Introduction A summary of the case analysis process

Dallas Hanson, University of Tasmania

Case analysis is an essential part of strategic management course and is also perhaps the most entertaining part of such a course.

The 'full story' that follows this summary gives you considerable detail about how to go about a case analysis, but for now here is a brief account.

Before we start, a word about it a real exercise; you have a set of historical facts and use a rigorous system to work out what strategies should be followed.

All the cases are about real companies, and one of the entertaining bits of the analysis process is to compare what you have said they should do with what they really have done. So, it is best not to check the Net to see current strategies until you have completed your analysis.

What follows is one analytical system, a fairly tight one that you may want to adapt according to how much time you have and of the case.

External analysis

?

You must decide on this early. This is an important step, because it changes the analysis - for example, your industry analysis will yield different conclusions depending on what industry you determine.

Step 2 General environment analysis

- , political/legal and demographic - and work out what the important facts are. There may be many issues and facts in each element, but you put down only the important ones. It is also important to avoid the common error of overemphasis on the firm in question. So, assuming the firm operates in the Australian ice-cream industry, the demographic analysis may have this comment:

'A large baby generation is now becoming more health-conscious. This presents opportunities in health foods and healthy alternatives for conventional foods. It also presents opportunities for -fat ice creams.'

Or, in the demographics of the Cochlear TM firm, you may conclude that there is 1.8 million profoundly deaf people and that this provides a huge undeveloped market for the implantable hearing industry.

Step 3 The industry environment

, power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each.

For example, what are the issues involved in new entrants into the industry? For the implantable hearing industry, these may include the need for understanding of intricate new technology, possession of a reputation in the global deaf community for safe and effective product development, and links to research institutions.

This makes the industry hard to enter. Each force needs a brief discussion followed by a short conclusion.

One extra consideration before you pull the analysis together and work out if this is an attractive industry (the main conclusion) is:

Is there a key force or force in your industry? Porter argues that there is a key force in any industry, one that exerts more influence than the other forces.

Now, is it an attractive industry? You need to explain, briefly, why or why not. Bear in mind that it is often not a clear decision because the forces are mixed - for example, there may be little concern about new entrants, suppliers or substitutes, but buyers may be fickle and rivalry high. In such cases, the key force analysis is very important.

Remember: it is the industry you analysis, not the firm.

Step 4 Competitive environment

Is there a strategic group that you need to take account of? What capabilities What strategies do they follow? What threats do they represent?

Step 5 You now have material about opportunities and threats

It is easy to pull this together from the four steps you have now completed.

Step 6 The firm's resources, tangible and intangible

List all relevant resources. It is useful to distinguish between tangible and intangible resources. Remember firms have many resources.

At this point, if you have the skill and time, you can the financial information that almost all cases provide. This provides material for a financial paragraph.

Step 7 Capabilities identification

Here you make a list of capabilities. Capabilities tell you what the firm can do.

Remember: each firm may have a dozen or more capabilities, so include some that are very unlikely to be core competencies. This is a difficult step, because you must explain the capabilities carefully to indicate what the firm really does. For example, Cochlear has a capability for research in cochlear-related technology. It does not have a generic research capability.

Step 8 Core competency analysis

For each capability, indicate which of the four tests for a core competency it meets. As easy way to do this is through of a table. For example:

_________________________________________________________________________________________1- Rare? 2- Valuable? 3- Costly to imitate? 4- Non substitutable __________________________________________________________________________

a. Logistics management 1- Yes 2- Yes 3- No 4- No

]

b. Research knowledge and 1- Yes 2- Yes 3- Yes 4- Yes

]

Etc.

__________________________________________________________________________

This is an important step, because the core competencies are fundamental in the strategies you suggest firms use their core competencies.

Step 9 Weaknesses

What major weaknesses does the firm have - for example, old technology, very limited finance and poor cash flow, no succession planning?

Step 10 Pulling it together

You now have all the material for an excellent SWOT (strengths/weaknesses, opportunities/threats) analysis. Pull together the earlier identification of opportunities and threats (step 5) with internal analysis you have done.

This -based, theory-oriented system gives you a powerful vocabulary to describe what simpler systems call 'strengths', and the other elements of the system allow you to systematically identify other significant factors in the mix.

Step 11 Current strategies

Work out the firm's current strategies

Step 12 Strategies

Here you take advantage of opportunities and handle threats. You should be able to make use of core competencies to do this.

You may need strategies at the business level, corporate level and international level (but it depends on the industry and on whether all are required). Also, bear in mind that you may need to specify functional level strategies to fit the generic strategies at the business level.

For example, if your ice-cream company adopts a differentiation strategy, you must specify how it is differentiated (on what grounds - low fat?) and there must be associated innovation and marketing strategies (or, in the corporate-level strategy, a supporting acquisition strategy may be used to handle the innovation issue).

Make a list of alternative possibilities and use the external and internal analyses that you have conducted to assess them. Choose one set of alternatives.

How do these differ from current strategies?

Make sure earlier analysis. Use all the conclusions in the earlier analysis. For example (and bear in mind that this is simplified to make the idea, if you are in a has good growth prospects because of useful demographic change and you have good financial resources, you may argue for expansion into the new segment using available resources.

If the finances were not there, this strategy would be difficult to support.

Using the Cochlear TM case as training

This case analysis process is easy to use once you have learned it, and the best way to learn is to try it out.

The Cochlear TM case in this book is designed as a training to help you do this Don't be concerned if you get a slightly different analysis to other people:

analysis that they are never 'right'; some are, however, more plausible than others.

Preparing an effective case analysis - the full story

In most strategic management courses, cases are used extensively as a teaching tool. [1]

A key reason is that cases provide active learners with opportunities to use the strategic management process to identify and solve problems. Thus, by situations that are described in cases and presenting the results, active learners (that is, students) become skilled at effectively using the tools, techniques and concepts that combine to form the strategic management process.

The cases that follow are concerned with actual companies.

Presented within the cases are problems and situations that managers and those with whom they work must and resolve.

As you will see, a strategic management case can focus on an entire industry, a single or a business unit of a large, diversified firm.

The strategic management issues facing not-for-profit also can be examined using the case analysis method.

Basically, the case analysis method calls for a careful diagnosis of current (as manifested by its external and internal environments) so that appropriate strategic actions can be recommended in light of the firm's strategic intent and strategic mission.

Strategic action to develop and then use a firm's core to select and implement different strategies, including business level, corporate-level, acquisition and restructuring, international and cooperative strategies.

Thus, appropriate strategic actions help the firm to survive in the long run as it creates and uses competitive advantages as the foundation for achieving strategic competitiveness and earning above-average returns.

The case method that we are recommending to you has a rich heritage as a pedagogical approach to the study and understanding of managerial effectiveness. [2]

As an active learner, your preparation is critical to successful use of the case analysis method. Without careful study and analysis, active learners lack the insights required to participate fully in the discussion of a firm's situation and the strategic actions that are appropriate.

Instructors adopt different approaches in their application of the case analysis method. Some require active learners/students to use a specific analytical procedure to examine an others less structure, expecting students to learn by developing their own unique analytical method.

Still other instructors believe that a moderately structured framework should be used to a firm's situation and make appropriate recommendations, Your lecturer or tutor will determine the specific approach you take. The approach we are presenting to you is a moderately structured framework.

We divide our discussion of a moderately structured case analysis method framework into four sections.

First, we describe the importance of understanding the skills active learners can acquire through effective use of the case analysis method.

In the second section, we provide you with a process-oriented framework.

This framework can be of value in your efforts the results of your work. Using this framework in a classroom setting yields valuable experiences that can, in turn, help you to successful complete assignments that you will receive from your employer.

The third section is where we describe briefly what you can expect to occur during in-class case discussions. As this description the relationship and interaction between instructors and active learners/students during case discussions are different than they are during lectures.

In the final section, we present a moderately structured framework that we believe can help you to prepare effective oral and written presentations. Written and oral communication skills also valued highly in many settings; hence, their development today can serve you well in the future.

Skills gained through use of the case analysis method

The case analysis method is based on a philosophy that combines knowledge acquisition with significant involvement from students as active learners.

In the words of Alfred North Whitehead, this philosophy ' the doctrine that students had first learned passively, and then, having learned should apply knowledge'. [3]

In contrast to this philosophy, the case analysis method is based on principles that were elaborated upon by John Dewey:

Only by wrestling with the conditions of this problem at hand, seeking and finding his own way out, does [the student] think If he cannot devise his own solution (not, of course, in isolation, but in correspondence with the teacher and other pupils) and find his own way out he will not learn, not even if he can recite some correct answer with a hundred percent accuracy. [4]

The case analysis method brings reality into the classroom. When developed and presented effectively, with rich and interesting detail, cases keep conceptual discussions grounded in reality. Experience shows that simple fictional accounts of situations and collections of actual data and articles from public sources are not as effective for learning as fully developed cases.

A comprehensive case presents you with a partial clinical study of a real-life situation that faced managers as well as other stakeholders, including employees.

A case presented in narrative from motivation for involvement with and analysis of a specific situation. By framing alternative strategic action and by confronting the complexity and ambiguity of the practical world, case analysis provides extraordinary power for your involvement with a personal learning experience.

Some of the potential consequences of using the case method are in Exhibit 1. As Exhibit 1 suggests, the case analysis method can assist active learners in the development of their analytical and judgement skills. Case analysis also helps students to learn how to ask the right questions.

By this we mean questions that focus on the core strategic issues that are included in a case. Active learner/students with managerial aspirations can improve their ability to identify underlying problems rather focusing on superficial symptoms as they develop skills at asking probing, yet appropriate, questions.

The collection of instructor chooses to assign can expose you to a wide variety of and decision situations. This approach vicariously broadens your experience base and provides insights into many types of managerial situations, tasks and responsibilities.

Exhibit 1

__________________________________________________________________________

1. Case analysis requires students to important managerial skills - diagnosing, making decisions, observing, listening and persuading - while preparing for a case discussion.
2. Cases require students to relate analysis and action, to develop realistic and concrete actions despite the complexity and partial knowledge the situation being studied.
3. Students must confront the intractability of reality - complete with of an imbalance between needs and available resources, and conflicts among competing objectives.
4. Students develop a general managerial point of view - where responsibility is sensitive to action in a diverse environmental context.

_______________________________________________________________________

Source: C. C. Lundberg and C. , 1993, 'A framework for student case preparation', Case Research 13 (summer), p. 134.

Such indirect experience can help you to make a more informed career decision about the industry and managerial situation you believe will prove to be challenging and satisfying.

Finally, experience in cases definitely enhances your problem-solving skills, and research indicates that the case method for this subject is better than the lecture method. [5]

Furthermore, when your instructor requires oral and written presentations, your communication skills will be honed method.

Of course, these added skills depend on your preparation as well as your instructor's facilitation of learning.

However, the primary responsibility for learning is yours. The quality of case discussion to require, at a minimum, a thorough mastery of case facts and some independent analysis of them.

The case method therefore first requires that you read and think carefully about each case.

Additional comments about the preparation you should complete to successfully discuss a case appear in the next section.

Student preparation for case discussion

If you are inexperienced with the case method, you may need a alter your study A lecture-oriented course may not require you to do intensive preparation for each class period. In such a course, you have the lecture notes according to your own schedule. However, an assigned case require significant and conscientious preparation before class. Without it, you will be unable to contribute meaningfully to in-class discussion.

Therefore, careful reading and thinking about case facts, as well as reasoned analyses and the development of alternative solutions to case problems, are essential.

Recommended alternatives should flow logically from core problems identified

Exhibit 2 shows a set of steps that can help you to yourself with a case, identify problems and propose strategic action that increase the probability that a firm will achieve strategic competitiveness and earn above average returns.

Exhibit 2

__________________________________________________________________________Step 1: Gaining familiarity

a. In general - determine who, how, where and when (the critical facts of the case).

b. In detail - identify the places, persons, activities and contexts of the situation.

c. /uncertainty of acquired information.

____________________________________________________________________

Step 2: symptoms

a. List all indicators (including stated 'problems') that something is not expected or as desired.

b. Ensure that symptoms are not assumed to be the problem. Symptoms should lead to identification of the problem.)

__________________________________________________________________________

Step 3: Identifying goals

a. Identify critical statements by major parties (e.g. , group, the work unit, etc.).

b. List all goals of the major parties that exist or can be reasonably inferred.

__________________________________________________________________________

Step 4: Conducting the analysis

a. Decide which ideas, models and theories seem useful.

b. Apply these conceptual tools to the situation.

c. As new information is revealed, cycle back to sub-steps (a) and (b).

__________________________________________________________________________

Step 5: Making the diagnosis

a. Identify predicaments (goal inconsistencies).

b. Identify problems (discrepancies between goals and performance).

c. / , importance, etc.

__________________________________________________________________________

Step 6: Doing the action planning

a. Specify and the criteria used to choose

Discover or invent

Examine the probable consequences of action alternatives.

d. Select a course of action.

e. Design an implementation plan/schedule.

f. Create a plan for assessing the action to be implemented.

__________________________________________________________________________Source: C. C. Lundberg and C. , 1993, 'A framework for student case preparation', Case Research Journal, 13 (summer), p. 144.

Gaining familiarity

The first step of an effective case analysis process calls for you to become familiar with the facts featured in the case and the focal firm's situation.

Initially, you should become familiar with the focal firm's general situation (for example, who, what, how, where and when).

Thorough demand appreciation of the nuances, as well as the major issues, in the case.

Gaining familiarity with a situation requires you to study several situational levels, including interactions between and among individuals within group, business units, the corporate office, the local community and the society at large.

levels facilitates a more thorough understanding of the specific case situation.

It is also important that you evaluate information on a continuum of certainty.

Information that is verifiable by several sources and judged along similar dimensions can be classified as a fact.

Information representing someone's perceptual judgement of a particular situation is referred to as an inference.

Information gleaned from a situation that is not verifiable is classified as

, information that is independent of verifiable sources and arises through individual or group discussion is an assumption.

Obviously, case analysis and decision makers prefer having access to over inferences, speculations and assumptions.

Personal feeling, judgements and opinions evolve when you are analysis a case.

It is important to be aware of your own feelings about the case and to evaluate the accuracy of perceived 'fact' to ensure that the objectivity of

Recognition of symptoms is the second step of an effective case analysis process.

A symptoms an indication the something is not as you or someone else thinks it should be. You may be tempted to correct the symptoms instead of searching for true problems.

True problems are the conditions or situations requiring solution before the performance of or individual can improve. Identifying and listing symptoms early in the case analysis process to reduce the temptation to symptoms as problems.

The focus of your analysis should be on the actual causes of a problem, rather than on its symptoms.

Thus, it is important to remember that symptoms are indicators of problems; subsequent work facilitates discovery of critical causes of the problems that your case recommendations must address.

Identifying goals

The third step of effective case analysis calls for you to identify the goals of the major business units and/or individuals in a case.

As appropriate, you should also identify each firm's strategic intent and strategic mission.

Typically, these -setting statements (goals, strategic intents and strategic missions) are derived from comments made by central characters in the business unit or top management team as described in the case and/or from public documents (for example, an annual report).

Completing this step successfully can sometimes be difficult.

Nonetheless, the outcomes you attain from this step are essential to an effective case analysis because identifying goals, intent and mission you to clarify the main problems featured in a case and to evaluate alternative solutions to those problems.

Direction-setting statements are not always stated publicly or prepared in written format.

When this occurs, you must infer goals from other available factual data and information.

Conducting the analysis

The fourth concerned with acquiring a systematic understanding of a situation. Occasionally, cases are in a less-than-thorough manner.

Such analyses may be a busy schedule or of the difficulty and complexity of the issues described in a particular case. Sometimes you will face pressures on your limited amounts of time and may believe that you can understand the situation described in without systematic analysis of all the facts.

However, experience shows that familiarity with a case's facts is a necessary, but insufficient, step in the development of effective solutions - solutions that can enhance a firm's strategic competitiveness.

In fact, a less-than-thorough analysis typically results in an emphasis on symptoms, rather than on problems and their causes.

To analysis a case effectively, you should be of quick or easy approaches and answers.

A systematic analysis helps you to understand a situation and determine what can work and probably what will not work.

Key linkages and underlying causal networks based on the history of the firm becomes apparent. In this way, you can separate causal networks from symptoms.

Also, because the quality of a case analysis depends on applying appropriate tools, it is important that you use the ideas, models and theories that seem to be useful for evaluating and solving individual and unique situations.

As you consider and symptoms, a useful theory may become apparent. Of course, having familiarity with conceptual models may be important in the effective analysis of a situation.

Successful student and successful strategists add to their intellectual tool kits on a continual basis.

Making the diagnosis

The fifth step of effective case analysis - diagnosis - is the process of identifying and clarifying the roots of the problems by comparing goals with facts.

In this step, it is useful to search for predicaments. Predicaments are situations in which goals do not fit with known facts.

When you evaluate the actual performance or you may identify over- or under-achievement (relative to established goals).

Of course, single-problem situation rare. Accordingly, you should that the case situation you study probably will be complex in nature.

Effective diagnosis requires you to determine the problems affecting -term performance and those requiring immediate handling.

Understanding these issues will aid your efforts to problems and predicaments, given available resources and existing constraints.

Doing the action planning

The final step of an effective case analysis process is called action planning. Action planning is the process of identifying appropriate alternative actions.

In the action planning step, you select the criteria you will use to evaluate the identified alternatives. You may derive these criteria from the analyses; typically, they are related to key strategic situations facing the focal

, it is important that you the criteria to ensure a rational and effective evaluation of alternative action.

Typically, managers '' when selecting courses of action; that is, they find acceptable courses of action that meet most of the chosen evaluation criteria.

A rule of thumb that has proved valuable to strategic decision makers is to select an alternative that leaves other plausible alternatives available if the one selected

.

Developing an implementation plan serves as a reality check on the feasibility of your alternatives.

Thus, it is important that you give thoughtful consideration to all issues associated with the implementation of the selected alternatives.

What to expect from in-class case discussion

Classroom discussion of significantly from lectures.

The case method calls for instructor to guide the discussion, encourage student participation and encourage student participation and solicit views. When alternative views are not forthcoming, instructors typically adopt one view so that students can be challenged to respond to it Often students's 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 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.

Instructors should 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 to increase their knowledge of advantages and dis advantage of group decision-making processes.

Student peers as well as the instructor value comments that contribute to the discussion. To offer relevant contribution, you are encourage 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 taken to complete the six steps an effective case analysis process.

When preparing for an in-class case discussion, you should plan to use the case data explain your assessment of the situation.

Assume that your peers and instructor know the case facts. 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 a thorough discussion of a case. Moreover, thorough notes eliminate the need for you to memorise the facts and figures needed to discuss a case successfully.

The case analysis process just described 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 action through which the firm can increase the probability that it will achieve strategic competitiveness.

In some instances, your instructor may ask you to prepare either an oral or written analysis of the particular case. Typically, such an assignment demands even more thorough study and analysis of the case contents. At your your instructor's discretion, oral and written analysis 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 Exhibit 2 are often of value in the development of an oral or 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 the next section.