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INTRODUCTION TO CASES

The cases featured in this course are representative of real-world problems that managers
in different service organizations have to face and resolve. They describe problems from a
wide variety of industries in several different countries. Some of the events depicted took
place recently, while others occurred some years ago but still contain important lessons
and insights for the managers of tomorrow.
Unlike methods of instruction that use lectures and textbooks, the case method of
instruction doesnt present students with a body of tried and true knowledge about how to
be a successful manager. Instead, it provides an opportunity for you to learn by doing.
Dealing with cases is somewhat like working with the actual problems that people
encounter in their jobs as managers. In most instances, youll be identifying and clarifying
problems facing a company or nonprofit organization, analyzing qualitative information
and quantitative data, evaluating alternative courses of action, and then making decisions
about what strategy to pursue for the future. You may enjoy the process moreand will
probably learn moreif you accept the role of an involved participant rather than that of a
disinterested observer who has no stake or interest in resolving the problems in question.
The goal of case analysis is not to develop a set of correct facts, but to learn to reason
well with available data. Cases mirror the uncertainty of the real-world environment in
that the information they present is often imprecise and ambiguous. You may be frustrated
to find that, there is no one right answer or correct solution to any given case. Instead,
there are often a number of feasible strategies management might adopt, each with
somewhat different implications for the future of the organization, and each involving
different trade-offs.
Cases and the Real World
Cases differ from real-world management situations in several important respects. First,
the information is prepackaged in written form. By contrast, managers accumulate their
information through memoranda, meetings, chance conversations, research studies,
observations, news reports, and other externally published materials.
Second, cases tend to be selective in their reporting because they are designed with
specific teaching objectives in mind. Each must fit a relatively short class period and
focuses attention on certain types of issues within a given subject area. In the real world,
management problems are usually dynamic in nature. They call for some immediate
action, with further analysis and major decisions being delayed until some later time.
Managers are rarely able to wrap up their problems, put them away, and go on to the next
case. In contrast, discussing a case in class or writing an analysis of a case is more like
examining a snapshot taken at a particular point in time. Occasionally, a sequel case
provides a sense of continuity and poses the need for future decisions within the same
organization.

A third, and final, contrast between case analyses and real-world management is that
participants in case discussions and authors of written case reports arent responsible for
implementing their decisions, nor do they have to live with the consequences. This
doesnt mean, however, that you can be frivolous when making recommendations.
Instructors and classmates are likely to be critical of contributions that are not based on
careful analysis and interpretation of the facts.
PREPARING A CASE
Just as there is often no one right solution to a case, there is also no single correct way of
preparing a case for class discussion or for a written assignment. With practice, you
should be able to establish a working style with which you feel comfortable.
Initial Analysis
First, its important to gain a feel for the overall situation by skimming quickly through
the case. Ask yourself:

What sort of organization does the case concern?


What is the nature of the industry (broadly defined)?
What is going on in the external environment?
What problems does management appear to be facing?

After an initial fast reading, without making notes or underlining, youll be ready to make
a very careful second reading of the case. This time, seek to identify key facts so that you
can develop a situation analysis and clarify the nature of the problems facing
management. As you go along, try to make notes in response to such questions as:

What decisions need to be made, and who will be responsible for making them?
What are the objectives of the organization itself and of each of the key players in
the case? Are these objectives compatible?
What resources and constraints are present that may help or hinder attempts by the
organization to meet its objectives?

Try to establish the significance of any quantitative data presented in the text of the case
or, more often, in the exhibits. See if new insights may be gained by combining and
manipulating data presented in different parts of the case. But dont accept the data
blindly. In the cases, as in real life, not all information is equally reliable or equally
relevant. On the other hand, case writers wont deliberately misrepresent data or facts to
try to trick you.
Developing Recommendations
Now you should be in a position to summarize your evaluation of the situation and to
develop some recommendations for management. First, identify the alternative courses of

action open to the organization. Next, consider the implications of each alternative,
including possible undesirable outcomes, such as provoking responses from stronger
competitors. Ask yourself how short-term tactics fit with longer-term strategies. Relate
each alternative to the objectives of the organization (as defined or implied in the case, or
as redefined by you.). Then, develop a set of recommendations for future action, making
sure that these recommendations are supported by your analysis of the case data.
Your recommendations wont be complete unless you give some thought to how the
proposed strategy should be implemented:

What resourceshuman, financial, or otherwill be required?


Who should be responsible for implementation?
What time frame should be established for the various actions proposed?
How should subsequent performance be measured?

You have to submit to me the case analysis in two parts:


Part I
Follow the operational approach.
The following is an operational approach to case analysis.
1. Current Situation:
A. Environment
1. Economic
2. Cultural & Social
3. Politico Legal
4. Opportunities
5. Threats
B. Industry:
1. Definition
2. Classification
3. Technology
4. Political-Legal- Social factors
5. Industrial guidelines and trends
6. Financial indicators
7. Opportunities
8. Threats
C. Firm
1. Objectives
2. Constraints
3. Management philosophy

4. Strengths
5. Weaknesses
6. Structure
D. Marketing Program
1. Objectives
2. Constraints
3. Strengths
4. Weaknesses
5. Target Market(s)
6. Product Considerations
7. Pricing Considerations
8. Placing Considerations
9. Promotion Considerations.
E. Assumptions about current situation.
[If you do this for other functional areas like Management, Process, Finance, R&D etc.,
and integrate them then it will become a Business Plan!]
II.

Problems:
A. Primary Problem(s)
1. Symptoms
2. Proof.
B. Secondary Problem(s)
1. Symptoms
2. Proof.

III

Alternatives:
A. Alternative 1
1.

Strengths, opportunities and benefits (use this as


leverage)
2. Weaknesses, threats and costs (This is your critical
issue, you have to solve it)
B. Alternative 2
1. Strengths, opportunities and benefits (use this as
leverage)
2. Weaknesses, threats and costs (This is your critical
issue, you have to solve it)
C. Alternative 3
1. Strengths, opportunities and benefits (use this as
leverage)

2. Weaknesses, threats and costs (This is your critical


issue, you have to solve it)
IV

Decision and Implementation:


A. What
B. Who
C. When
D. Where
E. Why
F. How
Part II
Answer all the questions at the end of the case.

A word of caution!!
I have seen your predecessors committing the following errors, so avoid them:
a. They had given me inadequate definition of the problem.
b. They were searching for an answer to the case. Keep in mind there is no
one correct or official answer/solution to the case.
c. They had complained to me that they do not have enough information.
(You will seldom get enough information in real life).
d. They had given me a generalized recommendation and not a specific one.
e. Leaving the current situation, they have hypothesized a different situation
with an if and solved that situation instead of the one in the assigned
case.
f. Some of the solutions were myopic, a narrow vision analysis with one of
the four Ps.
g. Some of the solutions were unrealistic, suggesting a promotional program
of $100,000 for a firm with $ 75, 000 capital outlays.
h. Recommending marketing research to solve the problem. The
recommendation is not a solution.
i. Instead solving the case, rehashing the case material.
j. Premature conclusions.

IF YOU DO NOT COMMIT THESE


MISTAKES
ERRORS
BLUNDERS
YOU SHOULD BE ALRIGHT!!!

Quantifying SWOT Matrix


Strengths
Strength 1
Strength 2
Weaknesses
Weakness 1

M
3
1

I
3
2

R
9
2

-2

Opportunities
Opportunity 1
Opportunity 2
Threats
-4 Threat 1

Weakness 2

-3

-9 Threat 2

M I R
1 3 3
3 2 6
-3 3 9
-2 1 2

The first step is to quantify the magnitude of each element within the matrix.
Magnitude (M) refers to how strongly each element affects the firm. A
simple method is to use a scale of 1 (low magnitude), 2 (medium magnitude),
or 3 (high magnitude) for each strength and opportunity and -1 (low
magnitude), -2 (medium magnitude), or- 3 (high magnitude) for each
weakness and threat. The second step is to rate the importance (I) of each
element to the firm using a scale of 1 (weak importance), 2 (average
importance), or 3(major importance) for all elements in the matrix. The final
step is to multiply the magnitude ratings by the importance ratings to create a
total rating (R) for each element. Remember that the magnitude and
important ratings should be heavily influenced by customer perceptions, not
just the perceptions of the manager. Those elements with the highest total
rating (positive or negative) should have the greatest influence in developing
strategy.
(Ref: O.C. Ferrell and Michael D. Hartline, (2008),Marketing Strategy, 4th
Ed, South Western Cengage Learning)
SIMPLE GUIDELINES TO ANALYZE A CASE
1.
Read the case several times before you start doing anything with that case. This is
a must. Then start summarizing the case to extract important points in each paragraph.
Write down all the points.
2.
Group the points, with respect to market needs and competitors characters into two
groups.
a) Internal: Completely controllable by the manager.
b) External: Uncontrollable by the manager.
3.
Group the internal factors into two groups.
a) Strengths: Presence of economies of scale, economies of cost; capital, material
and human resources; functional skills; and intellectual, legal and reputational resources.

b) Weaknesses: Absence of economies of scale, economies of cost; capital,


material and human resources; functional skills; and intellectual, legal and reputational
resources.
4.
Group the external factors into two groups.
a) Opportunities: Favorable conditions or changes in the customer, competitive
and external environment.
b) Threats: Unfavorable conditions or changes in the customer, competitive and
external environment.
5.
Analyze quantitatively: Quantify each element in your SWOT.
First you have to quantify the magnitude of each element (Magnitude refers to
how strongly the element affects the firm). Use a scale 1 to 3.
Strength/Opportunity
Weakness/Threat
High magnitude
+3
-3
Medium magnitude
+2
-2
Low magnitude
+1
-1
Second you have to quantify the importance of each element (Importance refers to
how much that element is important to the firm). Use a scale 1 to 3.
Strength/Opportunity
Weakness/Threat
High importance
+3
-3
Medium importance
+2
-2
Low importance
+1
-1
Then calculate the rating of each element. Rating is the product of magnitude and
importance. That is R= M*I
6.
Plot the result in the SWOT matrix. On the Y axis plot the SW resultant and on
the X axis plot the OT resultant.
7.
Use the following to generate your corporate and business level strategies.
Aggressive: Many internal strengths/many external opportunities. (Q1)
Diversification: Many internal strengths/many external threats. (Q2)
Turnaround: Many internal weaknesses/many external opportunities. (Q3)
Defensive: Many internal weaknesses/many external threats. (Q4)

ADDITIONAL INFORMATION
INDUSTRY ANALYSIS:
THE EXTERNAL FACTOR EVALUATION
An EFE Matrix
1. An EFE Matrix allows strategists to summarize and evaluate economic, social,
cultural, demographic, environmental, political, governmental, legal,
technological, and competitive information.
2. There are five steps in developing an EFE Matrix as illustrated in Table 3-8.
a. List key external factors as identified in the external-audit process. Include
a total of 10-20 factors from both the opportunities and threats.
b. Assign to each factor a weight from .0 (not important) to 1.0 (very
important). These weights show the relative importance. The total of all the
weights should equal 1.0.
c. Assign a 1-4 rating to each factor to indicate how effectively the firms
current response strategy is: 1 = the response is poor, 2 = the response is
average, 3 = the response is above average, and 4 = the response is
superior.
d. Multiply each factors weight by its rating to get a weighted score.
e. Sum the weighted scores for each variable to determine the total weighted
score for the organization.
THE COMPETITIVE PROFILE MATRIX (CPM)
The CPM Matrix
1. The CPM, illustrated in Table 3-9, identifies a firms major competitors and
their particular strengths and weaknesses in relation to a sample firms strategic
position.
2. Table 3-10 provides a Competitive Profile Matrix for Gateway Computer
Company.
3. There are some important differences between the EFE and CPM. First, the
critical success factors in a CPM are broader. These factors are also not
grouped into opportunities and threats as in the EFE. In a CPM, the ratings and
weighted scores can be compared to rival firms.
THE INTERNAL FACTOR EVALUATION (IFE) MATRIX

The IFE Matrix


1. A summary step in conducting an internal strategic-management audit is to
construct an IFE Matrix. This strategy-formulation tool summarizes and
evaluates the major strengths and weaknesses in the functional areas of a
business, and it also provides a basis for identifying and evaluating
relationships among these areas.
2. Intuitive judgments are required in developing an IFE Matrix, so the
appearance of a scientific approach should not be interpreted to mean this is an
all-powerful technique.
An IFE Matrix is developed in five steps.
1. List key internal factors as identified in the internal-audit process. Use a total
from ten to twenty internal factors including both strengths and weaknesses.
2. Assign a weight ranging from 0 (not important) to 1.0 (very important). The
weight indicates the relative importance of the factor to being successful in the
firms industry. The sum of all the weights must equal 1.0.
3. Assign a 1-4 rating to each factor to indicate whether that factor represents a
major weakness (1), minor weakness (2), minor strength (3), or major strength
(4).
4. Multiply each factors weight by its rating to determine a weighted score for
each variable.
5. Sum the weighted scores for each variable to determine the total weighted
score for the organization.
6. Total weighted scores of below 2.5 indicate an internally weak organization.
THE MATCHING STAGE
A. The Matching Stage
1. The Matching Stage includes the Strengths-Weaknesses-Opportunities-Threats
(SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE)
Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE)
Matrix, and the Grand Strategy Matrix.
2. Any organization, whether military, product-oriented, service-oriented,
governmental, or even athletic must develop and execute good strategies to
win.
B. The SWOT Matrix
1. The SWOT Matrix is an important matching tool that helps managers develop
four types of strategies:

a. SO strategiesuse a firms internal strengths to take advantage of external


opportunities.
b. WO strategiesare aimed at improving internal weaknesses by taking
advantage of external opportunities.
c. ST strategiesuse a firms strengths to avoid or reduce the impact of
external threats.
d. WT strategiesare defensive tactics directed at reducing internal
weaknesses and avoiding external threats.
2. There are eight steps to construct a TOWS Matrix:
a.
b.
c.
d.
e.

List the firms key external opportunities.


List the firms key external threats.
List the firms key internal strengths.
List the firms key internal weaknesses.
Match internal strengths with external opportunities and record the
resulting SO strategies in the appropriate cell.
f. Match internal weaknesses with external opportunities and record the
resulting WO strategies.
g. Match internal strengths with external threats and record the resultant ST
strategies.
h. Match internal weaknesses with external threats and record the resulting
WT strategies.
C. The SPACE Matrix
1. The SPACE Matrix, another important Stage 2 matching tool. Its four-quadrant
framework indicates whether aggressive, conservative, defensive, or
competitive strategies are more appropriate for a given organization.
2. Depending on the type of organization, numerous variables could make up
each of the dimensions represented on the axes of the SPACE Matrix.
3. The steps to develop a SPACE Matrix:
a. Select a set of variables to define financial strength (FS), competitive
advantage (CA), environmental stability (ES), and industry strength
(IS).
b. Assign a numerical value ranging from 1 (worst) to 6 (best) for the
variables that make up the FS and IS dimensions. Assign a number
between 1 (best) to 6 (worst) for variables that make up the ES and CA
dimensions. On the FS and CA axes, make comparison to competitors. On
the IS and ES axes, make comparison to other industries.

c. Compute an average score for FS, CA, IS, and ES by summing the values
given to the variables and dividing by the number of variables included in
each dimension.
d. Plot the average scores for FS, IS, ES, and CA on the appropriate axis in
the SPACE Matrix.
e. Add the two scores on the x-axis and plot the resultant point on X. Add the
two scores on the y-axis and plot the resultant point on Y. Plot the
intersection of the new xy point.
f. Draw a directional vector from the origin of the SPACE matrix through the
new intersection point. This vector reveals the type of strategies
recommended for the organization.
1.
2.
3.
4.

Aggressive
Competitive
Defensive
Conservative

D. The BCG Matrix


1. The BCG Matrix graphically portrays differences among divisions (of a firm)
in terms of relative market share position and industry growth rate.
2. Divisions in the respective circles in the BCG Matrix are called question
marks, stars, cash cows, and dogs.
4. The four quadrants represent the following:
a. Question MarksDivisions in Quadrant I have a low relative market share
position, yet compete in a high-growth industry. Generally these firms
cash needs are high and their cash generation is low.
b. StarsQuadrant II businesses represent the organizations best long-run
opportunities for growth and profitability. These businesses have a high
relative market share and compete in high-growth-rate industries.
c. Cash CowsDivisions positioned in Quadrant III have a high relative
market position, but compete in a low-growth industry. Called cash cows
because they generate cash in excess of their needs.
d. DogsQuadrant IV divisions of the organization have a low relative
market share position and compete in a slowed or no-growth industry; they
are Dogs in a firms portfolio.
E. The IE Matrix

1. The IE Matrix positions an organizations various divisions in a nine-cell


display.
2. The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organization divisions in a schematic diagram; this is why they are called
portfolio matrices.
3. Differences between the IE Matrix and the BCG Matrix
a. Axes are different.
b. IE Matrix requires more information about divisions than BCG.
c. Strategic implications of each matrix are different.
F. The Grand Strategy Matrix
1. In addition to the SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix,
the Grand Strategy Matrix has become a popular tool for formulating
alternative strategies. All organizations can be positioned in one of the Grand
Strategy Matrixs four strategy quadrants.
2. It is based on two evaluative dimensions: competitive position and market
growth.
V.

THE DECISION STAGE


A. The Quantitative Strategic Planning Matrix (QSPM)
1. Other than ranking strategies to achieve the prioritized list, there is only one
analytical technique in the literature designed to determine the relative
attractiveness of feasible alternative actions.
2. This technique is the QSPM, which comprises Stage 3 of the strategyformulation analytical framework. This technique objectively indicates which
alternative strategies are best.
3. Six steps to developing a QSPM:
a.
b.
c.
d.
e.
f.

Make a list of the firms key external opportunities/threats and


internal strengths/weaknesses in the left column of the QSPM.
Assign weights to each key external and internal factor.
Examine the Stage 2 matrices and identify alternative strategies that
the organization should consider implementing.
Determine the Attractiveness Scores (AS).
Compute the total AS.
Compute the sum Total AS.

B. Positive Features and Limitations of the QSPM

1. A positive feature of the QSPM is that sets of strategies can be examined


sequentially or simultaneously. Another positive feature of the QSPM is that it
requires strategists to integrate pertinent external and internal factors into the
decision process. Developing a QSPM makes it less likely that key factors will
be overlooked or weighted inappropriately.
2. The QSPM is not without some limitations. First, it always requires intuitive
judgment. Second, it can only be as good as the prerequisite information and
matching analyses upon which it is based.