tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-1 Cases in Strategic Management tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-2 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 In 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? 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 above 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 truth is that the mere act of listening to lectures and sound advice about managing does little for anyone's management skills. 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 readymade 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 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 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. C-2 tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-3 A Guide to Case Analysis 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-andwhite 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 only valid test of management action 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 a student to understand in case analysis is that the managerial exercise of identifying, diagnosing, and recommending builds your skills; discovering the right answer or finding out what actually happened is no more than frosting on the cake. Even if you learn what the company did, you can't conclude that it was necessarily right or best. All that can be said is \"Here is what they did . . . \" 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. C-3 tho1978X_pt2.qxd C-4 10/18/2000 11:26 AM Page C-4 Cases in Strategic Management 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 assessmentsthis 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 in which you can get by without preparing intensively for each class and 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. To get ready for class discussion of a case, you must study the case, reflect carefully on the situation presented, and develop some reasoned thoughts. Your goal should be to end up with a sound, well-supported analysis of the situation and a sound, defensible set of recommendations. The Case-TUTOR software package that accompanies this edition will assist you in preparing the casesit contains a set of study questions for each case and step-by-step tutorials to walk you through the process of analyzing and developing reasonable recommendations. 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 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 from your instructor or in the CaseTUTOR software package, which you can download at the Web site for the text. If your instructor has elected not to give you assignment questions or has not recommended regular use of the Case-TUTOR, 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 clearthey are either stated directly in the case or easily inferred from it. At other times you will have to dig out the issues from all the information tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-5 A Guide to Case Analysis 5. 6. 7. 8. 9. given; if so, the study questions and the case preparation exercises provided in the Case-TUTOR software will guide you. Start your analysis of the issues with some number crunching. A big majority of strategy cases call for some kind of number crunchingcalculating 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 on the next page for a summary of key financial ratios, how they are calculated, and what they show. If you are using Case-TUTOR, some of the number crunching has been computerized and you'll spend most of your time interpreting the growth rates, financial ratios, and other calculations provided. 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. The case preparation guides on Case-TUTOR will point you toward the proper analytical tools needed to analyze the case situation. 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. Resolving conflicting information comes with the territory because a great many managerial situations entail opposing points of view, conflicting trends, and sketchy information. Support your diagnosis and opinions with reasons and evidence. Most important is to prepare 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 do you think so?\" that establishes just how good your analysis of the situation is. If your instructor has provided you with specific study questions for the case or if you are using the case preparation guides on Case-TUTOR, by all means prepare answers that include all the reasons and number-crunching evidence you can muster to support your diagnosis. Work through the case preparation exercises on Case-TUTOR conscientiously, or, if you are using study questions provided by the instructor, generate at least two pages of notes! 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 actionsactions 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. Bear in mind that proposing realistic, workable solutions is far preferable to casually tossing out top-of-the-head suggestions. Be prepared to explain why your recommendations C-5 tho1978X_pt2.qxd 10/18/2000 C-6 11:26 AM Page C-6 Cases in Strategic Management table 1 Key Financial Ratios, How They Are Calculated, and What They Show Ratio Profitability ratios 1. Gross profit margin 2. Operating profit margin (or return on sales) 3. Net profit margin (or net return on sales) 4. Return on total assets 5. Return on stockholders' equity (or return on net worth) 6. Return on capital employed 7. Earnings per share Liquidity ratios 1. Current ratio 2. Quick ratio (or acid-test ratio) 3. Inventory to net working capital Leverage ratios 1. Debt-to-assets ratio How Calculated What It Shows Sales \u0003 Cost of goods sold Sales Profits before taxes and before interest Sales An indication of the total margin available to cover operating expenses and yield a profit. Profits after taxes Sales Shows after-tax profits per dollar of sales. Subpar profit margins indicate that the firm's sales prices are relatively low or that costs are relatively high, or both. An indication of the firm's profitability from current operations without regard to the interest charges accruing from the capital structure. Profits after taxes Total assets or Profit after taxes \u0002 interest Total assets A measure of the return on total investment in the enterprise. It is sometimes desirable to add interest to the after-tax profits to form the numerator of the ratio since total assets are financed by creditors as well as by stockholders; hence, it is accurate to measure the productivity of assets by the returns provided to both classes of investors. Profits after taxes Total stockholders' equity A measure of the rate of return on stockholders' investment in the enterprise. Profits after taxes \u0003 Preferred stock dividends Total stockholders' equity \u0002 total debt \u0003 Par value of preferred stock Profits after taxes and after preferred stock dividends Number of shares of common stock outstanding Shows the earnings available to the owners of each share of common stock. Current assets Current liabilities Indicates the extent to which the claims of short-term creditors are covered by assets that are expected to be converted to cash in a period roughly corresponding to the maturity of the liabilities. Current assets \u0003 Inventory Current liabilities Inventory Current assets \u0003 Current liabilities Total debt Total assets 2. Debt-to-equity ratio Total debt Total stockholders' equity A measure of the rate of return on the total capital investment in the enterprise. A measure of the firm's ability to pay off shortterm obligations without relying on the sale of its inventories. A measure of the extent to which the firm's working capital is tied up in inventory. Measures the extent to which borrowed funds have been used to finance the firm's operations. Debt includes both long-term debt and short-term debt. Provides another measure of the funds provided by creditors versus the funds provided by owners. tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-7 A Guide to Case Analysis C-7 table 1 (concluded ) Ratio How Calculated What It Shows Leverage ratios (cont.) 3. Long-term debt-toequity ratio Long-term debt Total stockholders' equity A widely used measure of the balance between debt and equity in the firm's longterm capital structure. 4. Times-interest-earned (or coverage) ratio Profits before interest and taxes Total interest charges Measures the extent to which earnings can decline without the firm becoming unable to meet its annual interest costs. 5. Fixed-charge coverage Profits before taxes and interest \u0002 Lease obligations Total interest charges \u0002 Lease obligations A more inclusive indication of the firm's ability to meet all of its fixed-charge obligations. Activity ratios 1. Inventory turnover 2. Fixed assets turnover 3. Total assets turnover Sales Inventory of finished goods Sales Fixed assets Sales Total assets When compared to industry averages, it provides an indication of whether a company has excessive or perhaps inadequate finished goods inventory. A measure of the sales productivity and utilization of plant and equipment. A measure of the utilization of all the firm's assets; a ratio below the industry average indicates the company is not generating a sufficient volume of business, given the size of its asset investment. 4. Accounts receivable turnover Annual credit sales Accounts receivable A measure of the average length of time it takes the firm to collect the sales made on credit. 5. Average collection period Accounts receivable Total sales \u0004 365 or Accounts receivable Average daily sales Indicates the average length of time the firm must wait after making a sale before it receives payment. Other ratios 1. Dividend yield on common stock Annual dividends per share Current market price per share Current market price per share After-tax earnings per share A measure of the return to owners received in the form of dividends. 3. Dividend payout ratio Annual dividends per share After-tax earnings per share Indicates the percentage of profits paid out as dividends. 4. Cash flow per share After-tax profits \u0002 Depreciation Number of common shares outstanding 2. Price-earnings ratio Faster-growing or less-risky firms tend to have higher price-earnings ratios than slower-growing or more-risky firms. A measure of the discretionary funds over and above expenses that are available for use by the firm. Note: Industry-average ratios against which a particular company's ratios may be judged are available in Modern Industry and Dun's Reviews published by Dun & Bradstreet (14 ratios for 125 lines of business activities), Robert Morris Associates' Annual Statement Studies (11 ratios for 156 lines of business), and the FTC-SEC's Quarterly Financial Report for manufacturing corporations. tho1978X_pt2.qxd C-8 10/18/2000 11:26 AM Page C-8 Cases in Strategic Management are more attractive than other courses of action that are open. You'll find Case-TUTOR'S case preparation guides helpful in performing this step, too. 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 a company 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. So, if you have carefully prepared the case using either the CaseTUTOR case preparation guides or your instructor's assignment questions, don't lose confidence in the correctness of your work and judgment. PARTICIPATING IN CLASS DISCUSSION OF A CASE Classroom discussions of cases are sharply different from lecture classes. 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 of analyzing the situation and of 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 tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-9 A Guide to Case Analysis 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 anotherwhat you learn in one case helps prepare you for the next case discussion. 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. 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. 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. In making your points, assume that everyone has read the case and knows what it says; avoid reciting and rehashing information in the caseinstead, use the data and information to explain your assessment of the situation and to support your position. 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 everythingespecially 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 wisdomthis is because company situations and management problems are so diverse that no one mechanical way to approach a written case assignment always works. C-9 tho1978X_pt2.qxd C-10 10/18/2000 11:26 AM Page C-10 Cases in Strategic Management 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 or 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 that you can identify the firm's strategy (use the concepts and tools in Chapters 1-10 as diagnostic aids) and that you can pinpoint whatever strategy implementation issues may exist (consult the material in Chapters 11-13 for diagnostic help). Consult the key points we have provided at the end of each chapter for further diagnostic suggestions. Review the study questions for the case on Case-TUTOR. 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. Refer back to Table 1, which 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 or evaluation is appropriate. Work through the case preparation exercise on Case-TUTOR if one is available for the case you've been assigned. 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, overgeneralizations, and platitudes as a substitute for tight, logical argument backed up with facts and figures. 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. tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-11 A Guide to Case Analysis 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, do not simply say, \"The firm should improve its market position\" but state 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 4 Gragg, \"Because Wisdom Can't Be Told,\" p. 10. C-11 tho1978X_pt2.qxd C-12 10/18/2000 11:26 AM Page C-12 Cases in Strategic Management 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 meritthis 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 on 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 with Microsoft's PowerPoint software). Typically, oral presentations involve group assignments. Your instructor will provide the details of the assignmenthow 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: An opening slide covering the \"title\" of the presentation and names of the presenters. A slide showing an outline of the presentation (perhaps with presenters' names by each topic). One or more slides showing the key problems and strategic issues that management needs to address. A series of slides covering your analysis of the company's situation. tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-13 A Guide to Case Analysis C-13 A series of slides containing your recommendations and the supporting arguments and reasoning for each recommendationone slide for each recommendation and the associated reasoning has a lot of merit. 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 accompanied by weak analysis and poor oral delivery still add 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 are linked to databases containing the company's quarterly and annual reports and 10K and 10Q filings with the Securities and Exchange Commission. Frequently, you will find 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 onnew product introductions, recent alliances and partnership agreements, recent acquisitions, 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 online subscription services available in many university libraries provide access to a wide array of business reference material. For example, the Web-based Lexis-Nexis Academic Universe contains business news articles from general news sources, business publications, and industry tho1978X_pt2.qxd C-14 10/18/2000 11:26 AM Page C-14 Cases in Strategic Management 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 Web sites with Good Information In addition to company Web pages and online services provided by your university library, almost every major business publication has a subscription site available on the Internet. The Wall Street Journal Interactive Edition not only contains the same information that is available daily in its print version of the paper but also maintains a searchable database of all Wall Street Journal articles published during the past few years. The newspaper's online subscription site also has a Briefings Books section that allows you to conduct research on a specific company and track its financial and market performance in near-real time. Fortune and Business Week 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 Web sites are particularly good locations for company and industry information: Securities and Exchange Commission EDGAR database (contains company 10-Ks, 10-Qs etc.) NASDAQ CNNfn: The Financial Network Hoover's Online The Wall Street Journal Interactive Edition Business Week Fortune MSN Money Central Yahoo! Finance Individual News Page www.sec.gov/cgi-bin/srch-edgar www.nasdaq.com www.cnnfn.com www.hoovers.com www.wsj.com www.businessweek.com www.fortune.com www.moneycentral.msn.com www.quote.yahoo.com www.individual.com Some of these Internet sources require subscriptions in order to access their entire databases. Using a Search Engine Alternatively, or in addition, you can quickly locate and retrieve information on companies, industries, products, individuals, or other subjects of interest using such Internet search engines as Lycos, Go, Excite, Snap, and Google. Search engines find articles and other information sources that relate to a particular industry, company name, topic, phrase, or keyword of interest. Search engine technology is becoming highly intuitive in retrieving Web pages related to your query and will likely direct you to the company Web site and other sites that contain timely and accurate information about the company. However, keep in mind that the information retrieved by a search engine is unfiltered tho1978X_pt2.qxd 10/18/2000 11:26 AM Page C-15 A Guide to Case Analysis table 2 The 10 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. Either work through the case preparation exercises and/or study questions on Case-TUTOR or make a minimum of one to two pages of notes detailing your diagnosis. 4. Use every opportunity to apply the concepts and analytical tools in the text chapters all of the cases in the book have very definite ties to the concepts/tools in one or more of the text chapters and you are expected to apply them in analyzing the cases. 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 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 identifiedany 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. and may include sources that are not reliable or that contain inaccurate or misleading information. Be wary of information that is provided by authors who are unaffiliated with reputable organizations or publications or that doesn't come from the company or a credible trade associationbe 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 Learning Curve Is Steep 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 on the different Web sites mentioned above and with one or more search engines, 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 too few; the trick is to learn to zero in on those C-15 tho1978X_pt2.qxd C-16 10/18/2000 11:26 AM Page C-16 Cases in Strategic Management most relevant to what you are looking for. As with 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 10 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 10 Commandments of Case Analysis.\" They are shown in Table 2 on the previous page. 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