Part 3: Strategic Implementation
Strategic
Management:
creating competitive
advantages
Gregory G. Dess
G. T. Lumpkin
Marilyn L. Taylor
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Chapter 14
Analyzing Strategic
Management
Cases
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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?
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Why Analyze Strategic Management
Cases?
• Strategic management cases
• 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
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Skills Developed from Case Analyses
Differentiate
• Envision explanation that might
not readily be apparent
• Imagine different scenarios
Speculate
• 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
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Skills Developed from Case Analyses
• Look at the big picture
Differentiate
• Have an organizationwide
perspective
Speculate
• Integrate the information into
one set of recommendations
affecting the whole company
Integrate
• Changes made in one part will
affect the others
• Integrate the impact of various
decisions and environmental
influences on all parts of the
organization
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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.
Adapted from Exhibit 14.1 Summary of Financial Ratio Analysis Techniques
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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.
Adapted from Exhibit 14.1 Summary of Financial Ratio Analysis Techniques
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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.
Adapted from Exhibit 14.1 Summary of Financial Ratio Analysis Techniques
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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
Adapted from Exhibit 14.1 Summary of Financial Ratio Analysis Techniques
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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






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?
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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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
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
14-13
Preparing an Oral Case Presentation
Rule
Description
Be logical and
consistent
Rambling presentations are hard to follow, may confuse the
listener, and fail to evoke a good discussion. Present
arguments and explanations in logical sequence. Support
with facts and appropriate financial analyses. Be sure
solutions address the problems you identified.
Defend your
position
Anticipate what others might disagree with and be prepared
to defend your views in class discussion. Be aware of the
choices you made and implications of your
recommendations. Be clear about your assumptions. Be
able to expand on your analysis.
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.
Adapted from Exhibit 14.2 Preparing an Oral Case Presentation
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Preparing an Written Case Analysis
Rule
Description
Be thorough
Many ideas about oral presentations also apply to written
case analysis. However, a written analysis typically has to
be more complete. Write out the problem statement and
articulate assumptions. Support your arguments and
reference case materials and other facts more specifically.
Coordinate
team efforts
Written cases are often prepared by small groups. Within a
group you may disagree about the diagnosis or
recommended plan of action. Healthy disagreement may
lead to a richer understanding of the case, but, before
committing your ideas to writing make sure you coordinate
your responses. Don’t prepare a written analysis that
appears contradictory or looks like a patchwork of
disconnected thoughts.
Adapted from Exhibit 14.3 Preparing a Written Case Analysis
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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Preparing an Written Case Analysis
Rule
Description
Avoid
restating the
obvious
There is no reason to restate the case content. This uses
up valuable space and accomplishes little. Stay focused on
key points. Only restate information that is most central to
your analysis.
Present
information
graphically
Tables, graphs, and other exhibits are usually one of the
best ways to present supporting factual material. Financial
calculations such as break-even analysis, sensitivity
analysis, or return on investment are best presented
graphically. Even qualitative information such as product
lists or rosters of employees can be summarized and
viewed quickly by using a table or graph.
Exercise
quality control
Use good grammar, avoid misspelling words, and eliminate
typos and other visual distractions. Make your written
presentation appear as professional as possible. Don’t let a
poor appearance of your written case keep the reader from
recognizing the importance and quality of your analysis.
Adapted from Exhibit 14.3 Preparing a Written Case Analysis
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
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