Gregory G. Dess
G. T. Lumpkin
Marilyn L. Taylor
Why Analyze Strategic Management Cases?
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The process of analyzing, decision
making, and implementing strategic actions raises many good questions
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Why do some firms succeed and others
fail?
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Why are some companies higher performers
than others?
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What information is needed in the
strategic planning process?
•
How do competing values and beliefs
affect strategic decision making?
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What skills and capabilities are needed
to implement a strategy effectively?
Why Analyze Strategic Management Cases?
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Case analysis
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Simulates the real-world experience
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Forces you to choose among different
options
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Set forth a plan of action based on your
choices
Why Analyze Strategic Management Cases?
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Strategic management cases
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Detailed description of a challenging
situation faced by an organization
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Usually includes a chronology of events
and extensive support materials
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Financial statements
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Product lists
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Transcripts of interviews with employees
Skills Developed from Case Analyses
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Evaluate many different elements of a
situation at once
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Differentiating between the factors that
are influencing the situation
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Understanding that problems are often
complex and multilayered
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Dig deep
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Being too quick to accept an easy
solution will probably fail to get to the heart of the problem
Skills Developed from Case Analyses
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Envision explanation that might not
readily be apparent
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Imagine different scenarios
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Contemplate the outcome of a decision
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Deal with uncertainty and incomplete
knowledge
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Missing data
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Information may be contradictory
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Speculate about details and consequences
that are unknown
Skills Developed from Case Analyses
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Look at the big picture
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Have an organizationwide perspective
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Integrate the information into one set
of recommendations affecting the whole company
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Changes made in one part will affect the
others
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Integrate the impact of various
decisions and environmental influences on all parts of the organization
How to Conduct a Case Analysis
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Prepare for a case discussion
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Do your homework
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Investigate
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Analyze
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Research potential solutions
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Gather the advice of others
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Become immersed in facts, options, and
implications
How to Conduct a Case Analysis
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Put yourself “inside” the case
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Think like an actual participant
n Strategic
decision maker
n Board
of directors
n Outside
consultant
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Try different perspectives
n One
of the most challenging is as a business founder or owner
n Hiring
an outside consultant may not be an option
Five Steps for Conducting a Strategic Management
Case Analysis
Become familiar with the material
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Read quickly through the case one time
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Use initial read-through to assess
possible links to strategic concepts
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Read the case again, making notes
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Evaluate application of strategic
concepts
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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
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Some cases have more than one problem
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Avoid getting hung up on symptoms
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Articulate the problem
n 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
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Determine which strategic issues are involved
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Use strategic tools to conduct the
analysis
n Five-forces
analysis
n Value
chain analysis
n Contingency
frameworks
n Financial
analysis
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Test your own assumptions about the case
Financial Ratio Analysis Techniques
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.
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.
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.
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
Propose alternative solutions
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Develop a list of options first without
judging them
n Do
nothing is often a reasonable alternative
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Evaluate alternatives
n Can
the company afford it?
n Is
the solution likely to evoke a competitive response?
n Will
employees accept the change?
n How
will it affect other stakeholders?
n How
does it fit with the vision, mission, objectives?
n Will
the culture or values of the company change?
Make recommendations
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Make a set of recommendations that your
analysis supports
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Describe exactly what needs to be done
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Explain why this course of action will
solve the problem
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Include suggestions for how best to
implement the proposed solution
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The solution you propose must solve the
problem you identified
Preparing an Oral Case Presentation
Organize your thoughts
Begin by becoming familiar with the material.
Compare notes about key points of the case and share insights 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
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Background/Problem Statement 10-20%
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Strategic Analysis/Options 60-75 %
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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.
Be logical and consistent
Rambling presentations are hard to follow, may
confuse the 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 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
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Keep an open mind
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Take a stand for what you believe
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Draw on your own personal experience
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Participate and persuade
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Be concise and to the point
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Think out of the box
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Learn from the insights of others
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Apply insights from other case analyses
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Critically analyze your own performance
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Conduct outside research
Preparing
an Written Case Analysis
Be thorough
Many ideas about oral presentations also apply to
written case analysis. However, a written analysis typically has to be more
complete. Write out the problem statement and articulate assumptions. Support
your arguments and reference case materials and other facts more specifically.
Coordinate team efforts
Written cases are often prepared by small groups.
Within a group you may disagree about the diagnosis or recommended plan of
action. Healthy disagreement may lead to a richer understanding of the case,
but, before committing your ideas to writing make sure you coordinate your
responses. Don’t prepare a written analysis that appears contradictory or looks
like a patchwork of disconnected thoughts.
Avoid restating the obvious
There is no reason to restate the case content. This
uses up valuable space and accomplishes little. Stay focused on key points.
Only restate information that is most central to your analysis.
Present information graphically
Tables, graphs, and other exhibits are usually one
of the best ways to present supporting factual material. Financial calculations
such as break-even analysis, sensitivity analysis, or return on investment are
best presented graphically. Even qualitative information such as product lists
or rosters of employees can be summarized and viewed quickly by using a table
or graph.
Exercise quality control
Use good grammar, avoid misspelling words, and
eliminate typos and other visual distractions. Make your written presentation
appear as professional as possible. Don’t let a poor appearance of your written
case keep the reader from recognizing the importance and quality of your
analysis.
Symptoms of Groupthink and How to Prevent It
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Symptoms
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Illusion of invulnerability
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Belief in the inherent morality of the
group
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Stereotyped views of members of opposing
groups
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Application of pressure to members who
express doubts about the group’s shared allusions or question the validity of
arguments proposed
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Practice of self-censorship
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Appointment of mindguards
Symptoms of Groupthink and How to Prevent It
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Preventing groupthink
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Leaders must encourage group members to
address concerns and objectives
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Leaders should adopt impartial stance
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Leader should encourage members to
discuss deliberations with trusted associates and report perspectives back to
group
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Invite outside experts, challenge
group’s viewpoints and positions
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Divide into subgroups, meet at different
times, reconvene to resolve differences
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Hold a “second chance” meeting
Using Conflict to Improve Decision Making
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Devil’s advocacy
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One of the groups (or members) acts as a
critic to the plan
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Devil’s advocate comes up with problems
of the proposed alternative and suggests reasons for not adopting it
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Forces the group to take a hard look at
its proposed solution
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Can be demoralizing
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May not lead to better suggestions
Using Conflict to Improve Decision Making
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Dialectical inquiry
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Identify proposal and information used
to derive it
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State underlying assumptions
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Identify counter plan (antithesis)
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Engage in debate
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Identify a synthesis (best components of
each alternative)
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Can be very time consuming
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May result in undesirable
compromises (original solution was better)
