How to Analyze a

Case Study
Slides elaborated by Humberto Brea
What is a case study?

A case study is a narrative that contains information about a real

organization or event. You will need to make inferences based on the
presented evidence and afterwards make an informed
recommendation or opinion.

Why case studies are useful?

Practice, in addition to theory, is required to develop strategic thinking. It
is for this reason that a course in Strategic Management would not be
successful if it does not include an opportunity to practice what you
have learned during the lectures. Case study is a pedagogical tool that
provides this opportunity without the fear of making a big mistake.

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Advantages...
• They give you the opportunity to improve your analytical skills by
exposing you to a diverse range of situations.
• You will learn about different types of organizations and situations,
which improve your employment possibilities.
• Cases give you a holistic viewpoint of reality; forcing you to think in
long term perspective.

Limitation:
The lessons learned in a case study analysis are not necessarily valid to
other similar situations. The most valuable skill that you will acquire is
precisely the ability to analyze business situations rather than
punctual recipes for specific problems.
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What you should keep in mind when reading a case study

Cases might include irrelevant details, implicit information or not be

structured sequentially. This last feature is very important: do not expect
to understand a case by reading it multiple times. Understanding cases
demand active reading, you need to proactively search for the answers of
the questions that you should have in your mind. Here are some examples
of these kind of questions:

• What is the business of the company or the companies described in

the case?
• Who are the main characters in the case?
• What are the most important facts?
• In which order the key events occur?
• What elements are facts and what are just opinions of the characters
in the case?

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Case Typology
Professor William Ellet elaborated a case study typology that has been
used to simplify the analysis. Do not consider this classification
exhaustive, there might be cases that do not belong to the categories
described by Ellet. However, this knowledge would be convenient in the
majority of the cases that you will encounter. Ellet distinguished four types
of cases:

1. Problems: Something important has occurred but there is no

explanation for this situation. Problems could also have a positive
connotation.
2. Decisions: the top managerial team must make a business decision.
Sometimes the need to make a decision is implicit in the text.
3. Evaluations: you need to assess the consequence of a decision. The
key element when analyzing an evaluation case is the definition of the
criteria of assessment.
4. Rules: these cases demand the correct application of a quantitative
method.

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Analytical tools at your disposal:

Whether you are reading a problem, a decision, an evaluation or a rules

case; you might want to use some methodologies to refine your analysis.
It is important to determine the right tool for the specific issue that you are
studying. For example, if you want to understand the competitive
environment in an industry, Porter’s five forces is a powerful tool for this
kind of analysis but Barney’s resource-based view is not. You will become
familiarized with several methodologies as the course progress. Hint:
lectures and case studies are synchronized.

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Assessing Performance:

A key issue is to define the goals of the firm. Within the economics
context, the answer is straightforward: profit maximization. However, firms
might have other objectives in addition to this one. There are several
indicators that measure financial performance. These indicators usually
come as ratios and they provide information about different aspects of
performance such as profitability or efficiency.

Commonly Used Financial Indicators

INDICATOR FORMULA DESCRIPTION
Gross Margin (Sales – Intermediate goods costs)/ Sales Relationship between sales and the costs to support those
sales.
Returns on Assets Net income/Total assets Measures how efficient is the firm using its assets
Returns on Equity Net income/Total equity Earnings per unit of equity owned by the stockholders
Inventory Turnover Sales/Inventory It measures how many times the inventory is sold during a
year
Debt to equity Total liabilities/Total equity It measures the company’s leverage
Quick ratio (Cash + Marketable Securities + Net It measures the ability of the firm to pay its debts with its
receivables)/ Current liabilities more liquid assets.
Current ratio Current assets/current liabilities It measures short-term liquidity.

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Preparing your informed recommendation or opinion

Problem. If the case study is a problem:

• Define the problem by making a diagnosis. An effective diagnosis

requires the use of cause-and-effect analysis. The effects will be
described in the text; your goal is to identify their causes.

• Choose the right theoretical framework to make the analysis. The link
between causes and effects comes from theory.

• Propose a solution for the diagnosed problem. In this step, you have to
be specific by explaining clearly what the top managerial team needs
to do and why they have to do it. Avoid clichés such as “the company
needs to be more competitive” provide as much detail as you can by
enlisting what actions are required to be undertaken, what is the
timeline to perform them, how the firm could finance them and what
are the expected results.

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Preparing your informed recommendation or opinion
Decisions. if the case study is a decisions case:

• Identify all the possible options. Decisions cases are characterized

for hiding the alternatives throughout the text. It requires a
devoted effort to capture all the complexities that involve each
choice.

• Define the criteria for evaluation. Here, the use of financial ratios
to assess possible scenarios becomes handy. It is your
responsibility to select which financial indicators are the most
relevant for the case.

• Make a recommendation. You have to justify your

recommendation as well as provide ideas of how to better
implement the choice that you selected.

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Preparing your informed recommendation or opinion

Evaluations. If the case study is an evaluations case

• Establish the criteria of assessment. These criteria will become

evident after understanding the case. You will probably need to
calculate financial indicators as well.

• Define the terms used for assessment, the scale that you will use to
grade the situation that you are analyzing.

• Organize your evaluation results into categories where the readers

could understand each criterion and its terms of evaluation.

• Conclude with an overall assessment, a detailed recount of

elements that influenced your conclusions and a list of actions to be
performed by the top managerial team to improve the results.

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Preparing your informed recommendation or opinion

Rules: a rules case basically demands the application of quantitative

methodology using the available information. Commonly you prepare
different scenarios depending on the contingences presented in the
case.

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Case Discussion
It is imperative that you read the cases before class! If you do not read
the case, you would not be able to participate and miss an important part
of your formation. During classes, you will interact with your peers, and
expect that your viewpoints be challenged. Your objective is to persuade
your classmates with your arguments and to learn from them when they
come up with better ideas.

One final thought…

Enjoy your course! No matter what happen, you will not be fired.

To know more
Ellet, W. 2007. The Case Study Handbook, How to Read, Discuss, and
Write Persuasively About Cases. Harvard Business School Press,
Boston MA.

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