international

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Appendix 1

Student Guide to Case Analysis Using the American Management Association 8-step Process.

Sally Armstrong, May 2005. Davenport University.

References

Patten, D. (undated). Strategic Case Analysis. Davenport University.

Boone & Kurtz, (2006). Contemporary Business 11th Ed. New York. McGraw-Hill Irwin.

Case studies present you with real life scenarios and situations that help to develop your critical thinking, problem solving and decision making skills in the relatively safe environment of the classroom. Whether the situation described in a case is fairly straightforward or is highly complex, as in upper level courses, the entire problem solving process involves 3 stages and eight steps. However, in Introductory or Foundation courses the questions at the end of case studies will typically focus on specific steps, in the first two stages. This introductory guide will help you understand and practice all the steps of the process and will ensure that you are well prepared to tackle the more challenging cases in upper level classes when that time comes. It will also help you to become a better problem solver in your domestic, social and working life.

Steps 1-3 – The Problem Identification Stage

Step 1 – Review the case and identify the relevant facts

Problem situations or cases often include extraneous information or irrelevant ‘stuff’. Therefore, when you are trying to find a solution to a situation or to answer a case question, the first step is to identify the key facts so that you can figure out what is going on before deciding how to answer or solve the problem. In advanced courses, this usually involves extensive research but in an introductory or foundation level course, you will typically only use the information in the case. However, to do well in any case study assignment, it is important to read the case carefully and also to make sure you fully understand what the assignment and/or case questions are asking for. As you review the case, this will help you to identify what you need to pay attention to and what to ignore. That’s what relevance means – eliminating ‘stuff’ and identifying the important facts in a situation.

Let us assume that you have just read a case entitled XYZ company and are trying to answer the following question:

What are the current challenges facing XYZ company?

You must identify and list the key facts which, for the purposes of our example, are those listed below:

· The government has recently deregulated the industry to stimulate competition.

· Telecommunications advances have led to increasing internet use.

· More and more users are comparison shopping on the internet

· Price competition in the industry is increasing and average net profit margins have fallen 1% in the past two years.

· XYZ recently laid off 10% of its workforce in an effort to lower costs and remain competitive. Management believes that this is enough to allay the effects of competition for the next 3 years.

· Many companies in the industry are now forcing their employees to make a contribution to healthcare benefits.

· The company’s employee survey indicates that morale among employees is at an all time low.

· The management believes that low morale is the cause of the recent 2% fall in productivity.

· The employee survey also indicates that employees would be willing to pay a contribution towards healthcare if it stopped job losses.

· Although the company remains profitable and made over $11,000 000 last year, net profit decreased by $1,000 000.

· The company’s net profit margins also decreased by 1% last year.

· The company advertises regularly and its overall marketing costs are in line with its competitors.

· The company estimates that if employees pay 50% of their healthcare costs they can save $1,500 000 per annum.

Step 2 - Determining the Root Problem & Step 3 - Identifying the Problem Components

To identify the root or cause of the problem and the purpose of each question, consider how past experience or the concepts in this or previous courses may be useful. Bear in mind, that end of chapter cases in introductory or foundation level classes are generally assessing your understanding of the concepts discussed in that chapter. Also, not every concept will be relevant to every case or case question. However, you must decide what evidence or facts in the case are contributing to the problem and/or are symptomatic of the concept. Ranking each fact or item of evidence will help you to decide how important it is and the order in which it should be addressed.

Working through steps 1-3 is sometimes all that is required to answer case questions, such as:

Case Question: “What are the current challenges facing XYZ company?”

Continuing with the example from step 1, let us assume that the chapter concepts include the external forces that affect an organization such as political/legal, economic, socio-cultural, technological or competitive and also the internal forces such as management problems, staffing problems or financial problems. From reading the case, the key facts indicate that there are some external legal, technological and social forces that are causing competition to increase and are having an effect both outside and inside the organization. As you write up your answer, you should state the cause of the problem, describe the components you have identified and the effects they are having. So, an answer to this type of case question and our example might look something like this:

The current challenges facing XYZ are how to remain competitive and profitable, improve productivity and maintain good employee relations. A number of factors are contributing to this situation. First, the government has recently passed laws to deregulate the industry. This is causing competition in the industry to increase. Second, widespread adoption of telecommunications and the internet means customers are finding it much easier to shop around and compare prices. This is also stimulating competition and is driving down prices industry-wide. Lower prices have led to lower profits in the industry and the 1% fall in XYZ’s net margin is reflected in the $1,000 000 decline in net profit. Consequently, XYZ has been downsizing and recently laid off 10% of its workforce in an effort to cut costs. A recent company survey indicated that downsizing has adversely affected employee morale which the management believes is responsible for the 2% decline in productivity. (XYZ, pp 214-215).

Steps 4-6 – The Decision Making Stage

As you have seen, questions relating to the first 3 steps usually require you to provide a descriptive answer. Here are some typical examples of questions that make you think more creatively and critically and will require you to proceed through steps 4-6:

“Do you agree with Wal-Mart’s position or the union’s position on organizing Wal-Mart’s employees” Why?”

“What else do you think Stacy’s Pita Chips could do to promote its products? Be specific.”

“How do you think Toyota can protect its reputation for quality while growing rapidly?” (Boone & Kurtz, 2006).

Can you see how these questions require you to express an opinion, make a decision about a future course of action or propose a solution? Also, did you notice that they all call for you to explain your reasons? Let us look at how you should tackle this type of question using steps 4, 5, & 6 but, remember, you must always work through steps 1-3 before proceeding to this next stage.

Step 4 - Generating Alternatives

If the case assignment or question requires a solution, a decision or an opinion then you need to consider all the options; just like you might before buying a new car. Brainstorming will help you generate a list of possible alternatives. In this step, you do not need to be judgmental; virtually any idea goes but if you do not list it, you cannot then choose it as the best option.

Going back to our example in the problem identification stage, we will assume that the next question you have to answer is:

What do you think XYZ should do to overcome the challenges they are facing?

Before we move to step 5, let us brainstorm for a few moments and list some alternatives for XYZ:

1. Close XYZ down – the future is bleak

2. Do nothing – the company has already cut costs enough

3. Increase productivity- to reduce unit costs

4. Employ more sales people- to increase sales revenue

5. Run some extensive advertising campaigns- to increase sales revenue and product awareness

6. Discontinue company benefits – to reduce costs

7. Continue to lay off staff as needed – to reduce costs

8. Implement voluntary redundancy/retirement and a hiring freeze – to reduce costs.

9. Ask employees to pay a proportional cost of medical benefits – to reduce costs.

Step 5 - Evaluating Alternatives

Once you have listed all your alternatives, the next step is to narrow them down to those that seem most attractive; much like whittling down a long list of new cars to a few potential makes and models. After you’ve screened your list, take the relevant facts that you gathered in step 1 and apply them to each of the remaining alternatives. This provides you with the necessary supporting evidence to reject most of the remaining alternatives and decide on the best.

1. There is no need to close down – the company is still profitable.

2. Deregulation and consumer shopping habits mean competition is likely to be a fact of life for a long time to come– doing nothing is, therefore, not an option. The company must look for more ways to cut costs

3. Increasing productivity would help the company but without the commitment of the workforce this is unlikely to be successful.

4. Employing more sales people is an option but would increase costs without any real guarantee of success

5. The company already advertises regularly – doing more would push costs up higher than the industry average making it more uncompetitive unless revenues greatly increase as a result. This seems unlikely with the advent of increasing competition.

6. Discontinuing company benefits would decrease costs but may damage employee morale still further, However, it is a longer term possibility as employees have indicated they would rather pay for benefits than lose their jobs

7. Continuing to lay off employees will perpetuate the downward spiral of morale and productivity.

8. Voluntary redundancy/retirement and/or a hiring freeze may be a more acceptable alternative to enforced layoffs.

9. Employees have already indicated that they would be willing to pay a proportion of their healthcare costs so this is a good option. Also, this is becoming the industry norm so it should not adversely affect future recruitment.

Step 6 - Choose an Alternative

After evaluating all your options, choosing the best alternative is usually a straight forward next step but it is also one that is often skipped, even by business professionals. So, make sure that you state your preferred solution simply and clearly. Keep in mind that your readers aren’t as familiar with the case as you, so, even if you think the reasons for your solution, decision or opinion are obvious, you must still explain which facts led you to that conclusion. Imagine that you had decided to do nothing because you think things will settle down.

It is not enough to say,

“XYZ could close down or spend a lot of money on advertising and promotion to boost sales but the best solution is to do nothing, I think things will settle down.”

Using the evidence/information from the case, other research (typically only necessary in upper level classes) and your experience to clarify your reasoning, you would have to state that you are recommending ‘Do nothing’ because … , say what you mean by ‘things’ and why you think they will ‘settle down’. An unsupported decision, solution or opinion does not fly in business and it will not get you many points in your case assignments either. So, going back to our screened list of alternatives, our answer would read something like this:

Although management believes that the recent 10% reduction in staff has reduced costs sufficiently to allay the effects of competition for the next 3 years (XYZ), they cannot afford to stand still or do nothing further because competition is increasing and is here to stay (XYZ). Increasing promotional activity would also increase costs with no guaranteed results and more job losses would result in a further decline in morale and productivity. Bearing all this in mind, XYZ’s best option, therefore, is to introduce employee healthcare contributions. This will save the company $1, 500 000 per annum and employees have already indicated that they would be willing to accept this option in preference to further job losses (XYZ). Therefore, productivity is likely to improve once the changes are communicated and implemented.

Steps 7 & 8 – The Action Planning Stage.

The first two stages of the case analysis process focus on identifying and making decisions about the big picture. In this last stage, steps 7& 8 call for you to define how you will turn your solution or decision into action, how, when and what you will monitor to ensure things are working out as planned and what you will do if they are not. Steps 7 & 8 are often not required when answering introductory or foundation level case questions. However, learning about them and starting to use them appropriately will serve you well in future classes, impress your instructor and probably earn you some extra points in your assignments! It is also very good business practice.

Step 7 - Implementation Plan

If the case questions ask you for a solution or to decide on a course of action, it is important to describe how you will execute or implement it. Without this section, the plan is not complete and sometimes, particularly in upper level classes, your case assignment will not be either! An implementation plan outlines who will do what by when and is often conveyed in a simple table, as the following example for our XYZ case illustrates.

In our XYZ example, we have decided to introduce a new benefits program to reduce costs. Let us assume that the benefits team in the Human Resources department will be responsible for communicating changes in the benefits program to employees. This communication must be complete by mid May so that employees can make informed selections in the open enrollment period during the last two weeks of May.

Communication Plan for New Benefits Program

Action Required	Action by	Time required/Deadline
Identify volunteers for focus groups to identify appropriate communication methods	Benefits Director	1 week/ 31st Jan
Conduct focus groups	Benefits Team	2 weeks/14th Feb
Prepare communication & enrolment forms in formats identified by focus groups	Benefits Director & PR Consultants	4 weeks/14th March
Send draft communications & documents to printers	PR firm	1 week/21st March
Printer proofs edited	Benefits Director/PR consultants	1 week/28th March
Print communications & enrollment forms	Printer	4 weeks/21st April
Deliver communication materials & enrolment forms to employees	Benefits Team	2 weeks/5th May
Open enrollment	Employees	2 weeks /14th May – 31st May
E-mail deadline reminder	Benefits Director	1 day/ 21st May
Priority E-mail deadline reminder	Benefits Director	1 day/28th May
Priority E-mail & phone stragglers	Benefits Team	2 days/30th & 31st May

Step 8 - Alternative Choice

Finally, as with any plan, it is very important to build in measures so that you can periodically monitor whether it is working. Therefore, you need to state HOW, WHEN and WHAT you will measure, for example: quarterly reviews of new accounts opened, sales volume or number of units sold, increases in customer awareness or satisfaction levels, gross profit margins or net profits. You must also have a contingency plan in case things do not go as expected. Will you make modifications to your existing plan? Will you start the process over? Will you choose some other alternative that you have already identified?

Let us take a final look at our XYZ example and decide how, when and what we would measure if this were a real life situation and what else we could do if things do not go according to plan:

XYZ Measurement & Controls

· Month end reviews of management accounts to monitor costs/productivity

· Month end financial reviews to monitor profitability

· Quarterly employee satisfaction survey to monitor effects of new benefits program on morale

XYZ Alternative Strategies

· Assuming interim employee survey indicates restored morale, further employee contributions to benefits may be possible e.g. retirement contributions, reduction in paid time off

· If morale insufficiently restored - Voluntary lay offs/redundancy and hiring freeze may be necessary.

Writing Up Answers to Case Studies.

Good writing that presents the reader with clear, understandable information and is free from errors of typography, grammar, spelling and punctuation is one of the skills that most impresses instructors and employers. That is why written communication is listed in the D.U.E.S. and why DU provides Learning Center tutors to help you improve your writing skills. Working through the 8-step case analysis process requires a lot of effort so here are a few additional tips to ensure that poor mechanics do not undermine all your hard work:

· Include your name, assignment number and submission date on a cover page or as directed in the assignment guidelines.

· Use one inch margins, double line spacing and 12pt font – an APA 6th Ed. style requirement that also makes your work easier to read and grade. (APA template is available in MSWord on all DU academic computers).

· Use APA 6th Ed. style appropriately in the body of your work to cite evidence from all your sources, including case study information. It is plagiarism to use other people’s ideas and writing without acknowledging them and DU instructors search the internet for plagiarism using http://www.turnitin.com

· Always assume that the reader does not know the question you are answering. Therefore, do not respond with statements that begin “Yes, they should.” or “No, I don’t agree”. Review the sample answers in this document if you are unsure how to restate questions in your answer.

· Generally, it is better to write using third person and active voice, for example: “The company faces the following challenges…” rather than “I think the following challenges are faced by the company…” again, use the examples in this document to guide you.

· Create signposts for the reader by using headings for large sections and use sub headings, if necessary. Note: As in this document, business writing typically does not adopt APA style headings.

· Use formatting such as bold, underlining or italics judiciously and consistently to emphasize important points. For example, this document uses bold.

· Include charts and graphs if they can convey information more clearly than narrative –for example, in comparisons of statistical or financial data.

· Include an APA 6th Ed. style reference page that lists all the sources of information you cited in the body of your work.

· Run the spell and grammar check feature in Microsoft Word to correct errors.

· Proofread and edit your work to identify and correct additional errors.

· Have someone with strong writing skills check your work before you submit it.

· Review the assignment guidelines carefully to make certain that you have fulfilled all the requirements before you submit it.