An Approach To Case Analysis

The Case Method 1
An Approach to Case Analysis

This brief contains two case analysis approaches: (I) a general approach and, (II)
an approach that focuses on the strategic aspects of case analysis.

OPTION I: A General Approach to Case Analysis
What is a Case Study?

A case study is a description of an actual administrative situation involving a decision to
be made or a problem to be solved. It can be a real situation that actually happened just as
described, or may included portions that have been disguised for reasons of privacy. Most
case studies are written in such a way that the reader takes the place of the manager
whose responsibility is to make decisions to help solve the problem. In almost all case
studies, a decision must be made, although that decision might simply be to leave the
situation as it is and do nothing.

The Case Method as a Learning Tool

The case method of analysis is a learning tool in which students and instructors
participate in direct discussion of case studies, as opposed to the lecture method, where
the instructor speaks and students listen and take notes. In the case method, students teach
themselves, with the instructor being an active guide, rather than just a talking head
delivering content. The focus is on students learning through their joint, co-operative
effort.

Assigned cases are first prepared by students, and this preparation forms the basis for
class discussion under the direction of the instructor. Students learn, often unconsciously,
how to evaluate a problem, how to make decisions, and how to orally argue a point of
view. Using this method, they also learn how to think in terms of the problems faced by
an administrator. In courses that use the case method extensively, a significant part of the
student's evaluation may rest with classroom participation in case discussions, with
another substantial portion resting on written case analyses. For these reasons, using the
case method tends to be very intensive for both students and instructor.

How to do a Case Study

While there is no one definitive "Case Method" or approach, there are common steps that
most approaches recommend be followed in tackling a case study. It is inevitable that
different instructors will tell you to do things differently, this is part of life and will also
be part of working for others. This variety is beneficial since it will show you different
ways of approaching decision making. What follows is intended to be a rather general
approach, portions of which have been taken from an excellent book entitled, Learning
with Cases, by Erskine, Leenders, & Mauffette-Leenders, published by the Richard Ivey
School of Business, The University of Western Ontario, 1997.

| Tunghai University – College of Management

The Case Method 2

Beforehand (usually a week before), you will get:

1. the case study,
2. (often) some guiding questions that will need to be answered, and
3. (sometimes) some reading assignments that have some relevance to the case
subject.

Your work in completing the case can be divided up into three components:

1. what you do to prepare before the class discussion,
2. what takes place in the class discussion of the case, and
3. anything required after the class discussion has taken place.

For maximum effectiveness, it is essential that you do all three components. Here are the
subcomponents, in order. We will discuss them in more detail shortly.

1. Before the class discussion:
1. Read the reading assignments (if any)
2. Use the Short Cycle Process to familiarize yourself with the case.
3. Use the Long Cycle Process to analyze the case
4. Usually there will be group meetings to discuss your ideas.
5. Write up the case (if required)
2. In the class discussion:
1. Someone will start the discussion, usually at the prompting of the
instructor.
2. Listen carefully and take notes. Pay close attention to assumptions. Insist
that they are clearly stated.
3. Take part in the discussion. Your contribution is important, and is likely a
part of your evaluation for the course.
3. After the class discussion:
1. Review ASAP after the class. Note what the key concept was and how the
case fits into the course.

Preparing A Case Study: A Two Step Process

It helps to have a system when sitting down to prepare a case study as the amount of
information and issues to be resolved can initially seem quite overwhelming. The
following is a good way to start.

Step 1: The Short Cycle Process

1. Quickly read the case. If it is a long case, at this stage you may want to read only
the first few and last paragraphs. You should then be able to


The Case Method 3

2. Answer the following questions:
1. Who is the decision maker in this case, and what is their position and
responsibilities?
2. What appears to be the issue (of concern, problem, challenge, or
opportunity) and its significance for the organization?
3. Why has the issue arisen and why is the decision maker involved now?
4. When does the decision maker have to decide, resolve, act or dispose of
the issue? What is the urgency to the situation?
3. Take a look at the Exhibits to see what numbers have been provided.
4. Review the case subtitles to see what areas are covered in more depth.
5. Review the case questions if they have been provided. This may give you some
clues are what the main issues are to be resolved.

You should now be familiar with what the case study is about, and are ready to begin the
process of analyzing it. You are not done yet! Many students mistakenly believe that
this is all the preparation needed for a class discussion of a case study. If this was the
extent of your preparation, your ability to contribute to the discussion would likely be
limited to the first one quarter of the class time allotted. You need to go further to prepare
the case, using the next step. One of the primary reasons for doing the short cycle process
is to give you an indication of how much work will need to be done to prepare the case
study properly.

Step 2: The Long Cycle Process

At this point, the task consists of two parts:

1. A detailed reading of the case, and then
2. Analyzing the case.

When you are doing the detailed reading of the case study, look for the following sections:

1. Opening paragraph: introduces the situation.
2. Background information: industry, organization, products, history, competition,
financial information, and anything else of significance.
3. Specific (functional) area of interest: marketing, finance, operations, human
resources, or integrated.
4. The specific problem or decision(s) to be made.
5. Alternatives open to the decision maker, which may or may not be stated in the
case.
6. Conclusion: sets up the task, any constraints or limitations, and the urgency of
the situation.

Most, but not all case studies will follow this format. The purpose here is to thoroughly
understand the situation and the decisions that will need to be made. Take your time,
make notes, and keep focused on your objectives.


The Case Method 4

Analyzing the case should take the following steps:

1. Defining the issue(s)
2. Analyzing the case data
3. Generating alternatives
4. Selecting decision criteria
5. Analyzing and evaluating alternatives
6. Selecting the preferred alternative
7. Developing an action/implementation plan

Defining the issue(s)/Problem Statement

The problem statement should be a clear, concise statement of exactly what needs to be
addressed. This is not easy to write! The work that you did in the short cycle process
answered the basic questions. Now it is time to decide what the main issues to be
addressed are going to be in much more detail. Asking yourself the following questions
may help:

1. What appears to be the problem(s) here?
2. How do I know that this is a problem? Note that by asking this question, you
will be helping to differentiate the symptoms of the problem from the problem
itself. Example: while declining sales or unhappy employees are a problem to
most companies, they are in fact, symptoms of underlying problems which need to
addressed.
3. What are the immediate issues that need to be addressed? This helps to
differentiate between issues that can be resolved within the context of the case,
and those that are bigger issues that needed to addressed at a another time
(preferably by someone else!).
4. Differentiate between importance and urgency for the issues identified. Some
issues may appear to be urgent, but upon closer examination are relatively
unimportant, while others may be far more important (relative to solving our
problem) than urgent. You want to deal with important issues in order of urgency
to keep focused on your objective. Important issues are those that have a
significant effect on:
1. profitability,
2. strategic direction of the company,
3. source of competitive advantage,
4. morale of the company's employees, and/or
5. customer satisfaction.

The problem statement may be framed as a question, e.g.: What should Joe do? Or How
can Mr. Smith improve market share? Usually the problem statement has to be re-written
several times during the analysis of a case, as you peel back the layers of symptoms or
causation.


The Case Method 5

Analyzing Case Data

In analyzing the case data, you are trying to answer the following:

1. Why or how did these issues arise? You are trying to determine cause and effect
for the problems identified. You cannot solve a problem that you cannot
determine the cause of! It may be helpful to think of the organization in question
as consisting of the following components:
1. Resources such as materials, equipment, or supplies, and
2. People who transform these resources using
3. Processes which create something of greater value.

Now, where are the problems being caused within this framework, and why?

2. Who is affected most by this issues? You are trying to identify who are the
relevant stakeholders to the situation, and who will be affected by the decisions to
be made.
3. What are the constraints and opportunities implicit to this situation? It is very
rare that resources are not a constraint, and allocations must be made on the
assumption that not enough will be available to please everyone.
4. What do the numbers tell you? You need to take a look at the numbers given in
the case study and make a judgment as to their relevance to the problem identified.
Not all numbers will be immediately useful or relevant, but you need to be careful
not to overlook anything. When deciding to analyze numbers, keep in mind why
you are doing it, and what you intend to do with the result. Use common sense
and comparisons to industry standards when making judgments as to the meaning
of your answers to avoid jumping to conclusions.

Generating Alternatives

This section deals with different ways in which the problem can be resolved. Typically,
there are many (the joke is at least three), and being creative at this stage helps. Things to
remember at this stage are:

1. Be realistic! While you might be able to find a dozen alternatives, keep in mind
that they should be realistic and fit within the constraints of the situation.
2. The alternatives should be mutually exclusive, that is, they cannot happen at the
same time.
3. Not making a decision pending further investigation is not an acceptable
decision for any case study that you will analyze. A manager can always delay
making a decision to gather more information, which is not managing at all! The
whole point to this exercise is to learn how to make good decisions, and having
imperfect information is normal for most business decisions, not the exception.


The Case Method 6

4. Doing nothing as in not changing your strategy can be a viable alternative;
provided it is being recommended for the correct reasons, as will be discussed
below.
5. Avoid the meat sandwich method of providing only two other clearly undesirable
alternatives to make one reasonable alternative look better by comparison. This
will be painfully obvious to the reader, and just shows laziness on your part in not
being able to come up with more than one decent alternative.
6. Keep in mind that any alternative chosen will need to be implemented at some
point, and if serious obstacles exist to successfully doing this, then you are the one
who will look bad for suggesting it.

Once the alternatives have been identified, a method of evaluating them and selecting the
most appropriate one needs to be used to arrive at a decision.

Key Decision Criteria (KDC)

A very important concept to understand, they answer the question of how you are going
to decide which alternative is the best one to choose. Other than choosing randomly, we
will always employ some criteria in making any decision. Think about the last time that
you make a purchase decision for an article of clothing. Why did you choose the article
that you did? The criteria that you may have used could have been:

1. fit
2. price
3. fashion
4. color
5. approval of friend/family
6. availability

Note that any one of these criteria could appropriately finish the sentence: the
brand/style that I choose to purchase must.... These criteria are also how you will define
or determine that a successful purchase decision has been made. For a business situation,
the key decision criteria are those things that are important to the organization making the
decision, and they will be used to evaluate the suitability of each alternative
recommended.

Key decision criteria should be:

1. Brief, preferably in point form, such as
1. improve (or at least maintain) profitability,
2. increase sales, market share, or return on investment,
3. maintain customer satisfaction, corporate image,
4. be consistent with the corporate mission or strategy,
5. within our present (or future) resources and capabilities,
6. within acceptable risk parameters,
7. ease or speed of implementation,


The Case Method 7

8. employee morale, safety, or turnover,
9. retain flexibility, and/or,
10. minimize environmental impact.

2. Measurable, at least to the point of comparison, such as alternative A will
improve profitability more that alternative B.
3. Be related to your problem statement, and alternatives. If you find that you are
talking about something else, that is a sign of a missing alternative or key decision
criteria, or a poorly formed problem statement.

Students tend to find the concept of key decision criteria very confusing, so you will
probably find that you re-write them several times as you analyze the case. They are
similar to constraints or limitations, but are used to evaluate alternatives.

Evaluation of Alternatives

If you have done the above properly, this should be straightforward. You measure the
alternatives against each key decision criteria. Often you can set up a simple table with
key decision criteria as columns and alternatives as rows, and write this section based on
the table. Each alternative must be compared to each criteria and its suitability ranked in
some way, such as met/not met, or in relation to the other alternatives, such as better than,
or highest. This will be important to selecting an alternative. Another method that can be
used is to list the advantages and disadvantages (pros/cons) of each alternative, and then
discussing the short and long term implications of choosing each. Note that this implies
that you have already predicted the most likely outcome of each of the alternatives. Some
students find it helpful to consider three different levels of outcome, such as best, worst,
and most likely, as another way of evaluating alternatives.

Recommendation

You must have one! Business people are decision-makers; this is your opportunity to
practice making decisions. Give a justification for your decision (use the KDC's). Check
to make sure that it is one (and only one) of your Alternatives and that it does resolve
what you defined as the Problem.

Structure of the Written Report

Different instructors will require different formats for case reports, but they should all
have roughly the same general content. For this course, the report should have the
following sections in this order:

1. Title page
2. Table of contents


The Case Method 8

3. Executive summary
4. Problem (Issue) statement
5. Data analysis
6. Key Decision Criteria
7. Alternatives analysis
8. Recommendations
9. Action and Implementation Plan
10. Exhibits

Notes on Written Reports:

Always remember that you will be judged by the quality of your work, which
includes your written work such as case study reports. Sloppy, dis-organized, poor
quality work will say more about you than you probably want said! To ensure the
quality of your written work, keep the following in mind when writing your report:

1. Proof-read your work! Not just on the screen while you write it, but the hard
copy after it is printed. Fix the errors before submitting.
2. Use spell checker to eliminate spelling errors
3. Use grammar checking to avoid common grammatical errors such as run on
sentences.
4. Note that restating of case facts is not included in the format of the case report,
nor is it considered part of analysis. Anyone reading your report will be familiar
with the case, and you need only to mention facts that are relevant to (and support)
your analysis or recommendation as you need them.
5. If you are going to include exhibits (particularly numbers) in your report, you will
need to refer to them within the body of your report, not just tack them on at the
end! This reference should be in the form of supporting conclusions that you are
making in your analysis. The reader should not have to guess why particular
exhibits have been included, nor what they mean. If you do not plan to refer to
them, then leave them out.
6. Write in a formal manner suitable for scholarly work, rather than a letter to a
friend.
7. Common sense and logical thinking can do wonders for your evaluation!
8. Proof-read your work! Have someone else read it too! (particularly if English is
not your first language) This second pair of eyes will give you an objective
opinion of how well your report holds together.

Source: FC Manning School of Business, Nova Scotia, Canada
(Adapted and edited for use by Steve Varela)

Taken from web on March 31, 2008:
http://plato.acadiau.ca/courses/busi/introbus/casemethod.html


The Case Method 9

OPTION II: A Strategy Orientation
Houghton Mifflin Publishers (General Business Analysis)
ANALYZING A CASE STUDY

As just mentioned, the purpose of the case study is to let you apply the concepts you've
learned when you analyze the issues facing a specific company. To analyze a case study,
therefore, you must examine closely the issues with which the company is confronted.
Most often you will need to read the case several times - once to grasp the overall picture
of what is happening to the company and then several times more to discover and grasp
the specific problems.

Generally, detailed analysis of a case study should include eight areas:

1. The history, development, and growth of the company over time
2. The identification of the company's internal strengths and weaknesses
3. The nature of the external environment surrounding the company
4. A SWOT analysis
5. The kind of corporate-level strategy pursued by the company
6. The nature of the company's business-level strategy
7. The company's structure and control systems and how they match its strategy
8. Recommendations

To analyze a case, you need to apply what you've learned to each of these areas. We offer
a summary of the steps you can take to analyze the case material for each of the eight
points we just noted.

1. Analyze the company's history, development, and growth. A convenient way
to investigate how a company's past strategy and structure affect it in the present
is to chart the critical incidents in its history - that is, the events that were the most
unusual or the most essential for its development into the company it is today.
Some of the events have to do with its founding, its initial products, how it makes
new-product market decisions, and how it developed and chose functional
competencies to pursue. Its entry into new businesses and shifts in its main lines
of business are also important milestones to consider.

2. Identify the company's internal strengths and weaknesses. Once the historical
profile is completed, you can begin the SWOT analysis. Use all the incidents you
have charted to develop an account of the company's strengths and weaknesses as
they have emerged historically. Examine each of the value creation functions of
the company, and identify the functions in which the company is currently strong
and currently weak. Some companies might be weak in marketing; some might be
strong in research and development. Make lists of these strengths and weaknesses.
The SWOT checklist gives examples of what might go in these lists.


The Case Method 10

3. Analyze the external environment. The next step is to identify environmental
opportunities and threats. Here you should apply all information you have learned
on industry and macroenvironments, to analyze the environment the company is
confronting. Of particular importance at the industry level is Porter's five forces
model and the stage of the life cycle model. Which factors in the macro
environment will appear salient depends on the specific company being analyzed.
However, use each factor in turn (for instance, demographic factors) to see
whether it is relevant for the company in question.

Having done this analysis, you will have generated both an analysis of the
company's environment and a list of opportunities and threats. The SWOT
checklist lists some common environmental opportunities and threats that you
may look for, but the list you generate will be specific to your company.

4. Evaluate the SWOT analysis. Having identified the company's external
opportunities and threats as well as its internal strengths and weaknesses, you
need to consider what your findings mean. That is, you need to balance strengths
and weaknesses against opportunities and threats. Is the company in an overall
strong competitive position? Can it continue to pursue its current business- or
corporate-level strategy profitably? What can the company do to turn weaknesses
into strengths and threats into opportunities? Can it develop new functional,
business, or corporate strategies to accomplish this change? Never merely
generate the SWOT analysis and then put it aside. Because it provides a succinct
summary of the company's condition, a good SWOT analysis is the key to all the
analyses that follow.

5. Analyze corporate-level strategy. To analyze a company's corporate-level
strategy, you first need to define the company's mission and goals. Sometimes the
mission and goals are stated explicitly in the case; at other times you will have to
infer them from available information. The information you need to collect to find
out the company's corporate strategy includes such factors as its line(s) of
business and the nature of its subsidiaries and acquisitions. It is important to
analyze the relationship among the company's businesses. Do they trade or
exchange resources? Are there gains to be achieved from synergy? Alternatively,
is the company just running a portfolio of investments? This analysis should
enable you to define the corporate strategy that the company is pursuing (for
example, related or unrelated diversification or a combination of both) and to
conclude whether the company operates in just one core business. Then, using
your SWOT analysis, debate the merits of this strategy. Is it appropriate, given the
environment the company is in? Could a change in corporate strategy provide the
company with new opportunities or transform a weakness into a strength? For
example, should the company diversify from its core business into new businesses?

Other issues should be considered as well. How and why has the company's
strategy changed over time? What is the claimed rationale for any changes? Often
it is a good idea to analyze the company's businesses or products to assess its


The Case Method 11

situation and identify which divisions contribute the most to or detract from its
competitive advantage. It is also useful to explore how the company has built its
portfolio over time. Did it acquire new businesses, or did it internally venture its
own? All these factors provide clues about the company and indicate ways of
improving its future performance.

6. Analyze business-level strategy. Once you know the company's corporate-level
strategy and have done the SWOT analysis, the next step is to identify the
company's business-level strategy. If the company is a single-business company,
its business-level strategy is identical to its corporate-level strategy. If the
company is in many businesses, each business will have its own business-level
strategy. You will need to identify the company's generic competitive strategy -
differentiation, low cost, or focus - and its investment strategy, given the
company's relative competitive position and the stage of the life cycle. The
company also may market different products using different business-level
strategies. For example, it may offer a low-cost product range and a line of
differentiated products. Be sure to give a full account of a company's business-
level strategy to show how it competes.

Identifying the functional strategies that a company pursues to build competitive
advantage through superior efficiency, quality, innovation, and customer
responsiveness and to achieve its business-level strategy is very important. The
SWOT analysis will have provided you with information on the company's
functional competencies. You should further investigate its production, marketing,
or research and development strategy to gain a picture of where the company is
going. For example, pursuing a low-cost or a differentiation strategy successfully
requires a very different set of competencies. Has the company developed the
right ones? If it has, how can it exploit them further? Can it pursue both a low-
cost and a differentiation strategy simultaneously?

The SWOT analysis is especially important at this point if the industry analysis,
particularly Porter's model, has revealed the threats to the company from the
environment. Can the company deal with these threats? How should it change its
business-level strategy to counter them? To evaluate the potential of a company's
business-level strategy, you must first perform a thorough SWOT analysis that
captures the essence of its problems.

Once you complete this analysis, you will have a full picture of the way the
company is operating and be in a position to evaluate the potential of its strategy.
Thus, you will be able to make recommendations concerning the pattern of its
future actions. However, first you need to consider strategy implementation, or
the way the company tries to achieve its strategy.

7. Analyze structure and control systems. The aim of this analysis is to identify
what structure and control systems the company is using to implement its strategy
and to evaluate whether that structure is the appropriate one for the company.


The Case Method 12

Different corporate and business strategies require different structures. For
example, does the company have the right level of vertical differentiation (for
instance, does it have the appropriate number of levels in the hierarchy or
decentralized control?) or horizontal differentiation (does it use a functional
structure when it should be using a product structure?)? Similarly, is the company
using the right integration or control systems to manage its operations? Are
managers being appropriately rewarded? Are the right rewards in place for
encouraging cooperation among divisions? These are all issues that should be
considered.

In some cases there will be little information on these issues, whereas in others
there will be a lot. Obviously, in analyzing each case you should gear the analysis
toward its most salient issues. For example, organizational conflict, power, and
politics will be important issues for some companies. Try to analyze why
problems in these areas are occurring. Do they occur because of bad strategy
formulation or because of bad strategy implementation?

Organizational change is an issue in many cases because the companies are
attempting to alter their strategies or structures to solve strategic problems. Thus,
as a part of the analysis, you might suggest an action plan that the company in
question could use to achieve its goals. For example, you might list in a logical
sequence the steps the company would need to follow to alter its business-level
strategy from differentiation to focus.

8. Make recommendations. The last part of the case analysis process involves
making recommendations based on your analysis. Obviously, the quality of your
recommendations is a direct result of the thoroughness with which you prepared
the case analysis. The work you put into the case analysis will be obvious to the
professor from the nature of your recommendations. Recommendations are
directed at solving whatever strategic problem the company is facing and at
increasing its future profitability. Your recommendations should be in line with
your analysis; that is, they should follow logically from the previous discussion.
For example, your recommendation generally will center on the specific ways of
changing functional, business, and corporate strategy and organizational structure
and control to improve business performance. The set of recommendations will be
specific to each case, and so it is difficult to discuss these recommendations here.
Such recommendations might include an increase in spending on specific research
and development projects, the divesting of certain businesses, a change from a
strategy of unrelated to related diversification, an increase in the level of
integration among divisions by using task forces and teams, or a move to a
different kind of structure to implement a new business-level strategy. Again,
make sure your recommendations are mutually consistent and are written in the
form of an action plan. The plan might contain a timetable that sequences the
actions for changing the company's strategy and a description of how changes at
the corporate level will necessitate changes at the business level and subsequently
at the functional level.


The Case Method 13

After following all these stages, you will have performed a thorough analysis of
the case and will be in a position to join in class discussion or present your ideas
to the class, depending on the format used by your professor. Remember that you
must tailor your analysis to suit the specific issue discussed in your case. In some
cases, you might completely omit one of the steps in the analysis because it is not
relevant to the situation you are considering. You must be sensitive to the needs
of the case and not apply the framework we have discussed in this section blindly.
The framework is meant only as a guide and not as an outline that you must use to
do a successful analysis.

Taken from web on March, 31 2008:

http://college.hmco.com/business/resources/casestudies/students/analyzing.htm

Source: Houghton Mifflin College Division Online Study Section, Business Resources
for Students.


The Case Method 14

Some Useful Models for Strategic Analysis:

Porter's Five Forces Model

(Developed by Michael E. Porter of the Harvard School of Business Administration)

This model focuses on five forces that shape competition within an industry.

1. The risk of new entry by potential competitors
2. The degree of rivalry among established companies within an industry
3. The bargaining power of buyers
4. The bargaining power of suppliers
5. The threat of substitute products

See: The Five Competitive Forces that Shape Strategy, 2004. Michael E. Porter, HBS Reprint R0801E

See also: What is Strategy, 1996. Michael E. Porter, HBS Product 4134

Industry Life Cycle Model

This model is a useful tool for analyzing the effects of an industry's evolution on
competitive forces. Using the industry life cycle model, we can identify five industry
environments, each linked to a distinct stage of an industry's evolution:

1. An embryonic industry environment
2. A growth industry environment
3. A shakeout industry environment
4. A mature industry environment
5. A declining industry environment

Feel free to use any combination of the methods illustrated above or your own.

Assembled/edited by Steve Varela, January, 2008
Individual credit cited.


An Approach To Case Analysis

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