Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.
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[Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]
Analyzing Strategic Management Cases
Copyright Anatoli Styf/Shutterstock
After reading this chapter, you should have a good understanding of:
13-1 How strategic case analysis is used to simulate real-world experiences.
13-2 How analyzing strategic management cases can help develop the ability to differentiate, speculate, and integrate when evaluating complex business problems.
13-3 The steps involved in conducting a strategic management case analysis.
13-4 How to get the most out of case analysis.
13-5 How integrative thinking and conflict-inducing discussion techniques can lead to better decisions.
13-6 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.
Strategic Case Analysis
Consider . . .
To remain competitive, established firms must continually refine their ability to solve business problems. This requires making good decisions.
Making a good decision requires choosing among various alternatives, and research is required in order to identify alternatives.
Good research requires asking and answering the right questions.
It is often said that the key to finding good answers is to ask good questions. Strategic managers and business leaders are required to evaluate options, make choices, and find solutions to the challenges they face every day. To do so they must learn to ask the right questions.
Strategic Case Analysis: Questions
Case analysis helps us learn how to ask good questions & to make good decisions.
Why do some firms succeed and others fail?
Why are some companies higher performers than others?
What information is needed in the strategic planning process?
How do competing values and beliefs affect strategic decision making?
What skills and capabilities are needed to implement a strategy effectively?
The process of analyzing, decision making, and implementing strategic actions raises many good questions. 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. Case analysis = a method of learning complex strategic management concepts, such as environmental analysis, the process of decision making, and implementing strategic actions, through placing students in the middle of an actual situation and challenging them to figure out what to do. As one CEO said “if you don’t ask the right questions, then you’re never going to get the right solution.” Case analysis forces you to choose among different options and set forth a plan of action, a potential solution, 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.
What are the three ongoing processes involved in the strategic management process?
analysis, actions, and synthesis.
analysis, decisions, and actions.
analysis, evaluation, and critique.
analysis, synthesis, and antithesis.
Answer: B. Remember, the strategic management process involves strategy analysis (analysis of the external environment, both general and industry–specific, and an assessment of internal capabilities plus creation of strategic goals vision, mission, strategic objectives), strategy formulation (decisions regarding what industries should we compete in? How should we compete in those industries?), and strategy implementation (what actions should we take to allocate necessary resources? How can we design the organization to bring intended strategies to reality?)
Strategic Case Analysis: Requirements
Strategic management cases include:
Detailed description of the challenging situation faced by an organization
Chronology of events, usually
Can include financial statements, product lists, interviews with employees
Strategic case analysis requires:
Ability to evaluate business situations
Going beyond the textbook & rooting out essential issues & causes of a company’s problems
One of the main reasons to analyze strategic management cases is to develop an ability to evaluate business situations critically. Just as organizational leaders and managers must analyze the overall environment, make decisions about how to compete, and then design the organization in order to implement these decisions and take required action, students must analyze the issues, choose among different options, and set forth a plan of action based on their choices. Students must go beyond memorizing key terms and conceptual frameworks. Case analysis requires a deep look into the information that is provided, and then the ability to root out the essential issues and causes of a company’s problems.
Strategic Case Analysis: Skills (1 of 3)
Strategic capabilities needed include the ability to differentiate.
Evaluate many different elements of the situation at once.
Differentiate between the factors that are influencing the situation.
Understand that problems are often complex & multilayered.
Need to dig deep.
Don’t be too quick to accept an easy solution.
Case analysis adds to the overall learning experience by helping students 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. The ability to differentiate = isolate critical facts, evaluate whether assumptions are useful or faulty, and distinguish between good and bad information.
Strategic Case Analysis: Skills (2 of 3)
Strategic capabilities also include the ability to speculate.
Envision an explanation that might not readily be apparent.
Imagine different scenarios.
Contemplate the outcome of the decision.
Deal with uncertainty & incomplete knowledge.
Data may be missing.
Information may be contradictory.
Details & consequences may be unknown.
The ability to speculate = being able to imagine different scenarios or contemplate the outcome of the decision without complete knowledge of the circumstances. The ability to speculate about details that are unknown, or anticipate the consequences of an action when the solution is not easily apparent, can be very helpful.
Strategic Case Analysis: Skills (3 of 3)
Strategic capabilities also include the ability to integrate.
Consider the impact of various decisions & environmental influences on all parts of the organization.
Create one set of recommendations that affect the whole company.
Realize that changes made in one part of the company will affect other parts.
Adopt a holistic perspective.
The ability to integrate = being able to comprehend how all the factors that influence the organization will interact. Requires looking at the big picture and having an organization-wide perspective. 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. The mark of a good strategic manager is the ability to simultaneously make distinctions and envision the whole, and to imagine a future scenario while staying focused on the present.
Conducting a Case Analysis: Preparation
Investigate the situation.
Analyze and research possible solutions.
Gather the advice of others.
Put yourself in the shoes of an actual participant.
Are you a strategic decision maker?
Are you the business founder or owner?
Are you a member of the board of directors?
Are you an outside consultant?
The process of analyzing strategic management cases involves several steps. Before beginning, there are two things to keep in mind that will prepare you: clarifying your understanding of the process and making the results of the process more meaningful. First, you need to prepare by immersing yourself in the facts, options, and implications surrounding the problem. This means reading and thoroughly comprehending the case materials before trying to make an analysis. Second, to get the most out of the case analysis you must place yourself “inside” the case – that is, think like an actual participant in the case situation. Envision yourself assuming a role as either the primary strategic decision maker (CEO, business owner, or strategic manager in a key executive position), or a member of the board of directors, or an outside consultant brought in to give advice to a key decision maker. Note that if you are the business founder or owner, hiring an outside consultant may not be an option.
Conducting a Case Analysis: Step 1
Step 1: Become familiar with the material.
Read quickly through the case one time.
Assess possible links to strategic concepts.
Read the case again, making notes.
Evaluate application of strategic concepts.
Formulate an initial recommendation.
Go through the case again to assess the consequences of actions you propose.
Written cases often include a lot of material. They may be complex and include detailed financials or long passages. Even so, to understand the 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 lower-level employee, or even contained in additional material accessed through the endnotes. Here are some techniques to help enhance comprehension.
Conducting a Case Analysis: Step 2
Step 2: Identify problems.
Some cases have more than one problem to solve.
Avoid getting hung up on the case symptom.
Try to articulate the case problems.
Sometimes writing down a problem statement gives you a reference point.
Some problems will not be apparent until after you do the case analysis.
When conducting case analysis, one of your most important tasks is to identify the problem, and find a solution. But some cases have more than one problem, and the problems are usually related. When trying to determine the problem, avoid getting hung up on symptoms. Case symptoms = observable and concrete information in the case analysis that indicates an undesirable state of affairs. Case problems = inferred causes of case symptoms. 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 identified. Bear in mind that 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.
Conducting a Case Analysis: Step 3
Step 3: Conduct strategic analyses.
Determine which strategic issues are involved.
Use strategic tools to conduct the analysis.
Five Forces analysis
Contingency frameworks, e.g. when to use related rather than unrelated diversification
Financial analysis – using Financial Ratio Analysis.
Test your own assumptions about the case.
When conducting strategic analysis, determine what strategic issues are associated with the problems you have identified. Remember also that most real-life case situations involve issues that are highly interrelated. Even in cases where there is only one major problem, strategic processes required to solve it may involve several parts of the organization. Once you identify the issues that apply to the case, conduct the analysis. For instance, you may need to conduct a five-forces analysis or dissect the company’s competitive strategy. Perhaps you need to evaluate whether its resources are rare, valuable, difficult to imitate, or difficult to substitute. Financial analysis may be needed to assess the company’s economic prospects. Financial ratio analysis = a method of evaluating a company’s performance and financial well-being through ratios of accounting values, including short-term solvency, long-term solvency, asset utilization, profitability, and market value ratios. See Appendix 1 to Chapter 13 for examples. 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. Finally, ask yourself why you have chosen one type of analysis over another. This process of assumption checking can also help determine if you’ve gotten to the heart of the problem or are still just dealing with symptoms.
Strategic Case Analysis Tools (1 of 2)
Exhibit 13.1 Summary of Financial Ratio Analysis Techniques
|RATIO||WHAT IT MEASURES|
|Short-term solvency, or liquidity, ratios: Current ratio||Ability to use assets to pay off liabilities.|
|Short-term solvency, or liquidity, ratios: Quick ratio||Ability to use liquid assets to pay off liabilities quickly.|
|Short-term solvency, or liquidity, ratios: Cash ratio||Ability to pay off liabilities with cash on hand.|
|Long-term solvency, or financial leverage, ratios: Total debt ratio||How much of a company’s total assets are financed by debt with how much it is financed by equity.|
|Long-term solvency, or financial leverage, ratios: Debt-equity ratio||Compares how much a company is financed by debt with how much it is financed by equity.|
|Long-term solvency, or financial leverage, ratios: Equity multiplier||How much debt is being used to finance assets.|
|Long-term solvency, or financial leverage, ratios: Times interest earned ratio||How well a company has its interest obligations covered.|
|Long-term solvency, or financial leverage, ratios: Cash coverage ratio||A company’s ability to generate cash from operations.|
Here is review of financial ratios that can be used to evaluate a company’s performance and financial well-being. See also Appendix 1.
Strategic Case Analysis Tools (2 of 2)
Exhibit 13.1 Summary of Financial Ratio Analysis Techniques
|RATIO||WHAT IT MEASURES|
|Asset utilization, or turnover, ratios: Inventory||How many times each year a company sells its entire inventory.|
|Asset utilization, or turnover, ratios: Days’ sales in inventory||How many days on average inventory is on hand before it is sold.|
|Asset utilization, or turnover, ratios: Receivables turnover||How frequently each year a company collects on its credit sales.|
|Asset utilization, or turnover, ratios: Days’ sales in receivables||How many days on average it takes to collect on credit sales (average collection period.)|
|Asset utilization, or turnover, ratios: Total asset turnover||How much of sales is generated for every dollar in assets.|
|Asset utilization, or turnover, ratios: Capital intensity||The dollar investment in assets needed to generate $1 in sales.|
|Profitability ratios: Profit margin||How much profit is generated by every dollar of sales.|
|Profitability ratios: Return on assets (ROA)||How effectively assets are being used to generate a return.|
|Profitability ratios: Return on equity (ROE)||How effectively amounts invested in the business by its owners are being used to generate a return.|
|Market value ratios: Price-earnings ratio||How much investors are willing to pay per dollar of current earnings.|
|Market value ratios: Market-to-book ratio||Compares market value of the company’s investments to the cost of those investments.|
Here is review of financial ratios that can be used to evaluate a company’s performance and financial well-being. See also Appendix 1.
Conducting a Case Analysis: Step 4
Step 4: Propose alternative solutions.
Develop a list of options – what are the possible solutions?
Evaluate the alternatives.
Can the company afford it?
How will competitors respond?
Will employees accept the change?
How will it affect other stakeholders?
How does it fit with the vision, mission & objectives?
Will the culture or values of the company change?
After conducting strategic analysis and identifying the problem, develop a list of options. Evaluate the alternatives and choices and the implications of those choices. Ask how the choices made will be implemented. Remember that not all cases call for dramatic decisions or sweeping changes. Some companies just need to make small adjustments. In fact, doing nothing may be a reasonable alternative in some cases. When evaluating alternatives, realize that the point of this step is to find 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 final recommendation that is more thoughtful and complete.
Conducting a Case Analysis Step 5
Step 5: Make recommendations.
Make a set of recommendations supported by your analysis.
Describe exactly what needs to be done.
Explain why this course of action will solve the problem.
Indicate how best to implement the proposed solution.
Note: the solution you propose must solve the problem you identified.
Your analysis is not complete until you have recommended a course of action. Make a logical argument that shows how the problem led to the analysis and how 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 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 firm are interrelated. Your analysis is not complete until you have recommended a course of action. This can be done with an oral presentation or a formal written case analysis. If preparing an oral case presentation, see Exhibit 13.2. If preparing a written case analysis, see Exhibit 13.3.
Getting the Most from Case Analysis
Keep an open mind.
Take a stand for what you believe.
Draw on your personal experience.
Participate and persuade.
Be concise and to the point.
Learn from the insights of others.
Apply insights from other case analyses.
Critically analyze your own performance.
Conduct outside research.
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 integrated 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.
Case Analysis Decision-Making Techniques: Integrative Thinking
Integrative thinking involves making choices by reconciling opposing thoughts.
Proposing more options & new alternatives
Identifying creative solutions
Integrative thinking is done in four stages.
What features of the decision are salient – relevant & important?
What are the causal relationships between the features?
What might a sequence of decisions look like?
What might be the best, creative resolution?
There are several techniques that can help managers make better decisions and, in turn, enable their organizations to achieve higher performance. These techniques can also be useful when doing case analysis. The first technique comes from a study by Roger L. Martin, who contended that people who can consider two conflicting ideas simultaneously, without dismissing one of the ideas or becoming discouraged about reconciling them, often make the best problem solvers because of their ability to creatively synthesize the opposing thoughts. He calls this integrative thinking = a process of reconciling opposing thoughts by generating new alternatives and creative solutions rather than rejecting one thought in favor of another. This is in contrast to conventional thinking, which tends to focus on making choices between competing ideas from a limited set of alternatives. Applied to business, an integrative thinking approach enables decision makers to consider situations not as forced trade-offs but as a method for synthesizing opposing ideas into a creative solution. The key is to think in terms of “both-and” rather than “either-or.” Exhibit 13.4 outlines the four stages of the integrated thinking and deciding process, using the example of deciding where to go on vacation to illustrate the stages. Salience involves taking stock of what features of the decision you consider relevant and important. For example: where will you go? What will you see? Where will you stay? What will it cost? Is it safe? Then causality requires making a mental map of the causal relationships between the features, for example, is it worth it to invite friends to share expenses? Will an exotic destination be less safe? In the architecture stage, use the mental map to arrange a sequence of decisions that will lead to a specific outcome. For example, will you make the hotel and flight arrangements first, or focus on which sightseeing tours are available? Finally, in resolution, make your selections. For example, choose which destination, which flight, and so forth. Your final resolution is linked to how you evaluated the first three stages; if you are dissatisfied with your choices, the dotted arrows in the diagram suggest you can go back through the process and revisit your assumptions.
Case Analysis Decision-Making Techniques: Heretical Questions
Asking heretical questions can help challenge long-term beliefs about how things work.
Ask disruptive questions about small & large things.
Can we design travel routes with “no left turns”?
Can we dye clothes without water?
Does a toilet paper roll need a cardboard center?
Don’t be afraid to make mistakes; instead encourage something new. Mistakes are opportunities for learning.
Sometimes, making decisions requires a deeper level of innovation that challenges long-held beliefs about how things work. Andrew Winston introduced the concept of heretical innovation to help address the challenges associated with environmental sustainability in today’s world. Central to addressing these challenges is the need to pose “heretical questions”—those that challenge conventional wisdom. Typically, they may make us uncomfortable or may seem odd (or even impossible)—but they often become the means of coming up with major innovations. This idea of challenging entrenched beliefs has useful implication for major challenges faced by today’s managers in a wide range of firms and industries. Heretical questions can address issues that are both small and large—from redesigning a single process or product to rethinking the whole business model. One must not discount the value of the approach in considering small matters. After all, the vast majority of people in a company don’t have the mandate to rethink strategy. However, anyone in an organization can ask disruptive questions that profoundly change one aspect of a business. What makes this heretical is how deeply it challenges the conventional wisdom. However, aiming for deep, heretical innovation is difficult for most organizations to embrace because when you are doing something new, you are by definition doing something you don’t know very well, and that means mistakes. Ed Catmull, the president and founder of animation pioneer Pixar, suggests that if you don’t encourage mistakes, he says, you won’t encourage anything new—mistakes are actually just learning.
Case Analysis Decision-Making Techniques: Conflict Inducing
Conflict inducing techniques can be very helpful in arriving at better solutions.
Conflict can help avoid groupthink.
Failure to critically evaluate alternatives
The devil’s advocacy approach assigns someone the role of official critic.
Ensures the group will take a hard look at its original proposal
Dialectical inquiry approaches a problem from two alternative points of view.
Formal debate using a thesis (a proposal)
Antithesis (a counterplan).
Conflict can be very helpful as a means for developing new insights as well as for rigorously questioning and analyzing assumptions and strategic alternatives. In fact, if you don’t have constructive conflict, you may only get consensus. When this happens, decisions tend to be based on compromise rather than collaboration. This consensus might suffer from groupthink, a condition in which group members strive to reach agreement or consensus without realistically considering other viable alternatives. In effect, group norms bolster morale at the expense of critical thinking and decision making is impaired. See the section, Conflict-Inducing Techniques in the chapter for some symptoms of groupthink and how to prevent it. When managed properly, conflict can be used to improve decision making. Conflict can be incorporated into the decision making process through formalized debate using two approaches: devil’s advocacy = a method of introducing conflict into a decision-making process by having specific individuals or groups act as a critic to an analysis or planned solution; and dialectical inquiry = a method of introducing conflict into a decision-making process by devising different proposals that are feasible, politically viable, and credible, but rely on different assumptions; and debating the merits of each. Both devils advocacy and dialectical inquiry force debate about underlying assumptions, data, and recommendations between subgroups. Such debate tends to prevent the uncritical acceptance of a plan that may seem to be satisfactory after a cursory analysis. The approach serves to tap the knowledge and perspectives of group members and continues until group members agree on both assumptions and recommended actions. Given that both approaches serve to use, rather than minimize or suppress, conflict, higher-quality decisions should result.
Case Analysis Decision-Making Techniques: Conflict Inducing Example
Exhibit 13.5 Two Conflict-Inducing Decision-Making Processes
This figure briefly summarizes the techniques of devil’s advocacy and dialectical inquiry.
Strategic Case Analysis Process: Goals & Objectives
Analyzing organizational goals & objectives
Has the company developed short-term objectives that are inconsistent with its long-term mission?
Has the company considered all of its stakeholders equally in making critical decisions?
Is the company being faced with an issue that conflicts with one of its long-standing policies?
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. Here we draw on the material presented in each of the 12 chapters to show how it informs the case analysis process. In Chapter 1 we discussed how the company’s vision, mission, and objectives keep organization members focused on a common purpose. These elements also influence 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 objectives, while doing your case analysis you might ask the above questions.
Strategic Case Analysis Process: External Environment
Analyzing the external environment
Does the company follow trends and events in the general environment?
Is the company effectively scanning and monitoring the competitive environment?
Has the company correctly analyzed the impact of the competitive forces in its industry on profitability?
In Chapter 2 we discussed how the company’s general environment consists of demographic, socio-cultural, 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 man
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