Case Analysis – Some Guidance

Case Analysis – Often puts you in the position of CEO or Strategic Manager. You get to see the “big
picture” in ways that you are unlikely to see when you start your career. The benefit of this is that it
gives you insight into the problems that face organizations and how executives deal with these
problems.

With any case analysis, you will want to use the AFI (Analysis, Formulation, and Implementation)
Strategy Framework. Analyze the situation and diagnose the key problem or opportunity, Formulate
options (identifying the best alternative), and then create an Implementation plan. When considering
your plan, think about the near-term as well as the longer term. Also consider how your plan will impact
key stakeholders as well as competitors (and how they might respond).

Cases are generally informative but they do not always provide you with a complete picture. Think
about the tools in our strategic management toolkit that are useful given what you are presented in the
case.
 PESTEL Analysis (Political, Economic, Sociocultural, Technological, Ecological, Legal Forces). Are
any of these things significant to the case? How are any of these affecting firms and what is the
impact for the future (how might it affect our implementation plan?)?
 Porter’s 5-Forces Analysis (Threat of New Entrants, Supplier Power, Buyer Power, Threat of
Substitutes, Rivalry). How are these affecting the industry? What is the expected level of
profitability in the industry based on these forces?
 Internal Analysis (this will be covered in chapter 4). What resources and capabilities and core
competencies does the organization possess? How can these be leveraged?
 Business Model and value chain – how does the company create economic value? What are the
inputs, transformation of inputs, and outputs in the business? What does the company pay for
the inputs and what does it get from its outputs?
 Business-level strategy (how does a company position itself in the industry), Corporate-level
strategy (diversification – what industries is the company in), and international strategy (where
and how does it compete).

After using the tools that are applicable you should consider the company’s performance vis-à-vis
competitors and/or the industry average. Ratio analysis (when data is available) is useful. Make sure
that any ratios (profitability, activity, leverage, liquidity, and market ratios) are germane to the situation.
For some companies such as retailers, inventory management is critical so ratios like inventory turnover
and days average inventory are important as well as gross margin. A retailer with weakening margins
and slower turnover may be facing a problem with the product becoming less desired by customers.

After analyzing the situation, you want to identify the key opportunities or threats that are facing the
organization – this is the strategic challenge. Some threats must be dealt with immediately. Others can
become chronic problems if they are not dealt with. With opportunities, it is sometimes difficult to
recognize what will happen if a company were to pursue an opportunity. For example, sometimes
companies have engaged in unwise expansion (of the product line or geographically) that leads to major
problems.

When you identify the “best” solution, you will need to consider an implementation plan. An
implementation plan describes who does what and when. Think about the costs to implement the plan
and how this will be funded. Also think about the potential outcomes (to key stakeholders and
competitors’ responses).

Remember, in a case discussion, there are no “right” or “wrong” answers. You are best served by
avoiding opinion and “gut” decisions. Instead you want to back up your recommendations with sound
analysis.