Assignment Budget Planning and ControlBefore approaching this a.docx

Assignment: Budget Planning and Control
Before approaching this assignment, be sure that you have
watched the following video.
· Budgetary Planning featuring Babycakes *FULL VIDEO*.
(2016). YouTube.
Babycakes, a specialty bakery, is the company that will be
considered for all parts of your budget planning and control
report. For this assignment, you will develop a three to four (3 –
4) page paper in which you address the following.
1. Briefly discuss the ways a realistic budget will benefit the
owner of Babycakes versus having no budget at all. Be sure to
use Babycakes as the company and any specific product details
in your explanation.
2. Prepare a sales budget for the LA Babycakes store for the 4th
quarter of 2016. Present the number of units, sales price, and
total sales for each month; include October, November, and
December, and a total for the quarter. Use one-half of the
Valentine’s Day sales as the basis for a usual day in the new
quarter. Use 30 days for each month. Calculate the total sales
for each month for October, November, and December.
3. Create three (3) new products, one (1) for each of the three
(3) holiday seasons in the 4th quarter. Estimate the sales units,
sales price, and total sales for each month. Describe the
assumptions used to make these estimates. Include an overview
of the budget in the report, presenting the actual budget as an
appendix with all data and calculations. Add these amounts to
your sales budget.
4. The owner of Babycakes is interested in preparing a flexible
budget rather than the static budget she currently uses. She does
not understand why, when sales increase, her static budget often
shows an unfavorable variance. Explain how a flexible budget
will overcome this problem. Use the details of your newly
prepared budget for the 4th quarter of 2016 to address her
concern.

5. Imagine that Babycakes is facing a financial challenge that is
causing the actual amount of money that it spends to become
significantly more than its budgeted amount. Include a
discussion of your own unique cause of the overspending.
Explain the corrective actions needed to address these
challenges.
6. Integrate relevant information from at least three (3) quality
academic resources in this assignment. Note: Please do not use
your textbook as an academic resource. Also, Wikipedia and
other Websites that are unreliable do not qualify as academic
resources.
Your assignment must follow these formatting requirements.
· Be typed, double spaced, using Times New Roman font (size
12), with one-inch margins on all sides; references must follow
APA or school-specific format. Check with your professor for
any additional instructions.
· Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the
date. The cover page and the reference page are not included in
the required page length.
· An abstract is not required.
The specific course learning outcomes associated with this
assignment are:
· Evaluate management control systems and examine their
relationship with accounting and planning, including feedback
and non-ﬁnancialperformance measurements.
· Evaluate decision-making tools for capital investments,
budgeting, and budgeting controls.
· Analyze financial accounting tools and techniques that convert
financial accounting data into information for decision making.
· Use technology and information resources to research issues in
financial accounting for managers.
· Write clearly and concisely about financial accounting using
proper writing mechanics.

A Guide to Case Analysis
I keep six honest serving men (They taught me all I knew);
Their names are What and Why and When; And How and Where
and Who.
Rudyard Kipling
(
I
)n most courses in strategic management, students use cases
about actual companies to practice strategic analysis and to gain
some experience in the tasks of crafting and implementing
strategy. A case sets forth, in a factual manner, the events and
organizational circumstances surrounding a particular
managerial situation. It puts
readers at the scene of the action and familiarizes them with all
the relevant circumstances. A case on strategic management can
concern a whole industry, a single organization, or some part of
an organization; the organization involved can be either profit
seeking or not-for-profit. The essence of the student’s role in

case analysis is to diagnose and size up the situation described
in the case and then to recommend appropriate action steps.
Why Use Cases to Practice Strategic Management?
(
4
) (
STRATEGY:
Core
Concepts
and
Analytical
Approaches
)
(
5
) (
A
Guide
to
Case
Analysis
)

A student of business with tact Absorbed many answers he
lacked. But acquiring a job,
He said with a sob,
“How does one fit answer to fact?”
The foregoing limerick was used some years ago by Professor
Charles Gragg to characterize the plight of business students
who had no exposure to cases.1 The facts are that the mere act
of listening to lectures and sound advice about managing does
little for anyone’s management skills and that the accumulated
managerial wisdom cannot effectively be passed on by lectures
and assigned readings alone. If anything had been learned about
the practice of management,
it is that a storehouse of ready-made textbook answers does not
exist. Each managerial situation has unique aspects, requiring
its own diagnosis, judgment, and tailor-made actions. Cases
provide would-be managers with a valuable way to practice
wrestling with the actual problems of actual managers in actual
companies.
The case approach to strategic analysis is, first and foremost, an
exercise in learning by doing. Because cases provide you with
detailed information about conditions and problems of different
industries and companies, your task of analyzing company after
company and situation after situation has the twin benefit of
boosting your analytical skills and exposing you to the ways
companies and managers actually do things. Most college
students have limited managerial backgrounds and only
fragmented knowledge about companies and real-life strategic
situations. Cases help substitute for on-the-job experience by
(1) giving you broader exposure to a variety of industries,
organizations, and strategic problems; (2) forcing you to assume
a managerial role (as opposed to that of just an onlooker); (3)
providing a test of how to apply the tools and techniques of
strategic management; and

(4) asking you to come up with pragmatic managerial action
plans to deal with the issues at hand.
Objectives of Case Analysis
Using cases to learn about the practice of strategic management
is a powerful way for you to accomplish five things:2
1. Increase your understanding of what managers should and
should not do in guiding a business to success.
2. Build your skills in sizing up company resource strengths
and weaknesses and in conducting strategic analysis in a variety
of industries and competitive situations.
3. Get valuable practice in identifying strategic issues that need
to be addressed, evaluating strategic alternatives, and
formulating workable plans of action.
4. Enhance your sense of business judgment, as opposed to
uncritically accepting the authoritative crutch of the professor
or “back-of-the-book” answers.
5. Gaining in-depth exposure to different industries and
companies, thereby acquiring something close to actual business
experience.
If you understand that these are the objectives of case analysis,
you are less likely to be consumed with curiosity about “the
answer to the case.” Students who have grown comfortable with
and accustomed to textbook statements of fact and definitive
lecture notes are often frustrated when discussions about a case
do not produce concrete answers. Usually, case discussions
produce good arguments for more than one course of action.
Differences of opinion nearly always exist. Thus, should a class
discussion conclude without a strong, unambiguous consensus
on what do to, don’t grumble too much when you are not told

what the answer is or what the company actually did. Just
remember that in the business world answers don’t come in
conclusive black-and-white terms. There are nearly always
several feasible courses of action and approaches, each of which
may work out satisfactorily. Moreover, in the business world,
when one elects a particular course of action, there is no
peeking at the back of a book to see if you have chosen the best
thing to do and no one to turn to for a provably correct answer.
The best test of whether management action is “right’ or
“wrong” is results. If the results of an action turn out to be
“good,” the decision to take it may be presumed “right.” If not,
then the action chosen was “wrong” in the sense that it didn’t
work out
Hence, the important thing for you to understand about
analyzing cases is that the managerial exercise of identifying,
diagnosing, and recommending is aimed at building your skills
of business judgment. Discovering what the company actually
did is no more than frosting on the cake—the actions that
company managers actually took may or may not be “right” or
best (unless there is accompanying evidence that the results of
their actions were highly positive.
The point is this: The purpose of giving you a case assignment
is not to cause you to run to the library or surf the Internet to
discover what the company actually did but, rather, to enhance
your skills in sizing up situations and developing your
managerial judgment about what needs to be done and how to
do it. The aim of case analysis is for you to become actively
engaged in diagnosing the business issues and managerial
problems posed in the case, to propose workable solutions, and
to explain and defend your assessments—this is how cases
provide you with meaningful practice at being a manager.
Preparing a Case for Class Discussion
If this is your first experience with the case method, you may

have to reorient your study habits. Unlike lecture courses where
you can get by without preparing intensively for each class and
where you have latitude to work assigned readings and reviews
of lecture notes into your schedule, a case assignment requires
conscientious preparation before class. You will not get much
out of hearing the class discuss a case you haven’t read, and you
certainly won’t be able to contribute anything yourself to the
discussion. What you have got to do to get ready for class
discussion of a case is to study the case, reflect carefully on the
situation presented, and develop some reasoned thoughts. Your
goal in preparing the case should be to end up with what you
think is a sound, well-supported analysis of the situation and a
sound, defensible set of recommendations about which
managerial actions need to be taken.
To prepare a case for class discussion, we suggest the following
approach:
1. Skim the case rather quickly to get an overview of the
situation it presents. This quick overview should give you the
general flavor of the situation and indicate the kinds of issues
and problems that you will need to wrestle with. If your
instructor has provided you with study questions for the case,
now is the time to read them carefully.
2. Read the case thoroughly to digest the facts and
circumstances. On this reading, try to gain full command of the
situation presented in the case. Begin to develop some tentative
answers to the study questions your instructor has provided. If
your instructor has elected not to give you assignment
questions, then start forming your own picture of the overall
situation being described.
3. Carefully review all the information presented in the
exhibits. Often, there is an important story in the numbers

contained in the exhibits. Expect the information in the case
exhibits to be crucial enough to materially affect your diagnosis
of the situation.
4. Decide what the strategic issues are. Until you have
identified the strategic issues and problems in the case, you
don’t know what to analyze, which tools and analytical
techniques are called for, or otherwise how to proceed. At times
the strategic issues are clear—either being stated in the case or
else obvious from reading the case. At other times you will have
to dig them out from all the information given; if so, the study
questions will guide you.
5. Start your analysis of the issues with some number
crunching. A big majority of strategy cases call for some kind
of number crunching—calculating assorted financial ratios to
check out the company’s financial condition and recent
performance, calculating growth rates of sales or profits or unit
volume, checking out profit margins and the makeup of the cost
structure, and understanding whatever revenue-cost-profit
relationships are present. See Table 1 for a summary of key
financial ratios, how they are calculated, and what they show.
6. Apply the concepts and techniques of strategic analysis you
have been studying. Strategic analysis is not just a collection of
opinions; rather, it entails applying the concepts and analytical
tools described in Chapters 1 through 13 to cut beneath the
surface and produce sharp insight and understanding. Every
case assigned is strategy related and presents you with an
opportunity to usefully apply what you have learned. Your
instructor is looking for you to demonstrate that you know how
and when to use the material presented in the text chapters.
7. Check out conflicting opinions and make some judgments
about the validity of all the data and information provided.
Many times cases report views and contradictory opinions (after

all, people don’t always agree on things, and different people
see the same things in different ways). Forcing you to evaluate
the data and information presented in the case helps you
develop your powers of inference and judgment. Asking you to
resolve conflicting information “comes with the territory”
because a great many managerial situations entail opposing
points of view, conflicting trends, and sketchy information.
8. Support your diagnosis and opinions with reasons and
evidence. The most important things to prepare for are your
answers to the question “Why?” For instance, if after studying
the case you are of the opinion that the company’s managers are
doing a poor job, then it is your answer to “Why?” that
establishes just how good your analysis of the situation is. If
your instructor has provided you with specific study questions
for the case, by all means prepare answers that include all the
reasons and number-crunching evidence you can muster to
support your diagnosis. If you are using study questions
provided by the instructor, generate at least two pages of notes!
9. Develop an appropriate action plan and set of
recommendations. Diagnosis divorced from corrective action is
sterile. The test of a manager is always to convert sound
analysis into sound actions—actions that will produce the
desired results. Hence, the final and most telling step in
preparing a case is to develop an action agenda for management
that lays out a set of specific recommendations on what to do.
Bear in mind that proposing realistic, workable solutions is far
preferable to casually tossing out off-the-top-of-your-head
suggestions. Be prepared to argue why your recommendations
are more attractive than other courses of action that are open.
Table 1 Key Financial Ratios: How to Calculate Them and
What They Mean

Ratio
How Calculated
What It Shows
Profitability ratios
1. Gross profit margin
Sales revenues – Cost of goods sold Sales revenues
Shows the percentage of revenues available to cover operating
expenses and yield a profit. Higher is better and the trend
should be upward.
2. Operating profit margin (or return on sales)
Sales revenues – Operating expenses Sales
or Operating income Sales revenues
Shows the profitability of current operations without regard to
interest charges and income taxes. Higher is better and the trend
should be upward.
3. Net profit margin (or net return on sales)
Profits after taxes Sales revenues
Shows after tax profits per dollar of sales. Higher is better and
the trend should be upward.
4. Return on total assets
Profits after taxes + interest Total assets
A measure of the return on total assets earned by both lenders
and stockholders. Interest is added to after
tax profits to form the numerator since total assets are financed
by the lenders of borrowed funds as well as by stockholders.
Higher is better, and the trend should be upward.
5. Net return on total assets
Profits after taxes Total assets
A measure of the return earned by stockholders on the firm’s
total assets. Higher is better, and the trend should be upward.
6. Return on invested capital (ROIC)
Profits after taxes Long term debt + Total stockholders’
equity
Shows the return that both stockholders and the providers of
long-term loans are earning on the capital that has been invested
in the company. A higher ROIC reflects greater bottom-line

effectiveness in the use of long-term capital, and the trend in
ROIC should be upward.
7. Return on stockholders’ equity (ROE)
Profits after taxes Total stockholders’ equity
Shows the return stockholders are earning on their investment in
the enterprise. A return in the 12% to 15% range is “average,”
and the trend should be upward.
8. Earnings per share (EPS)
Profits after taxes Number of shares of common stock
outstanding
Shows the earnings for each share of common stock
outstanding. The trend in EPS should be upward, and the bigger
the annual percentage gains, the better.
Liquidity Ratios
1. Current ratio
Current assets Current liabilities
Shows a firm’s ability to pay current liabilities using assets that
can be converted to cash in the near term. Ratio should
definitely be higher than 1.0; ratios of 2 or higher are better
still.
2. Working capital
Current assets – Current liabilities
Bigger amounts are better because the company has more
internal funds available to (1) pay its current liabilities on a
timely basis and (2) finance inventory expansion, additional
accounts receivable, and a larger base of operations without
resorting to borrowing or raising more equity capital.
Leverage Ratios
1. Total debt-to-assets ratio
Total debt Total assets
Measures the extent to which borrowed funds (both short-term
loans and long-term debt) have been used to finance the firm’s
operations. A low fraction or ratio is better—a high fraction
indicates overuse of debt and greater risk of bankruptcy.
continued

6 STRATEGY: Core Concepts and Analytical Approaches
Table 1 continued
Ratio
How Calculated
What It Shows
Leverage Ratios continued
2. Long-term debt-to-capital ratio
Long-term debt Long-term debt +
total stockholders’ equity
An important measure of creditworthiness and balance sheet
strength. It indicates the percentage of capital investment in the
enterprise that has been financed by both long-term lenders and
stockholders. A ratio below
0.25 is usually preferable since monies invested by stockholders
account for 75% or more of the company’s total capital. The
lower the ratio, the greater the capacity to borrow additional
funds. A debt-to capital ratio above
0.50 and certainly above 0.75 indicates a heavy and perhaps
excessive reliance on long-term borrowing, lower
creditworthiness, and weak balance sheet strength.
3. Debt-to-equity ratio
Total debt
Total stockholders’ equity
Shows the balance between debt (funds borrowed both short-
term and long-term) and the amount that stockholders have
invested in the enterprise. A low ratio indicates greater
capacity to borrow additional funds if needed.
4. Times-interest-earned (or coverage) ratio
Operating income Interest expenses
Measures the ability to pay annual interest charges. Lenders
usually insist on a minimum ratio of 2.0, but ratios above 3.0
signal better creditworthiness.
Activity Ratios
1. Days of inventory
Inventory

Cost of goods sold ÷ 365
Measures inventory management efficiency. Fewer days of
inventory are usually better.
2. Inventory turnover
Cost of goods sold Inventory
Measures the number of inventory turns per year. Higher is
better.
3. Average collection period
Accounts receivable Total sales revenues ÷ 365
or Accounts receivable Average daily sales
Indicates the average length of time the firm must wait after
making a sale to receive cash payment. A shorter collection
time is better.
Other Important Measures of Financial Performance
1. Dividend yield on common stock
Annual dividends per share Current market price per share
A measure of the return that shareholders receive in the form of
dividends. A “typical” dividend yield is 2-3%.
The dividend yield for fast-growth companies is often below 1%
(maybe even 0); the dividend yield for slow- growth companies
can run 4-5%.
2. Price-earnings ratio
Current market price per share Earnings per share
P-e ratios above 20 indicate strong investor confidence in a
firm’s outlook and earnings growth; firms whose future earnings
are at risk or likely to grow slowly typically have ratios below
12.
3. Dividend payout ratio
Annual dividends per share Earnings per share
Indicates the percentage of after-tax profits paid out as
dividends.
4. Internal cash flow
After tax profits + Depreciation
A quick and rough estimate of the cash a company’s business is
generating after payment of operating expenses, interest, and
taxes. Such amounts can be used for dividend payments or

funding capital expenditures.
5. Free cash flow
After tax profits + Depreciation – Capital Expenditures –
Dividends
A quick and rough estimate of the cash a company’s business is
generating after payment of operating expenses, interest, taxes,
dividends, and desirable reinvestments in the business. The
larger a company’s free cash flow, the greater is its ability to
internally fund new strategic initiatives, repay debt, make new
acquisitions, repurchase shares of stock, or increase dividend
payments.
As long as you are conscientious in preparing your analysis and
recommendations, and have ample reasons, evidence, and
arguments to support your views, you shouldn’t fret unduly
about whether what you’ve prepared is “the right answer” to the
case. In case analysis there is rarely just one right approach or
set of recommendations. Managing companies and crafting and
executing strategies are not such exact sciences that there exists
a single provably correct analysis and action plan for each
strategic situation. Of course, some analyses and action plans
are better than others; but, in truth, there’s nearly always more
than one good way to analyze a situation and more than one
good plan of action.
Participating in Class Discussion of a Case
Classroom discussions of cases are sharply different from
attending a lecture class. In a case class students do most of the
talking. The instructor’s role is to solicit student participation,
keep the discussion on track, ask “Why?” often, offer
alternative views, play the devil’s advocate (if no students jump
in to offer opposing views), and otherwise lead the discussion.
The students in the class carry the burden for analyzing the
situation and for being prepared to present and defend their

diagnoses and recommendations. Expect a classroom
environment, therefore, that calls for your size-up of the
situation, your analysis, what actions you would take, and why
you would take them. Do not be dismayed if, as the class
discussion unfolds, some insightful things are said by your
fellow classmates that you did not think of. It is normal for
views and analyses to differ and for the comments of others in
the class to expand your own thinking about the case. As the old
adage goes, “Two heads are better than one.” So it is to be
expected that the class as a whole will do a more penetrating
and searching job of case analysis than will any one person
working alone. This is the power of group effort, and its virtues
are that it will help you see more analytical applications, let you
test your analyses and judgments against those of your peers,
and force you to wrestle with differences of opinion and
approaches.
To orient you to the classroom environment on the days a case
discussion is scheduled, we compiled the following list of
things to expect
1. Expect the instructor to assume the role of extensive
questioner and listener.
2. Expect students to do most of the talking. The case method
enlists a maximum of individual participation in class
discussion. It is not enough to be present as a silent observer; if
every student took this approach, there would be no discussion.
(Thus, expect a portion of your grade to be based on your
participation in case discussions.)
3. Be prepared for the instructor to probe for reasons and
supporting analysis.
4. Expect and tolerate challenges to the views expressed. All
students have to be willing to submit their conclusions for

scrutiny and rebuttal. Each student needs to learn to state his or
her views without fear of disapproval and to overcome the
hesitation of speaking out. Learning respect for the views and
approaches of others is an integral part of case analysis
exercises. But there are times when it is OK to swim against the
tide of majority opinion. In the practice of management, there is
always room for originality and unorthodox approaches. So
while discussion of a case is a group process, there is no
compulsion for you or anyone else to cave in and conform to
group opinions and group consensus.
5. Don’t be surprised if you change your mind about some
things as the discussion unfolds. Be alert to how these changes
affect your analysis and recommendations (in the event you get
called on).
6. Expect to learn a lot in class as the discussion of a case
progresses; furthermore, you will find that the cases build on
one another—what you learn in one case helps prepare you for
the next case discussion.
(
8
) (
STRATEGY:
Core
Concepts
and
Analytical
Approaches
)
(

9
) (
A
Guide
to
Case
Analysis
)
There are several things you can do on your own to be good and
look good as a participant in class discussions:
Although you should do your own independent work and
independent thinking, don’t hesitate before (and after) class to
discuss the case with other students. In real life, managers often
discuss the company’s problems and situation with other people
to refine their own thinking.
n In participating in the discussion, make a conscious effort
to contribute, rather than just talk. There is a big difference
between saying something that builds the discussion and
offering a long-winded, off-the-cuff remark that leaves the class
wondering what the point was.
n Avoid the use of “I think,” “I believe,” and “I feel”;
instead, say, “My analysis shows —” and “The
company should do
.because

.” Always give supporting reasons and evidence for
your views; then your instructor won’t have to ask you “Why?”
every time you make a comment.
n In making your points, assume that everyone has read the
case and knows what it says; avoid reciting and rehashing
information in the case—instead, use the data and information
to explain your assessment of the situation and to support your
position.
n Bring the printouts of the work you’ve done on Case-
TuTor or the notes you’ve prepared (usually two or three pages’
worth) to class and rely on them extensively when you speak.
There’s no way you can remember everything off the top of
your head—especially the results of your number crunching. To
reel off the numbers or to present all five reasons why, instead
of one, you will need good notes. When you have prepared
thoughtful answers to the study questions and use them as the
basis for your comments, everybody in the room will know you
are well prepared, and your contribution to the case discussion
will stand out.
Preparing a Written Case Analysis
Preparing a written case analysis is much like preparing a case
for class discussion, except that your analysis must be more
complete and put in report form. Unfortunately, though, there is
no ironclad procedure for doing a written case analysis. All we
can offer are some general guidelines and words of wisdom—
this is because company situations and management problems
are so diverse that no one mechanical way to approach a written
case assignment always works.
Your instructor may assign you a specific topic around which to
prepare your written report. Or, alternatively, you may be asked
to do a comprehensive written case analysis, where the

expectation is that you will (1) identify all the pertinent issues
that management needs to address, (2) perform whatever
analysis and evaluation is appropriate, and (3) propose an action
plan and set of recommendations addressing the issues you have
identified. In going through the exercise of identify, evaluate,
and recommend, keep the following pointers in mind.3
Identification It is essential early on in your paper that you
provide a sharply focused diagnosis of strategic issues and key
problems and that you demonstrate a good grasp of the
company’s present situation. Make sure you can identify the
firm’s strategy (use the concepts and tools in Chapters 1–5 as
diagnostic aids) and that you can pinpoint whatever strategy
implementation issues may exist (again, consult the material in
Chapters 9–11 for diagnostic help). Consult the key points
provided at the end of each chapter for further diagnostic
suggestions. Consider beginning your paper with an overview of
the company’s situation, its strategy, and the significant
problems and issues that confront management. State
problems/issues as clearly and precisely as you can. Unless it is
necessary to do so for emphasis, avoid recounting facts and
history about the company (assume your professor has read the
case and is familiar with the organization).
Analysis and Evaluation This is usually the hardest part of the
report. Analysis is hard work! Check out the firm’s financial
ratios, its profit margins and rates of return, and its capital
structure, and decide how strong the firm is financially. Table 1
contains a summary of various financial ratios and how they are
calculated. Use it to assist in your financial diagnosis.
Similarly, look at marketing, production, managerial
competence, and other factors underlying the organization’s
strategic successes and failures. Decide whether the firm has
valuable resource strengths and competencies and, if so,
whether it is capitalizing on them.

Check to see if the firm’s strategy is producing satisfactory
results and determine the reasons why or why not. Probe the
nature and strength of the competitive forces confronting the
company. Decide whether and why the firm’s competitive
position is getting stronger or weaker. Use the tools and
concepts you have learned about to perform whatever analysis
and evaluation is appropriate.
In writing your analysis and evaluation, bear in mind four
things:
1. You are obliged to offer analysis and evidence to back up
your conclusions. Do not rely on unsupported opinions, over-
generalizations, and platitudes as a substitute for tight, logical
argument backed up with facts and figures.
2. If your analysis involves some important quantitative
calculations, use tables and charts to present the calculations
clearly and efficiently. Don’t just tack the exhibits on at the end
of your report and let the reader figure out what they mean and
why they were included. Instead, in the body of your report cite
some of the key numbers, highlight the conclusions to be drawn
from the exhibits, and refer the reader to your charts and
exhibits for more details.
3. Demonstrate that you have command of the strategic concepts
and analytical tools to which you have been exposed. Use them
in your report.
4. Your interpretation of the evidence should be reasonable and
objective. Be wary of preparing a one-sided argument that omits
all aspects not favorable to your conclusions. Likewise, try not
to exaggerate or overdramatize. Endeavor to inject balance into
your analysis and to avoid emotional rhetoric. Strike phrases
such as “I think,” “I feel,” and “I believe” when you edit your

first draft and write in “My analysis shows,” instead.
Recommendations The final section of the written case analysis
should consist of a set of definite recommendations and a plan
of action. Your set of recommendations should address all of
the problems/issues you identified and analyzed. If the
recommendations come as a surprise or do not follow logically
from the analysis, the effect is to weaken greatly your
suggestions of what to do. Obviously, your recommendations
for actions should offer a reasonable prospect of success. High-
risk, bet-the-company recommendations should be made with
caution. State how your recommendations will solve the
problems you identified. Be sure the company is financially
able to carry out what you recommend; also check to see if your
recommendations are workable in terms of acceptance by the
persons involved, the organization’s competence to implement
them, and prevailing market and environmental constraints. Try
not to hedge or weasel on the actions you believe should be
taken.
By all means state your recommendations in sufficient detail to
be meaningful—get down to some definite nitty-gritty specifics.
Avoid such unhelpful statements as “the organization should do
more planning” or “the company should be more aggressive in
marketing its product.” For instance, if you determine that “the
firm should improve its market position,” then you need to set
forth exactly how you think this should be done. Offer a
definite agenda for action, stipulating a timetable and sequence
for initiating actions, indicating priorities, and suggesting who
should be responsible for doing what.
In proposing an action plan, remember there is a great deal of
difference between, on the one hand, being responsible for a
decision that may be costly if it proves in error and, on the
other hand, casually suggesting courses of action that might be
taken when you do not have to bear the responsibility for any of

the consequences.
A good rule to follow in making your recommendations is:
Avoid recommending anything you would not yourself be
willing to do if you were in management’s shoes. The
importance of learning to develop good managerial judgment is
indicated by the fact that, even though the same information and
operating data may be available to every manager or executive
in an organization, the quality of the judgments about what the
information means and which actions need to be taken does vary
from person to person.4
It goes without saying that your report should be well organized
and well written. Great ideas amount to little unless others can
be convinced of their merit—this takes tight logic, the
presentation of convincing evidence, and persuasively written
arguments.
Preparing an Oral Presentation
During the course of your business career it is very likely that
you will be called upon to prepare and give a number of oral
presentations. For this reason, it is common in courses of this
nature to assign cases for oral presentation to the whole class.
Such assignments give you an opportunity to hone your
presentation skills.
The preparation of an oral presentation has much in common
with that of a written case analysis. Both require identification
of the strategic issues and problems confronting the company,
analysis of industry conditions and the company’s situation, and
the development of a thorough, well-thought out action plan.
The substance of your analysis and quality of your
recommendations in an oral presentation should be no different
than in a written report. As with a written assignment, you’ll
need to demonstrate command of the relevant strategic concepts

and tools of analysis and your recommendations should contain
sufficient detail to provide clear direction for management. The
main difference between an oral presentation and a written case
is in the delivery format. Oral presentations rely principally on
verbalizing your diagnosis, analysis, and recommendations and
visually enhancing and supporting your oral discussion with
colorful, snappy slides (usually created on Microsoft’s
PowerPoint software).
Typically, oral presentations involve group assignments. Your
instructor will provide the details of the assignment—how work
should be delegated among the group members and how the
presentation should be conducted. Some instructors prefer that
presentations begin with issue identification, followed by
analysis of the industry and company situation analysis, and
conclude with a recommended action plan to improve company
performance. Other instructors prefer that the presenters assume
that the class has a good understanding of the external industry
environment and the company’s competitive position and expect
the presentation to be strongly focused on the group’s
recommended action plan and supporting analysis and
arguments. The latter approach requires cutting straight to the
heart of the case and supporting each recommendation with
detailed analysis and persuasive reasoning. Still other
instructors may give you the latitude to structure your
presentation however you and your group members see fit.
Regardless of the style preferred by your instructor, you should
take great care in preparing for the presentation. A good set of
slides with good content and good visual appeal is essential to a
first-rate presentation. Take some care to choose a nice slide
design, font size and style, and color scheme. We suggest
including slides covering each of the following areas:
n An opening slide covering the “title” of the presentation
and names of the presenters.

n A slide showing an outline of the presentation (perhaps
with presenters’ names by each topic).
n One or more slides showing the key problems and strategic
issues that management needs to address.
n A series of slides covering your analysis of the company’s
situation.
n A series of slides containing your recommendations and
the supporting arguments and reasoning for each
recommendation—one slide for each recommendation and the
associated reasoning has a lot of merit.
(
14
) (
STRATEGY:
Core
Concepts
and
Analytical
Approaches
)
(
13
) (
A
Guide

to
Case
Analysis
)
You and your team members should carefully plan and rehearse
your slide show to maximize impact and minimize distractions.
The slide show should include all of the pizzazz necessary to
garner the attention of the audience, but not so much that it
distracts from the content of what group members are saying to
the class. You should remember that the role of slides is to help
you communicate your points to the audience. Too many
graphics, images, colors, and transitions may divert the
audience’s attention from what is being said or disrupt the flow
of the presentation. Keep in mind that visually dazzling slides
rarely hide a shallow or superficial or otherwise flawed case
analysis from a perceptive audience. Most instructors will tell
you that first-rate slides will definitely enhance a well-delivered
presentation but that impressive visual aids, if accompanied by
weak analysis and poor oral delivery, still adds up to a
substandard presentation.
Researching Companies and Industries via the Internet and
Online Data Services
Very likely, there will be occasions when you need to get
additional information about some of the assigned cases,
perhaps because your instructor has asked you to do further
research on the industry or company or because you are simply
curious about what has happened to the company since the case
was written. These days it is relatively easy to run down recent
industry developments and to find out whether a company’s
strategic and financial situation has improved, deteriorated, or
changed little since the conclusion of the case. The amount of

information about companies and industries available on the
Internet and through online data services is formidable and
expanding rapidly.
It is a fairly simple matter to go to company Web sites, click on
the investor information offerings and press release files, and
get quickly to useful information. Most company Web sites
allow you to view or print the company’s quarterly and annual
reports, its 10K and 10Q filings with the Securities and
Exchange Commission, and various company press releases of
interest. Frequently, a company’s Web site will also provide
information about its mission and vision statements, values
statements, codes of ethics, and strategy information, as well as
charts of the company’s stock price. The company’s recent press
releases typically contain reliable information about what of
interest has been going on—new product introductions, recent
alliances and partnership agreements, recent acquisitions,
summaries of the latest financial results, tidbits about the
company’s strategy, guidance about future revenues and
earnings, and other late-breaking company developments. Some
company Web pages also include links to the home pages of
industry trade associations where you can find information
about industry size, growth, recent industry news, statistical
trends, and future outlook. Thus, an early step in researching a
company on the Internet is always to go to its Web site and see
what’s available.
Online Data Services
Lexis-Nexis, Bloomberg Financial News Services, and other on-
line subscription services available in many university libraries
provide access to a wide array of business reference material.
For example, the web-based Lexis-NexisAcademic Universe
contains business news articles from general news sources,
business publications, and industry trade publications.

Broadcast transcripts from financial news programs are also
available through Lexis-Nexis, as are full-text 10-Ks, 10-Qs,
annual reports, and company profiles for more than 11,000 U.S.
and international companies. Your business librarian should be
able to direct you to the resources available through your
library that will aid you in your research.
Public and Subscription Websites with Good Information
Plainly, you can use a search engine such as Google or Yahoo!
or MSN to find the latest news on a company or articles written
by reporters that have appeared in the business media. These
can be very valuable in running down information about recent
company developments. However, keep in mind that the
information retrieved by a search engine is “unfiltered” and may
include sources that are not reliable or that contain inaccurate
or misleading information. Be wary of information provided by
authors who are unaffiliated with reputable
organizations or publications and articles that were published in
off-beat sources or on Web sites with an agenda. Be especially
careful in relying on the accuracy of information you find
posted on various bulletin boards. Articles covering a company
or issue should be copyrighted or published by a reputable
source. If you are turning in a paper containing information
gathered from the Internet, you should cite your sources
(providing the Internet address and date visited); it is also wise
to print Web pages for your research file (some Web pages are
updated frequently).
The Wall Street Journal, Bloomberg Businessweek, Forbes,
Barron’s, and Fortune are all good sources of articles on
companies. The online edition of The Wall Street Journal
contains the same information that is available daily in its print

version of the paper, but the WSJ Web site also maintains a
searchable database of all The Wall Street Journal articles
published during the past few years. Fortune and Bloomberg
Businessweek also make the content of the most current issue
available online to subscribers as well as provide archives
sections that allow you to search for articles related to a
particular keyword that were published during the past few
years.
The following publications and Web sites are particularly good
sources of company and industry information:
Securities and Exchange Commission EDGAR
http://www.sec.gov/edgar/ database (contains company 10-
Ks, 10-Qs, etc.) searchedgar/companysearch
Google Finance http://finance.google.com
CNN Money http://money.cnn.com
Hoover’s Online http://hoovers.com
The Wall Street Journal Interactive Edition www.wsj.com
Bloomberg Businessweek www.businessweek.com and
www.bloomberg.com
Fortune www.fortune.com
MSN Money Centralhttp://moneycentral.msn.com
Yahoo! Finance http://finance.yahoo.com/
Some of these Internet sources require subscriptions in order to
access their entire databases.
You should always explore the investor relations section of
every public company’s Web site; in today’s world, these Web
sites typically have a wealth of information concerning a
company’s mission, core values, performance targets, strategy,
recent financial performance, and latest developments (as
described in company press releases).

Learning Comes Quickly With a modest investment of time, you
will learn how to use Internet sources and search engines to run
down information on companies and industries quickly and
efficiently. And it is a skill that will serve you well into the
future. Once you become familiar with the data available at the
different Web sites mentioned above and with using a search
engine, you will know where to go to look for the particular
information that you want. Search engines nearly always turn up
too many information sources that match your request rather
than two few; the trick is to learn to zero in on those most
relevant to what you are looking for. Like most things, once you
get a little experience under your belt on how to do company
and industry research on the Internet, you will find that you can
readily find the information you need.
The Ten Commandments of Case Analysis
As a way of summarizing our suggestions about how to
approach the task of case analysis, we have compiled what we
like to call “The Ten Commandments of Case Analysis.” They
are shown in Table 2. If you observe all or even most of these
commandments faithfully as you prepare a case either for class
discussion or for a written report, your chances of doing a good
job on the assigned cases will be much improved. Hang in there,
give it your best shot, and have some fun exploring what the
real world of strategic management is all about.
Table 2 The Ten Commandments of Case Analysis
To be observed in written reports and oral presentations, and
while participating in class discussions.
1. Go through the case twice, once for a quick overview and
once to gain full command of the facts; then take care to
explore the information in every one of the case exhibits.
2. Make a complete list of the problems and issues that the
company’s management needs to address.

3. Be thorough in your analysis of the company’s situation
(make a minimum of 1 to 2 pages of notes detailing your
diagnosis).
4. Look for opportunities to apply the concepts and analytical
tools in the text chapters—all of the cases in the book have very
definite ties to the material in one or more of the text
chapters!!!!
5. Do enough number crunching to discover the story told by the
data presented in the case. (To help you comply with this
commandment, consult Table 1 in this section to guide your
probing of a company’s financial condition and financial
performance.)
6. Support any and all off-the-cuff opinions with well-reasoned
arguments and numerical evidence; don’t stop until you can
purge “I think” and “I feel” from your assessment and, instead,
are able to rely completely on “My analysis shows.”
7. Prioritize your recommendations and make sure they can be
carried out in an acceptable time frame with the available
resources.
8. Support each recommendation with persuasive argument and
reasons as to why it makes sense and should result in improved
company performance.
9. Review your recommended action plan to see if it addresses
all of the problems and issues you identified—any set of
recommendations that does not address all of the issues and
problems you identified is incomplete and insufficient.
10. Avoid recommending any course of action that could have
disastrous consequences if it doesn’t work out as planned;
therefore, be as alert to the downside risks of your
recommendations as you are to their upside potential and
appeal.

EndnotEs
1 Charles I. Gragg, “Because Wisdom Can’t Be Told,” in The
Case Method at the Harvard Business School, ed. M. P. McNair
(New York: McGraw-Hill, 1954), p. 11.
2 Ibid., pp. 12–14; and D. R. Schoen and Philip A. Sprague,
“What Is the Case Method?” in The Case Method at the Harvard
Business School, ed. M. P. McNair, pp. 78–79.
3 For some additional ideas and viewpoints, you may wish to
consult Thomas J. Raymond, “Written Analysis of Cases,” in
The Case Method at the Harvard Business School, ed. M. P.
McNair, pp. 139–63. Raymond’s article includes an actual case,
a sample analysis of the case, and a sample of a student’s
written report on the case.
4 Gragg, “Because Wisdom Can’t Be Told,” p. 10.

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