Lesson 12: IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND MIS ISSUES

Projected Financial Statements

 A central strategy-implementation technique because it allows an organization to examine the

expected results of various actions and approaches.

There are six steps in performing projected financial analysis:

1. Prepare the projected income statement before the balance sheet.

2. Use the percentage-of-sales method to project cost of goods sold (CGS) and the expense items
in the income statement.

3. Calculate the projected net income.

4. Subtract from the net income any dividends to be paid for that year.

5. Project the balance sheet items, beginning with retained earnings and then forecasting
stockholders’ equity, long-term liabilities, current liabilities, total liabilities, total assets, fixed
assets, and current assets (in that order).

6. List comments (remarks) on the projected statements.

Financial Budgets

- A document that details how funds will be obtained and spent for a specified period of time.

Annual budgets are most common, although the period of time for a budget can range from one day to
more than 10 years. Fundamentally, financial budgeting is a method for specifying what must be done to
complete strategy implementation successfully.

Evaluating the Worth of a Business

• First approach - determining its net worth or stockholders’ equity.

• Second approach - the belief that the worth of any business should be based largely on the
future benefits its owners may derive through net profits.

• Third approach - the price-earnings ratio method.

• Fourth method - the outstanding shares method.

- Evaluating the worth of a business is central to strategy implementation because integrative, intensive,
and diversification strategies are often implemented by acquiring other firms.

To use the price-earnings ratio method, divide the market price of the firm’s common stock by the
annual earnings per share and multiply this number by the firm’s average net income for the past five
years.

To use the outstanding shares method, simply multiply the number of shares outstanding by the market
price per share and add a premium.
Research and Development (R&D) Issues

• Research and development (R&D) personnel can play an integral part in strategy
implementation. These individuals are generally charged with developing new products and
improving old products in a way that will allow effective strategy implementation

R&D policies can enhance strategy implementation efforts to:

1. Emphasize product or process improvements.

2. Stress basic or applied research.

3. Be leaders or followers in R&D.

4. Develop robotics or manual-type processes.

5. Spend a high, average, or low amount of money on R&D.

6. Perform R&D within the firm or to contract R&D to outside firms.

7. Use university researchers or private-sector researchers.

Research and Development (R&D) Issues

Management Information Systems (MIS) Issues

• Firms that gather, assimilate, and evaluate external and internal information most effectively
are gaining competitive advantages over other firms.

• Having an effective management information system (MIS) may be the most important factor in
differentiating successful from unsuccessful firms.

• Information collection, retrieval, and storage can be used to create competitive advantages in
ways such as cross-selling to customers, monitoring suppliers, keeping managers and employees
informed, coordinating activities among divisions, and managing funds.

• A good information system can allow a firm to reduce costs.

Highlight Summary

• Projected Financial Statements . A central strategy-implementation technique because it allows

an organization to examine the expected results of various actions and approaches.

• Financial Budgets. A document that details how funds will be obtained and spent for a specified
period of time.

• Evaluating the Worth of a Business. First approach - determining its net worth or stockholders’
equity; Second approach - the belief that the worth of any business should be based largely on
the future benefits its owners may derive through net profits; Third approach - the price-
earnings ratio method; and Fourth method - the outstanding shares method.

• Research and development (R&D) personnel can play an integral part in strategy
implementation.

• Management Information Systems (MIS) Issues. Firms that gather, assimilate, and evaluate
external and internal information most effectively are gaining competitive advantages over
other firms.

Lesson 13: STRATEGY REVIEW, EVALUATION, AND CONTROL

The Nature of Strategy Evaluation

Three Basic Activities of Strategy Evaluation

-Examining the underlying bases of a firm’s strategy

- Comparing expected results with actual results

-Taking corrective actions to ensure that performance conforms to plans

The strategic-management process results in decisions that can have significant, long lasting
consequences. Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult,
if not impossible, to reverse. Most strategists agree, therefore, that strategy evaluation is vital to an
organization’s well-being; timely evaluations can alert management to problems or potential problems
before a situation becomes critical.

Adequate and timely feedback is the cornerstone of effective strategy evaluation. Strategy evaluation
can be no better than the information on which it is based. Too much pres sure from top managers may
result in lower managers contriving numbers they think will be satisfactory.

Strategy Review, Evaluation, & Control

Rumelt’s 4 Criteria

1. Consistency
2. Consonance
3. Feasibility
4. Advantage
It is impossible to demonstrate conclusively that a particular strategy is optimal or even to guarantee
that it will work. One can, however, evaluate it for critical flaws. Richard Rumelt offered four criteria that
could be used to evaluate a strategy: consistency, consonance, feasibility, and advantage. Consonance
and advantage are mostly based on a firm’s external assessment, whereas consistency and feasibility are
largely based on an internal assessment.

Strategy Review, Evaluation, & Control

Consistency

A strategy should not present inconsistent goals and policies. Organizational conflict and
interdepartmental bickering are often symptoms of managerial disorder, but these problems may also
be a sign of strategic inconsistency.

Three guidelines help determine if organizational problems are due to inconsistencies in strategy:

• If managerial problems continue despite changes in personnel and if they tend to be issue-based
rather than people-based, then strategies may be inconsistent.

• If success for one organizational department means, or is interpreted to mean, failure for another
department, then strategies may be inconsistent.

• If policy problems and issues continue to be brought to the top for resolution, then strategies may be
inconsistent.

Consonance

Consonance refers to the need for strategists to examine sets of trends, as well as individual trends, in
evaluating strategies.

A strategy must represent an adaptive response to the external environment and to the critical changes
occurring within it. One difficulty in matching a firm’s key internal and external factors in the
formulation of strategy is that most trends are the result of interactions among other trends.

Feasibility

A strategy must neither overtax available resources nor create unsolvable subproblems.

The final broad test of strategy is its feasibility; that is, can the strategy be attempted within the
physical, human, and financial resources of the enterprise? The financial resources of a business are the
easiest to quantify and are normally the first limitation against which strategy is evaluated. It is
sometimes forgotten, however, that innovative approaches to financing are often possible.

Advantage

A strategy must provide for the creation and/or maintenance of a competitive advantage in a selected
area of activity

Competitive advantages normally are the result of superiority in one of three areas: (1) resources, (2)
skills, or (3) position.
Strategy Review, Evaluation, & Control

Difficulties in Strategy Evaluation

1. Increase in environment’s complexity

2. Difficulty predicting future with accuracy

3. Increasing number of variables

4. Rate of obsolescence of plans

5. Domestic and global events

6. Decreasing time span for planning certainty

The Process of Evaluating Strategies

-Initiate managerial questioning of expectations and assumptions

-Trigger a review of objectives and values

-Stimulate creativity in generating alternatives and formulating criteria of evaluation.

Strategy evaluation is necessary for all sizes and kinds of organizations. Strategy evaluation should
initiate managerial questioning of expectations and assumptions, should trigger a review of objectives
and values, and should stimulate creativity in generating alternatives and formulating criteria of
evaluation.3 Regardless of the size of the organization, a certain amount of management by wandering
around at all levels is essential to effective strategy evaluation. Strategy-evaluation activities should be
performed on a continuing basis, rather than at the end of specified periods of time or just after
problems occur. Waiting until the end of the year, for example, could result in a firm closing the barn
door after the horses have already escaped. Evaluating strategies on a continuous rather than on a
periodic basis allows benchmarks of progress to be established and more effectively monitored. Some
strategies take years to implement; consequently, associated results may not become apparent for
years. Successful strategies combine patience with a willingness to promptly take corrective actions
when necessary.
A Strategy-Evaluation Framework

A Strategy-Evaluation Framework

1. Review of Underlying Bases of Strategy

 Develop revised EFE Matrix

 Develop revised IFE Matrix

Reviewing the underlying bases of an organization’s strategy could be approached by developing a

revised EFE Matrix and IFE Matrix. A revised IFE Matrix should focus on changes in the organization’s
management, marketing, finance/accounting, production/operations, R&D, and management
information systems strengths and weaknesses. A revised EFE Matrix should indicate how effective a
firm’s strategies have been in response to key opportunities and threats.

Review Effectiveness of Strategy

1. Competitors’ reaction to strategy

2. Competitors’ change in strategy

3. Competitors’ changes in strengths & weaknesses

4. Reasons for competitors’ strategic change

5. Reasons for competitors’ successful strategies

6. Competitors’ present market positions & profitability

7. Potential for competitor retaliation

8. Potential for cooperation with competitors

Monitor Strengths & Weaknesses; Opportunities & Threats

 Are strengths still strengths?

 Have we added additional strengths?

 Are weaknesses still weaknesses?

 Have we developed other weaknesses?

 Are opportunities still opportunities?

 Other opportunities develop?

 Are threats still threats

 Other threats emerged?

 Are we vulnerable to hostile takeover?

Highlight Summary

• Three Basic Activities of Strategy Evaluation. Examining the underlying bases of a firm’s strategy;
Comparing expected results with actual results; and Taking corrective actions to ensure that
performance conforms to plans.

• Rumelt’s 4 Criteria. Consistency, Consonance, Feasibility, Advantage.

• Review of Underlying Bases of Strategy. Develop revised EFE Matrix AND Develop revised IFE
Matrix

Lesson 14: STRATEGY REVIEW, EVALUATION, AND CONTROL Continuation…

A Strategy-Evaluation Framework

2. Measuring Organizational Performance

Compare expected to actual results

Investigate deviations from plans

Evaluate individual performance

Examine progress toward stated objectives

Quantitative Criteria for Strategy Evaluation

Financial Ratios

o Compare performance over different periods

o Compare performance to competitors

o Compare performance to industry averages

Key Financial Ratios

• Return on investment (ROI)

• Return on equity (ROE)

• Profit margin

• Market Share

• Debt to equity

• Earnings per share (EPS)

• Sales growth

• Asset growth

3. Taking Corrective Actions

The final strategy-evaluation activity, taking corrective actions, requires making changes to
competitively reposition a firm for the future.

Examples of changes that may be needed are altering an organization’s structure, replacing one or more
key individuals, selling a division, or revising a business mission.

Strategy Review, Evaluation, & Control

Balanced Scorecard

Evaluate strategies from 4 perspectives:

1. Financial performance

2. Customer knowledge

3. Internal business processes

4. Learning & growth

The Balanced Scorecard is an important strategy-evaluation tool. The Balanced Scorecard analysis
requires that firms seek answers to the following questions and utilize that information, in conjunction
with financial measures, to adequately and more effectively evaluate strategies being implemented:

1. How well is the firm continually improving and creating value along measures such as
innovation, technological leadership, product quality, operational process efficiencies, and so
on?

2. How well is the firm sustaining and even improving upon its core competencies and competitive
advantages?

3. How satisfied are the firm’s customers?

Balance Scorecard

Measure or Primary
Area of Objectives Time Expectation
Target Responsibility

Customers      

1      

2      

Managers/Employees      

1      

2      

Operations/Processes      

1      

2      

Community/Social Responsibility      

1      

2      

Business Ethics/Natural Environment      

1      

2      

Financial      

1      

2      
A sample Balanced Scorecard is provided in Table. Notice that the firm examines six key issues in
evaluating its strategies: (1) Customers, (2) Managers/Employees, (3) Operations/Processes, (4)
Community/Social Responsibility, (5) Business Ethics/Natural Environment, and (6) Financial. The basic
form of a Balanced Scorecard may differ for different organizations. The Balanced Scorecard approach to
strategy evaluation aims to balance long-term with short-term concerns, to balance financial with
nonfinancial concerns, and to balance internal with external concerns. It can be an excellent
management tool, and it is used successfully today by Chemical Bank, Exxon/Mobil Corporation, CIGNA
Property and Casualty Insurance, and numerous other firms. The Balanced Scorecard would be
constructed differently, that is, adapted, to particular firms in various industries with the underlying
theme or thrust being the same, which is to evaluate the firm’s strategies based upon both key
quantitative and qualitative measures.

Characteristics of Strategy Evaluation

• Economical

• Meaningful

• Generates useful information

• Timely information

• Provides accurate picture of events

Strategy-Evaluation Assessment Matrix

Have major changes Have major changes Has the firm progressed Result
occurred in the firm’s occurred in the firm’s satisfactorily toward
internal strategic external strategic achieving its stated
position? position? objectives?

No No No Corrective actions

Yes Yes Yes Corrective actions

Yes Yes No Corrective actions

Yes No Yes Corrective actions

Yes No No Corrective actions

No Yes Yes Corrective actions

No Yes No Corrective actions

No No Yes Continue course

Contingency Planning

Alternative plans that can be put into effect if certain key events do not occur as expect

Auditing

o Financial audits determine correspondence between assertions based on strategic plan &
established criteria

o Environmental audits insure sound and safe practices

A frequently used tool in strategy evaluation is the audit. Auditing is defined by the American
Accounting Association (AAA) as “a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of correspondence
between these assertions and established criteria, and communicating the results to interested users.

21st Century Challenges in Strategic Management

 o Process is more an “art” than “science”

o Should strategies be visible or hidden from stakeholders

o Should process be more top-down or bottom up

Highlight Summary

• Measuring Organizational Performance. Compare expected to actual results; Investigate

deviations from plans; Evaluate individual performance; and Examine progress toward stated
objectives.

• Quantitative Criteria for Strategy Evaluation. Financial Ratios

• Taking Corrective Actions. The final strategy-evaluation activity, taking corrective actions,
requires making changes to competitively reposition a firm for the future.

• Balanced Scorecard. The Balanced Scorecard is an important strategy-evaluation tool.

• Contingency Planning. Alternative plans that can be put into effect if certain key events do not
occur as expect

• Auditing. Auditing is defined by the American Accounting Association (AAA) as “a systematic

process of objectively obtaining and evaluating evidence regarding assertions about economic
actions and events to ascertain the degree of correspondence between these assertions and
established criteria, and communicating the results to interested users.

• 21st Century Challenges in Strategic Management. Process is more an “art” than “science

BUSINESS ETHICS/SOCIAL RESPONSIBILITY/ENVIRONMENTAL SUSTAINABILITY

Social Responsibility, Environmental Sustainability

Social responsibility - Refers to actions an organization takes beyond what is legally required to protect
or enhance the well-being of living things .

Sustainability - Refers to the extent that an organization’s operations and actions protect, mend, and
preserve rather than harm or destroy the natural environment.

Business Ethics

Defined as principles of conduct within organizations that guide decision making and behavior.

Good ethics is good business. Bad ethics can derail even the best strategic plans. This chapter provides
an overview of the importance of business ethics in strategic management.

Code of Business Ethics

To ensure that the code of ethics is read, understood, believed, and remembered, periodic ethics
workshops are needed to sensitize people to workplace circumstances in which ethics issues may arise.
A new wave of ethics issues related to product safety, employee health, sexual harassment, AIDS in the
workplace, smoking, acid rain, affirmative action, waste disposal, foreign business practices, cover-ups,
takeover tactics, conflicts of interest, employee privacy, inappropriate gifts, and security of company
records has accentuated the need for strategists to develop a clear code of business ethics. Internet
fraud, hacking into company computers, spreading viruses, and identity theft are other unethical
activities that plague every sector of online commerce.

An Ethics Culture

 Whistle-blowing- policies that requires employees to report any unethical violations they
discover or see in the firm.

 Ethics training programs should include messages from the CEO or owner of the business
emphasizing ethical business practices, the development and discussion of codes of ethics, and
procedures for discussing and reporting unethical behavior .

Bribes

 The offering, giving, receiving, or soliciting of any item of value to influence the actions of an
official or other person in discharge of a public or legal duty.

A bribe is a gift bestowed to influence a recipient’s conduct. The gift may be any money, good, right in
action, property, preferment, privilege, emolument, object of value, advantage, or merely a promise or
undertaking to induce or influence the action, vote, or influence of a person in an official or public
capacity.

Social Responsibility

 Ralph Nader proclaims that organizations have tremendous social obligations proclaims that
organizations have tremendous social obligations.

 Milton Friedman asserts that organizations have no obligation to do any more for society than is
legally required.

Social Policy

 Embraces managerial philosophy and thinking at the highest level of the firm.

 Concerns what responsibilities the firm has to employees, consumers, environmentalists,

minorities, communities, shareholders, and other groups.

Firms should strive to engage in social activities that have economic benefits.
Highlight Summary

• Social responsibility Refers to actions an organization takes beyond what is legally required to
protect or enhance the well-being of living things .

• Sustainability. The extent that an organization’s operations and actions protect, mend, and
preserve rather than harm or destroy the natural environment.

• Business Ethics . Defined as principles of conduct within organizations that guide decision
making and behavior.

• Whistle-blowing- policies that requires employees to report any unethical violations they
discover or see in the firm.

• Social Responsibility. Ralph Nader proclaims that organizations have tremendous social
obligations proclaims that organizations have tremendous social obligations. Milton Friedman
asserts that organizations have no obligation to do any more for society than is legally required.

Lesson 16: BUSINESS ETHICS/SOCIAL RESPONSIBILITY/ENVIRONMENTAL SUSTAINABILITY

Environmental Sustainability

 Employees, consumers, governments, and society are especially resentful of firms that harm
rather than protect the natural environment.

 Conversely people today are especially appreciative of firms that conduct operations in a way
that mends, conserves, and preserves the natural environment

According to the International Standards Organization (ISO), the word environment is defined as
“surroundings in which an organization operates, including air, water, land, natural resources, flora,
fauna, humans, and their interrelation.”

What Is a Sustainability Report?

 Wal-Mart Stores is one among many companies today that annually provides a sustainability
report that reveals how the firm’s operations impact the natural environment.

 This document discloses to shareholders information about Wal-Mart’s firm’s labor practices,
product sourcing, energy efficiency, environmental impact, and business ethics practices.

Lack of Standards Changing

 Uniform standards defining environmentally responsible company actions are rapidly being
incorporated into our legal landscape.

 It has become more and more difficult for firms to make “green” claims when their actions are
not substantive, comprehensive, or even true.
Managing Environmental Affairs in the Firm

Environmental strategies can include:

- developing or acquiring green businesses

- divesting or altering environment-damaging businesses

- striving to become a low-cost producer through waste minimization and energy conservation

- pursuing a differentiation strategy through green-product features

Reasons Why Firms Should “Be Green”

1. Consumer demand for environmentally safe products and packages is high.

2. Public opinion demanding that firms conduct business in ways that preserve the natural
environment is strong.

3. Environmental advocacy groups now have over 20 million Americans as members.

4. Federal and state environmental regulations are changing rapidly and becoming more complex.

5. More lenders are examining the environmental liabilities of businesses seeking loans.

6. Many consumers, suppliers, distributors, and investors shun doing business with
environmentally weak firms.

7. Liability suits and fines against firms having environmental problems are on the rise.

Be Proactive, Not Reactive

A proactive policy views environmental pressures as opportunities and includes such actions as
developing green products and packages, conserving energy, reducing waste, recycling, and creating a
corporate culture that is environmentally sensitive.

ISO 14000/14001 Certification

The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects on the
environment caused by its activities and continually monitors and improves its own environmental
performance.

 ISO 14001 is a set of standards adopted by thousands of firms worldwide to certify to their
constituencies that they are conducting business in an environmentally friendly manner

 Results in an environmental management system

Major Requirements of an EMS

 Show commitments to prevention of pollution, continual improvement in overall environmental

performance, and compliance with all applicable statutory and regulatory requirements.

 Identify all aspects of the organization’s activities, products, and services that could have a
significant impact on the environment, including those that are not regulated.

 Set performance objectives and targets for the management system that link back to three
policies: (1) prevention of pollution, (2) continual improvement, and (3) compliance .

 Meet environmental objectives that include training employees, establishing work instructions
and practices, and establishing the actual metrics by which the objectives and targets will be
measured.

 Conduct an audit operation of the EMS

 Take corrective actions when deviations from the EMS occur

Highlight Summary

• Sustainability Report. Wal-Mart Stores is one among many companies today that annually
provides a sustainability report that reveals how the firm’s operations impact the natural
environment.

• Uniform standards defining environmentally responsible company actions are rapidly being
incorporated into our legal landscape.

• A proactive policy views environmental pressures as opportunities and includes such actions as
developing green products and packages, conserving energy, reducing waste, recycling, and
creating a corporate culture that is environmentally sensitive.

• The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects
on the environment caused by its activities and continually monitors and improves its own
environmental performance.

• ISO 14001 is a set of standards adopted by thousands of firms worldwide to certify to their
constituencies that they are conducting business in an environmentally friendly manner

Lesson 17: GLOBAL/INTERNATIONAL ISSUES

Multinational Organizations

• Organizations that conduct business operations across national borders are called international
firms or multinational corporations.

• The process is more complex for international firms due to more variables and relationships.
More time and effort are required to identify and evaluate external trends and events in multinational
corporations than in domestic corporations.

Multinational corporations (MNCs) face unique and diverse risks, such as expropriation of assets,
currency losses through exchange rate fluctuations, unfavorable foreign court interpretations of
contracts and agreements, social/political disturbances, import/ export restrictions, tariffs, and trade
barriers. Strategists in MNCs are often confronted with the need to be globally competitive and
nationally responsive at the same time.

• International firms or multinational corporations face many complex variables:

- Social

- Cultural

- Demographic

- Environmental

- Political

- Governmental

- Legal

- Technological

- Competitive Opportunities and threats

Advantages and Disadvantages of International Operations

Potential advantages of international operations :

1. Gain new customers

2. Absorb excess capacity, reduce unit costs, and spread economic risks

3. Allow firms to establish low-cost production facilities

4. Competition may be less intense

5. reduced tariffs, lower taxes, and favorable political treatment

6. Joint ventures can enable firms to learn the technology, culture, and business practices

7. Economies of scale

8. Power and prestige in domestic markets may be significantly enhanced

Potential disadvantages of international operations :

1. Foreign operations could be seized

2. different and often little-understood social, cultural, demographic, environmental, political,

governmental, legal, technological, economic, and competitive forces
 3. Weaknesses of competitors overestimated

4. Language, culture, and value systems differ among countries

5. understanding of regional organizations

6. Dealing with two or more monetary systems

The Global Challenge

• How to gain and maintain exports to other nations

• How to defend domestic markets against imported goods

Changes in the Global Economy

• Corporations are obtaining customers globally

• Markets are shifting rapidly and converging in tastes, trends, and prices

• Innovative transport systems are accelerating transfer of technology

• Nature and location of production systems are shifting

Protectionism

Countries imposing tariffs, taxes, and regulations on firms outside the country to favor their own
companies and people

Globalization

- A process of doing business worldwide.

-Global Strategy includes:

 Design

 Production

 Marketing

A Weak Economy

• Recession

- two consecutive quarters o a decline in real gross domestic product

• Many countries have recently experienced a recession

• Unemployment rates are high around the world

Cultural Differences

 Time

 Space
  Family roles

 Religious factors

 Family time

 Values

 Eating

 Rules of etiquette

 Importance of relationships

European Business Cultures

 Participatory management

 Most workers are unionized

 More frequent vacations and holidays

 Guaranteed permanent employment common

 Workers often resent pay for performance, commissions, and objective measurement and
reward systems

Asian Business Cultures

 First names are not generally used in business

 Extended periods of silence are important

 A sale is the beginning, not the end of a relationship

 Resting, listening, meditating, and thinking are considered productive

Mexican Business Cultures

 Low tolerance for adversarial relations or friction at work

 Employers are paternalistic

 Workers do not expect self-expression or initiative at work

 Business stress collectivism, continuity, cooperation, belongingness, formality, and doing exactly
what you are told

 Rarely entertain business associates at homes

 Preserving one’s honor, saving face, and looking important are valued

 Opinions expressed by employees are often regarded as back talk

 Supervisors are viewed as weak if they explain the rationale for the orders to workers
  Mexicans often do not follow rules

 Life is slower in Mexico, tardiness is common

Japanese Business Cultures

 Importance of group loyalty and consensus called “Wa”

 Constant discussion and compromise

 Silence is a plus in formal meetings

 When confronted with disturbing questions, managers often remain silent

 Managers are reserved, quiet, distant, introspective, and other oriented

Communication Differences Across Cultures

 Italians, Germans, and French do not soften up executives with praise before a criticism

 Israelis are accustomed to fast paced meetings

 British executives complain that Americans chatter too much

 Europeans feel that they are being treated like children when asked to wear nametags

 Executives in India are used to interrupting each other

 In Malaysia and Japan periods of silence are appropriate, no silence is needed in Israel

 “How was your weekend?” is considered intrusive by many business people

Worldwide Tax Rates

 Europe --------------------------------------------------------------------- 26%

 Asia-Pacific Region ---------------------------------------------------- 30%

 US and Japan ----------------------------------------------------------- 38%

 Ireland and Former Soviet-Bloc nations near ------------------- 0%

 Germany ----------------------------------------------------------------- 30%

 Great Britain –----------------------------------------------------------- 28%

 France –------------------------------------------------------------------- 27%

Joint Ventures in India

 Debt is 80% of GDP

 Gap between rich and poor widening

 Middle class is growing

 Join ventures are mandatory for foreign companies doing business of India
  Foreign firms restricted to 74% ownership of India-based firms

 Most joint ventures in India fail

Highlight Summary

• Multinational Organizations. Organizations that conduct business operations across national

borders are called international firms or multinational corporations.

• Advantages and Disadvantages of International Operations

• The Global Challenge. How to gain and maintain exports to other nations. How to defend
domestic markets against imported goods

• Protectionism. Countries imposing tariffs, taxes, and regulations on firms outside the country to
favor their own companies and people

• Globalization. A process of doing business worldwide.

• Recession. Two consecutive quarters o a decline in real gross domestic product.

Lesson 18: HOW TO PREPARE AND PRESENT A CASE ANALYSIS

Purpose

The purpose of this section is to help you analyze strategic-management cases. Guidelines for preparing
written and oral case analyses are given, and suggestions for preparing cases for class discussion are
presented. Steps to follow in preparing case analyses are provided. Guidelines for making an oral
presentation are described.

What Is a Strategic-Management Case?

- Describes an organization’s external and internal conditions and raises issues concerning the firm’s
mission, strategies, objectives, and policies.

Most of the information in a business policy case is established fact, but some information may be
opinions, judgments, and beliefs. Strategic-management cases are more comprehensive than those you
may have studied in other courses. They generally include a description of related management,
marketing, finance/accounting, production/operations, R&D, computer information systems, and
natural environment issues.

Guidelines for Preparing Case Analyses

The Need for Practicality

 Do what strategists do every day—make reasonable assumptions about unknowns

 Clearly state assumptions

 Perform appropriate analyses

 Make decisions
Be practical. For example, in performing a projected financial analysis, make reasonable assumptions,
appropriately state them, and proceed to show what impact your recommendations are expected to
have on the organization’s financial position. Avoid saying, “I don’t have enough information.” You can
always supplement the information provided in a case with Internet and library research.

The Need for Justification

 The most important part of analyzing cases is not what strategies you recommend but rather
how you support your decisions and how you propose that they be implemented.

 There is no single best solution or one right answer to a case, so give ample justification for your
recommendations.

The Need for Realism

 Avoid recommending a course of action beyond an organization’s means.

The Need for Specificity

 Do not make broad generalizations such as “The company should pursue a market penetration
strategy.” Be specific by telling what, why, when, how, where, and who.

Failure to use specifics is the single major shortcoming of most oral and written case analyses.

The Need for Originality

 Do not necessarily recommend the course of action that the firm plans to take or actually
undertook, even if those actions resulted in improved revenues and earnings.

 Compare and contrast what you recommend versus what the company plans to do or did.

Support your position with charts, graphs, ratios, analyses, and the like—not a revelation from the
library. You can become a good strategist by thinking through situations, making management
assessments, and proposing plans yourself. Be original.

The Need to Contribute

 Strategy formulation, implementation, and evaluation decisions are commonly made by a group
of individuals rather than by a single person.

 Therefore, your professor may divide the class into three- or four-person teams and ask you to
prepare written or oral case analyses.

Be a good listener and a good contributor.

Preparing a Case for Class Discussion

The Case Method versus Lecture Approach

 The case method involves a classroom situation in which students do most of the talking; your
professor facilitates discussion by asking questions and encouraging student interaction
regarding ideas, analyses, and recommendations.
The case method of teaching is radically different from the traditional lecture approach, in which little or
no preparation is needed by students before class.

The Cross-Examination

 Apply strategic-management concepts and too

 Seek defensible arguments and positions

 Support opinions and judgments with facts, reasons, and evidence

 Crunch the numbers before class

 Be willing to describe your recommendations

 Respect the ideas of others but be willing to go against the majority opinion

Cross-examination discussions commonly arise, just as they occur in a real business organization. Avoid
being a silent observer.

Preparing a Written Case Analysis

The Executive Summary

(1) To identify and evaluate the organization’s existing mission, objectives, and strategies; or

(2) To propose and defend specific recommendations for the company; or

(3) To develop an industry analysis by describing the competitors, products, selling techniques, and
market conditions in a given industry.

The Comprehensive Written Analysis

• When preparing, picture yourself as a consultant.

• Prepare exhibits to support your recommendations.

• Highlight exhibits with some discussion in the paper.

Comprehensive written analyses are usually about 10 pages in length, plus exhibits.

Steps in Preparing a Comprehensive Written Analysis

Step 1 Identify the firm’s existing vision, mission, objectives, and strategies.

Step 2 Develop vision and mission statements for the organization.

Step 3 Identify the organization’s external opportunities and threats.

Step 4 Construct a Competitive Profile Matrix (CPM).

Step 5 Construct an External Factor Evaluation (EFE) Matrix.

Step 6 Identify the organization’s internal strengths and weaknesses.

Step 7 Construct an Internal Factor Evaluation (IFE) Matrix.

Step 8 Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Strategic Position and
Action Evaluation (SPACE) Matrix, Boston Consulting Group (BCG) Matrix, Internal-External (IE) Matrix,
Grand Strategy Matrix, and Quantitative Strategic Planning Matrix (QSPM) as appropriate. Give
advantages and disadvantages of alternative strategies.

Step 9 Recommend specific strategies and long-term objectives. Show how much your
recommendations will cost. Clearly itemize these costs for each projected year. Compare your
recommendations to actual strategies planned by the company.

Step 10 Specify how your recommendations can be implemented and what results you can expect.
Prepare forecasted ratios and projected financial statements. Present a timetable or agenda for action.

Step 11 Recommend specific annual objectives and policies.

Step 12 Recommend procedures for strategy review and evaluation.

Making an Oral Presentation

- Two parts

1. Content and

2. Delivery

Content refers to the quality, quantity, correctness, and appropriateness of analyses presented,
including such dimensions as logical flow through the presentation, coverage of major issues, use of
specifics, avoidance of generalities, absence of mistakes, and feasibility of recommendations. Delivery
includes such dimensions as audience attentiveness, clarity of visual aids, appropriate dress,
persuasiveness of arguments, tone of voice, eye contact, and posture.

Organizing the Presentation

• Begin by introducing yourself and giving a clear outline of topics to be covered

• Capture your audience’s interest and attention (display products by telling interesting sort
story/experience/ develop or obtain a video show).

Controlling Your Voice

• 100 to 125 words per minute

• Avoid a monotone by placing emphasis on different words or sentences

• Speak loudly and clearly, but don’t shout

• Stop at the end of each sentence

Managing Body Language

• Be sure not to fold your arms, lean on the podium, put your hands in your pockets, or put your
hands behind you

• Keep a straight posture

 • Do not turn your back to the audience

• Maintain good eye contact throughout the presentation

• Use humor and smiles

Speaking from Notes

• Be sure not to read to your audience because reading puts people to sleep.

Constructing Visual Aids

• Make sure your visual aids are legible to individuals in the back of the room.

Answering Questions

• It is best to field questions at the end of your presentation, rather than during the presentation
itself.

Tips for Success in Case Analysis

Two basic sections:

(1) Content Tips- relate especially to the content of your case analysis

(2) Process Tips- relate mostly to the process that you and your group mates undergo in preparing
and delivering your case analysis/presentation.

Highlight Summary

• Strategic-management case describes an organization’s external and internal conditions and

raises issues concerning the firm’s mission, strategies, objectives, and policies.

• Guidelines for Preparing Case Analyses: The Need for Practicality; The Need for Justification;
The Need for Realism; The Need for Specificity; The Need for Originality; and The Need to
Contribute .

• Preparing a Case for Class Discussion: The Case Method versus Lecture Approach and The
Cross-Examination.

• Preparing a Written Case Analysis: The Executive Summary and The Comprehensive Written
Analysis.

• Making an Oral Presentation: Organizing the Presentation; Controlling Your Voice; Managing
Body Language; Speaking from Notes; Constructing Visual Aids; and Answering Questions.

• The tips are grouped into two basic sections: (1) Content Tips and (2) Process Tips.