introduction to business case studies 301 - cases in... · cases in business finance and strategy...

PGDBFS 301 - CBFS 11/9/19

Conducted by Nadun Kumara 1

PGDBFS 301Cases in Business Finance and Strategy (CBFS)Postgraduate Diploma in Business Finance & Strategy

SESSION 01

Conducted by – Nadun Kumara

01.Introduction to Business Case StudiesLet’s begin with the end in mind…



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Case study analysis is an integral part of a course in strategic management.

The purpose of a case study is to provide students with experience of the strategic management problems that

actual organizations face…

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01.01 - INTRODUCTION to Business Case Studies

▸A case study is a particular account of a set of circumstances faced by anindustry, specific organization or individual.

▸ It provides information about a real life business situation and givesexamples of how strategic issues are managed by real organizations.

▸A case study describes an actual situation, such as the current state of anindustry and factors influencing it or, for example, specific problems facing anorganization.

▸When undertaking such analysis, you would be expected to utilize relevanttheoretical concepts and frameworks.



01.02 - OBJECTIVES of Business Case Studies

1. Increase your understanding of what managers should and should not do inguiding a business to success.

2. Build your skills in sizing up company resource strengths and weaknessesand in conducting strategic analysis in a variety of industries andcompetitive situations.

3. Get valuable practice in identifying strategic issues that need to beaddressed, evaluating strategic alternatives, and formulating workable plansof action.

4. Enhance your sense of business judgment, as opposed to uncriticallyaccepting the authoritative crutch of the professor or “back-of-the-book”answers.

5. Gaining in-depth exposure to different industries and companies, therebyacquiring something close to actual business experience.

02.Process of Business Case Analysis (BCA)How it is done…



02.01 – PROCESS of BCA

Read Situational Analysis

Assumptions & Missing

informationProblem

DefinitionStrategic Analysis Alternatives Recommen-

dations

R S A P S A R

02.01 – PROCESS of BCA (contd.)

▸ No one can analyze a case after reading it only one time, or even worse, doing the analysis duringthe first reading of the case. You should read through the case once just to get an understanding ofthe nature of the case. During the second reading, you can begin to structure and classify the issuesas they appear. A truly comprehensive case analysis will probably require at least three readings.

▸ Don’t get trapped into thinking the “answer” to the case is hidden somewhere in the case text.There is never a single answer to a case just as there is never a single marketing strategy that isappropriate for all situations. Each case is unique. Looking for tricks or shortcuts is not appropriate.

▸ Make an effort to put yourself in the shoes of the decision maker in the case. The use of role-playing as part of the analysis can be very useful. It helps you gain some feeling for the perspectiveof the key parties at the time the case took place.



informationProblem


dations






informationProblem


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Situational Analysis

Internal

“SW”OT Ratio Analysis

External

SW“OT” PESTEL P5Fs


▸ There can be a plethora of information that is missing as you feel.

▸ The way forward is…



informationProblem


dations

Identify the missing

information

State VALID and LOGICAL assumptions

State restrictions in the analysis




▸ The identification and clear presentation of the problem(s) or issue(s) facing the company is themost critical part of the analysis framework.

▸ Only a problem properly defined can be addressed.

▸ Tools used in Step 02 can help you to identify the problems / issues of the organization.



informationProblem


dations


▸ The most important question in the identification of any problem is “WHY?”▸ The “WHY?” question should always be asked after a potential problem has been proposed.

▸ Example –To illustrate, pinpointing the problem associated with a sales decline might progress like this:ü Why have sales declined?Sales have declined because there are too many sales territories that are not assigned to a salesperson.ü Why are so many sales territories unassigned?Sales territories are unassigned because sales force turnover has doubled in the past year.ü Why has sales force turnover doubled?Turnover began to increase over a year ago when the sales force compensation plan was altered in orderto reduced variable expenses.



informationProblem


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▸ When you can no longer devise a meaningful response to the “WHY?” question, you have probablyfound the problem.

▸ Example –In this instance, the problem statement might read:“The current sales force compensation plan at XYZ Company is inadequate to retain an acceptablepercentage of the firm’s salespeople, resulting in lost customers and decreased sales.”

▸ The problem statement should be brief—almost always one or two sentences.

▸ It should be to the point, and it should provide a clear indication as to what must be addressed toimprove the performance of the organization.



informationProblem


dations


▸ BUSINESS STRATEGY TOOLS▸ Vision / Mission / Goals / Objectives / KPIs▸ Porter’s Generic Strategies▸ Ansoff’s Matrix▸ BCG Matrix▸ Value Chain Analysis

▸ FINANCE TOOLS▸ Corporate Valuations▸ Cost of Capital▸ Financial Statement Analysis▸ Investment Appraisals



informationProblem


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▸ Once we have the problem clearly and sufficiently defined and the strategy clearly identified, we arein a position to develop a set of strategic alternatives that have a reasonable potential to solve theproblem.

▸ A key problem students face in this step is that they generate a laundry list of a dozen fairly detail-oriented items. These items have a lot more to do with the tactics of implementing a strategy thanwith presenting alternative strategies from which we will make our selections.



informationProblem


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▸ Example –▸ Going back to the sales force example above, the list may include ideas such as:ü Take candidates through a more rigorous interview processü Lengthen the training programü Give every salesperson a company carü Offer both individual and regional bonusesü Increase company contribution to the retirement program for each year of employmentü Conduct an employee-evaluation training program for the firm’s sales managers

▸ While these may all be good ideas, they are not strategic alternatives. The term alternative suggestsan either/or situation. From the list above, you might include several items in your recommendationsection.



informationProblem


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▸ Once you have developed a set of realistic alternatives, it is time to do a thorough evaluation ofeach of the options.

▸ Three major criteria should be used in this evaluation process:



informationProblem


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01 –How well does the alternative address the problems or issues as stated in Step 4?

02 –Does it meet the “Strategy” of the organization as analyzed in Step 5?

03 –Does it have a cost-benefit impact to the organization in the short run or long run?

BIG PICTURELike anything else, the learning benefits of case analysis are dependent on the amount of effort you put into the analysis. Learning to think critically and see the big picture are important lessons to be learned in a case course.



03. Tips & HintsWhat to do & What not to do…

03.01 – Tips & Hints – WHAT TO DO?

• ALWAYS try to relate to and apply theoretical models, concepts, frameworks…etc.

• When reading the case study, put yourself in the situation of the case study and imagine how you would have felt

• Highlight/underline key names, key phrases, and, statistics, pointers, issues, strategy

• Make notes in an orderly manner

• Apply the case study info as well This means, using names, phrases, statistics, examples, actions, activities, issues, situations, and any sort of details from the case study, back in your answer to help justify your answer



03.02 – Tips & Hints – WHAT “NOT” TO DO?

• Not understanding and accepting the facts of the case

• Not explaining exactly what the problems are and why they have occurred

• Making unwarranted assumptions to try to simplify the case

• Sticking to generalities, such as “they must try to improve communication”

• Not integrating the various points into a preferred solution

• Seeking ways out of the situation (such as “fire them all”) rather than trying to solve the problems

• Ignoring practicalities

THANKS!Any [email protected] 796 063

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