Preparing an Effective Case Analysis


What To Expect From In-Class Case Discussions

Classroom discussions of cases differ significantly from lectures. The case method calls for instructors to guide the discussion, encourage student participation, and solicit alternative views. When alternative views are not forthcoming, instructors typically adopt one view so students can be challenged to respond thoughtfully to it. Often students' work is evaluated in terms of both the quantity and the quality of their contributions to in-class case discussions. Students benefit by having their views judged against those of their peers and by responding to challenges by other class members and/or the instructor.

During case discussions, instructors listen, question, and probe to extend the analysis of case issues. In the course of these actions, peers or the instructor may challenge an individual's views and the validity of alternative perspectives that have been expressed. These challenges are offered in a constructive manner; their intent is to help students develop their analytical and communication skills. Commonly instructors encourage students to be innovative and original in the development and presentation of their ideas. Over the course of an individual discussion, students can develop a more complex view of the case, benefiting from the diverse inputs of their peers and instructor. Among other benefits, experience with multiple case discussions should help students increase their knowledge of the advantages and disadvantages of group decision-making processes.

Comments that contribute to the discussion are valued by student peers as well as the instructor. To offer relevant contributions, you are encouraged to use independent thought and, through discussions with your peers outside of class, to refine your thinking. We also encourage you to avoid using "I think," "I believe," and "I feel" to discuss your inputs to a case analysis process. Instead, consider using a less emotion laden phrase, such as "My analysis shows...." This highlights the logical nature of the approach you have taken to complete the six steps of an effective case analysis process. When preparing for an in-class case discussion, you should plan to use the case data to explain your assessment of the situation. Assume that the case facts are known to your peers and instructor. In addition, it is good practice to prepare notes before class discussions and use them as you explain your view. Effective notes signal to classmates and the instructor that you are prepared to engage in a thorough discussion of a case. Moreover, thorough notes eliminate the need for you to memorize the facts and figures needed to discuss a case successfully.

The case analysis process described above can help you prepare to effectively discuss a case during class meetings. Adherence to this process results in consideration of the issues required to identify a focal firm's problems and to propose strategic actions through which the firm can increase the probability it will achieve strategic competitiveness. In some instances, your instructor may ask you to prepare either an oral or a written analysis of a particular case. Typically, such an assignment demands even more thorough study and analysis of the case contents. At your instructor's discretion, oral and written analyses may be completed by individuals or by groups of two or more people. The information and insights gained through completing the six steps shown in Table 2 often are of value in the development of an oral or a written analysis. However, when preparing an oral or written presentation, you must consider the overall framework in which your information and inputs will be presented. Such a framework is the focus of the next section.

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Preparing An Oral/Written Case Presentation

Experience shows that two types of thinking are necessary to develop an effective oral or written presentation (see Figure 1). The upper part of the model in Figure 1 outlines the analysis of case preparation.

In the analysis stage, you should first analyze the general external environmental issues affecting the firm. Next your environmental analysis should focus on the particular industry (or industries, in the case of a diversified company) in which a firm operates. Finally, you should examine the competitive environment of the focal firm. Through study of the three levels of the external environment, you will be able to identify a firm's opportunities and threats. Following the external environmental analysis is the analysis of the firm's internal environment. This analysis results in the identification of the firm's strengths and weaknesses.

As noted in Figure 1, you must then change the focus from analysis to synthesis. Specifically, you must synthesize information gained from your analysis of the firm's internal and external environments. Synthesizing information allows you to generate alternatives that can resolve the significant problems or challenges facing the focal firm. Once you identify a best alternative, from an evaluation based on predetermined criteria and goals, you must explore implementation actions.

Figure 1
FIGURE 1

Table 3 outlines the sections that should be included in either an oral or a written presentation: introduction (strategic profile and purpose), situation analysis, statements of strengths/weaknesses and opportunities/threats, strategy formulation, and implementation. These sections, which can be completed only through use of the two types of thinking featured in Figure 1, are described in the following discussion. Familiarity with the contents of your book's 13 chapters is helpful because the general outline for an oral or a written presentation shown in Table 3 is based on an understanding of the strategic management process detailed in those chapters.

Table 3    General Outline for an Oral or Written Presentation
  I. Strategic Profile and Case Analysis Purpose
 II. Situation Analysis
A. General environmental analysis
B. Industry analysis
C. Competitive environmental analysis
D. Internal analysis
III. Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses (SWOT Analysis)
IV. Strategy Formulation
A. Strategic alternatives
B. Alternative evaluation
C. Alternative choice
 V. Strategic Alternative Implementation
A. Action items
B. Action plan

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Strategic Profile and Case Analysis Purpose

The strategic profile should state briefly the critical facts from the case that have affected the historical strategic direction and performance of the focal firm. The case facts should not be restated in the profile; rather, these comments should show how the critical facts lead to a particular focus for your analysis. This primary focus should be emphasized in this section's conclusion. In addition, this section should state important assumptions about case facts on which the analyses may be based.

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Situation Analysis

As shown in Table 3, a general starting place for completing a situation analysis is the general environment. General Environmental Analysis First, your analysis of the general environment should consider the effects of globalization on the focal firm and its industry. Following that evaluation, you should analyze general environmental trends. Table 4 lists a number of general environmental trends that, when studied, should yield valuable insights. Many of these issues are explained more fully in Chapter 2. These trends need to be evaluated for their impact on the focal firm's strategy and on the industry (or industries) in which it competes in the pursuit of strategic competitiveness.

 
Table 4    Sample General Environmental Categories
Technology
  • Information technology continues to become cheaper and have more practical applications.
  • Database technology allows organization of complex data and distribution of information.
  • Telecommunications technology and networks increasingly provide fast transmission of all sources of data, including voice, written communications, and video information
Demographic Trends
  • Computerized design and manufacturing technologies continue to facilitate quality and flexibility.
  • Regional changes in population due to migration
  • Changing ethnic composition of the population
  • Aging of the population
  • Aging of the "baby boom" generation
Economic Trends
  • Interest rates
  • Inflation rates
  • Savings rates
  • Trade deficits
  • Budget deficits
  • Exchange rates
Political/Legal Environment
  • Anti-trust enforcement
  • Tax Policy changes
  • Environmental protection laws
  • Extent of regulation/deregulation
  • Developing countries privatizing state monopolies
  • State-owned industries
Sociocultural Environment
  • Women in the work force
  • Awareness of health and fitness issues
  • Concern for the environment
  • Concern for customers
Global Environment
  • Currency exchange rates
  • Free trade agreements
  • Trade deficits

Industry Analysis Once you analyze the general environmental trends, you should study their effect on the focal industry. Often the same environmental trend may have a significantly different impact on separate industries. Furthermore, the same trend may affect firms within the same industry differently. For instance, with deregulation of the airline industry, older, established airlines had a significant decrease in profitability, while many smaller airlines, with lower cost structures and greater flexibility, were able to aggressively enter new markets.

Porter's five force model is a useful tool for analyzing the specific industry (see Chapter 2). Careful study of how the five competitive forces (i.e., supplier power, buyer power, potential entrants, substitute products, and rivalry among competitors) affect firm strategy is important. These forces may create threats or opportunities relative to the specific business-level strategies (i.e., differentiation, low cost, focus) being implemented. Often a strategic group's analysis reveals how different environmental trends are affecting industry competitors. Strategic group analysis is useful for understanding the industry's competitive structure and the profit possibilities within those structures.

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Competitive Environmental Analysis

Firms also need to analyze each of their primary competitors. This analysis should identify competitors' current strategies, strategic intent, strategic mission, capabilities, core competencies, and a competitive response profile. This information is useful to the focal firm in formulating an appropriate strategy and in predicting competitors' probable responses. Sources that can be used to gather information about an industry and companies with whom the focal firm competes are listed in Appendix I. Included in this list is a wide range of publications, such as periodicals, newspapers, bibliographies, directories of companies, industry ratios, forecasts, rankings/ratings, and other valuable statistics.

Internal Analysis Assessing a firm's strengths and weaknesses through a value chain analysis facilitates moving from the external environment to the internal environment. Analysis of the primary and support activities of the value chain provides opportunities to understand how external environmental trends affect the specific activities of a firm. Such analysis helps highlight strengths and weaknesses (see Chapter 3 for an explanation of the value chain).

For purposes of preparing an oral or a written presentation, it is important to note that strengths are internal resources and capabilities that have the potential to be core competencies. Weaknesses, on the other hand, are internal resources and capabilities that have the potential to place a firm at a competitive disadvantage relative to its rivals. Thus, some of a firm's resources and capabilities are strengths; others are weaknesses.

When evaluating the internal characteristics of the firm, your analysis of the functional activities emphasized is critical. For instance, if the strategy of the firm is primarily technology driven, it is important to evaluate the firm's R&D activities. If the strategy is market driven, marketing functional activities are of paramount importance. If a firm has financial difficulties, critical financial ratios would require careful evaluation. In fact, because of the importance of financial health, most cases require financial analyses. Appendix II lists and operationally defines several common financial ratios. Included are tables describing profitability, liquidity, leverage, activity, and shareholders' return ratios. Other firm characteristics that should be examined to study the internal environment effectively include leadership, organizational culture, structure, and control systems.

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Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses (SWOT Analysis)

The outcome of the situation analysis is the identification of a firm's strengths and weaknesses and its environmental threats and opportunities. The next step requires that you analyze the strengths and weaknesses and the opportunities and threats for configurations that benefit or do not benefit a firm's efforts to achieve strategic competitiveness. Case analysts, and organizational strategists as well, seek to match a firm's strengths with its external environmental opportunities. In addition, strengths are chosen to prevent any serious environmental threat from affecting negatively the firm's performance. The key objective of conducting a SWOT analysis is to determine how to position the firm so it can take advantage of opportunities, while simultaneously avoiding or minimizing environmental threats. Results from a SWOT analysis yield valuable insights into the selection of strategies a firm should implement to achieve strategic competitiveness. The analysis of a case should not be overemphasized relative to the synthesis of results gained from your analytical efforts. There may be a temptation to spend most of your oral or written case analysis on results from the analysis. It is important, however, that you make an equal effort to develop and evaluate alternatives and to design implementation of the chosen strategy.

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Strategy Formulation-Strategic Alternatives, Alternative Evaluation, and Alternative Choice

Developing alternatives is often one of the most difficult steps in preparing an oral or a written presentation. Development of three to four alternative strategies is common (see Chapter 4 for business-level strategy alternatives and Chapter 6 for corporate-level strategy alternatives). Each alternative should be feasible (i.e., it should match the firm's strengths, capabilities, and especially core competencies), and feasibility should be demonstrated. In addition, you should show how each alternative takes advantage of the environmental opportunity or avoids/buffers against environmental threats. Developing carefully thought out alternatives requires synthesis of your analyses' results and creates greater credibility in oral and written case presentations.

Once you develop strong alternatives, you must evaluate the set to choose the best one. Your choice should be defensible and provide benefits over the other alternatives. Thus, it is important that both alternative development and evaluation of alternatives be thorough. The choice of the best alternative should be explained and defended.

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Strategic Alternative Implementation-Action Items and Action Plan

After selecting the most appropriate strategy (that is, the strategy with the highest probability of enhancing a firm's strategic competitiveness), you must consider effective implementation. Effective synthesis is important to ensure that you have considered and evaluated all critical implementation issues. Issues you might consider include the structural changes necessary to implement the new strategy. In addition, leadership changes and new controls or incentives may be necessary to implement strategic actions. The implementation actions you recommend should be explicit and thoroughly explained. Occasionally, careful evaluation of implementation actions may show the strategy to be less favorable than you thought originally. A strategy is only as good as the firm's ability to implement it effectively. Therefore, effort to determine effective implementation is important.

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Process Issues

You should ensure that your presentation (either oral or written) has logical consistency throughout. For example, if your presentation identifies one purpose, but your analysis focuses on issues that differ from the stated purpose, the logical inconsistency will be apparent. Likewise, your alternatives should flow from the configuration of strengths, weaknesses, opportunities, and threats you identified by the internal and external analyses.

Thoroughness and clarity also are critical to an effective presentation. Thoroughness is represented by the comprehensiveness of the analysis and alternative generation. Furthermore, clarity in the results of the analyses, selection of the best alternative strategy, and design of implementation actions are important. For example, your statement of the strengths and weaknesses should flow clearly and logically from the internal analyses presented.

Presentations (oral or written) that show logical consistency, thoroughness, and clarity of purpose, effective analyses, and feasible recommendations (strategy and implementation) are more effective and will receive more positive evaluations. Furthermore, developing the skills necessary to make such presentations will enhance your future job performance and career success.

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