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P A R T 4 Case Analysis PA R T O U T L I N E 13. Analyzing Strategic Management Cases 417 Chapter 1 Analyzing Goals and Objectives Chapter 2 Analyzing the External Environment Chapter 4 Assessing Intellectual Capital Strategy Analysis Chapter 3 Analyzing the Internal Environment Chapter 5 Formulating Business-Level Strategies Chapter 9 Implementation: Strategic Controls Chapter 11 Strategic Leadership: Excellence, Ethics and Change Chapter 12 Strategic Leadership: Fostering Entrepreneurship Strategy Implementation Chapter 6 Formulating Corporate-Level Strategies Chapter 8 Formulating Internet Strategies Strategy Formulation

Chapter 7 Formulating International Strategies Chapter 10 Implementation: Organization Design Chapter 13 Case Analysis C H A P T E R 13 Analyzing Strategic Management Cases CHAPTER OBJECTIVES After reading this chapter, you should have a good understanding of: I I How strategic case analysis is used to simulate real-world experiences. How analyzing strategic management cases can help develop the ability to differentiate, speculate, and integrate when evaluating complex business problems. The steps involved in conducting a strategic management case analysis.

How to get the most out of case analysis. How to use the strategic insights and material from each of the 12 previous chapters in the text to analyze issues posed by strategic management cases. I I I C ase analysis is one of the most effective ways to learn strategic management. It provides a complement to other methods of instruction by asking you to use the tools and techniques of strategic management to deal with an actual business situation. Strategy cases include detailed descriptions of management challenges faced by executives and business owners.

By studying the background and analyzing the strategic predicaments posed by a case, you ? rst see that the circumstances businesses confront are often dif? cult and complex. Then you are asked what decisions you would make to address the situation in the case and how the actions you recommend will affect the company. Thus, the processes of analysis, formulation, and implementation that have been addressed by this textbook can be applied in a real-life situation. In this chapter we will discuss the role of case analysis as a learning tool in both the classroom and the real world.

One of the bene? ts of strategic case analysis is to develop the ability to differentiate, speculate, and integrate. We will also describe how to 419 420 PA R T 4 Case Analysis conduct a case analysis and address techniques for deriving the greatest bene? t from the process. Finally, we will discuss how case analysis in a classroom setting can enhance the process of analyzing, making decisions, and taking action in real-world strategic situations. I WHY ANALYZE STRATEGIC MANAGEMENT CASES? It is often said that the key to ? nding good answers is to ask good questions.

Strategic managers and business leaders are required to evaluate options, make choices, and ? nd solutions to the challenges they face every day. To do so, they must learn to ask the right questions. The study of strategic management poses the same challenge. The process of analyzing, decision making, and implementing strategic actions raises many good questions. I I I I I Why do some ? rms 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? How does a student of strategic management answer those questions? By strategic case analysis. Case analysis simulates the real-world experience that strategic managers and company leaders face as they try to determine how best to run their companies. It places students in the middle of an actual situation and challenges them to ? gure out what to do. 1 Asking the right questions is just the beginning of case analysis.

In the previous chapters we have discussed issues and challenges that managers face and provided analytical frameworks for understanding the situation. But once the analysis is complete, decisions have to be made. Case analysis forces you to choose among different options and set forth a plan of action based on your choices. But even then the job is not done. Strategic case analysis also requires that you address how you will implement the plan and the implications of choosing one course of action over another. A strategic management case is a detailed description of a challenging situation faced by an organization. It usually includes a chronology of events and extensive support materials such as ? nancial statements, product lists, and transcripts of interviews with employees. Although names or locations are sometimes changed to provide anonymity, cases usually report the facts of a situation as authentically as possible. One of the main reasons to analyze strategic management cases is to develop an ability to evaluate business situations critically. In case analysis, memorizing key terms and conceptual frameworks is not enough.

To analyze a case, it is important that you go beyond textbook prescriptions and quick answers. It requires you to look deeply into the information that is provided and root out the essential issues and causes of a company’s problems. The types of skills that are required to prepare an effective strategic case analysis can bene? t you in actual business situations. Case analysis adds to the overall learning C H A P T E R 13 Analyzing Strategic Management Cases 421 experience by helping you acquire or improve skills that may not be taught in a typical lecture course.

Three capabilities that can be learned by conducting case analysis are especially useful to strategic managers—the ability to differentiate, speculate, and integrate. 3 Here’s how case analysis can enhance those skills. I I I Differentiate. Effective strategic management requires that many different elements of a situation be evaluated at once. This is also true in case analysis. When analyzing cases, it is important to isolate critical facts, evaluate whether assumptions are useful or faulty, and to distinguish between good and bad information.

Differentiating between the factors that are in? uencing the situation presented by a case is necessary for making a good analysis. Strategic management also involves understanding that problems are often complex and multilayered. This applies to case analysis as well. Ask whether the case deals with operational, business-level, or corporate issues. Do the problems stem from weaknesses in the internal value chain or threats in the external environment? Dig deep. Being too quick to accept the easiest or least controversial answer will usually fail to get to the heart of the problem.

Speculate. Strategic managers need to be able to use their imagination to envision an explanation or solution that might not readily be apparent. The same is true with case analysis. Being able to imagine different scenarios or contemplate the outcome of a decision can aid the analysis. Managers also have to deal with uncertainty since most decisions are made without complete knowledge of the circumstances. This is also true in case analysis. Case materials often seem to be missing data or the information provided is contradictory.

The ability to speculate about details that are unknown or the consequences of an action can be helpful. Integrate. Strategy involves looking at the big picture and having an organizationwide perspective. Strategic case analysis is no different. Even though the chapters in this textbook divide the material into various topics that may apply to different parts of an organization, all of this information must be integrated into one set of recommendations that will affect the whole company. A strategic manager needs to comprehend how all the factors that in? uence the organization will interact.

This also applies to case analysis. Changes made in one part of the organization affect other parts. Thus, a holistic perspective that integrates the impact of various decisions and environmental in? uences on all parts of the organization is needed. In business, these three activities sometimes “compete” with each other for your attention. For example, some decision makers may have a natural ability to differentiate among elements of a problem but are not able to integrate them very well. Others have enough innate creativity to imagine solutions or ? ll in the blanks when information is missing.

But they may have a dif? cult time when faced with hard numbers or cold facts. Even so, each of these skills is important. It is the ability to simultaneously make distinctions and envision the whole, and to imagine a future scenario while staying focused on the present, that is the mark of a good strategic manager. Thus, another reason to conduct case analysis is to help you develop and exercise your ability to differentiate, speculate, and integrate. STRATEGY SPOTLIGHT 13. 1 | ANALYSIS, DECISION MAKING, AND CHANGE AT SAPIENT HEALTH NETWORK Sapient Health Network (SHN) had gotten off to a good start.

CEO Jim Kean and his two cofounders had raised $5 million in investor capital to launch their vision: an Internet based health care information subscription service. The idea was to create an Internet community for people suffering from chronic diseases. It would provide members with expert information, resources, a message board, and chat rooms so that people suffering from the same ailments could provide each other with information and support. “Who would be more voracious consumers of information than people who are faced with life-changing, life-threatening illnesses? thought Bill Kelly, one of SHN’s cofounders. Initial market research and beta tests had supported that view. During the beta tests, however, the service had been offered for free. The troubles began when SHN tried to convert its trial subscribers into paying ones. Fewer than 5 percent signed on, far less than the 15 percent the company had projected. Sapient hired a vice president of marketing who launched an aggressive promotion, but after three months of campaigning SHN still had only 500 members. SHN was now burning through $400,000 per month, with little revenue to show for it.

At that point, according to SHN board member Susan Clymer, “there was a lot of scrambling around trying to ? gure out how we could wring value out of what we’d already accomplished. ” One thing SHN had created was an expert software system which had two components: an “intelligent pro? le engine” (IPE) and an “intelligent query engine” (IQE). SHN used this system to collect detailed information from its subscribers. SHN was sure that the expert system was its biggest selling point. But how to use it? Then the founders remembered hat the original business plan had suggested there might be a market for aggregate data about patient populations gathered from the website. Could they turn the business around by selling patient data? To analyze the possibility, Kean tried out the idea on the market research arm of a huge East Coast health care conglomerate. The of? cials were intrigued. SHN realized that its expert system could become a market research tool. Once the analysis was completed, the founders made the decision: They would still create Internet communities for chronically ill patients, but the service would be free.

And they would transform SHN from a company that processed subscriptions to one that sold market research. Finally, they enacted the changes. Some of it was painful, including laying off 18 employees. Instead, SHN needed more health care industry expertise. It even hired an interim CEO, Craig Davenport, a 25-year veteran of the industry, to steer the company in its new direction. Finally, SHN had to communicate a new message to its members. It began by reimbursing the $10,000 of subscription fees they had paid. All of this paid off dramatically in a matter of just two years.

Revenues jumped to $1. 9 million in 1998. Early in 1999 SHN was purchased by WebMD and less than a year later, WebMD merged with Healtheon. The combined company still operates a thriving of? ce out of SHN’s original location in Portland, Oregon. Sources: K. Brenneman, “Healtheon/WebMD’s Local Of? ce Is Thriving,” Business Journal of Portland, June 2, 2000; D. Raths, “Reversal of Fortune,” Inc. Technology, 2 (1998), pp. 52–62. Case analysis takes the student through the whole cycle of activity that a manager would face.

Beyond the textbook descriptions of concepts and examples, case analysis asks you to “walk a mile in the shoes” of the strategic decision maker and learn to evaluate situations critically. Executives and owners must make decisions every day with limited information and a swirl of business activity going on around them. Consider the example of Sapient Health Networks, an Internet start-up that had to undergo some analysis and problem solving just to survive. Strategy Spotlight 13. 1 describes how this company transformed itself after a serious self-examination during a time of crisis. 22 C H A P T E R 13 Analyzing Strategic Management Cases 423 As you can see from the experience of Sapient Health Networks, businesses are often faced with immediate challenges that threaten their life. The Sapient case illustrates how the strategic management process helped it survive. First, the company realistically assessed the environment, evaluated the marketplace, and analyzed its resources. Then it made tough decisions which included shifting its market focus, hiring and ? ring, and redeploying its assets. Finally, it took action.

The result was not only ? rm survival, but a quick turnaround leading to rapid success. HOW TO CONDUCT A CASE ANALYSIS The process of analyzing strategic management cases involves several steps. In this section we will review the mechanics of preparing a case analysis. Before beginning, there are two things to keep in mind that will help make your understanding of the process more clear and the results of the process more meaningful. First, unless you prepare for a case discussion, there is little you can gain from the discussion and even less that you can offer.

Effective strategic managers don’t enter into problem-solving situations without doing some homework—investigating the situation, analyzing and researching possible solutions, and sometimes gathering the advice of others. Good problem solving often requires that decision makers be immersed in the facts, options, and implications surrounding the problem. In case analysis, this means reading and thoroughly comprehending the case materials before trying to make an analysis. The second point is related to the ? rst.

To get the most out of a case analysis you must place yourself “inside” the case—that is, think like an actual participant in the case situation. However, there are several positions you can take. These are discussed in the following paragraphs: I I I Strategic decision maker. This is the position of the senior executive responsible for resolving the situation described in the case. It may be the CEO, the business owner, or a strategic manager in a key executive position. Board of directors. Since the board of directors represents the owners of a corporation, it has a responsibility to step in when a management crisis threatens the company.

As a board member, you may be in a unique position to solve problems. Outside consultant. Either the board or top management may decide to bring in outsiders. Consultants often have an advantage because they can look at a situation objectively. But they may also be at a disadvantage since they have no power to enforce changes. Before beginning the analysis, it may be helpful to envision yourself assuming one of these roles. Then, as you study and analyze the case materials, you can make a diagnosis and recommend solutions in a way that is consistent with your position. Try different perspectives. You may ? d that your view of the situation changes depending on the role you play. As an outside consultant, for example, it may be easy for you to conclude that certain individuals should be replaced in order to solve a problem presented in the case. However, if you take the role of the CEO who knows the individuals and STRATEGY SPOTLIGHT 13. 2 | USING A BUSINESS PLAN FRAMEWORK TO ANALYZE STRATEGIC CASES Established businesses often have to change what they are doing in order to improve their competitive position or sometimes simply to survive. To make the changes effectively, businesses usually need a plan.

Business plans are no longer just for entrepreneurs. The kind of market analysis, decision making, and action planning that is considered standard practice among new ventures can also bene? t going concerns that want to make changes, seize an opportunity, or head in a new direction. The best business plans, however, are not those loaded with decades of month-by-month ? nancial projections or that depend on rigid adherence to a schedule of events that is impossible to predict. The good ones are focused on four factors that are critical to new venture success. These same factors are important in case nalysis as well because they get to the heart of many of the problems found in strategic cases. 1. The People. “When I receive a business plan, I always read the resume section ? rst,” says Harvard Professor William Sahlman. The people questions that are critically important to investors include: What are their skills? How much experience do they have? What is their reputation? Have they worked together as a team? These same questions may also be used in case analysis to evaluate the role of individuals in the strategic case. The Opportunity. Business opportunities come in many forms. They are not limited to new ventures.

The chance to enter new markets, introduce new products, or merge with a competitor provide many of the challenges that are found in strategic management cases. What are the consequences of such actions? Will the proposed changes affect the ? rm’s business concept? What factors might stand in the way of success? The same issues are also present in most strategic cases. The Context. Things happen in contexts that cannot be controlled by a ? rm’s managers. This is particularly true of the general environment where social trends, economic changes, or events such as the September 11, 2001, terrorist attacks can change business overnight.

When evaluating strategic cases, ask: Is the company aware of the impact of context on the business? What will it do if the context changes? Can it in? uence the context in a way that favors the company? Risk and Reward. With a new venture, the entrepreneurs and investors take the risks and get the rewards. In strategic cases, the risks and rewards often extend to many other stakeholders—employees, customers, suppliers, and so on. When analyzing a case, ask: Are the managers making choices that will pay off in the future? Are the rewards evenly distributed?

Will some stakeholders be put at risk if the situation in the case changes? What if the situation remains the same—could that be even more risky? 3. 4. 2. Whether a business is growing or shrinking, large or small, industrial or service oriented, the issues of people, opportunities, context, and risks and rewards will have a large impact on its performance. Therefore, you should always consider these four factors when evaluating strategic management cases. Sources: C. A. DeKluyver, Strategic Thinking: An Executive Perspective (Upper Saddle River, NJ: Prentice Hall, 2000); F. L. Fry and C. R.

Stoner, “Business Plans: Two Major Types,” Journal of Small Business Management, January 1985, pp. 1–6; W. A. Sahlman, “How to Write a Great Business Plan,” Harvard Business Review, 75, no. 4 (1997), pp. 98–108. the challenges they have been facing, you may be reluctant to ? re them and will seek another solution instead. The idea of assuming a particular role is similar to the real world in various ways. In your career, you may work in an organization where outside accountants, bankers, lawyers, or other professionals are advising you about how to resolve business situations or improve your practices.

Their perspective will be different from yours but it is useful to understand things from their point of view. Conversely, you may work as a 424 C H A P T E R 13 Analyzing Strategic Management Cases 425 member of the audit team of an accounting ? rm or the loan committee of a bank. In those situations, it would be helpful if you understood the situation from the perspective of the business leader who must weigh your views against all the other advice that he or she receives. Case analysis can help develop an ability to appreciate such multiple perspectives.

One of the most challenging roles to play in business is as a business founder or owner. For small businesses or entrepreneurial start-ups, the founder may wear all hats at once—key decision maker, primary stockholder, and CEO. Hiring an outside consultant may not be an option. However, the issues faced by young ? rms and established ? rms are often not that different, especially when it comes to formulating a plan of action. Business plans that entrepreneurial ? rms use to raise money or propose a business expansion typically revolve around a few key issues that must be addressed no matter what the size or age of the business.

Strategy Spotlight 13. 2 reviews business planning issues that are most important to consider when evaluating any case, especially from the perspective of the business founder or owner. Next we will review ? ve steps to follow when conducting a strategic management case analysis: becoming familiar with the material, identifying the problems, analyzing the strategic issues using the tools and insights of strategic management, proposing alternative solutions, and making recommendations. 4 Become Familiar with the Material Written cases often include a lot of material. They may be complex and include detailed ? ancials or long passages. Even so, to understand a case and its implications, you must become familiar with its content. Sometimes key information is not immediately apparent. It may be contained in the footnotes to an exhibit or an interview with a lowerlevel employee. In other cases the important points may be dif? cult to grasp because the subject matter is so unfamiliar. When you approach a strategic case try the following technique to enhance comprehension: I I I I I Read quickly through the case one time to get an overall sense of the material. Use the initial read-through to assess possible links to strategic concepts.

Read through the case again, in depth. Make written notes as you read. Evaluate how strategic concepts might inform key decisions or suggest alternative solutions. After formulating an initial recommendation, thumb through the case again quickly to help assess the consequences of the actions you propose. Identify Problems When conducting case analysis, one of your most important tasks is to identify the problem. Earlier we noted that one of the main reasons to conduct case analysis was to ? nd solutions. But you cannot ? nd a solution unless you know the problem. Another saying you may have heard is, “A good diagnosis is half the cure. In other words, once you have determined what the problem is, you are well on your way to identifying a reasonable solution. 426 PA R T 4 Case Analysis Some cases have more than one problem. But the problems are usually related. For a hypothetical example, consider the following: Company A was losing customers to a new competitor. Upon analysis, it was determined that the competitor had a 50 percent faster delivery time even though its product was of lower quality. The managers of company A could not understand why customers would settle for an inferior product.

It turns out that no one was marketing to company A’s customers that its product was superior. A second problem was that falling sales resulted in cuts in company A’s sales force. Thus, there were two related problems: inferior delivery technology and insuf? cient sales effort. When trying to determine the problem, avoid getting hung up on symptoms. Zero in on the problem. For example, in the company A example above, the symptom was losing customers. But the problems were an underfunded, understaffed sales force combined with an outdated delivery technology.

Try to see beyond the immediate symptoms to the more fundamental problems. Another tip when preparing a case analysis is to articulate the problem. 5 Writing down a problem statement gives you a reference point to turn to as you proceed through the case analysis. This is important because the process of formulating strategies or evaluating implementation methods may lead you away from the initial problem. Make sure your recommendation actually addresses the problems you have identi? ed. One more thing about identifying problems: Sometimes problems are not apparent until after you do the analysis.

In some cases the problem will be presented plainly, perhaps in the opening paragraph or on the last page of the case. But in other cases the problem does not emerge until after the issues in the case have been analyzed. We turn next to the subject of strategic case analysis. Conduct Strategic Analyses This textbook has presented numerous analytical tools (e. g. , ? ve-forces analysis and value-chain analysis), contingency frameworks (e. g. , when to use related rather than unrelated diversi? cation strategies), and other techniques that can be used to evaluate strategic situations.

The previous 12 chapters have addressed practices that are common in strategic management, but only so much can be learned by studying the practices and concepts. The best way to understand these methods is to apply them by conducting analyses of speci? c cases. The ? rst step is to determine which strategic issues are involved. Is there a problem in the company’s competitive environment? Or is it an internal problem? If it is internal, does it have to do with organizational structure? strategic controls? uses of technology? Or perhaps the company has overworked its employees or underutilized its intellectual capital.

Has the company mishandled a merger? Chosen the wrong diversi? cation strategy? Botched a new product introduction? Each of these issues is linked to one or more of the concepts discussed earlier in the text. Determine what strategic issues are associated with the problems you have identi? ed. Remember also that most real-life case situations involve issues that are highly interrelated. Even in cases where there is only one major problem, the strategic processes required to solve it may involve several parts of the organization. C H A P T E R 13 Analyzing Strategic Management Cases 427

Once you have identi? ed the issues that apply to the case, conduct the analysis. For example, you may need to conduct a ? ve-forces analysis or dissect the company’s competitive strategy. Perhaps you need to evaluate whether its resources are rare, valuable, dif? cult to imitate, or dif? cult to substitute. Financial analysis may be needed to assess the company’s economic prospects. Perhaps the international entry mode needs to be reevaluated because of changing conditions in the host country. Employee empowerment techniques may need to be improved to enhance organizational learning.

Whatever the case, all the strategic concepts introduced in the text include insights for assessing their effectiveness. Determining how well a company is doing these things is central to the case analysis process. In this part of the overall strategic analysis process, it is also important to test your own assumptions about the case. 6 First, what assumptions are you making about the case materials? It may be that you have interpreted the case content differently than your team members or classmates. Being clear about these assumptions will be important in determining how to analyze the case.

Second, what assumptions have you made about the best way to resolve the problems? Ask yourself why you have chosen one type of analysis over another. This process of assumption checking can also help determine if you have gotten to the heart of the problem or are still just dealing with symptoms. As mentioned earlier, sometimes the critical diagnosis in a case can only be made after the analysis is conducted. However, by the end of this stage in the process, you should know the problems and have completed a thorough analysis of them. You can now move to the next step: ? nding solutions. Propose Alternative Solutions

It is important to remember that in strategic management case analysis, there is rarely one right answer or one best way. Even when members of a class or a team agree on what the problem is, you may not agree upon how to solve the problem. Therefore, it is helpful to consider several different solutions. After conducting strategic analysis and identifying the problem, develop a list of options. What are the possible solutions? What are the alternatives? Generate a list ? rst, listing all of the options you can think of without prejudging any one of them. Remember that not all cases call for dramatic decisions or sweeping changes.

Some companies just need to make small adjustments. In fact, “Do nothing” may be a reasonable alternative in some cases. Although that is rare, it might be useful to consider what will happen if the company does nothing. This point illustrates the purpose of developing alternatives: to evaluate what will happen if a company chooses one solution over another. Thus, during this step of a case analysis, you will evaluate choices and the implications of those choices. One aspect of any business that is likely to be highlighted in this part of the analysis is strategy implementation.

Ask how the choices made will be implemented. It may be that what seems like an obvious choice for solving a problem creates an even bigger problem when implemented. But remember also that no strategy or strategic “? x” is going to work if it cannot be implemented. Once a list of alternatives is generated, ask: 428 PA R T 4 Case Analysis I I I I I I Can the company afford it? How will it affect the bottom line? Is the solution likely to evoke a competitive response? Will employees throughout the company accept the changes? What impact will the solution have on morale?

How will the decision affect other stakeholders? Will customers, suppliers, and others buy into it? How does this solution ? t with the company’s vison, mission, and objectives? Will the culture or values of the company be changed by the solution? Is it a positive change? The point of this step in the case analysis process is to ? nd a solution that both solves the problem and is realistic. A consideration of the implications of various alternative solutions will generally lead you to a ? nal recommendation that is more thoughtful and complete. Make Recommendations

The basic aim of case analysis is to ? nd solutions. Your analysis is not complete until you have recommended a course of action. In this step the task is to 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. The recommendation should also include suggestions for how best to implement the proposed solution because the recommended actions and their implications for the performance and future of the ? rm are interrelated. Recall that the solution you propose must solve the problem you identi? d. This point cannot be overemphasized; too often students make recommendations that treat only symptoms or fail to tackle the central problems in the case. Make a logical argument that shows how the problem led to the analysis and the analysis led to the recommendations you are proposing. Remember, an analysis is not an end in itself; it is useful only if it leads to a solution. The actions you propose should describe the very next steps that the company needs to take. Don’t say, for example, “If the company does more market research, then I would recommend the following course of action . . . Instead, make conducting the research part of your recommendation. Taking the example a step further, if you also want to suggest subsequent actions that may be different depending on the outcome of the market research, that’s OK. But don’t make your initial recommendation conditional on actions the company may or may not take. In summary, case analysis can be a very rewarding process but, as you might imagine, it can also be frustrating and challenging. If you will follow the steps described above, you will address the different elements of a thorough analysis. This approach can give your analysis a solid footing.

Then, even if there are differences of opinion about how to interpret the facts, analyze the situation, or solve the problems, you can feel con? dent that you have not missed any important steps in ? nding the best course of action. Students are often asked to prepare oral presentations of the information in a case and their analysis of the best remedies. This is frequently assigned as a group project. Or you may be called upon in class to present your ideas about the circumstances or solutions for a case the class is discussing. Exhibit 13. 1 provides some tips for preparing an oral case presentation.

C H A P T E R 13 Analyzing Strategic Management Cases 429 Exhibit 13. 1 Preparing an Oral Case Presentation Rule Organize your thoughts. Description Begin by becoming familiar with the material. If you are working with a team, compare notes about the key points of the case and share insights that other team members may have gleaned from tables and exhibits. Then make an outline. This is one of the best ways to organize the ? ow and content of the presentation. The purpose of case analysis is to diagnose problems and ? nd solutions. In the process, you may need to unravel the case material as presented and recon? ure it in a fashion that can be more effectively analyzed. Present the material in a way that lends itself to analysis—don’t simply restate what is in the case. This involves three major categories with the following emphasis: Background/Problem Statement Strategic Analysis/Options Recommendations/Action Plan 10–20% 60–75% 10–20% Emphasize strategic analysis. As you can see, the emphasis of your presentation should be on analysis. This will probably require you to reorganize the material so that the tools of strategic analysis can be applied. Be logical and consistent.

A presentation that is rambling and hard to follow may confuse the listener and fail to evoke a good discussion. Present your arguments and explanations in a logical sequence. Support your claims with facts. Include ? nancial analysis where appropriate. Be sure that the solutions you recommend address the problems you have identi? ed. Usually an oral presentation is followed by a class discussion. Anticipate what others might disagree with and be prepared to defend your views. This means being aware of the choices you made and the implications of your recommendations. Be clear about your assumptions. Be able to expand on your analysis.

Strategic management case analyses are often conducted by teams. Each member of the team should have a clear role in the oral presentation, preferably a speaking role. It’s also important to coordinate the different parts of the presentation into a logical, smooth-? owing whole. How well a team works together is usually very apparent during an oral presentation. Defend your position. Share presentation responsibilities. HOW TO GET THE MOST FROM CASE ANALYSIS One of the reasons case analysis is so enriching as a learning tool is that it draws on many resources and skills besides just what is in the textbook.

This is especially true in the study of strategy. Why? Because strategic management itself is a highly integrative task that draws on many areas of specialization at several levels, from the individual to the whole of society. Therefore, to get the most out of case analysis, expand your horizons beyond the concepts in this text and seek insights from your own reservoir of knowledge. Here are some tips for how to do that. 7 I Keep an open mind. Like any good discussion, a case analysis discussion often evokes strong opinions and high emotions.

But it’s the variety of perspectives that makes case analysis so valuable: Many viewpoints usually lead to a more 430 PA R T 4 Case Analysis I I I I I complete analysis. Therefore, avoid letting an emotional response to another person’s style or opinion keep you from hearing what he or she has to say. Once you evaluate what is said, you may disagree with it or dismiss it as faulty. But unless you keep an open mind in the ? rst place, you may miss the importance of the other person’s contribution. Also, people often place a higher value on the opinions of those they consider to be good listeners.

Take a stand for what you believe. Although it is vital to keep an open mind, it is also important to state your views proactively. Don’t try to ? gure out what your friends or the instructor wants to hear. Analyze the case from the perspective of your own background and belief system. For example, perhaps you feel that a decision is unethical or that the managers in a case have misinterpreted the facts. Don’t be afraid to assert that in the discussion. For one thing, when a person takes a strong stand, it often encourages others to evaluate the issues more closely.

This can lead to a more thorough investigation and a more meaningful class discussion. Draw on your personal experience. You may have experiences from work or as a customer that shed light on some of the issues in a case. Even though one of the purposes of case analysis is to apply the analytical tools from this text, you may be able to add to the discussion by drawing on your outside experiences and background. Of course, you need to guard against carrying that to extremes. In other words, don’t think that your perspective is the only viewpoint that matters! Simply recognize that ? sthand experience usually represents a welcome contribution to the overall quality of case discussions. Participate and persuade. Have you heard the phrase, “Vote early . . . and often”? Among loyal members of certain political parties, it has become rather a joke. Why? Because a democratic system is built on the concept of one person, one vote. Even though some voters may want to vote often enough to get their candidate elected, it is against the law. Not so in a case discussion. People who are persuasive and speak their mind can often in? uence the views of others. But to do so, you have to be prepared and convincing.

Being persuasive is more than being loud or long-winded. It involves understanding all sides of an argument and being able to overcome objections to your own point of view. These efforts can make a case discussion more lively. And they parallel what happens in the real world; in business, people frequently share their opinions and attempt to persuade others to see things their way. Be concise and to the point. In the previous point, we encouraged you to speak up and “sell” your ideas to others in a case discussion. But you must be clear about what you are selling. Make your arguments in a way that is explicit and direct.

Zero in on the most important points. Be brief. Don’t try to make a lot of points at once by jumping around between topics. Avoid trying to explain the whole case situation at once. Remember, other students usually resent classmates who go on and on, take up a lot of “airtime,” or repeat themselves unnecessarily. The best way to avoid this is to stay focused and be speci? c. Think out of the box. It’s OK to be a little provocative; sometimes that is the consequence of taking a stand on issues. But it may be equally important to be C H A P T E R 13 Analyzing Strategic Management Cases 431 I I I I maginative and creative when making a recommendation or determining how to implement a solution. Albert Einstein once stated, “Imagination is more important than knowledge. ” The reason is that managing strategically requires more than memorizing concepts. Strategic management insights must be applied to each case differently—just knowing the principles is not enough. Imagination and out-ofthe-box thinking helps to apply strategic knowledge in novel and unique ways. Learn from the insights of others. Before you make up your mind about a case, hear what other students have to say. Get a second opinion, and a third, and so forth.

In a situation where you have to put your analysis in writing, of course, you may not be able to learn from others ahead of time. But in a case discussion, observe how various students attack the issues and engage in problem solving. Such observation skills may also be a key to ? nding answers within the case. For example, people tend to believe authority ? gures, so they would place a higher value on what a company president says. In some cases, however, the statements of middle managers may represent a point of view that is even more helpful for ? nding a solution to the problems presented by the case.

Apply insights from other case analyses. Throughout the text, we have used examples of actual businesses to illustrate strategy concepts. The aim has been to show you how ? rms think about and deal with business problems. During the course, you may be asked to conduct several case analyses as part of the learning experience. Once you have performed a few case analyses, you will see how the concepts from the text apply in real-life business situations. Incorporate the insights learned from the text examples and your own previous case discussions into each new case that you analyze.

Critically analyze your own performance. Performance appraisals are a standard part of many workplace situations. They are used to determine promotions, raises, and work assignments. In some organizations, everyone from the top executive down is subject to such reviews. Even in situations where the owner or CEO is not evaluated by others, they often ? nd it useful to ask themselves regularly, Am I being effective? The same can be applied to your performance in a case analysis situation. Ask yourself, Were my comments insightful? Did I make a good contribution? How might I improve next time?

Use the same criteria on yourself that you use to evaluate others. What grade would you give yourself? This technique will not only make you more fair in your assessment of others, but also indicate how your own performance can improve. Conduct outside research. Many times, you can enhance your understanding of a case situation by investigating sources outside the case materials. For example, you may want to study an industry more closely or research a company’s close competitors. Recent moves such as mergers and acquisitions or product introductions may be reported in the business press.

The company itself may provide useful information on its website or in its annual reports. Such information can usually spur additional discussion and enrich the case analysis. (Caution: It is best to check with your instructor in advance to be sure this kind of additional research is encouraged. Bringing in outside research may con? ict with the instructor’s learning objectives. ) 432 PA R T 4 Case Analysis Exhibit 13. 2 Preparing a Written Case Analysis Rule Be thorough. Descripton Many of the ideas presented in Exhibit 13. 1 about oral presentations also apply to written case analysis.

However, a written analysis typically has to be more complete. This means writing out the problem statement and articulating assumptions. It is also important to provide support for your arguments and reference case materials or other facts more speci? cally. Written cases are often prepared by small groups. Within a group, just as in a class discussion, you may disagree about the diagnosis or the recommended plan of action. This can be healthy if it leads to a richer understanding of the case material. But before committing your ideas to writing, make sure you have coordinated your responses.

Don’t prepare a written analysis that appears contradictory or looks like a patchwork of disconnected thoughts. There is no reason to restate material that everyone is familiar with already, namely, the case content. It is too easy for students to use up space in a written analysis with a recapitulation of the details of the case—this accomplishes very little. Stay focused on the key points. Only restate the information that is most central to your analysis. Tables, graphs, and other exhibits are usually one of the best ways to present factual material that supports your arguments.

For example, ? nancial 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 effectively and viewed quickly by using a table or graph. When presenting a case analysis in writing, it is especially important to use good grammar, avoid misspelling words, and eliminate typos and other visual distractions. Mistakes that can be glossed over in an oral presentation or class discussion are often highlighted when they appear in writing.

Make your written presentation appear as professional as possible. Don’t let the appearance of your written case keep the reader from recognizing the importance and quality of your analysis. Coordinate team efforts. Avoid restating the obvious. Present information graphically. Exercise quality control. Several of the points suggested above for how to get the most out of case analysis apply only to an open discussion of a case, like that in a classroom setting. Exhibit 13. 2 provides some additional guidelines for preparing a written case analysis. FOLLOWING THE ANALYSIS-DECISION-ACTION CYCLE IN CASE ANALYSIS In Chapter 1 we de? ed strategic management as the analysis, decisions, and actions that organizations undertake to create and sustain competitive advantages. It is no accident that we chose that sequence of words because it corresponds to the sequence of events that typically occurs in the strategic management process. In case analysis, as in the real world, this cycle of events can provide a useful framework. First, an analysis of the case in terms of the business environment and current events is needed. To make such an analysis, the case background must be considered. Next, based on that analysis, decisions must be made.

This may involve formulating a strategy, choosing between C H A P T E R 13 Analyzing Strategic Management Cases 433 dif? cult options, moving forward aggressively, or retreating from a bad situation. There are many possible decisions, depending on the case situation. Finally, action is required. Once decisions are made and plans are set, the action begins. The recommended action steps and the consequences of implementing these actions are the ? nal stage. Each of the previous 12 chapters of this book includes techniques and information that may be useful in a case analysis.

However, not all of the issues presented will be important in every case. As noted earlier, one of the challenges of case analysis is to identify the most critical points and sort through material that may be ambiguous or unimportant. In this section we draw on the material presented in each of the 12 chapters to show how it informs the case analysis process. The ideas are linked sequentially and in terms of an overarching strategic perspective. One of your jobs when conducting case analysis is to see how the parts of a case ? t together and how the insights from the study of strategy can help you understand the case situation. . Analyzing organizational goals and objectives. A company’s vision, mission, and objectives keep organization members focused on a common purpose. They also in? uence how an organization deploys its resources, relates to its stakeholders, and matches its short-term objectives with its long-term goals. The goals may even impact how a company formulates and implements strategies. When exploring issues of goals and objective, you may need to ask: I Has the company developed short-term objectives that are inconsistent with its long-term mission? If so, how can management realign its vision, mission, and objectives?

I Has the company considered all of its stakeholders equally in making critical decisions? If not, should the views of all stakeholders be treated the same or are some stakeholders more important than others? I Is the company being faced with an issue that con? icts with one of its longstanding policies? If so, how should it compare its existing policies to the potential new situation? 2. Analyzing the external environment. The business environment has two components. The general environment consists of demographic, sociocultural, political/legal, technological, economic, and global conditions.

The competitive environment includes rivals, suppliers, customers, and other factors that may directly affect a company’s success. Strategic managers must monitor the environment to identify opportunities and threats that may have an impact on performance. When investigating a ? rm’s external environment, you may need to ask: I Does the company follow trends and events in the general environment? If not, how can these in? uences be made part of the company’s strategic analysis process? I Is the company effectively scanning and monitoring the competitive environment?

If so, how is it using the competitive intelligence it is gathering to enhance its competitive advantage? I Has the company correctly analyzed the impact of the competitive forces in its industry on pro? tability? If so, how can it improve its competitive position relative to these forces? 434 PA R T 4 Case Analysis 3. Analyzing the internal environment. A ? rm’s internal environment consists of its resources and other value-adding capabilities. Value-chain analysis and a resource-based approach to analysis can be used to identify a company’s strengths and weaknesses and determine how they are contributing to its competitive advantages.

Evaluating ? rm performance can also help make meaningful comparisons with competitors. When researching a company’s internal analysis, you may need to ask: I Does the company know how the various components of its value chain are adding value to the ? rm? If not, what internal analysis is needed to determine its strengths and weakness? I Has the company accurately analyzed the source and vitality of its resources? If so, is it deploying its resources in a way that contributes to competitive advantages? I Is the company’s ? nancial performance as good as or better than that of its close competitors?

If so, has it balanced its ? nancial success with the performance criteria of other stakeholders such as customers and employees? 4. Assessing a ? rm’s intellectual assets. Human capital is a major resource in today’s knowledge economy. As a result, attracting, developing, and retaining talented workers is a key strategic challenge. Other assets such as patents and trademarks are also critical. How companies leverage their intellectual assets through social networks and strategic alliances, and how technology is used to manage knowledge may be a major in? uence on a ? rm’s competitive advantage. When analyzing a ? m’s intellectual assets, you may need to ask: I Does the company have underutilized human capital? If so, what steps are needed to develop and leverage its intellectual assets? I Is the company missing opportunities to forge strategic alliances? If so, how can it use its social capital to network more effectively? I Has the company developed knowledge-management systems that capture what it learns? If not, what technologies can it employ to retain new knowledge? 5. Formulating business-level strategies. Firms use the competitive strategies of differentiation, focus, and overall cost leadership as a basis for overcoming the ? e competitive forces and developing sustainable competitive advantages. Combinations of these strategies may work best in some competitive environments. Additionally, an industry’s life cycle is an important contingency that may affect a company’s choice of business-level strategies. When assessing business-level strategies, you might ask: I Has the company chosen the correct competitive strategy given its industry environment and competitive situation? If not, how should it use its strengths and resources to improve its performance? I Does the company use combination strategies effectively?

If so, what capabilities can it cultivate to further enhance pro? tability? I Is the company using a strategy that is appropriate for the industry life cycle in which it is competing? If not, how can it realign itself to match its efforts to the current stage of industry growth? 6. Formulating corporate-level strategies. Large ? rms often own and manage portfolios of businesses. Corporate strategies address methods for achieving synergies among these C H A P T E R 13 Analyzing Strategic Management Cases 435 businesses. Related and unrelated diversi? ation techniques are alternative approaches to deciding which business should be added to or removed from a portfolio. Companies can diversify by means of mergers, acquisitions, joint ventures, strategic alliances, and internal development. When analyzing corporate-level strategies, you might ask: I Is the company competing in the right businesses given the opportunities and threats that are present in the environment? If not, how can it realign its diversi? cation strategy to achieve competitive advantages? I Is the corporation managing its portfolio of businesses in a way that creates synergies among the businesses?

If so, what additional business should it consider adding to its portfolio? I Are the motives of the top corporate executives who are pushing diversi? cation strategies appropriate? If not, what action can be taken to curb their activities or align them with the best interests of all stakeholders? 7. Formulating international-level strategies. Foreign markets provide both opportunities and potential dangers for companies that want to expand globally. To decide which entry strategy is most appropriate, companies have to evaluate the trade-offs between two factors that ? ms face when entering foreign markets: cost reduction and local adaptation. To achieve competitive advantages, ? rms will typically choose one of three strategies: global, multidomestic, or transnational. When evaluating internationallevel strategies, you might ask: I Is the company’s entry into an international marketplace threatened by the actions of local competitors? If so, how can cultural differences be minimized to give the ? rm a better chance of succeeding? I Has the company made the appropriate choices between cost reduction and local adaptation to foreign markets?

If not, how can it adjust its strategy to achieve competitive advantages? I Can the company improve its effectiveness by embracing one international strategy over another? If so, how should it choose between a global, multidomestic, or transnational strategy? 8. Formulating Internet strategies. The Internet has created a new arena for strategic analysis, decisions, and action. The technologies and applications that the Internet makes possible is having an impact on competitive forces in many industries. Internet strategies that combine elements of low cost, differentiation, and focus are creating new wealth in this New Economy.

When conducting an analysis that involves Internet strategies, you might ask: I Has the company correctly assessed shifts in the ? ve competitive forces that have been brought about by the Internet? If so, what new strategies should it formulate to take advantage of—or defend itself—in the New Economy? I Does the company have an opportunity to lower its transaction costs by doing business over the Internet? If so, what supply-chain or distribution channel relationships might be disrupted? I Is the company using the right mix of competitive strategies to make the most of Internet-based technologies?

If not, how might it deploy its resources and capabilities differently? 436 PA R T 4 Case Analysis 9. Achieving effective strategic control. Strategic controls enable a ? rm to implement strategies effectively. Informational controls involve comparing performance to stated goals and scanning, monitoring, and being responsive to the environment. Behavioral controls emerge from a company’s culture, reward systems, and organizational boundaries. When assessing the impact of strategic controls on implementation, consider asking: I Is the company employing the appropriate informational control systems?

If not, how can it implement a more interactive approach to enhance learning and minimize response times? I Does the company have a strong and effective culture? If not, what steps can it take to align its values and rewards system with its goals and objectives? I Has the company implemented control systems that match its strategies? If so, what additional steps can be taken to improve performance? 10. Creating effective organization designs. Organizational designs that align with competitive strategies can enhance performance. As companies grow and change, their structures must also evolve to meet new emands. In today’s economy, ? rm boundaries must be ? exible and permeable to facilitate smoother interactions with external parties such as customers, suppliers, and alliance partners. New forms of organizing are becoming more common. When evaluating the role of organizational structure on strategy implementation, consider asking: I Has the company implemented organizational structures that are suited to the type of business it is in? If not, how can it alter the design in ways that enhance its competitiveness? I Is the company employing boundaryless organizational designs where appropriate?

If so, how are senior managers maintaining control of lower-level employees? I Does the company use outsourcing to achieve the best possible results? If not, what criteria should it use to decide which functions can be outsourced? 11. Creating a learning organization and an ethical organization. Strong leadership is essential for achieving competitive advantages. Two leadership roles are especially important. The ? rst is creating a learning organization by harnessing talent and encouraging the development of new knowledge. Second, leaders play a vital role in motivating employees to excellence and inspiring ethical behavior.

When exploring the impact of effective strategic leadership, consider asking: I Do company leaders promote excellence as part of the overall culture? If so, how has this in? uenced the performance of the ? rm and the individuals in it? I Is the company committed to being a learning organization? If not, what can it do to capitalize on the individual and collective talents of organization members? I Have company leaders exhibited an ethical attitude in their own behavior? If not, how has their behavior in? uenced the actions of other employees? 12. Fostering corporate entrepreneurship and new venture creation.

Many ? rms continually seek new growth opportunities and avenues for strategic renewal. In corporate settings, the autonomous actions of product champions and other ? rm members provide companies with the impetus to expand into new areas. Young and small businesses also C H A P T E R 13 Analyzing Strategic Management Cases 437 recognize opportunities and launch ventures that add jobs, create new wealth, and generate new strategic leaders. When investigating the impact of entrepreneurship on strategic effectiveness, consider asking: I Is the company engaged in an ongoing process of opportunity recognition?

If not, how can it enhance its ability to identify new business opportunities? I Has the company developed autonomous work units that have the freedom to bring forth new product ideas? If so, has it used product champions to implement new venture initiatives? I Does the company have an entrepreneurial orientation? If not, what can it do to encourage entrepreneurial attitudes in the strategic behavior of its organizational members? SUMMARY Strategic management case analysis provides an effective method of learning how companies analyze problems, make decisions, and resolve challenges.

Strategic cases include detailed accounts of actual business situations. The purpose of analyzing such cases is to gain exposure to a wide variety of organizational and managerial situations. By putting yourself in the place of a strategic decision maker, you can gain an appreciation for the dif? culty and complexity of many strategic situations. In the process you can learn how to ask good strategic questions and enhance your analytical skills. Presenting case analyses can also help develop oral and written communication skills. In this chapter we have discussed the importance of strategic case analysis and described the ? e steps involved in conducting a case analysis: becoming familiar with the material, identifying problems, analyzing strategic issues, proposing alternative solutions, and making recommendations. We have also discussed how to get the most from cases analysis. Finally, we have described how the case analysis process follows the analysis-decision-action cycle of strategic management and outlined issues and questions that are associated with each of the previous 12 chapters of the text. REFERENCES 1. The material in this chapter is based on several sources, including Barnes, L.

A. , Nelson, A. J. & Christensen, C. R. 1994. Teaching and the case method: Text, cases and readings. Boston: Harvard Business School Press; Guth, W. D. 1985. Central concepts of business unit and corporate strategy. In W. D. Guth, ed. Handbook of business strategy. Boston: Warren, Gorham & Lamont 1–9; Lundberg, C. C. & Enz, C. 1993. A framework for student case preparation. Case Research Journal, 13 (Summer): 129–140; and Ronstadt, R. 1980. The art of case analysis: A guide to the diagnosis of business situations. Dover, MA: Lord Publishing. Edge, A. G. & Coleman, D. R. 1986.

The guide to case analysis and reporting, 3rd ed. Honolulu, HI: System Logistics. Morris, E. 1987. Vision and strategy: A focus for the future. Journal of Business Strategy, 8:51–58. This section is based on Lundberg & Enz, op. cit. ; and Ronstadt, op. cit. 2. 3. 4. 438 PA R T 4 Case Analysis 5. 6. 7. The importance of problem de? nition was emphasized in Mintzberg, H. , Raisinghani, D. & Theoret, A. 1976. The structure of “unstructured” decision processes. Administrative Science Quarterly, 21(2):246–75. Drucker, P. F. 1994. The theory of the business. Harvard Business Review, 72(5):95–104.

This section draws on Edge & Coleman, op. cit. APPENDIX TO CHAPTER 13: SOURCES OF COMPANY AND INDUSTRY INFORMATION* In order for business executives to make the best decisions when developing strategy, it is critical for them to be knowledgeable about their competitors and about the industries in which they compete. This appendix provides an overview of important sources of information that may be useful in conducting company and industry analysis. Much information of this nature is available in libraries in article databases, business reference books, and on websites.

This list will recommend a variety of them. Ask a librarian for assistance because library collections and resources vary. The information sources are organized into 10 categories: Competitive Intelligence; Public or Private, Subsidiary or Division, U. S. or Foreign? ; Annual Report Collections—Public Companies; Guides and Tutorials; SEC Filings/EDGAR—Company Disclosure Reports; Company Rankings; Business Metasites and Portals; Strategic and Competitive Analysis—Information Sources; Sources for Industry Research and Analysis; and Search Engines. Competitive Intelligence

Students and other researchers who want to learn more about the value and process of competitive intelligence should see three recent books on this subject. Managing Frontiers in Competitive Intelligence. Craig S. Fleisher and Da

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