HOW TO CONDUCT A

STRATEGIC CASE ANALYSIS

INSTRUCTOR: CATHERINE M. GARCIA

OUTLINE FOR CASE

ANALYSIS

I. SITUATIONAL ANALYSIS
II. IDENTIFICATION OF THE
PROBLEM(OPPORTUNITY)
III. DEVELOPMENT OF STRATEGIC
ALTERNATIVES
IV. EVALUATION OF THE STRATEGIC
ALTERNATIVES
V. RECOMMENDATIONS

Before beginning the strategic analysis, there are two things to keep in mind that will clarify your understanding
of the process and make 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. Second, to get the most out of case analysis, you must place yourself "inside" the case-that is,
think like an actual participant in the case situation. You can take any of the following positions:

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 also may be at a
disadvantage since they have no power to enforce changes.

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 member of the audit team of
an accounting firm 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.
BE FAMILIAR WITH THE The list below highlights some of the important areas that might be

CASE CONTENT included in this stage of case analysis.

A. External Environmental Analysis

Written cases often include a lot of material. 1. The General Environment. What are the macroenvironmental
They may be complex and include detailed factors that will affect the organization? What are the prevailing

financials or long passages. Even so, to economic conditions affecting the nation or world? What regulatory
philosophies, trends, and legislation will affect citizens and
understand a case and its implications, you
organizations within the society? What lifestyle and demographic
must become familiar with its content. factors are changing and how rapidly? What technological forces
Sometimes key information is not are likely to influence strategic decision-making?
immediately apparent. It may be contained 2. The Environment Within the Industry. What is the size of the
industry? Growth trends? What is the nature of the competition?
in the footnotes to an exhibit or in an
How many direct competitors are there, and is the competition
interview with a lower-level employee. In increasing or decreasing? What are the relative market shares of the
other cases, the important points may be different competitors? Which organizations are indirect
difficult to grasp because the subject matter competitors? What are the macro-environmental factors that will
affect the industry? What are the prevailing economic conditions?
is so unfamiliar. When you approach a
What regulatory philosophies, trends, and legislation will affect the
strategic case, try the following technique to industry? What lifestyle and demographic factors are changing and
enhance comprehension: how rapidly? What technological forces are likely to influence
strategic decision-making within the industry?
3. The Market. Who are the organization's primary customers-baby
Read quickly through the case one
boomers, the elderly, working mothers? To what extent are the
time to get an overall sense of the customers loyal to the organization's products and services? Is price
material. the only major determinant in the purchasing decision? Will
Use the initial read-through to assess customers travel and otherwise be inconvenienced to obtain the
organization's products and services? How sophisticated are the
possible links to strategic concepts.
organization's customers in terms of their buying habits and
Read through the case again, in- processes? What does this tell management about advertising and
depth. Make written notes as you promotion? Is the market for the organization's products
read. geographically concentrated? Are market segments easily
identified? Are different strategies for each feasible or advisable?
Evaluate how strategic concepts
might inform key decisions or suggest
B. Internal Environmental Analysis
alternative solutions. 1. Mission. Does the organization have a clear sense of mission? Is
After formulating an initial there a mission statement and is it communicated to those

recommendation, thumb through the responsible for accomplishing it? Does the organization have the
human and nonhuman resources necessary to accomplish its
case again quickly to help assess the
mission?
consequences of the actions you 2. Objectives. Are there well-developed and communicated long- and
propose. short-range objectives? Are they shared with those responsible for
achieving them?
3. Functional Area Analysis. Are the functional areas working
synergistically to achieve the organization's objectives? Are the
financial resources needed to compete available, or is the
organization undercapitalized, too highly leveraged, or not
leveraged enough? How do the key financial ratios of this
Step 1: Situation Analysis organization compare with others in the industry and region? Is the
organization operating at capacity? Are equipment, facilities, and so
The first step in case analysis is to forth new and up-to-date? Are the company's products labor-
intensive? Is quality at a desirable level? Are the organization's
understand the environment, the
managers and employees skilled in their work? Is turnover a factor?
organization, the industry, and the decision- Is there a shortage of trained personnel to fill jobs?
makers at the time a strategic decision is 4. Marketing Strategies. Are the organization's marketing strategies
needed. This is called "situation analysis" appropriate to achieve the organization's objectives? How
sophisticated is the organization in terms of its marketing activities?
because we must understand the
How flexible are the organization's marketing policies? When was
circumstances and the environment facing the last time management tried something new and innovative in
the organization if good decisions are to the area of marketing? More important, perhaps, has the
result from our analysis. Situation analysis is organization ever done any serious marketing of its services? What
about products and services? Does the organization offer a full
one of the most important steps in analyzing
range of products? Is the present product mix complementary, or
a case.
does the organization compete with itself in some areas?

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 Step 2: Identify Problems
When conducting a case analysis, one of
your most important tasks is to identify
the problem. One of the main reasons to
conduct a case analysis is to find
solutions. But you cannot find 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
Strengths, Weaknesses, Opportunities, what the problem is, you are well on
and Threats your way to identifying a reasonable
solution.

Once we have reviewed our situation, a better evaluation of Some cases have more than one
the opportunities and threats facing the organization can be problem. But the problems are usually
made. Moreover, we must be able to look objectively at our related. For a hypothetical example,
own organization and ask: "Given the organization's consider the following: Company A was
apparent strengths and weaknesses, how do we take losing customers to a new competitor.
advantage of our opportunities and avoid the dangers in the Upon analysis, it was determined that
environment?" An effective way of asking these questions is the competitor had a 50 percent faster
with the use of SWOT (strengths, weaknesses, opportunities, delivery time even though its product
and threats) analysis. was of lower quality. The managers of
Suppose in the case that you are studying, the chief executive company A could not understand why
officer of a regional restaurant chain specializing in steaks customers would settle for an inferior
is considering expansion into a new geographic region product. It turns out that no one was
(market development). An environmental analysis confirms marketing to company A's customers
that people are increasingly eating out because of more that its product was superior. A second
disposable income, more two-income families, and less time problem was that falling sales resulted
available for meal preparation. In addition, the analysis has in cuts in company A's sales force.
revealed that the market is extremely large and well-
segmented.

EXHIBIT 1: STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS (SWOT) ANALYSIS

Internal Strengths External Opportunities

1. The ability to deliver a quality product at a reasonable 1. Eating out is increasing in the United States.
price. 2. Dining-out market is extremely large.
2. Strong consumer franchisein the southeastern region of the
External Threats
United States.
1. Health trends in the consumption of red meat.
3. Operating at near-capacity with currentmenu.
2. Aggressive competition.
4. Strong in current market niche.
3. Decline in the steak segment of the eating-away-from-
Internal Weaknesses
home market.
1. Limited menu.
2. Limited geographic area.
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3. Limited number of qualified restaurant managers.
4. Aging restaurants.
 Looking for Real Causes, Not
Symptoms

It is important to realize that the

things observed in an organization
and reported in a case may not be the
"real" or essentialproblems and
opportunities. Often what we
observe are the symptoms of more-
serious coreproblems. For example,
When trying to determine the This is important becausethe declining sales appears to be a
problem, avoid getting hung up process of formulating problem in many case analyses. In
on symptoms. Zero in on the strategiesor evaluating reality, theproblem may be poor
problem. For example, in the
implementation methods may training of thesales force,
company A example, the
lead you away from the initial inferiorproduct quality, distribution
symptom was losing customers.
problem. . Make sure your problems causing out of stocks,
But the problemswere an
recommendation actually incorrect positioning, prices that are
underfunded, understaffed sales
addresses the problemsyou have too high (or too low), and so forth.
force combined with an
identified. The fundamental problem, however,
outdated delivery technology.
Try to see beyond the immediate Sometimesproblems are might be changes in the
symptoms to the more notapparent until after you do demographics of the market.
fundamental problems. Another the analysis.In some casesthe Problems may havemore than a
tip when preparing a case problem will bepresented plainly, single cause, so do not be overly
analysis is toarticulate the perhaps in the opening paragraph confident when a single, simple
problem. Writing down a or on the last page of the case. reason is isolated. In fact,the
problem statement gives you a But in other cases the problem suggestion of a simple solution
reference point to turn to as you does not emerge until after the should increase rather than decrease
proceed through the case issuesin the case have been our skepticism.
analysis. analyzed.

Identifying Important Issues The results may be either increasing

gains or cutting potential losses. Long-
Once the problems are identified, and short-range aspects of problems
they must be preciselystated and should also be identified and stated. In
the selection defended. The best strategic analysis the emphasis is on
defense for the selection of the core long-range problems rather than
problem is the data set used to merely patching up emergencies and
guide the problem-discovery holding things together.It is important
process. The reasons for selection of to keep in mind that most
the problemsand issues should be strategicdecision makers can deal
briefly and specifically summarized with only a limited number of issues at
along withthe supportive a single time. Therefore,identify key
information upon which judgments result areas that will have the greatest
have been based.Thestatement of positive impact on organizational
the problem should relate only to performance.
those areas of strategy and
operationswhere actions have a PAGE 04
chance of producing results.
Step 3: Conduct Strategic Analyses

Financial ratio
analysis is one
of the primary
tools used to
conduct case
analysis. Exhibit
13.1 provides a
summary of the
financialratios
presented in
Appendix 1 to
this chapter.

There are numerous analytical tools (e.g., five-forces analysis and value- chain analysis), contingency frameworks
(e.g., when to use related rather than unrelated diversification strategies),and other techniquesthat can be used to
evaluate strategic situations.
1. The first step in analyzing a specific case 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 diversification 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 theproblems 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,the strategic
processes required to solve it may involve several parts of the organization.
2. Once you have identified the issues that apply to the case, conduct the analysis.For example, you may need to
conducta five-forces analysis or a SWOT 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. Perhaps the international
entry mode needs to be reevaluated because of changingconditions in the host country. Employee
empowerment techniquesmay need to be improved to enhance organizational learning. Whatever the case,
all the strategic concepts introduced in the text include insights for assessingtheir effectiveness. Determining
howwell a company is doing these things is central tothe case analysis process.

ENGLETOWN ELEMENATARY SCHOOL PAGE 05

Step 4: Propose Alternative Solutions
It is important to remember that in Thus, during this step of a case analysis,
strategic management case analysis, you will evaluate choices and the
there is rarely one right answer or one implications of those choices. One
best way. Even when members of a aspect of any business that is likely to
class or a team agree on what the be highlighted in this part of the
problem is, they may not agree upon analysis is strategy implementation. Ask
how to solve the problem. Therefore, it how the choices made will be
is helpful to consider several different implemented. It may be that what
solutions. After conducting strategic seems like an obvious choice for solving
analysis and identifying the problem, a problem creates an even bigger
develop a list of options. What are the problem when implemented. But
possible solutions? What are the remember also that no strategy or
alternatives? First, generate a list of all strategic "fix" is going to work if it
the options you can think of without cannot be implemented. Once a list of
prejudging any one of them. alternatives is generated, ask:
Remember that not all cases call for
dramatic decisions or sweeping • Can the company afford it? How will it
changes. Some companies just need to affect the bottom line?
• Is the solution likely to evoke a competitive
make small adjustments. In fact, "Do
response?
nothing" may be a reasonable • Will employees throughout the company
alternative in some cases. Although accept the changes? What impact will the
solution have on morale?
that is rare, it might be useful to
• How will the decision affect other
consider what will happen if the stakeholders? Will customers, suppliers, and
company does nothing. This point others buy into it?
• How does this solution fit with the
illustrates the purpose of developing
company's vision, mission, and objectives?
alternatives: to evaluate what will • Will the culture or values of the company be
happen if a company chooses one changed by the solution? Is it a positive
solution over another. change?

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ALTERNATIVE ACTIONS AND
SOLUTIONS

If the job of obtaining and organizing information has

been done well, the generation of alternatives will be a

challenging yet attainable task. Good alternatives

possess specific characteristics. They should be

practical, or no one will seriouslyconsider them.

Alternative courses of action that are too theoretical or

abstract to be understood by those who have to

accomplish them are not useful. Alternatives should be

carefully stated with a brief justification of why they

are useful ways of solving at least one of the core

problems in the case. Alternatives should be specific.

Relate each alternative to the core problem it is

intendedto address. This is a good check on your work.

If the alternatives generated do not directly address

core problems, ask yourself if they are important to the

case analysis or whether they should be eliminated from

consideration.

Finally, alternatives should be usable. A usable

alternative is one that can be reasonably accomplished

within the constraints of the financial and human

action is more than merely the one with the lowest

resourcesavailable to the organization. Alternatives

breakeven.A poorer quality product, offered at a low price,

should be ones that can be placed into action in a

would achieve a low breakeven,but would it diminish the

relatively short period of time. If it takes too long to

prestige of the company's other brands? What other long-

implement a proposed solution, it is likely that the

term effects might occur?

momentum of the recommended action will be lost. Of

Carefully think through the advantages and disadvantages

course, implementation should always take place in

of each alternative. All alternatives have disadvantages;

light of potential long-range effects of shorter-term

youcannot ignore an evaluation/assessment of the risks

decisions.
associated withan alternative-. Sometimes information in

After the alternatives have been generated and

the case will provide the basis for evaluatingthe

listed, each one must be:

alternatives. The company states that it is intent on growth

(1) evaluatedin terms of the core problems and key

but refuses to borrowmoney. Which alternatives can offer

result areas isolated in the prior analysis,

growthat a very low cost?

(2) evaluatedin terms of its relative advantage or

Once the alternatives have been evaluated, one must be

disadvantage compared with other possible solutionsto

selected. At this point it is absolutely essential to

core problems, and

completely understandthe criteria upon which the

(3) justified as a potentially valuable way of addressing

selectionis being made and the justification for the criteria.

the strategic issues found in the case.

Sometimes the key to identifying the criteria is in the case

itself. At other times it is necessaryto look outside to what

EVALUATING ALTERNATIVES
is going on in the industry. Is competition for services so

fierce that capitalinvestment decisions are likely to

radically affect the organization's ability to compete? If so,

should the organization intentionally postpone short-term

Alternatives should be evaluated according to both actions to ensure sufficient resources are dedicated to

quantitative and qualitative criteria. Break-even modernization of facilities and the purchaseof up-ta-date

analysis provides some basis for examining the impact technologies in order to improve the chances of long-range

of different courses of action. However, a good growth and development?

alternative course of
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Step 5: Make Recommendations
The basic aim of case analysis is to find solutions. Making good recommendations is a critical aspect
Your analysis is not complete until you have of successful case analysis. If recommendations
recommended a course of action. In this step the are theoretically sound and justifiable, people will
task is to make a set of recommendations that pay attention to them. If they are not, little is
your analysis supports. Describe exactly what likely to result from all the work done to this
needs to be done. Explain why this course of point. One effective method for presenting
action will solve the problem. The recommendations is to relate each one to
recommendation should also include suggestions organizational strengths. Or, if necessary, a
for how best to implement the proposed solution recommendation can illustrate how it assists in
because the recommended actions and their avoiding known weaknesses. For example, if the
implications for the performance and future of marketing resources are limited, it will be
the firm are interrelated. important to avoid recommendations that rely on
Recall that the solution you propose must solve resources that are not available; Beware of
the problem you identified. This point cannot be recommending marketing research. In most
overemphasized; too often students make instances, the decision-maker does not have six
recommendations that treat only symptoms or fail months or a year that it would take to perform
to tackle the central problems in the case. Make a the research. If you see no other alternative,
logical argument that shows how the problem led specify concisely the type of research you would
to the analysis and the analysis led to the do, what results you expect, what decision you
recommendations you are proposing. Remember, would make based on the results expected, and
an analysis is not an end in itself; it is useful only your prediction about the likelihood of the results
if it leads to a solution. you expect. In case analysis, further research is a
difficult recommendation to support.

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