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

 Evaluate many different

Differentiate 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

 Envision explanation that might

Differentiate not readily be apparent
 Imagine different scenarios
 Contemplate the outcome of a
Speculate
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

 Look at the big picture

Differentiate  Have an organizationwide
perspective
 Integrate the information into
Speculate one set of recommendations
affecting the whole company
 Changes made in one part will
affect the others
Integrate
 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

Step Two
One
Identify problems
 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

Step
StepThree
Two
Conduct strategic analyses
 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 Ability to use assets to pay off liabilities.

Quick ratio Ability to use liquid assets to pay off liabilities quickly.
Cash ratio 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 How much of a company’s total assets are financed by
debt.
Debt-equity ratio Compares how much a company is financed by debt with
how much is it finance by equity.
Equity multiplier How much debt is being used to finance assets.
Times interest How well a company has its interest obligations covered.
ratio
Cash coverage A company’s ability to generate cash from operations.
ratio
 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.
Day’s 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 How much profit is generated by every dollar of sales.
Return on assets How effectively assets are being used to generate a
(ROA) return.
Return on equity How effectively amounts invested in the business by its
(ROE) owners are being used to generate a return.

Market value
ratios:
Price-earnings How much investors are willing to pay per dollar of current
ratio earnings.
Market-to-book Compares market value of the company's investments to
ratio the cost of those investments
 Five Steps for Conducting a Strategic
Management Case Analysis

Step
StepThree
Four
Propose alternative solutions
 Develop a list of options first without
judging them
 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

Step
Step Four
Five
Make recommendations
 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
thoughts notes about key points of the case and share insights
among team members. Make an outline.

Emphasize Purpose of case analysis is to diagnose problems and find

strategic solutions. You may need to unravel the case material as
analysis 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
consistent listener, and fail to evoke a good discussion. Present
arguments and explanations in logical sequence. Support
with facts and appropriate financial analyses. Be sure
solutions address the problems you identified.
Defend your Anticipate what others might disagree with and be prepared
position 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 Strategic management case analyses are often conducted
presentation by teams. Each member should have a clear role in the oral
responsibilities 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

Devil’s Dialectical
Advocacy 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

 Symptoms
Groupthink  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 group’s
shared allusions or question the validity
of arguments proposed
 Practice of self-censorship
 Appointment of mindguards
 Symptoms of Groupthink and How to Prevent It

 Preventing groupthink
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 group’s
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

Devil’s  Devil’s advocacy

Advocacy  One of the groups (or members) acts
as a critic to the plan
 Devil’s 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

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