differentiate

Speculate

Integrate

Look at the big picture

Have an organizationwide
perspective
Integrate the information
into one set of
recommendations affecting
the whole company
Changes made in one part will
affect the others
Integrate the impact of
various decisions and
environmental influences on
all parts of the organization

How to Conduct a Case Analysis

Prepare for a case discussion
Do your homework
Investigate
Analyze
Research potential solutions
Gather the advice of others
Become immersed in facts, options,
and implications

How to Conduct a Case Analysis

Put yourself inside the case
Think like an actual participant
Strategic decision maker
Board of directors
Outside consultant

Try different perspectives

One of the most challenging is as a business
founder or owner
Hiring an outside consultant may not be an option

Five Steps for Conducting a Strategic

Management Case Analysis
Step One

Become familiar with the material

Read quickly through the case

one
time
Use initial read-through to assess possible
links to strategic concepts
Read the case again, making notes
Evaluate application of strategic concepts
After forming first recommendation,
thumb through the case again to assess
consequences of actions you propose

Five Steps for Conducting a Strategic

Management Case Analysis
Identify problems

Step One
Two

Some cases have more

than one problem
Avoid getting hung up on symptoms
Articulate the problem

Writing down a problem statement gives you

a reference point when you proceed through
the case analysis

Some problems are not apparent until

after you do the analysis

Five Steps for Conducting a Strategic

Management Case Analysis
Conduct strategic analyses

Step
StepThree
Two

Determine which strategic

issues are
involved
Use strategic tools to conduct the analysis

Five-forces analysis
Value chain analysis
Contingency frameworks
Financial analysis

Test your own assumptions about the case

Financial Ratio Analysis Techniques

Ratio

What It Measures

Short-term
solvency, or
liquidity, ratios:

Current ratio
Quick ratio
Cash ratio

Ability to use assets to pay off liabilities.

Ability to use liquid assets to pay off liabilities quickly.
Ability to pay off liabilities with cash on hand.

Financial Ratio Analysis Techniques

Ratio

What It Measures

Long-term
solvency, or
financial
leverage, ratios:

Total debt ratio

Debt-equity ratio
Equity multiplier
Times interest
ratio
Cash coverage
ratio

How much of a companys total assets are financed by

debt.
Compares how much a company is financed by debt with
how much is it finance by equity.
How much debt is being used to finance assets.
How well a company has its interest obligations covered.
A companys ability to generate cash from operations.

Financial Ratio Analysis Techniques

Ratio

What It Measures

Asset
utilization, or
turnover,
ratios:
Inventory turnover How many times each year a company sells its entire
inventory.
Days sales in
How many days on average inventory is on hand before it
inventory
is sold.
Receivables
How frequently each year a company collects on its credit
turnover
sales.
Days sales in
How many days on average it takes to collect on credit
receivables
sales (average collection period).
Total asset
How much of sales is generated for every dollar in assets.
turnover
Capital intensity
The dollar investment in assets needed to generate $1 in
sales.

Financial Ratio Analysis Techniques

Ratio

What It Measures

Profitability
ratios:
Profit margin
Return on assets
(ROA)
Return on equity
(ROE)

How much profit is generated by every dollar of sales.

How effectively assets are being used to generate a
return.
How effectively amounts invested in the business by its
owners are being used to generate a return.

Market value
ratios:
Price-earnings
ratio
Market-to-book
ratio

How much investors are willing to pay per dollar of current

earnings.
Compares market value of the company's investments to
the cost of those investments

Five Steps for Conducting a Strategic

Management Case Analysis
Propose alternative solutions
Develop a list of options first
them

Step
Step Three
Four
without judging

Do nothing is often a reasonable alternative

Evaluate alternatives

Can the company afford it?

Is the solution likely to evoke a competitive
response?
Will employees accept the change?
How will it affect other stakeholders?
How does it fit with the vision, mission, objectives?
Will the culture or values of the company change?

Five Steps for Conducting a Strategic

Management Case Analysis
Make recommendations

Step
Step Four
Five

Make a set of recommendations

that your analysis supports
Describe exactly what needs to be done
Explain why this course of action will
solve the problem
Include suggestions for how best to
implement the proposed solution
The solution you propose must solve the
problem you identified

Preparing an Oral Case Presentation

Rule

Description

Organize your Begin by becoming familiar with the material. Compare

notes about key points of the case and share insights
thoughts

among team members. Make an outline.

Emphasize
strategic analysis

Purpose of case analysis is to diagnose problems and find

solutions. You may need to unravel the case material as
presented and reconfigure it in a way that can be more
effectively analyzed. Three major categories
Background/Problem Statement
10-20%
Strategic Analysis/Options
60-75 %
Recommendations/Action Plan
10-20%
Emphasis should be on analysis. You may need to
reorganize the material so that the tools of strategic
analysis can be applied.

Preparing an Oral Case Presentation

Rule

Description

Be logical and Rambling presentations are hard to follow, may confuse the
listener, and fail to evoke a good discussion. Present
consistent

arguments and explanations in logical sequence. Support

with facts and appropriate financial analyses. Be sure
solutions address the problems you identified.

Defend your
position

Anticipate what others might disagree with and be prepared

to defend your views in class discussion. Be aware of the
choices you made and implications of your
recommendations. Be clear about your assumptions. Be
able to expand on your analysis.

Share presentation
responsibilities

Strategic management case analyses are often conducted

by teams. Each member should have a clear role in the oral
presentation, preferably a speaking role. Coordinate the
different parts into a logical, smooth-flowing whole.

How to Get the Most from Case Analysis

Keep an open mind

Take a stand for what you believe
Draw on your own personal experience
Participate and persuade
Be concise and to the point
Think out of the box
Learn from the insights of others
Apply insights from other case analyses
Critically analyze your own performance
Conduct outside research

Using Conflict-Inducing Decision-Making

Techniques in Case Analysis
Devils
Advocacy

Dialectical
Inquiry

Groupthink
Use conflict-inducing decision-making techniques to
help prevent groupthink and lead to better decisions.

Symptoms of Groupthink and How to Prevent It

Groupthink

Symptoms
Illusion of invulnerability
Belief in the inherent morality of
the group
Stereotyped views of members of
opposing groups
Application of pressure to
members who express doubts
about the groups shared allusions
or question the validity of
arguments proposed
Practice of self-censorship
Appointment of mindguards

Symptoms of Groupthink and How to Prevent It

Groupthink

Preventing groupthink
Leaders must encourage group
members to address concerns and
objectives
Leaders should adopt impartial stance
Leader should encourage members to
discuss deliberations with trusted
associates and report perspectives back
to group
Invite outside experts, challenge
groups viewpoints and positions
Divide into subgroups, meet at different
times, reconvene to resolve differences
Hold a second chance meeting

Using Conflict to Improve Decision Making

Devils
Advocacy

Devils advocacy
One of the groups (or members)
acts as a critic to the plan
Devils advocate comes up with
problems of the proposed
alternative and suggests reasons
for not adopting it
Forces the group to take a hard
look at its proposed solution
Can be demoralizing
May not lead to better suggestions

Using Conflict to Improve Decision Making

Devils
Advocacy

Dialectical
Inquiry

Dialectical inquiry
Identify proposal and
information used to derive it
State underlying assumptions
Identify counter plan (antithesis)
Engage in debate
Identify a synthesis (best
components of each alternative)
Can be very time consuming
May result in undesirable
compromises (original solution
was better)