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 One
Two
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 companys 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 companys 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.
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 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
Begin by becoming familiar with the material. Compare
Organize notes about key points of the case and share insights
your among team members. Make an outline.
thoughts
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
Rambling presentations are hard to follow, may confuse the
Be logical listener, and fail to evoke a good discussion. Present
and arguments and explanations in logical sequence. Support
consistent 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

Devils 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 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

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
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 Devils advocacy

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
Dialectical inquiry
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)