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In most strategic management courses, cases are usedextensively as a teaching tool. 1 A key reason is thatcases provide active learners with opportunities to usethe strategic management process to identify and solveorganisational problems. Thus, by analysing situations thatare described in cases and presenting the results, activelearners (that is, students) become skilled at effectivelyusing the tools, techniques and concepts that combine toform the strategic management process.

The cases that follow are concerned with actualcompanies. Presented within the cases are problems andsituations that managers and those with whom they work mustanalyse and resolve. As you will see, a strategic managementcase can focus on an entire industry, a single organisation,or a business unit of a large, diversied rm. The strategicmanagement issues facing not-for-prot organisations alsocan be examined using the case analysis method.

Basically, the case analysis method calls for acareful diagnosis of an organisation’s current conditions(as manifested by its external and internal environments)so that appropriate strategic actions can be recommendedin view of the r m’s strategic intent and strategic mission.Strategic actions are taken to develop and then usea rm’s core competencies to select and implementdifferent strategies, including business-level, corporate-level, acquisition and restructuring, international andcooperative strategies. Thus, appropriate strategic actionshelp the rm to survive in the long run as it creates and usescompetitive advantages as the foundation for achieving

strategic competitiveness and earning above-averagereturns. The case method that we are recommending toyou has a rich heritage as a pedagogical approach to thestudy and understanding of managerial effectiveness. 2

As an active learner, your preparation is criticalto successful use of the case analysis method. Withoutcareful study and analysis, active learners lack the insightsrequired to participate fully in the discussion of a rm’ssituation and the strategic actions that are appropriate.

Instructors adopt different approaches in their

application of the case analysis method. Some require active

learners/students to use a specic analytical procedure toexamine an organisation; others provide less structure,expecting students to learn by developing their own uniqueanalytical method. Still other instructors believe that amoderately structured framework should be used to analysea rm’s situation and make appropriate recommendations.Your lecturer or tutor will determine the specic approachyou take. The approach we are presenting to you is amoderately structured framework.

We divide our discussion of a moderately structuredcase analysis method framework into four sections. First,we describe the importance of understanding the skillsactive learners can acquire through effective use of thecase analysis method. In the second section, we provideyou with a process-oriented framework. This frameworkcan be of value in your efforts to analyse cases and thenpresent the results of your work. Using this framework ina classroom setting yields valuable experiences that can, inturn, help you to successfully complete assignments thatyou will receive from your employer. The third section iswhere we describe briey what you can expect to occurduring in-class case discuss ions. As this description shows,the relationship and interactions between instructorsand active learners/students during case discussions aredifferent than they are during lectures. In the nal section,we present a moderately structured framework that webelieve can help you to prepare effective written and oralpresentations. Written and oral communication skillsalso are valued highly in many organisational settings;hence, their development today can serve you well in thefuture.

SKILLS GAINED THROUGHUSE OF THE CASE ANALYSISMETHODThe case analysis method is based on a philosophythat combines knowledge acquisition with signicant

involvement from students as active learners. In the

P R E P A R I N G A N E F F E C T I V E C A S E A N A LY S I S :T H E F U L L S T O R Y

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words of Alfred North Whitehead, this philosophy ‘rejectsthe doctrine that students had rst learned passively,and then, having learned should apply knowledge’. 3 Incontrast to this philosophy, the case analysis method isbased on principles that were elaborated upon by JohnDewey:

Only by wrestling with the conditions of this problemat hand, seeking and nding his own way out, does [thestudent] think . . . If he cannot devise his own solution

(not, of course, in isolation, but in correspondence withthe teacher and other pupils) and nd his own way outhe will not learn, not even if he can recite some correctanswer with a hundred percent accuracy. 4

The case analysis method brings reality into theclassroom. When developed and presented effectively,

with rich and interesting detail, cases keep conceptualdiscussions grounded in reality. Experience shows thatsimple ctional accounts of situations and collectionsof actual organisational data and articles from publicsources are not as effective for learning as fully developedcases. A comprehensive case presents you with a partialclinical study of a real-life situation that faced managersas well as other stakeholders, including employees. Acase presented in narrative form provides motivation forinvolvement with and analysis of a specic situation. Byframing alternative strategic actions and by confrontingthe complexity and ambiguity of the practical world,case analysis provides extraordinary power for yourinvolvement with a personal learning experience. Someof the potential consequences of using the case methodare summarised in Exhibit 1.

As Exhibit 1 suggests, the case analysis methodcan assist active learners in the development of theiranalytical and judgement skills. Case analysis also helpsstudents to learn how to ask the right questions. By thiswe mean questions that focus on the core strategic issuesthat are included in a case. Active learners/students withmanagerial aspirations can improve their ability to identifyunderlying problems rather than focusing on supercialsymptoms as they develop skills at asking probing, yetappropriate, questions.

The collection of cases your instructor chooses toassign can expose you to a wide variety of organisationsand decision situations. This approach vicariouslybroadens your experience base and provides insightsinto many types of managerial situations, tasks andresponsibilities. Such indirect experience can help you tomake a more informed career decision about the industry

and managerial situation you believe will prove to bechallenging and satisfying. Finally, experience in analysingcases denitely enhances your problem-solving skills, andresearch indicates that the case method for this subject isbetter than the lecture method. 5

Furthermore, when your instructor requires oraland written presentations, your communication skills willbe honed through use of the case method. Of course, theseadded skills depend on your preparation as well as yourinstructor’s facilitation of learning. However, the primaryresponsibility for learning is yours. The quality of case dis-cussion is generally acknowledged to require, at a minimum,a thorough mastery of case facts and some independentanalysis of them. The case method therefore rst requiresthat you read and think carefully about each case. Additionalcomments about the preparation you should complete tosuccessfully discuss a case appear in the next section.

E X H I B I T 1

1 Case analysis requires students to practise important managerial skills – diagnosing, making decisions, observing,listening and persuading – while preparing for a case discussion.

2 Cases require students to relate analysis and action, to develop realistic and concrete actions despite the complexityand partial knowledge characterising the situation being studied.

3 Students must confront the intractability of reality – complete with absence of needed information, an imbalancebetween needs and available resources, and conicts among competing objectives.

4 Students develop a general managerial point of view – where responsibility is sensitive to action in a diverseenvironmental context.

Source: C. C. Lundberg & E. Enz, 1993, ‘A framework for student case preparation’,Case Research Journal , 13 (Summer): 134.



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STUDENT PREPARATION FORCASE DISCUSSIONIf you are inexperienced with the case method, you mayneed to alter your study habits. A lecture-oriented coursemay not require you to do intensive preparation for each class period. In such a course, you have the latitude towork through assigned readings and review lecture notesaccording to your own schedule. However, an assigned

case requires signicant and conscientious preparationbefore class . Without it, you will be unable to contribute

meaningfully to in-class discussion. Therefore, carefulreading and thinking about case facts, as well as reasonedanalyses and the development of alternative solutions tocase problems, are essential. Recommended alternativesshould ow logically from core problems identiedthrough study of the case. Exhibit 2 shows a set of stepsthat can help you to familiarise yourself with a case,identify problems and propose strategic actions thatincrease the probability that a rm will achieve strategiccompetitiveness and earn above-average returns.

E X H I B I T 2

Step 1:Gaining familiarity

a In general – determine who, what, how, where and when (the critical facts of the case).b In detail – identify the places, persons, activities and contexts of the situation.c Recognise the degree of certainty/uncertainty of acquired information.

Step 2:Recognising symptoms

a List all indicators (including stated ‘problems’) that something is not as expected or asdesired.

b Ensure that symptoms are not assumed to be the problem. (Symptoms should lead toidentication of the problem.)

Step 3:Identifying goals

a Identify critical statements by major parties (e.g. people, groups, the work unit, etc.).b List all goals of the major parties that exist or can be reasonably inferred.

Step 4:Conducting the analysis

a Decide which ideas, models and theories seem useful.b Apply these conceptual tools to the situation.

c As new information is revealed, cycle back to sub-steps (a) and (b).

Step 5:Making the diagnosis

a Identify predicaments (goal inconsistencies).b Identify problems (discrepancies between goals and performance).c Prioritise predicaments/problems regarding timing, importance, etc.

Step 6:Doing the action planning

a Specify and prioritise the criteria used to choose action alternatives.b Discover or invent feasible action alternatives.c Examine the probable consequences of action alternatives.d Select a course of action.e Design an implementation plan/schedule.f Create a plan for assessing the action to be implemented.

Source: Lundberg & Enz, ‘A framework for student case preparation’: 144.

G A I N I N G FA M I L I A R I T YThe rst step of an effective case analysis process callsfor you to become familiar with the facts featured in the

case and the focal rm’s situation. Initially, you shouldbecome familiar with the focal rm’s general situation (forexample, who, what, how, where and when). Thorough



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familiarisation demands appreciation of the nuances, aswell as the major issues, in the case.

Gaining familiarity with a situation requires youto study several situational levels, including interactionsbetween and among individuals within groups, businessunits, the corporate ofce, the local community and thesociety at large. Recognising relationships within andamong levels facilitates a more thorough understandingof the specic case situation.

It is also important that you evaluate information ona continuum of certainty. Information that is veriable byseveral sources and judged along similar dimensions canbe classied as a fact . Information representing someone’sperceptual judgement of a particular situation is referredto as an inference . Information gleaned from a situationthat is not veriable is classied as speculation . Finally,information that is independent of veriable sourcesand arises through individual or group discussion is anassumption . Obviously, case analysts and organisationaldecision makers prefer having access to facts overinferences, speculations and assumptions.

Personal feelings, judgements and opinions evolvewhen you are analysing a case. It is important to be awareof your own feelings about the case and to evaluate theaccuracy of perceived ‘facts’ to ensure that the objectivityof your work is maximised.

R E C O G N I S I N G S Y M P T O M SRecognition of symptoms is the second step of an effective

case analysis process. A symptom is an indication thatsomething is not as you or someone else thinks it shouldbe. You may be tempted to correct the symptoms insteadof searching for true problems. True problems are theconditions or situations requiring solution before theperformance of an organisation, business unit or individualcan improve. Identifying and listing symptoms early in thecase analysis process tends to reduce the temptation tolabel symptoms as problems. The focus of your analysisshould be on the actual causes of a problem, rather than

on its symptoms. Thus, it is important to remember thatsymptoms are indicators of problems; subsequent workfacilitates discovery of critical causes of problems thatyour case recommendations must address.

I D E N T I F Y I N G G O A L SThe third step of effective case analysis calls for you toidentify the goals of the major organisations, businessunits and/or individuals in a case. As appropriate, you

should also identify each rm’s strategic intent andstrategic mission. Typically, these direction-settingstatements (goals, strategic intents and strategic missions)are derived from comments made by central characters inthe organisation, business unit or top management teamas described in the case and/or from public documents(for example, an annual report).

Completing this step successfully can sometimesbe difcult. Nonetheless, the outcomes you attainfrom this step are essential to an effective case analysisbecause identifying goals, intent and mission helps youto clarify the main problems featured in a case and toevaluate alternative solutions to those problems.Direction-setting statements are not always statedpublicly or prepared in written format. When this occurs,you must infer goals from other available factual data andinformation.

C O N D U C T I N G T H E A N A LY S I S

The fourth step of effective case analysis is concernedwith acquiring a systematic understanding of a situation.Occasionally, cases are analysed in a less-than-thoroughmanner. Such analyses may be a product of a busy scheduleor of the difculty and complexity of the issues describedin a particular case. Sometimes you will face pressures onyour limited amounts of time and may believe that youcan understand the situation described in a case withoutsystematic analysis of all the facts. However, experienceshows that familiarity with a case’s facts is a necessary,

but insufcient, step in the development of effectivesolutions – solutions that can enhance a rm’s strategiccompetitiveness. In fact, a less-than-thorough analysistypically results in an emphasis on symptoms, rather thanon problems and their causes. To analyse a case effectively,you should be sceptical of quick or easy approaches andanswers.

A systematic analysis helps you to understand asituation and determine what can work and probablywhat will not work. Key linkages and underlying causal

networks based on the history of the rm becomeapparent. In this way, you can separate causal networksfrom symptoms.

Also, because the quality of a case analysis dependson applying appropriate tools, it is important that you usethe ideas, models and theories that seem to be useful forevaluating and solving individual and unique situations.As you consider facts and symptoms, a useful theorymay become apparent. Of course, having familiarity withconceptual models may be important in the effective



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signal to classmates and the instructor that you areprepared to engage in a thorough discussion of a case.Moreover, thorough notes eliminate the need for you tomemorise the facts and gures needed to discuss a casesuccessfully.

The case analysis process just described canhelp you prepare to effectively discuss a case duringclass meetings. Adherence to this process results inconsideration of the issues required to identify a focalrm’s problems and to propose strategic actions throughwhich the rm can increase the probability that it willachieve strategic competitiveness.

In some instances, your instructor may ask you toprepare either an oral or a written analysis of a particularcase. Typically, such an assignment demands even morethorough study and analysis of the case contents. At yourinstructor’s discretion, oral and written analyses may be

completed by individuals or by groups of two or morepeople. The information and insights gained throughcompleting the six steps shown in Exhibit 2 are often ofvalue in the development of an oral or written analysis.However, when preparing an oral or written presentation,you must consider the overall framework in whichyour information and inputs will be presented. Such aframework is the focus of the next section.

PREPARING AN ORAL/WRITTEN CASE STRATEGIC PLANExperience shows that two types of thinking are necessar yin order to develop an effective oral or written presentation(see Exhibit 3). The upper part of the model in Exhibit 3outlines the analysis stage of case preparation.

E X H I B I T 3 Ty p e s o f t h i n k i n g i n c a s e p r e p a r a t i o n : A n a l y s i s a n d s y n t h e s i s

ANALYSIS

External environment

General environmentIndustry environment

Competitor environment

Internal environment

Statements of

strengths,weaknesses,opportunitiesand threats

AlternativesEvaluations of alternatives

Implementation

SYNTHESIS

In the analysis stage, you should rst analysethe general external environmental issues affecting therm. Next, your environmental analysis should focus

on the particular industry (or industries, in the case ofa diversied company) in which a rm operates. Finally,you should examine the competitive environment of



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the focal rm. Through study of the three levels of theexternal environment, you will be able to identify arm’s opportunities and threats. Following the externalenvironmental analysis is the analysis of the rm’s internalenvironment, which results in the identication of therm’s strengths and weaknesses.

As noted in Exhibit 3, you must then changethe focus from analysis to synthesis . Specically, youmust synthesise information gained from your analysisof the rm’s internal and external environments.Synthesising information allows you to generate alternativesthat can resolve the signicant problems or challenges facingthe focal rm. Once you identify a best alternative, from anevaluation based on predetermined criteria and goals, youmust explore implementation actions.

Exhibits 4 and 5 outline the sections that shouldbe included in either an oral or a written strategic plan

presentation – introduction (strategic intent and miss ion),situation analysis, statements of strengths/weaknessesand opportunities/threats, strategy formulation andimplementation plan. These sections, which can becompleted only through use of the two types of thinkingfeatured in Exhibit 3, are described in the followingdiscussion. Familiarity with the contents of your textbook’s13 chapters is helpful because the general outline for anoral or a written s trategic plan shown in Exhibit 5 is basedon an understanding of the strategic management processdetailed in those chapters.

E X T E R N A L E N V I R O N M E N TA N A LY S I SAs shown in Exhibit 5 , a general starting placefor completing a situation analysis is the external

E X H I B I T 4 S t r a t e g i c p l a n n i n g p r o c e s s

Strategic intent

Strategic mission

Strategies

• 1 to 5 years• Cost linkages

Objectives• 1 year or less• Cost linkages

Key result areas• Required efforts• Cost linkages

External environment

• Opportunities (possibilities)

• Threats (constraints)

Internal environment

• Strengths• Weaknesses



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environment. The external environment is composed ofoutside conditions that affect a rm’s performance. Youranalysis of the environment should consider the effects ofthe general environment on the focal rm. Following thatevaluation, you should analyse the industry and competitorenvironmental trends.

These trends or conditions in the externalenvironment shape the rm’s strategic intent and mission.The external environment analysis essentially indicateswhat a rm might choose to do . Often called an environmentalscan , an analysis of the external environment allows a rmto identify key conditions that are beyond its direct control.The purpose of studying the external environment is toidentify a rm’s opportunities and threats. Opportunities are conditions in the external environment that appearto have the potential to contribute to a rm’s success. Inessence, opportunities represent possibilities . Threats areconditions in the external environment that appear tohave the potential to prevent a rm’s success. In essence,threats represent potential constraints .

When studying the external environment, thefocus is on trying to predict the future (in terms of local,regional, and international trends and issues) and to

predict the expected effects on a rm’s operations. Theexternal environment features conditions in the broadersociety and in the industry (area of competition) thatinuence the rm’s possibilities and constraints. Areasto be considered (to identify opportunities and threats)

when studying the general environment are listed inExhibit 6. Many of these issues are explained more fullyin Chapter 2.

Once you analyse the general environmentaltrends, you should study their effect on the focalindustry. Often the same environmental trend may havea signicantly different impact on separate industries, orit may affect rms within the same industry differently.For instance, with deregulation of the airline industryin the United States, older, established airlines had asignicant decrease in protability, while many smallerairlines, such as Southwest Airlines, with lower coststructures and greater exibility, were able to aggressivelyenter new markets.

Porter’s ve forces model is a useful tool foranalysing the specic industry (see Chapter 2). Carefulstudy of how the ve competitive forces (that is, supplierpower, buyer power, potential entrants, substituteproducts and rivalry among competitors) affect a rm’sstrategy is important. These forces may create threatsor opportunities relative to the specic business-levelstrategies (that is, differentiation, cost leadership, focus)being implemented. Often a strategic group’s analysisreveals how different environmental trends are affectingindustry competitors. Strategic group analysis is usefulfor understanding the industry’s competitive structuresand rm constraints and possibilities within thosestructures.

E X H I B I T 5 S t r a t e g i c p l a n n i n g a n d i t s p a r t s

Strategic planning is a process through which a rm determines what it seeks to accomplish and the actions required toachieve desired outcomes✓ Strategic planning , then, is a process that we use to determine what (outcomes to be reached) and how (actions to be

taken to reach outcomes)

The effective strategic plan for a rm would include statements and details about the following:✓ Opportunities (possibilities) and threats (constraints)✓ Strengths (what we do especially well) and weaknesses (deciencies)✓ Strategic intent (an indication of a rm’s ideal state)✓ Strategic mission (purpose and scope of a rm’s operations in product and market terms)✓ Key result areas (KRAs) (categories of activities where efforts must take place to reach the mission and intent)✓ Strategies (actions for each KRA to be completed within one to ve years)✓ Objectives (specic statements detailing actions for each strategy that are to be completed in one year or less)✓ Cost linkages (relationships between actions and nancial resources)



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Firms also need to analyse each of their primarycompetitors. This analysis should identify their competitors’current strategies, strategic intent, strategic mission,

capabilities, core competencies and competitive responseprole. This information is useful to the focal rm informulating an appropriate strategic intent and mission.

I N T E R N A L E N V I R O N M E N TA N A LY S I SThe internal environment is composed of strengths andweaknesses internal to a rm that inuence its strategic

competitiveness. The purpose of completing an analysisof a rm’s internal environment is to identify itsstrengths and weaknesses. The strengths and weaknesses

in a rm’s internal environment shape the strategicintent and strategic mission. The internal environmentessentially indicates what a rm can do . Capabilitiesor skills that allow a rm to do something that otherscannot do or that allow a rm to do something betterthan others do it are called strengths. Strengths can becategorised as something that a rm does especiallywell. Strengths help a rm to take advantage of externalopportunities or overcome external threats. Capabilities

E X H I B I T 6 S a m p l e g e n e r a l e n v i r o n m e n t a l c a t e g o r i e s

Technology Information technology continues to become cheaper and have more practicalapplications Database technology allows organisation of complex data and distribution ofinformation Telecommunications technology and networks increasingly provide fast transmissionof all sources of data, including voice, written communications and video information

Demographic trends Computerised design and manufacturing technologies continue to facilitate qualityand exibility Regional changes in population due to migration Changing ethnic composition of the population Ageing of the population Ageing of the baby boomer generation

Economic trends Interest rates Ination rates Savings rates Trade decits Budget decits

Exchange ratesPolitical/legal environment Antitrust enforcement

Tax policy changes Environmental protection laws Extent of regulation/deregulation Developing countries privatising state monopolies State-owned industries

Socio-cultural environment Increasing proportion of women in the workforce Awareness of health and tness issues Concern for the environment

Concern for customersGlobal environment Currency exchange rates

Free trade agreements Trade decits New or developing markets



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or skill deciencies that prevent a rm from completingan important activity as well as others do it are calledweaknesses. Weaknesses have the potential to prevent arm from taking advantage of external opportunities orsucceeding in efforts to overcome external threats. Thus,weaknesses can be thought of as something the rm needsto improve.

Analysis of the primary and support activities ofthe value chain provides opportunities to understand howexternal environmental trends affect the specic activitiesof a rm. Such analysis helps to highlight strengthsand weaknesses. (See Chapter 3 for an explanationof the value chain.) For the purposes of preparing anoral or written presentation, it is important to notethat strengths are internal resources and capabilitiesthat have the potential to be core competencies.Weaknesses, on the other hand, have the potential toplace a rm at a competitive disadvantage in relation toits rivals.

When evaluating the internal characteris tics of therm, your analysis of the functional activities emphasisedis critical. For example, if the strategy of the rm isprimarily technology-driven, it is important to evaluatethe rm’s R&D activities. If the strategy is market-driven, marketing functional activities are of paramountimportance. If a rm has nancial difculties, criticalnancial ratios would require careful evaluation. In fact,because of the importance of nancial health, mostcases require nancial analysis. The appendix lists andoperationally denes several common nancial ratios.Included are exhibits describing protability, liquidity,leverage, activity and shareholders’ return ratios.Other rm characteristics that should be examinedto study the internal environment effectively includeleadership, organisational culture, structure and controlsystems.

I D E N T I F I C AT I O N O F S T R AT E G I CI N T E N T A N D M I S S I O NStrategic intent is associated with a mind-set that managersseek to imbue within the company. Essentially, a mind-setcaptures how we view the world and our intended rolein it. Strategic intent reects or identies a rm’s idealstate. Strategic intent ows from a rm’s opportunities,threats, strengths and weaknesses. However, the maininuence on strategic intent is a rm’s strengths . Strategicintent should reect a rm’s intended character and acommitment to ‘stretch’ available resources and strengths

in order to reach strategies and objectives. Examples ofstrategic intent include:

the relentless pursuit of perfection (Lexus). to be the top performer in everything that we do

(Phillips Petroleum). we are dedicated to being the world’s best at

bringing people together (AT&T).

The strategic mission ows from a rm’s strategicintent; it is a statement used to describe a rm’s unique

intent and the scope of its operations in product andmarket terms. In its most basic for m, the strategic missionindicates to stakeholders what a rm seeks to accomplish.An effective strategic mission reects a rm’s individualityand reveals its leadership’s predisposition(s). The usefulstrategic mission shows how a rm differs from othersand denes boundaries within which the rm intends tooperate. For example:

Cochlear’s mission is to have ‘clinical teams andrecipients embrace Cochlear as their partner in

hearing for life’. Coca-Cola Amatil’s mission is to have market

leadership in every territor y.

HINTS FOR PRESENTING ANEFFECTIVE STRATEGIC PLANThere may be a temptation to spend most of your oral orwritten case analysis on the results from the analysis. Itis important, however, that the analysis of a case shouldnot be over-emphasised relative to the synthesis of resultsgained from your analytical efforts – what does theanalysis mean for the organisation (see Exhibit 3)?

S T R AT E G Y F O R M U L AT I O N :C H O O S I N G K E Y R E S U LTA R E A SOnce you have identied strengths and weaknesses,determined the rm’s core competencies (if any), andformulated a strategic intent and mission, you have apicture of what the rm is and what challenges and threatsit faces.

You can now determine alternative key resultareas (KRAs). Each of these is a category of activitiesthat helps to accomplish the strategic intent of the rm.For example, KRAs for Cochlear may include to remaina leader in hearing implant technology and to buildlinks with hearing clinicians in South-East Asia. Each



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alternative should be feasible (that is, it should matchthe rm’s strengths, capabilities and, especially, corecompetencies), and feasibility should be demonstrated.In addition, you should show how each alternativetakes advantage of the environmental opportunity oravoids/buffers against environmental threats. Developingcarefully thought-out alternatives requires synthesis ofyour analyses and creates greater credibility in oral andwritten case presentations.

Once you develop a strong set of alternative KRAs,you must evaluate the set to choose the best ones. Yourchoice should be defensible and provide benets overthe other alternatives. Thus, it is important that both thealternative development and evaluation of alternativesbe thorough. The choice of the best alternative shouldbe explained and defended. For the two Cochlear KRAspresented earlier, the strategies are clear and in both casesthey take advantage of competencies within the companyand opportunities in the external environment.

K E Y R E S U LT A R E AI M P L E M E N TAT I O NAfter selecting the most appropriate KRAs (that is,those with the highest probability of enhancing a rm’sstrategic competitiveness), you must consider effectiveimplementation. Effective synthesis is important toensure that you have considered and evaluated all criticalimplementation issues. Issues you might consider includethe structural changes necessary to implement the new

strategies and objectives associated with each KRA.In addition, leadership changes and new controls orincentives may be necessary to implement these strategicactions. The implementation actions you recommendshould be explicit and thoroughly explained. Occasionally,careful evaluation of implementation actions may show

the strategy to be less favourable than you originallythought. (You may nd that the capabilities required toimplement the strategy are absent and unobtainable.) Astrategy is only as good as the rm’s ability to implementit effectively. Therefore, expending the effort to determineeffective implementation is important.

P R O C E S S I S S U E SYou should ensure that your presentation (either oral orwritten) has logical consistency throughout. For example, ifyour presentation identies one purpose, but your analysisfocuses on issues that differ from the stated purpose,the logical inconsistency will be apparent. Likewise,your alternatives should ow from the conguration ofstrengths, weaknesses, opportunities and threats youidentied through the internal and external analyses.

Thoroughness and clarity also are critical to aneffective presentation. Thoroughness is represented bythe comprehensiveness of the analysis and alternativegeneration. Furthermore, clarity in the results of theanalyses, selection of the best alternative KRAs andstrategies, and design of implementation actions areimportant. For example, your statement of the strengthsand weaknesses should ow clearly and logically from theinternal analyses presented, and these should be reectedin KRAs and strategies.

Presentations (oral or written) that show logicalconsistency, thoroughness and clarity of purpose,effective analyses, and feasible recommendations are

more effective and will receive more positive evaluations.Being able to withstand tough questions from peers afteryour presentation will build credibility for your strategicplan presentation. Furthermore, developing the skillsnecessary to make such presentations will enhance yourfuture job performance and career success.

NOTES1 M. A. Lundberg, B. B. Levin & H. I. Harrington, 2000,

Who Learns What from Cases and How? The Research Base for Teaching and Learning with Cases , Englewood Cliffs,NJ: Lawrence Erlbaum Associates.

2 L. B. Barnes, A. J. Nelson & C. R. Christensen, 1994,Teaching and the Case Method: Text, Cases and Readings ,Boston: Harvard Business School Press; C. C. Lundberg,1993, ‘Introduction to the case method’, in C. M. Vance(ed.), Mastering Management Education , Newbury Park,Calif.: Sage; C. Christensen, 1989, Teaching and the Case

Method , Boston: Harvard Business School PublishingDivision.

3 C. C. Lundberg & E. Enz, 1993, ‘A framework forstudent case preparation’, Case Research Journal , 13(Summer): 133.

4 J. Solitis, 1971, ‘John Dewey’, in L. E. Deighton (ed.),Encyclopedia of Education , New York: Macmillan & TheFree Press.

5 F. Bocker, 1987, ‘Is case teaching more effectivethan lecture teaching in business administration? Anexploratory analysis’, Interfaces , 17(5): 64–71.



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APPENDIX: FINANCIAL ANALYSIS IN CASE STUDIES

A P P E N D I X 1 P R O F I TA B I L I T Y R AT I O S

RATIO FORMULA WHAT IT SHOWS

1 Return on total assets Prots after taxesTotal assets

The net return on total investmentof the rm

or or

Prots after taxes + interestTotal assets

The return on both creditors’ andshareholders’ investments

2 Return on shareholders’ equity(or return on net worth)

Prots after taxesTotal shareholders’ equity

How effectively the company isutilising shareholders’ funds

3 Return on ordinary equity Prot after taxes – preference share dividendsTotal shareholders’ equity – par value of

preference shares

The net return to ordinaryshareholders

4 Operating prot margin(or return on sales)

Prots before taxes and before interestSales

The rm’s protability from regularoperations

5 Net prot margin(or net return on sales)

Prots after taxesSales

The rm’s net prot as a percentageof total sales

A P P E N D I X 2 L I Q U I D I T Y R AT I O S


1 Current ratio Current assetsCurrent liabilities

The rm’s ability to meet its current nancialliabilities

2 Quick ratio (or acid-test rat io) Current assets – inventoryCurrent liabilities

The rm’s ability to pay off short-termobligations without relying on sales ofinventory

3 Inventory to net workingcapital

Inventory

Current assets – current liabilities

The extent to which the rm’s working capitalis tied up in inventory



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A P P E N D I X 3 L E V E R A G E R AT I O S


1 Debt-to-assets Total debtTotal assets

Total borrowed funds as a percentage of totalassets

2 Debt-to-equity Total debtTotal shareholders’ equity

Borrowed funds versus the funds provided byshareholders

3 Long-term debt-to-equity Long-term debtTotal shareholders’ equity

Leverage used by the rm

4 Times-interest-earned(or coverage ratio)

Prots before interest and taxesTotal interest charges

The rm’s ability to meet all interest payments

5 Fixed charge coverage Prots before taxes and interest+ lease obligations

Total interest charges+ lease obligations

The rm’s ability to meet all xed-chargeobligations, including lease payments

A P P E N D I X 4 A C T I V I T Y R AT I O S


1 Inventory turnover SalesInventory of nished goods

The effectiveness of the rm in employinginventory

2 Fixed assets turnover SalesFixed assets

The effectiveness of the rm in utilising plantand equipment

3 Total assets turnover SalesTotal assets

The effectiveness of the rm in utilising totalassets

4 Accounts receivable turnover Annual credit sales Accounts receivable

How many times the total receivableshave been collected during the accountingperiod

5 Average collection period Accounts receivable Average daily sales

The average length of time the rm waits tocollect payments after sales



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A P P E N D I X 5 S H A R E H O L D E R S ’ R E T U R N R AT I O S


1 Dividend yield on ordinaryshares

Annual dividends per shareCurrent market price per share

A measure of return to ordinary shareholdersin the form of dividends

2 Price–earnings ratio Current market price per share After-tax earnings per share

An indication of market perception of the rm.Usually, the faster-growing or less risky rmstend to have higher PE ratios than the slower-

growing or more risky rms

3 Dividend payout ratio Annual dividends per share After-tax earnings per share

An indication of dividends paid out as apercentage of prots

4 Cash ow per share After-tax prots + depreciationNumber of ordinary shares outstanding

A measure of total cash per share available foruse by the rm


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