Chapter fourteen
Analyzing Strategic
Management Cases
Topics
 Why?
 Steps involved in conducting a case analysis.
 Better decisions from conflict-inducing
discussion techniques
 How to get the most out of case analysis.
Why Analyze Strategic Management Cases?
 The process of analyzing, decision making, and
implementing strategic actions raises many
good questions
 Why do some firms succeed and others fail?
 Why are some companies higher performers than
others?
 What information is needed in the strategic planning
process?
 How do competing values and beliefs affect strategic
decision making?
 What skills and capabilities are needed to implement
a strategy effectively?
Why Analyze Strategic Management Cases?
 Case analysis
 Simulates the real-world experience
 Forces you to choose among different
options
 Set forth a plan of action based on your
choices
Why Analyze Strategic Management Cases?
 Cases include:
 Detailed description of a challenging
situation faced by an organization
 Usually includes a chronology of events and
extensive support materials
 Financial statements
 Product lists
 Transcripts of interviews with employees
Skills Developed from Case Analyses
Differentiate
 Evaluate many different
elements of a situation at once
 Differentiating between the
factors that are influencing the
situation
 Understanding that problems
are often complex and
multilayered
 Dig deep
 Being too quick to accept an easy
solution will probably fail to get to
the heart of the problem
Skills Developed from Case Analyses
Differentiate
Speculate
 Envision explanation that might
not readily be apparent
 Imagine different scenarios
 Contemplate the outcome of a
decision
 Deal with uncertainty and
incomplete knowledge
 Missing data
 Information may be contradictory
 Speculate about details and
consequences that are unknown
Skills Developed from Case Analyses
Differentiate
Speculate
Integrate
 Look at the big picture
 Have an organizationwide
perspective
 Integrate the information into
one set of recommendations
affecting the whole company
 Changes made in one part will
affect the others
 Integrate the impact of various
decisions and environmental
influences on all parts of the
organization
How to Conduct a Case Analysis
 Prepare for a case discussion
 Do your homework
 Investigate
 Analyze
 Research potential solutions
 Gather the advice of others
 Become immersed in facts, options, and
implications
How to Conduct a Case Analysis
 Put yourself “inside” the case
 Think like an actual participant
 Strategic decision maker
 Board of directors
 Outside consultant
 Try different perspectives
 One of the most challenging is as a business founder or
owner
 Hiring an outside consultant may not be an option
Five Steps for Conducting a Strategic
Management Case Analysis
Become familiar with the material
Step One
 Read quickly through the case
one time
 Use initial read-through to assess possible links
to strategic concepts
 Read the case again, making notes
 Evaluate application of strategic concepts
 After forming first recommendation, thumb
through the case again to assess
consequences of actions you propose
Five Steps for Conducting a Strategic
Management Case Analysis
Identify problems
Step One
Two
 Some cases have more
than one problem
 Avoid getting hung up on symptoms
 Articulate the problem

Writing down a problem statement gives you a
reference point when you proceed through the case
analysis
 Some problems are not apparent until after
you do the analysis
Five Steps for Conducting a Strategic
Management Case Analysis
Conduct strategic analyses
Step
StepThree
Two
 Determine which strategic
issues are involved
 Use strategic tools to conduct the analysis
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Five-forces analysis
Value chain analysis
Contingency frameworks
Financial analysis
 Test your own assumptions about the case
Financial Ratio Analysis Techniques
Ratio
What It Measures
Short-term
solvency, or
liquidity,
ratios:
Current ratio
Quick ratio
Cash ratio
Ability to use assets to pay off liabilities.
Ability to use liquid assets to pay off liabilities quickly.
Ability to pay off liabilities with cash on hand.
Financial Ratio Analysis Techniques
Ratio
What It Measures
Long-term
solvency, or
financial
leverage,
ratios:
Total debt ratio
Debt-equity ratio
Equity multiplier
Times interest
ratio
Cash coverage
ratio
How much of a company’s total assets are financed by
debt.
Compares how much a company is financed by debt with
how much is it finance by equity.
How much debt is being used to finance assets.
How well a company has its interest obligations covered.
A company’s ability to generate cash from operations.
Financial Ratio Analysis Techniques
Ratio
What It Measures
Asset
utilization, or
turnover,
ratios:
Inventory turnover How many times each year a company sells its entire
inventory.
Day’s sales in
How many days on average inventory is on hand before it
inventory
is sold.
Receivables
How frequently each year a company collects on its credit
turnover
sales.
Days’ sales in
How many days on average it takes to collect on credit
receivables
sales (average collection period).
Total asset
How much of sales is generated for every dollar in assets.
turnover
Capital intensity
The dollar investment in assets needed to generate $1 in
sales.
Financial Ratio Analysis Techniques
Ratio
What It Measures
Profitability
ratios:
Profit margin
Return on assets
(ROA)
Return on equity
(ROE)
How much profit is generated by every dollar of sales.
How effectively assets are being used to generate a
return.
How effectively amounts invested in the business by its
owners are being used to generate a return.
Market value
ratios:
Price-earnings
ratio
Market-to-book
ratio
How much investors are willing to pay per dollar of current
earnings.
Compares market value of the company's investments to
the cost of those investments
Five Steps for Conducting a Strategic
Management Case Analysis
Propose alternative solutions
Step
StepThree
Four
 Develop a list of options first
without judging them

Do nothing is often a reasonable alternative
 Evaluate alternatives

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
Can the company afford it?
Is the solution likely to evoke a competitive
response?
Will employees accept the change?
How will it affect other stakeholders?
How does it fit with the vision, mission,
objectives?
Will the culture or values of the company
change?
Five Steps for Conducting a Strategic
Management Case Analysis
Make recommendations
Step
Step Four
Five
 Make a set of recommendations
that your analysis supports
 Describe exactly what needs to be done
 Explain why this course of action will solve the
problem
 Include suggestions for how best to implement
the proposed solution
 The solution you propose must solve the
problem you identified
Preparing an Oral Case Presentation
Rule
Description
Organize
your
thoughts
Emphasize
strategic
analysis
Begin by becoming familiar with the material. Compare
notes about key points of the case and share insights
among team members. Make an outline.
Purpose of case analysis is to diagnose problems and find
solutions. You may need to unravel the case material as
presented and reconfigure it in a way that can be more
effectively analyzed. Three major categories
• Background/Problem Statement
10-20%
• Strategic Analysis/Options
60-75 %
• Recommendations/Action Plan
10-20%
Emphasis should be on analysis. You may need to
reorganize the material so that the tools of strategic
analysis can be applied.
Preparing an Oral Case Presentation
Rule
Be logical
and
consistent
Defend your
position
Description
Rambling presentations are hard to follow, may confuse the
listener, and fail to evoke a good discussion. Present
arguments and explanations in logical sequence. Support
with facts and appropriate financial analyses. Be sure
solutions address the problems you identified.
Anticipate what others might disagree with and be prepared
to defend your views in class discussion. Be aware of the
choices you made and implications of your
recommendations. Be clear about your assumptions. Be
able to expand on your analysis.
Strategic management case analyses are often conducted
Share
by teams. Each member should have a clear role in the oral
presentation
responsibilities presentation, preferably a speaking role. Coordinate the
different parts into a logical, smooth-flowing whole.
How to Get the Most from Case Analysis
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Keep an open mind
Take a stand for what you believe
Draw on your own personal experience
Participate and persuade
Be concise and to the point
Think out of the box
Learn from the insights of others
Apply insights from other case analyses
Critically analyze your own performance
Conduct outside research
Using Conflict-Inducing Decision-Making
Techniques in Case Analysis
Devil’s
Advocacy
Dialectical
Inquiry
Groupthink
Use conflict-inducing decision-making techniques to
help prevent groupthink and lead to better decisions.
Symptoms of Groupthink and How to Prevent It
 Symptoms
Groupthink
 Illusion of invulnerability
 Belief in the inherent morality of the
group
 Stereotyped views of members of
opposing groups
 Application of pressure to members
who express doubts about the group’s
shared allusions or question the validity
of arguments proposed
 Practice of self-censorship
 Appointment of mindguards
Symptoms of Groupthink and How to Prevent It
 Preventing groupthink
Groupthink
 Leaders must encourage group
members to address concerns and
objectives
 Leaders should adopt impartial stance
 Leader should encourage members to
discuss deliberations with trusted
associates and report perspectives back
to group
 Invite outside experts, challenge
group’s viewpoints and positions
 Divide into subgroups, meet at different
times, reconvene to resolve differences
 Hold a “second chance” meeting
Using Conflict to Improve Decision Making
Devil’s
Advocacy
 Devil’s advocacy
 One of the groups (or members) acts as
a critic to the plan
 Devil’s advocate comes up with
problems of the proposed alternative
and suggests reasons for not adopting
it
 Forces the group to take a hard look at
its proposed solution
 Can be demoralizing
 May not lead to better suggestions
Using Conflict to Improve Decision Making
Devil’s
Advocacy
Dialectical
Inquiry
 Dialectical inquiry
 Identify proposal and information
used to derive it
 State underlying assumptions
 Identify counter plan (antithesis)
 Engage in debate
 Identify a synthesis (best
components of each alternative)
 Can be very time consuming
 May result in undesirable
compromises (original solution
was better)