Managing Diversity and Inclusion at Yelp
Ttnguyen
textbook-BUAD.pdf
1.
Advanced Business Communication
Debra Danielsen
BUAD 301 Spring 2021
California State University - Fullerton
Table of Contents
The Student Guide to the Case Method...........................................................................................5
Telus: Ethics and Cellphone Tower Sites.......................................................................................69
Building a Backdoor to the iPhone: An Ethical Dilemma................................................................77
Managing Diversity and Inclusion at Yelp.......................................................................................87
Team Conflict: The Chatty Accusation At The Customer Support Call Center...............................97
Advanced Business Communication BUAD 301 Spring 2021
Debra Danielsen California State University - Fullerton
2.
THE STUDENT GUIDE TO THE CASE METHOD
By Laurie George Busuttil and Susan J. Van Weelden
Product # 9B18M128
IVEY SCHOOL OF BUSINESS FOUNDATION COPYRIGHT © 2018
To order copies or request permission to reproduce materials, please contact: Ivey Publishing, Ivey School of Business Foundation
c/o Ivey Business School Western University 1255 Western Road
London, Ontario N6G 0N1 Tel: (519) 661-3208 Fax: (519) 661-3882
Email: [email protected]
Ivey School of Business Foundation prohibits any form of reproduction, storage, posting, or transmission of this material without its written permission. Reproduction of this
material is not covered under authorization by any reproduction rights organization.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
5
The Student Guide to the Case Method
2
NOTE 1: UNDERSTANDING THE CASE METHOD ..................................................................................5 1. Introduction to Understanding the Case Method ..............................................................................6 2. Purpose of the Case Method ............................................................................................................6 3. Reading a Case .................................................................................................................................7 4. Analyzing a Case ..............................................................................................................................7 5. Scope of the Case Guide Series .......................................................................................................7 6. Case Analysis and Academic Integrity ..............................................................................................8
NOTE 2: PERFORMING A CASE ANALYSIS .........................................................................................10
1. Introduction to Performing a Case Analysis ....................................................................................11 2. Identify the Issues ...........................................................................................................................11
2.1. Pay Attention to Questions ......................................................................................................11 2.2. Distinguish Symptoms from Issues ..........................................................................................12 2.3. Limit Issues to a Manageable Set ............................................................................................12
3. Analyze the Issues ..........................................................................................................................12 3.1. Use Case Facts ........................................................................................................................13 3.2. Use Business Concepts, Models, and Tools ...........................................................................13 3.3. Use Outside Research Sparingly .............................................................................................13
4. Develop and Evaluate the Alternatives ...........................................................................................13 4.1. Develop Alternative Solutions ..................................................................................................14 4.2. Evaluate the Alternative Solutions ...........................................................................................14 4.3. Use Case Facts and Business Concepts, Models, and Theories to Evaluate the Alternatives ..............................................................................................................................15
5. Recommendations ..........................................................................................................................16 5.1. Apply Criteria for Making Sound Recommendations ...............................................................16 5.2. Craft Your Recommendations ..................................................................................................16 5.3. Base Your Recommendation on the Information You Have ....................................................16 5.4. Evaluate Your Recommendations ...........................................................................................17
6. Variations on performing a Full Case Analysis ...............................................................................17 6.1. Analytical Cases .......................................................................................................................17 6.2. Partial Case Analysis ...............................................................................................................17
NOTE 3: PREPARING TO DISCUSS A CASE .........................................................................................18
1. Introduction to Preparing to Discuss a Case in Class .....................................................................19 2. Prepare before Class ......................................................................................................................19 3. Contribute to In-Class Discussion ...................................................................................................19 4. Listen to others in Class ..................................................................................................................20
4.1. Use Active Listening Techniques .............................................................................................20 4.2. Use Listening Etiquette ............................................................................................................21
5. Enhance the Quality of Your Class Participation ............................................................................21 NOTE 4: PREPARING A WRITTEN CASE REPORT ..............................................................................22
1. Introduction to Preparing a Written Case Report ............................................................................23 2. Play Your Assigned Role ................................................................................................................23 3. Identify the Issues ...........................................................................................................................23
3.1. Be Clear ...................................................................................................................................23 3.2. Settle on a Manageable Set of Issues .....................................................................................24 3.3. Use Your Issue Statement to Let the Reader Know What to Expect ......................................24
4. Analyze the Issues ..........................................................................................................................25 4.1. Test the Case Facts .................................................................................................................25 4.2. Use Business Concepts ...........................................................................................................25 4.3. Use External Research Sparingly ............................................................................................26 4.4. Adhere to Length Constraints ..................................................................................................26
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
6
The Student Guide to the Case Method
3
5. Develop and Evaluate Your Alternatives.........................................................................................26 6. Make Recommendations ................................................................................................................27 7. Content and Format of your Report ................................................................................................27
7.1. Length ......................................................................................................................................27 7.2. Font ..........................................................................................................................................27 7.3. Spacing ....................................................................................................................................28 7.4. Page Numbers .........................................................................................................................28 7.5. Headings and Subheadings .....................................................................................................28 7.6. Cover Page ..............................................................................................................................28 7.7. Executive Summary .................................................................................................................28 7.8. Introduction ..............................................................................................................................29 7.9. Body of the Report ...................................................................................................................29 7.10. Conclusion ............................................................................................................................29 7.11. Figures and Appendices .......................................................................................................29
7.11.1. The Purpose of Figures and Appendices……………………………………………………29 7.11.2. Quantitative Figures and Appendices……………………………….……………………….30 7.11.3. Numbering of Figures and Appendices……………………………………….……………..30
8. Writing Style, Grammar, and Spelling .............................................................................................31 8.1. Basic Criteria of a Well-Written Report ....................................................................................31 8.2. Use of “I Think” and “I Believe” ................................................................................................31 8.3. Formal versus Informal Reports ...............................................................................................31
9. Professional Language, Tone, and Tact .........................................................................................32 9.1. Use Professional Language .....................................................................................................32 9.2. Use Constructive Language .....................................................................................................33 9.3. Use Must and Need Sparingly .................................................................................................33
10. Case Reports Written by Teams .................................................................................................33 10.1. Team Meetings .....................................................................................................................33 10.2. Brainstorming .......................................................................................................................34 10.3. The Task of Writing the Report ............................................................................................34
11. Case Analysis and Academic Integrity ........................................................................................34 NOTE 5: MAKING AN ORAL CASE PRESENTATION ...........................................................................35
1. Introduction to Making An Oral Case Presentation .........................................................................36 2. Purpose of a Case Presentation .....................................................................................................36 3. Criteria of a Good Presentation .......................................................................................................36 4. Content of a Case Presentation ......................................................................................................37
4.1. Presentation of a Full Case Report ..........................................................................................37 4.2. Presentation without a Case Report ........................................................................................37
5. Audiovisual Aids ..............................................................................................................................38 6. Presentation Skills ...........................................................................................................................38 7. Handling Audience Questions .........................................................................................................39 8. Team Presentations ........................................................................................................................39 9. Role Of The Audience .....................................................................................................................40 10. Dress for Success ........................................................................................................................40
NOTE 6: PREPARING FOR AND WRITING A CASE EXAM ..................................................................41
1. Introduction to Writing a Case Exam ...............................................................................................42 2. Purpose of a Case Exam ................................................................................................................42 3. Preparing for a Case Exam .............................................................................................................42
3.1. Reread Notes and Texts ..........................................................................................................42 3.2. Practise Writing a Case under Exam Conditions .....................................................................43
4. Writing a Case Exam .......................................................................................................................43 4.1. Read the Instructions ...............................................................................................................43 4.2. Read the Case .........................................................................................................................44
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
7
The Student Guide to the Case Method
4
4.3. Prepare an Outline ...................................................................................................................44 4.4. Write Your Report ....................................................................................................................45
4.4.1. Prioritize and Manage Your Time…………………...………………………………………..45 4.4.2. Identify the Issues…………………………....………………………………………………...45 4.4.3. Analyze the Issues……………………………………………………………………………..45 4.4.4. Identify Alternative Solutions…………………………………….……………………………45 4.4.5. Evaluate Alternative Solutions………………………..……………………………………...45 4.4.6. Make Your Recommendation………………………………………………..……………….46 NOTE 7: USING COMMON TOOLS FOR CASE ANALYSIS ..................................................................47
1. Introduction to Common Tools for Case Analysis………………………………….….…………….48 2. Horizontal Analysis………………………………………………………………………………………48 3. Vertical Analysis…………………………………………………………………………………………49 4. Ratio Analysis……………………………………………………………………………..……………..49
4.1 Profitability or Activity Ratios………………………………………………………………………50 4.1.1 Return on Assets……………………………………………………………………………….50 4.1.2 Profit Margin…………………………………………………………………….………………50 4.1.3 Gross Profit Margin…………………………………………………………………………….51 4.1.4 Expense Ratios……………………………………………………………………….………..51 4.1.5 Asset Turnover…………………………………………………………………………………51 4.1.6 Inventory Turnover………………………………………………………………………..……51 4.1.7 Receivables Turnover………………………………………………………………………….52 4.1.8 Return on Equity………………………………………………………………………………..52 4.1.9 Earnings per Share………………………………………………………………………...…..53 4.1.10 Price-Earnings Ratio………………………………………………………………………..….53
4.2 Liquidity Ratios………………………………………………………………………………………53 4.2.1 Current Ratio ……………………………………………………………………………..……53 4.2.2 Acid Test Ratio (Quick Ratio)……………………………………………………………..….54
4.3 Solvency Ratios…………………………………………………………………………………..…54 4.3.1 Debt Ratio…………………………………………………………………….………………...54 4.3.2 Debt to Equity Ratio………………………………………………………….…..…………….55 4.3.3 Times Interest Earned……………………………………………………….…….…………..55
5. Assessing Profitability………………………………………………………………….…….………….55 6. Break-Even Analysis…………………………………………………………………….…...…………56 7. Market Potential and Market Share…………………………………………………….…….………..56 8. SWOT Analysis…………………………………………………………………………….…………….57 9. PESTLE Analysis………………………………………………………………………………………..57 10. Porter’s Five Forces Framework………………………………………………………………….……58 11. Stakeholder Analysis………………………………………………………………………………..…..60 12. Industry Success Factors……………………………………………………………………………….60 13. Value Chain Analysis………………………………………………………………………………..…..60
13.1. Industry Value Chain………………………………………………………………………………60 13.2. Organizational Value Chain…………………………………………………………………..…..61
14. Competitive Position Matrix………………………………………………………………………...…..61 15. Strategic Cluster Map………………………………………………………………………………..….62 16. Resource Gap Analysis…………………………………………………………………………………62 17. Core Competencies…………………………………………………………...…………….…………..63 18. Competitive Advantage Analysis VRIO………………………………………………………………..63 19. Case Analysis and Academic Integrity.........................................................................................64
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
8
The Student Guide to the Case Method
5
NOTE 1: UNDERSTANDING THE CASE METHOD
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
9
The Student Guide to the Case Method
6
A case or case study is a real business story that requires you to step into the role of a manager or a member of the management team that faces a dilemma, or the role of a consultant assisting an organization that faces a dilemma. Acting in that role, you are tasked with resolving the issues or problems that the profiled organization is facing at a particular moment in time. Alternatively, you are asked to evaluate and choose among opportunities that exist for the organization at a specific point in time. Those issues and opportunities may be confined to a specific discipline in business, such as accounting, marketing, human resources, or strategic management. However, the challenges often involve several disciplines, reflecting the multi-faceted nature of business in practice. The case method involves learning by doing. It provides you with an opportunity to apply your knowledge and skills to real-life and realistic situations. Listening to class lectures, reading about various business subjects, and performing quantitative and qualitative analyses to solve well-defined problems are all valuable learning tools; however, management skills and knowledge cannot be developed by these methods alone. Management requires more than applying a storehouse of prepackaged solutions or standard answers. Each situation faced by management has its own variables unique to the situation. Using the case method provides you with valuable opportunities to develop and practise skills you will need in those situations. 1. INTRODUCTION TO UNDERSTANDING THE CASE METHOD This note introduces you to the case method. It provides an overview of the steps used in case analysis and the types of case assignments you might encounter. It is designed to help you develop a basic understanding of the case method and to guide you in approaching your first few cases. Subsequent notes provide more detailed guidance about individual steps in the process. 2. PURPOSE OF THE CASE METHOD Case analysis is used as a teaching and learning tool to practise the art and science of management. The situations described in cases are less structured than the typical problems and questions found in most textbooks. There is not necessarily one right answer to resolving the issues, problems, or opportunities (collectively referred to hereafter as “issues”) faced by the organization in the case. While some answers could be better than others, there is no answer key at the back of the book to tell you whether you have made the right choices. The organization described in the case might be familiar to you, and you might even be able to find out what the organization actually did in the situation described in the case; however, the approach taken by the organization is not necessarily the one you should recommend. Also, because cases describe relatively current or recent situations, enough time might not have passed since the decision point in the case to allow you—or others in the business world—to evaluate whether the organization made the best possible choices. You are asked to draw your own conclusions and support them with your own analysis. Learning with the case method will help you develop essential management competencies, skills, and abilities. You will use technical, analytical, problem-solving, and creative skills. You will hone your written and oral communication skills by writing reports, participating in class discussions, and making presentations. You will develop your ability to work effectively with others by preparing team case reports and presentations. Along the way, you will learn about a wide variety of industries, organizations, and management issues.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
10
The Student Guide to the Case Method
7
3. READING A CASE Before reading the case itself, read the course requirements in the syllabus or on the course website. In addition to understanding the general purpose of the case method, it helps to know what your instructor wants you to do with the case—prepare for a class, answer questions, perform a complete analysis, prepare a written report or presentation, or undertake some combination of those tasks. When you read the case for the first time, resist the temptation to highlight important facts and to begin doing analysis and generating alternative solutions. If you use a highlighter on the first read, you will soon find yourself highlighting most of the case, especially in a short case that is rich in details. Instead, during the initial read, establish who the decision maker is and what decision needs to be made. Highlight any questions raised by the principal actors or characters: they usually indicate what work is expected (e.g., answers to specific questions, specific types of analysis, or evaluation of specific alternatives). Identify key goals of the organization, industry key success factors (if they are made explicit), and important constraints (e.g., the urgency of a decision, or the lack of resources or expertise). Develop a preliminary understanding of the issues facing the decision maker. Then read the case more carefully a second time. Armed with an initial understanding of the issues, you are now prepared to assess the relevance and importance of specific case facts. Highlighting the case facts at this stage will help you to be able to quickly extract them and use them effectively in your analysis. During your second read of the case, you can also gain a better understanding of the issues and begin to consider what analysis to perform with the case facts you have identified as relevant and important. Subsequent reads of the case will likely be confined to rereading specific sections of the case as you undertake the analysis described briefly in Section 3 and described in more detail in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054.
4. ANALYZING A CASE
Over the course of your business studies, you will face a variety of cases. Most of the cases will be in written format, but cases can also be provided as videos. The length of cases will vary, as will the breadth and complexity of issues they cover. As well, some cases will direct and limit the scope of your analysis, while other cases will pose general questions that require a more skilled approach to case analysis.
Regardless of the size and scope of the case, case analysis involves four basic steps:
A. Identify the issues, problems, and opportunities. B. Analyze the issues, problems, and opportunities. C. Develop and evaluate alternative solutions. D. Make recommendations for action.
Especially for complex cases, a case analysis is usually an iterative process. While an essential first step is to identify the issues to be resolved, analysis of those issues can refine the issues that were initially identified, leading to a revised issue statement.
5. SCOPE OF THE CASE GUIDE SERIES
This note and others in the Case Guide Series are designed to provide an overview of the case method. They provide a general template or pattern for case analysis that you can apply in various courses throughout your business studies. There is no one right way to analyze a case, just as there is no one right answer or solution to the issues presented in a case. You will encounter a variety of situations, issues, tasks, and topics that all require you to use judgment in applying the guidelines provided in the Case Guide Series.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
11
The Student Guide to the Case Method
8
The Case Guide Series covers five separate tasks that can form part of your case assignments. Case analysis: For all case assignments, you will be required to analyze the case by performing one or more of the steps described in Section 3 (i.e., identify the issues, analyze the issues, develop and evaluate alternatives, and recommend a course of action). Analyze, in the broad sense, refers to the full process of applying the case method. Analyze can also specifically refer to the case analysis step of probing into and dissecting issues. In both contexts, analysis is a critical component of the case method, so it is discussed first and receives the most attention. (See Note 2—“Performing a Case Analysis,” No. 9B18M054, and Note 7—“Common Tools for Case Analysis”, No. 9B18M059.) Class discussion: In some courses, instructors will use discussion of the case to apply and supplement the lecture material; in other courses, instructors will use discussion of the case as the main pedagogical tool. To benefit from the discussion and to provide meaningful input, it is important to adequately prepare. (See Note 3—“Preparing to Discuss a Case,” No. 9B18M055.) Report writing: You could be asked to prepare a written case report—either individually or as part of a small team. For this task, the emphasis is on organizing your analysis and findings in a written report that effectively communicates those findings to the reader. In most instances, you will be asked to play a specific role (e.g., the internal manager who is the decision maker in the case or an external consultant to that decision maker), and to write a report to a specific reader or group of readers (e.g., the vice-president of marketing or the board of directors). (See Note 4—“Preparing a Written Case Report,” No. 9B18M056.) Oral presentation: You could be asked to present your analysis and findings to the class, either individually or as part of a small team. The goal in this exercise is to develop and deliver a concise presentation that captures the main thrusts of your analysis and presents them in a professional and engaging manner. Here, too, you will usually be asked to play a specific role and to present to a specific target audience. (See Note 5—“Making an Oral Case Presentation,” No. 9B18M057.) Case exam: Your instructor might use the case method as a testing or examination tool. The goal in this situation is to showcase your analytical and writing skills under the time pressure of an exam setting. It will be important to read the case intentionally so that you can isolate relevant facts and data, identify issues, decide on the appropriate qualitative and quantitative analytical tools to use, and perform the necessary analysis. Time management will be crucial so that you can complete all required steps, including providing appropriate recommendations and a plan for their implementation. (See Note 6—“Preparing for and Writing a Case Exam,” No. 9B18M058.) When completing any of the above tasks, follow the specific instructions provided by your instructor in the course syllabus or course package. These specific instructions always supersede those contained in the Case Guide Series. Different instructors have differing expectations, which is good practice for the workplace, where you will need to give careful consideration to the preferences of your supervisor or client—in terms of both content and style.
6. CASE ANALYSIS AND ACADEMIC INTEGRITY
Because case analysis is complex, it may often seem helpful to discuss the case informally or formally with other students before participating in a class discussion, writing a report, or making a presentation. Managers and consultants often discuss problems with other people, within the constraints allowed by confidentiality. Therefore, your instructor may allow, encourage, or even require such discussion. However, to ensure academic integrity and to avoid plagiarism, unless your instructor has specifically indicated that some degree of discussion is permissible, you should consult with your instructor before engaging in any collaboration. This restriction on outside discussion is especially necessary when preparing reports and presentations.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
12
The Student Guide to the Case Method
9
It may also seem helpful to search the Internet for teaching notes for cases or for case reports or slide presentations prepared by other students. Academic integrity requires that you refrain from using such resources, in full or in part. Any attempt to use the work of others and to pass it off as your own is plagiarism. If the instructor is suspicious that plagiarism might be involved, you may be asked to upload a copy of your case report through Turnitin.com. While using the work of others may appear to provide a shortcut to a good grade, the quality of online sources and the work of other students is often suspect, at best. Most importantly, you deprive yourself of the learning opportunities the case method offers.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
13
The Student Guide to the Case Method
10
NOTE 2: PERFORMING A CASE ANALYSIS
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
14
The Student Guide to the Case Method
11
1. INTRODUCTION TO PERFORMING A CASE ANALYSIS For all case assignments, you will be required to analyze the case by performing one or more of the basic steps of analysis (i.e., identify the issues, analyze the issues, develop and evaluate alternative solutions, and recommend a course of action). Analyze, in the broad sense, refers to the full process of applying the case method. Analyze can also specifically refer to the case analysis step of probing into and dissecting issues. In both contexts, analysis is a critical component of the case method. This note of the Case Guide Series guides you through the specific process of analyzing a case. This method for basic case analysis can be used for several purposes: discussing the case in class, writing a report, making a presentation, and writing a case exam. 2. IDENTIFY THE ISSUES The first step in analyzing the case is to identify the organization’s issues, problems, and opportunities (collectively referred to hereafter as “issues”) that you will attempt to resolve. A clear understanding of the issues is paramount; otherwise, your analysis and your generation of alternative solutions will lack the necessary focus. Although some cases will direct your attention toward specific issues (especially early in your business studies), a considerable degree of judgment is usually required to identify the issues. 2.1. Pay Attention to Questions Questions from three sources provide important clues about the key issues: The principal actors or characters in the case. These clues are musings or direct questions raised by
the principal actors themselves. You can usually find these clues at the beginning and end of the case, but they might also be sprinkled throughout the case.
Your instructor. Questions can often be found in the syllabus or course package, or on the course website. These questions are sometimes intended to limit your analysis to issues that fit within a specific topic of discussion. At other times, these questions are intended to focus your attention on the most important issues.
The author of the case. In cases presented in textbooks, the case author sometimes provides attention- directing questions at the end of the case.
If, in your analysis of the case, you have not answered all of the questions posed in the case or in your course syllabus, you have likely either omitted an important issue or become sidetracked by minor issues. Moreover, even if you have resolved some issues, if you have not addressed all of the questions posed in the case or in your course syllabus, your analysis will likely fail to totally satisfy your instructor—and later, your supervisor or client. Especially in upper-level courses where the cases are, in general, more complex, your instructor could expect you to look beyond the more obvious issues or those suggested by the case principals to consider issues that people close to the situation could have overlooked. You should address these supplementary issues in addition to, not instead of, addressing the specific requests posed by principals in the case or by your instructor.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
15
The Student Guide to the Case Method
12
2.2. Distinguish Symptoms from Issues To correctly identify issues, it is important to distinguish between symptoms and underlying causes. Your goal should be to focus on the underlying causes. To uncover them, ask the question “Why?” until you can no longer provide a satisfactory answer. For instance, an organization might be suffering from low productivity. Asking why productivity is low might lead you to conclude that employee morale is low and that employees are not motivated to perform well. Probing further, you might find that both of these issues arise because the reward system does not adequately recognize good performance. Low productivity and employee morale are symptoms of the underlying cause. Alternatively, an organization might be plagued by low customer retention. Asking why customers are going elsewhere might lead you to conclude that customer service is poor, product defect rates are high, existing competitors have improved their product, and a new competitor has entered the market. The last two items are root causes because asking “why” will not lead to further answers. Therefore, they are issues to resolve even though they are not within the organization’s control. Asking “why” for the first two items might lead you to the third issue, namely that the company’s goals and reward systems emphasize efficiency rather than product quality. 2.3. Limit Issues to a Manageable Set Once you have identified the issues, you might need to reduce them to a manageable size to enable you to effectively carry out the subsequent steps in case analysis. For some cases, you might be required to resolve a single issue. However, you should still identify sub-issues, and decide which are most important and which you have the time and space to tackle. For example, the issue might be to set an admission price for a new museum. Possible sub-issues to consider include fit with the mission of the museum, customers’ ability and willingness to pay, the possibility of differential pricing (e.g., lower rates for students), competing forms of entertainment and their admission prices, costs that need to be covered by the admission price, and the break-even point. To identify the most important sub-issues, consider the information in the case, the questions discussed in Section 2.1, and the nature of the course. Other cases might present multiple issues. You might find it helpful to look for relationships among the issues and cluster them under one overarching issue. For instance, in an organizational behaviour case, you might be able to trace several issues—such as unclear decision making processes, inability to deal with job stresses, and inability to delegate—to the root issue of inadequate training of managers. Dealing with one issue is easier than dealing with three separate issues and will lead to better solutions. Other cases might not have an overarching issue; instead, you might face a seemingly unconnected set of distinct issues. You will then need to prioritize the issues, using the questions referred to in Section 2.1, and your judgment, so that you give adequate time and attention to the most important issues. 3. ANALYZE THE ISSUES Analysis involves examining the issues in detail. It requires that you dissect the issues and consider them closely to understand their nature and key elements.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
16
The Student Guide to the Case Method
13
3.1. Use Case Facts One aspect of analysis is using case facts to develop a detailed understanding of the issues. You can use the case facts to help build logical arguments, develop findings, and draw educated inferences rather than casual guesses. For instance, if the issue in an organizational behaviour case is inadequate managerial training, facts from the case should indicate that the training provided to managers did not sufficiently clarify decision making processes or how to delegate tasks, or both. Or, for a marketing case, an issue with increased competition might be supported by the case facts describing the entrance of new competitors into the market, new products introduced by competitors, or price reductions offered by competitors. Many important case facts are contained in a case’s figures and exhibits. These case facts could include data about the worldwide market size, the competition, the company’s revenues and profit, industry sales, product prices, or organizational charts. Study each figure or exhibit to determine the key insights it offers. Go beyond the specific facts highlighted in the body of the case; figures and exhibits usually include additional facts that can be interpreted in other ways to enhance your analysis.
3.2. Use Business Concepts, Models, and Tools Another aspect of analysis is the use of business concepts, models, and tools to analyze the issues. For example, in an organizational behaviour case, you could use equity theory or expectancy theory to explain why an organization’s reward system has been unsuccessful in motivating employees. In a marketing case, you could apply the model of a product life cycle or the concept of a target market; you could also calculate market share and changes in market share. To analyze issues in an accounting case, you could use tools such as contribution margin analysis or capital budgeting. In an integrated strategic management case, you might apply the concepts of value chain and competitive advantage, compute financial ratios, and apply tools such as a competitive position matrix and Porter’s five forces framework. You will sometimes be given directions to apply specific concepts or tools; other times, you are expected to use your discretion in selecting the most relevant concepts or tools to apply. For some cases, the analysis will largely rely on qualitative models and tools. However, many cases will involve both qualitative and quantitative elements. Note 7 of the Case Guide Series—“Using Common Tools for Case Analysis,” No. 9B18M059—describes some common qualitative and quantitative tools for analyzing issues and possible courses of action. 3.3. Use Outside Research Sparingly Analysis might also include conducting and integrating outside research—for example, researching the industry and competitors—to supplement the information provided in the case. However, for many cases you will encounter in your studies, you will not be asked to obtain outside research beyond any background knowledge required to understand the facts of the case. This approach is consistent with the requirement that you put yourself in the role of either the manager or a member of the management team making the decision. You are asked to make that decision based on the same information the actual managers in the actual organization had at that actual point in time. 4. DEVELOP AND EVALUATE THE ALTERNATIVES In this step of a case analysis, you first identify alternative solutions to address the issues you previously identified and analyzed, and then evaluate the advantages and disadvantages of each alternative. The best alternatives will resolve more than one of the identified issues.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
17
The Student Guide to the Case Method
14
4.1. Develop Alternative Solutions When identifying alternative solutions, go beyond the status quo (which might or might not be a viable solution, depending on the company’s situation) and beyond identifying a poor alternative and a very good one. Strive to develop multiple viable alternatives that are not chosen with a bias toward or against a particular course of action. Creative thinking will enable you to develop novel approaches. Avoid a premature evaluation of the alternatives, and try to develop as many alternatives as possible. Even if you know the course of action the organization ultimately chose, resist the temptation for that knowledge to bias your development and evaluation of alternatives. This topic is further discussed in Section 5.3. 4.2. Evaluate the Alternative Solutions Assessing the advantages and disadvantages of each alternative solution represents another form of analysis, as is quantifying the financial impact of an alternative solution. Some of the case analysis tools described in Note 7 can be used to analyze alternative solutions, in addition to being used to analyze issues. When you evaluate your alternatives, present a balanced assessment of both the advantages (pros) and disadvantages (cons). Use of biased or one-sided arguments undermines both the usefulness of your analysis and its credibility. Where possible, suggest how to overcome any significant disadvantages. If you have difficulty generating pros and cons, establish a set of criteria for decision making and use those criteria to identify pros and cons. For example, in a strategic management case, decision criteria might include the degree to which the action fits with the organization’s mission, value proposition, and goals; fits with stakeholder preferences; is profitable; increases market share; enhances the organization’s brand; capitalizes on specific external opportunities; helps to mitigate external threats; uses internal strengths; avoids or mitigates internal weaknesses; builds on an existing competitive advantage or helps to create a competitive advantage; requires additional resources and competencies; can be accomplished within the organization’s existing structure; or mitigates or increases risks, including environmental and reputational risks. The principal in the case or the questions in your syllabus or course pack might have alerted you to some of the decision criteria to be applied. If so, be sure to use those as your starting point in establishing a set of decision criteria. Measuring alternatives against decision criteria also helps to keep the analysis consistent, reducing bias. For instance, by applying the criteria, you avoid citing a loss of market share as a disadvantage of one alternative but overlooking the same disadvantage in another alternative that is your implicit favourite. When identifying pros and cons, be as specific as possible. For instance, instead of stating that an alternative will be unprofitable, indicate that the alternative will result in net losses of $72,800 and $52,500
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
18
The Student Guide to the Case Method
15
in years one and two, respectively. Instead of claiming that an alternative will increase market share, indicate that it will increase market share by an estimated three to four per cent by year five. Rather than arguing that an alternative will capitalize on an organization’s strengths, indicate the specific strengths that will be capitalized on and how they will be leveraged. When working with financial measures, if you can incorporate all of the information about revenues and costs into a profitability measure, it is unnecessary to then itemize individual revenues or expenses as pros and cons. Doing so would be redundant and is not nearly as valuable as doing the financial analysis required to determine profitability. Your evaluation of alternatives should also go beyond obvious disadvantages such as being “costly” or “time-consuming.” A costly alternative might still be highly advisable, especially if it generates sufficient advantages. Almost all courses of action involve some cost and time, so clearly distinguish how these factors vary from one alternative to the next and, when possible, provide evidence. For instance, one potential product line might require a significant push by the sales department to make it successful, whereas another might not require as much effort because it fits better with the organization’s existing product lines and target market. Once you begin to evaluate your alternatives, you will probably be able to quickly discard a few alternatives after some preliminary analysis. For instance, in a strategic management case, one alternative could lie far outside the organization’s existing competencies and contradict one or more of the organization’s clearly stated goals. Discarding one or more unsuitable alternatives will allow you to focus your detailed analysis on the more feasible and more helpful alternatives. Nonetheless, some preliminary analysis is important to ensure that you do not rule out options too quickly as a result of your own biases. It can sometimes seem expedient to group a few alternative solutions and evaluate them as a package. However, evaluating combined alternatives can be difficult because each component usually has its own pros and cons. Also, evaluating packaged alternative solutions often obscures some of the issues, resulting in an evaluation that is less thorough than if each alternative had been evaluated separately. Therefore, it is usually preferable to wait until the recommendation phase to combine alternatives. 4.3. Use Case Facts and Business Concepts, Models, and Theories to Evaluate the
Alternatives When evaluating alternative solutions, you will have another opportunity to introduce key facts from the case and to apply concepts, models, and theories from the course to support your analysis. Some of those concepts and models will tie directly to the decision criteria referred to in Section 4.2. For instance, in a strategic management case, alternatives can be evaluated by assessing their fit with stakeholders’ preferences and by identifying resource gaps that would need to be filled to implement each option. In an organizational behaviour case, if negative group norms are an issue, you could use theory to propose ways to build positive norms, such as rewarding desired behaviour and providing feedback about unacceptable behaviours. In a human resource case, you could evaluate alternative ways to recruit new managers by considering the theoretical pros and cons of various recruitment techniques and assessing their prospects for success, given the company’s specific needs and circumstances. In a finance case, solutions could be evaluated against the company’s required rate of return or payback period. In a marketing case, you could demonstrate how a proposed product is designed to meet the needs of the firm’s current target market or how its short development time would allow the firm to begin selling the product before its competitors do.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
19
The Student Guide to the Case Method
16
The examples in the preceding paragraph illustrate that the evaluation of alternative solutions usually involves some additional analysis. The analysis of the issues and of the alternative solutions should fit together; the concepts, models, and theories used to analyze the issues should be consistent with those used to evaluate alternative solutions. The goal in both exercises is to provide analyses that demonstrate sound argument and logic, and are supported by careful use of the case facts and appropriate analytical techniques (some of which are described in Note 7).
5. RECOMMENDATIONS 5.1. Apply Criteria for Making Sound Recommendations The last step of case analysis is to choose your recommended solution to the issues. Your recommended solution will often consist of a combination of alternatives because issues are usually not so simple that a single solution will suffice. Your goal is to develop recommendations that are useful, given the issues that you are trying to resolve; consistent with your analysis; reasonable, given the organization and its environment; feasible, given the organization’s resources; and convincing to your reader. Articulate the decision criteria (e.g., those listed in Section 4.2) that you have established and applied in developing your recommendations. If the principal in the case has established the decision criteria, your recommendations should explicitly address how your recommended solution meets those criteria. 5.2. Craft Your Recommendations Your recommendations should include sufficient operational-level details to enable their implementation. For example, specify who should implement the recommendations, how, when, and in what priority. You might want to develop a more complete implementation plan and attach it to your report as an appendix, after briefly referring to the plan in the body of the report. This approach helps to build a convincing, persuasive argument for your recommendations. If you are specifically asked to design a separate implementation plan, your recommendations will be more general, and the details regarding who, how, when, and in what priority will be included in the implementation plan. Your recommendations should address all the issues you identified, and should be both supported by and consistent with your analysis. Where appropriate, demonstrate how and why your recommendations would be acceptable to key individuals in the organization. Ensure that the organization is financially able to implement the action plan and has the expertise, time, and other organizational resources necessary to do so. 5.3. Base Your Recommendation on the Information You Have Avoid recommending that further information be obtained or that additional analysis be completed. Instead, base your recommendation on the information you have, even if you believe more information is needed. Managers rarely have all of the information they desire. If further analysis is absolutely essential, your recommendation should specifically state what should be done, why, and by whom. If the assigned case study is based on actual events, you might already know the course of action that management chose, or you might be able to obtain this information through further research. Resist the temptation to recommend this alternative, which assumes that management made the best decision. Base your recommendation on the information that management had at the time it faced the decision and on the analysis that you conduct. Only time allows us to evaluate the effectiveness of an organization’s actual
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
20
The Student Guide to the Case Method
17
chosen course of action. Even years later, we might not know whether outcomes would have been better for the organization had another alternative been chosen.
5.4. Evaluate Your Recommendations
Before finalizing your recommendations, take time to evaluate your recommended solution by asking the following key questions:
Does the recommended solution address the issues identified in the analysis? Is there theoretical support for the solution? Does the recommendation address the pros and cons identified when you evaluated the alternative solution? Does the recommendation suggest how to mitigate or overcome the most critical disadvantages,
including any risks posed to the organization? Does the recommended solution meet organizational goals? Is the recommended solution financially viable? Is it feasible from a resource perspective? Is the recommended solution acceptable to various stakeholders of the organization (e.g., management,
employees, shareholders, and customers)? Does the recommendation provide sufficient details to enable the organization to implement it?
Being able to answer these questions affirmatively will help your recommendations meet the key criteria of being useful, consistent, reasonable, feasible, and convincing.
6. VARIATIONS ON PERFORMING A FULL CASE ANALYSIS
The basic four steps (identify the issues, analyze the issues, develop and evaluate alternative solutions, and recommend a course of action) are required for a full case analysis. This section discusses two variations to a full case analysis: analytical cases and partial case analysis.
6.1. Analytical Cases
Some cases might not describe the issues to be resolved but might, instead, describe issues either in the context of a success story or in a situation where it is too late to resolve the issues. In such cases, the focus is on analyzing what can be learned from the organization’s successes or failures so that future prospects for success can be enhanced, or similar predicaments can be avoided or better handled by either the organization in the case or others. Business concepts, models, and tools should still be applied. For example, the leadership of an organization could be analyzed to identify which styles of leadership were evident and their effectiveness in the circumstances described in the case. Alternatively, a corporate initiative might be analyzed to determine its effectiveness in addressing resistance to change and its application of other change management principles.
6.2. Partial Case Analysis
Due to time or space constraints, your instructor might require only a partial case analysis. For example, you might be asked to focus only on identifying and analyzing the issues. Alternatively, the case might clearly define the issues, and you might be asked to only identify and evaluate possible alternative courses of action. Another form of partial case analysis is a “directed case,” in which you are directed to answer a specific set of questions about the case. Even though a full case analysis might not be required, it is still important to see how the task you are asked to perform fits within the larger picture of a full-fledged case analysis involving the four steps discussed above.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
21
The Student Guide to the Case Method
18
NOTE 3: PREPARING TO DISCUSS A CASE
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
22
The Student Guide to the Case Method
19
1. INTRODUCTION TO PREPARING TO DISCUSS A CASE IN CLASS The method for a basic case analysis presented in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054—can be used for various purposes: discussing the case in class, writing a report, making a presentation, or writing a case exam. This note helps you to adequately prepare to discuss a case in class and to provide meaningful input to the class discussion. The guidelines in this note are for general use. You should always defer to your instructor’s requirements, which may differ or be more specific. 2. PREPARE BEFORE CLASS To benefit from many of the opportunities of the case method, you need to do your own analysis before class and make your own decisions based on that analysis. Read the case once for familiarity and a second time to gain a full command of the facts, so you have good insight into the issues. As you read the case the second time, highlight the key points and make notes based on your assigned tasks. If questions about the case are provided in the course syllabus, they are intended to be used only as guidelines to identify the issues and some of the analysis to be done. You are still required to come to your own conclusions regarding the issues and relevant analysis. In most instances, you are expected to do a full analysis of each case: identify the key issues, problems, or opportunities (collectively referred to hereafter as “issues”); analyze the issues using case facts and relevant business tools, concepts, and models; develop and evaluate some alternative solutions (again drawing on case facts and appropriate tools, concepts, and models); and recommend a course of action. Prepare two or three pages of notes to take to class. These notes will give you talking points for the class discussion. Use your notes in class to keep track of the points your colleagues raise and to quickly identify opportunities to add to the discussion. As you track the discussion, you can formulate arguments to challenge your colleagues’ analysis of the case or to revise your own thoughts about the case. Due to time or space constraints, your instructor might require only a partial case analysis. For example, you could be asked to focus only on identifying and analyzing the issues. Alternatively, the case might clearly define the issues, and you could be asked to only identify and evaluate possible solutions. Another form of partial case analysis is a “directed case,” in which you are directed to answer a specific set of questions about the case. In such cases, your preparation for class should focus on the partial analysis you have been directed to perform. 3. CONTRIBUTE TO IN-CLASS DISCUSSION Your willingness to participate in the discussion of a case will enable you to consider a variety of viewpoints and insights, and thereby gain the full benefits of the class’s collective knowledge and experience. In class, the instructor’s role is to facilitate discussion, often by asking questions. Students should do most of the talking, and you should be prepared to provide supporting reasons for your views. You are expected to show respect for others’ opinions, but you are also encouraged to challenge each other. Similarly, you are expected to be willing to submit your analysis and conclusions to scrutiny by others, without becoming defensive. Several good plans of action are usually possible, so do not refrain from taking and maintaining a minority position, provided you can defend your position using sound analysis. On the other hand, feel free to change your position and recommendations as others’ views emerge and a more complete range of information is assembled. F
o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
23
The Student Guide to the Case Method
20
Due to time constraints, it is impossible to discuss every aspect of a case in class. Therefore, your instructor might steer the discussion in a particular direction, or the discussion might centre on only one or two steps of the case analysis; for example, identification and analysis of issues might be the focus of one case, while on another occasion, the issues might be clearly defined and your task could be to focus on developing possible solutions. Nevertheless, you are welcome to introduce additional ideas, other issues or a new alternative, for instance. Doing so will help to avoid feeling frustrated because some of your best ideas are not discussed. While your instructor might not be able to discuss your ideas to your complete satisfaction, you can enrich the discussion by noting additional aspects of the case that are worthy of more consideration. Generally, the class as a whole will perform a more thorough and creative analysis than would be possible by any one person working alone or by any given small team of students. Therefore, do not be discouraged because you did not consider a particular solution. As new ideas are raised, be prepared to supplement or adjust your prepared analysis and recommendations. 4. LISTEN TO OTHERS IN CLASS Listening to others in class is hard work. Use active listening techniques, apply listening etiquette, and refrain from activities that will prevent you or others from hearing what the speaker is saying. 4.1. Use Active Listening Techniques Listen for the ideas the speaker is presenting, not just the words being spoken. Link what one speaker is saying to what others have already said. By doing so, you can build on their arguments or dispute their conclusions by making direct reference to their statements. Listen critically for the main argument the speaker is presenting, so you can understand how the speaker’s argument differs from yours, and how the speaker uses case facts, concepts, and models in analysis. Recognizing the logic of the speaker’s argument aids you in structuring your own argument in response. Active listening helps you build on analyses and arguments presented by previous speakers. Ask questions that clarify a speaker’s use of case facts, concepts, and models, and that clarify the conclusions drawn by the speaker. Briefly summarizing a previous speaker’s comments in your notes ensures that you have understood what a colleague has said. This summary can also help you to establish and refine agreement among class members at various stages of the case discussion process. Avoid making judgments about a speaker’s ideas; quick judgments limit your willingness to hear what the speaker is saying, which can lead you to discount the value of your colleague’s contribution to the case discussion. Having preconceived ideas about what a speaker might say can cause you to tune out of the conversation; and when you tune back in, you could have missed a critical component of the speaker’s argument. Finally, approach a discussion with an open mind: you might discover during the class discussion that you misinterpreted a fact or misapplied a concept or model, and that the analysis, alternatives, and recommendation provided by others is more appropriate than yours.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
24
The Student Guide to the Case Method
21
4.2. Use Listening Etiquette Listening etiquette begins with focused attention on the speaker. Allowing colleagues to share what they have diligently prepared shows respect for the time they have spent preparing and recognizes the value of their thoughts and contributions. Give feedback to the speaker through your body language: maintain eye contact with the speaker, nod and smile when appropriate, and physically lean into the conversation. Show respect by allowing the speaker to completely finish speaking. A pause could simply be the speaker taking an opportunity to gather thoughts, not an indication that the speaker has finished talking. Appropriate listening etiquette requires that you do not carry on side conversations while a speaker has the floor. Side conversations distract not only the speaker but also those around you, and could prevent a speaker’s ideas from being understood by the entire group. Appropriate listening etiquette also requires that you not be distracted by electronic devices. Ensure that your laptop is open to your notes and the case. Turn off your cellphone and put it out of sight. When your attention is distracted by electronic devices, you also distract those around you and interfere with the collective understanding of the case. Good listening etiquette helps you to develop essential management competencies, skills, and abilities. Your technical, analytical, problem-solving, and creative skills will be sharpened as you evaluate your own analysis against that of your colleagues. 5. ENHANCE THE QUALITY OF YOUR CLASS PARTICIPATION There is no one single way to earn high marks for preparation and participation. However, the following guidelines can enhance the quality of your class participation: Identify the most important issues, including those that might have been overlooked by those closest
to the situation. Provide supporting arguments for any statements you make or conclusions you draw, but be clear and
to the point. Share appropriate analyses; for example, bring your proposed organizational chart or your financial
analysis on a flash drive, or at least be prepared to share a few key specifics of your analysis. This is a clear way to demonstrate your preparation.
Come to a decision and be prepared to give your recommendations. Any analysis you have completed is of minimal value if it does not culminate in a decision.
Participate in all phases of the discussion—identification and analysis of the issues, development and evaluation of alternatives, and development of an action plan.
Interact with other students. Ask them to provide support for their arguments. State why you disagree with their opinion. Build on their analysis, but avoid merely repeating what they have said.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
25
The Student Guide to the Case Method
22
NOTE 4: PREPARING A WRITTEN CASE REPORT
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
26
The Student Guide to the Case Method
23
1. INTRODUCTION TO PREPARING A WRITTEN CASE REPORT The method for a basic case analysis presented in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054—can be used for various purposes: discussing the case in class, writing a report, making a presentation, or writing a case exam. This note guides you in preparing a written case report by applying the four steps of case analysis described in Note 2. The report described in this note assumes that you are performing a full case analysis (rather than doing a partial case analysis or taking an analytical approach). The guidelines relating to format, organization, and written communication are for general use. You should always defer to your instructor’s requirements, which might differ and be more specific. 2. PLAY YOUR ASSIGNED ROLE For each case assignment, you will be asked to adopt a specific role as a student, consultant, employee, or manager who is writing a report to a specific person or persons. Depending on your assigned role, your analysis could be written as a report to your instructor, your supervisor, the board of directors, or to the client who engaged you as a consultant. In this note, we generally refer to the person who will receive the report as the reader. It is important that before you begin writing your report, you have a clear understanding of who will be reading your report and that person’s (or those persons’) needs and expectations. Your report should be written with your reader(s) in mind. Your audience is reading the report to gain an understanding of how you propose to solve an issue. They are pressed for time and are often inundated with information. They want their information quickly and easily without having to bring extra thought to the process of reading. The following are some suggestions to make your report reader-friendly: Avoid jargon, inside terminology, and undefined abbreviations. Keep your sentences simple and straightforward, use paragraphs to group similar thoughts, and keep
your paragraphs short. Make the information easy to find by using headers and page numbers, clear and informative section
headings, and accurate cross-references. Avoid decorative elements and be generous with white space—extra lines—between sections so your
reader can easily see how information is clustered. Always use professional tone and tact. However, if you are playing the role of an external consultant, you can be a little bolder in making your points than if you are playing the role of someone from within the organization—especially when writing to a supervisor. 3. IDENTIFY THE ISSUES 3.1. Be Clear A high-quality case report focuses on the most important issues and clearly identifies those issues at the start of the report. Without a clear statement of the issues, problems, and opportunities (collectively referred to hereafter as “issues”) that you intend to address, your report will wander aimlessly from one topic to the next and be of limited value to your reader.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
27
The Student Guide to the Case Method
24
3.2. Settle on a Manageable Set of Issues It is important to arrive at a set of relevant issues that are manageable within the size constraints of your written report. (See Note 2 for more information about evaluating and prioritizing issues.) In a short report (e.g., 1,000 to 1,500 words), you can usually effectively address only two or three issues. In a longer report (e.g., 2,500 to 3,000 words), you might be able to address five or six issues. Focusing in-depth on a few key issues is generally more productive than a cursory analysis of many issues. Particularly in long or complex cases, you will need to make choices among the issues and determine priorities. 3.3. Use Your Issue Statement to Let the Reader Know What to Expect An easy way to let the reader know what to expect in the upcoming analysis is to ensure that the issues you identify are the same issues that you subsequently analyze. Something you first identify as an issue might sometimes dissipate or diminish in priority after you begin your analysis, and other issues might surface. This change in priorities is part of the normal iterative process of case analysis. Although you should begin your draft report with a clear issue statement, the issue statement will evolve to a certain degree as you complete your report. Double-back after you have completed your initial analysis of the issues and revise your issue statement accordingly. In the final version of the report, the issues you identify at the start of the report should be in absolute agreement with your subsequent analysis and recommendations. For a complex case, your issue statement should also identify the sub-issues associated with each issue. Noting the sub-issues will help to prepare the reader for the analysis section. For instance, the owner of a business might contemplate whether to expand to the United States. As an issue statement, the question of whether to expand to the United States is superficial and can be made more precise. A full issue statement might include whether the company has the resources to successfully execute such a move, whether the American market is more attractive than the Canadian one, and whether such a move fits with the preferences of others who own a significant share of the company. The reader of the report is then set up to expect, for example, a resource gap analysis; an analysis of market size, growth trends, and the degree of competition in both the American and Canadian markets; and an analysis of stakeholder preferences. To provide another example, a 1999 strategic management case about WestJet Airlines Ltd. asked two questions: “Should WestJet move into Eastern Canada? If so, how soon and to what extent?” For that particular case, a sample issue statement might be
The main issue facing WestJet is whether to move into Eastern Canada. Three key factors to consider in this decision are the degree to which such a move will require the company to deviate from its successful Southwest model, how the move would fit with corporate goals, and the level of competition WestJet would face in Eastern Canada compared with in Western Canada. The second issue facing WestJet is to determine the timing and magnitude of any eastward expansion that would be compatible with the company’s goals and resource constraints, and align with competitors’ plans and capabilities.
This issue statement provides a logical foundation for the following analyses: an assessment of what the Southwest model involves, and how it gives WestJet a competitive advantage; an assessment of goals, such as keeping debt low and continuing to grow in Western Canada; and an analysis of the competition posed by Air Canada and other low-fare entrants in both Eastern and Western Canada. Although the issue statement does not explicitly lay out the types of analyses that will follow in the report, it should provide enough hints and clues that a reader will not be surprised to find a section on “The Southwest Model” or “Analysis of the Competition.” This approach to building an issue statement also ensures that you are being deliberate in selecting and applying various analytical tools and models.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
28
The Student Guide to the Case Method
25
Remember, a reasonable degree of clarity about the issues is necessary to begin preparing your case report, but expect your understanding of the issues to evolve as you progress through your analysis. Ensure that your final issue statement reflects your refined identification of the issues and accurately orients the reader to the rest of the case report. 4. ANALYZE THE ISSUES 4.1. Test the Case Facts To produce a high-quality report, you need to present the case facts in a way that contributes to your analysis and adds value to your report. Avoid merely reiterating or rehashing case material. When you restate case facts, be sure they form part of a logical argument and are accompanied by inferences and findings. To ensure that you are using the case facts appropriately, read each sentence in your report that includes a fact from the case and ask yourself, “What’s my point?” If the answer to this question is not addressed in the same sentence or in the next few lines of the report, either delete the fact or explain the inference that you intended to draw. For example, there is little value in repeating that “the company currently holds a five per cent market share in Canada” unless you use that fact to support, say, the contention that the company has room to grow its Canadian customer base prior to expanding into the United States. You do not need to use a formal footnote when referring to material from the case. Direct quotations from the case should be acknowledged by citing the page number of the case in the body of the report, but keep direct quotations to a bare minimum, using them only where special emphasis is desired. 4.2. Use Business Concepts Business concepts that are used as part of your analysis should add value to your report and be relevant to your reader. Avoid discussing theories or models unless you explain them sufficiently and fit them to the situation in the case. For example, discussing what constitutes a competitive advantage is of little value unless you then proceed to use the VRIO model developed by Jay Barney to illustrate that the organization’s resources and capabilities are valuable, rare, inimitable, and that the firm is organized to exploit those resources and capabilities. The required level of explanation depends on the reader’s knowledge, educational background, and organizational position. You might not need to explain common business terms, but do not assume that your reader is familiar with academic or business models such as Victor Vroom’s expectancy theory or the growth–share matrix developed by Boston Consulting Group. Some business terms, such as competitive advantage and core competencies, are widely used but different people might understand them differently. When in doubt, briefly explain a term. For example, you might specify that an organization’s competitive advantage refers to how it intends to attract customers by offering something that is of value to them and differs from what its competitors offer. Specifically and deliberately apply business concepts to the case. For example, a discussion of Raymond Vernon’s model of a product life cycle should categorize the company’s products into various life cycle stages and assess the implications of having two-thirds of the company’s products in the maturity and decline stages. A case report is not an academic research report; avoid writing that is overly theoretical and academic. Considerable skill is required to successfully integrate business theory so that it is perceived as practical and not overly conceptual. At the same time, you want to show your instructor that you are able to apply the course material and demonstrate to the intended reader that you have the appropriate expertise relevant to the situation.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
29
The Student Guide to the Case Method
26
4.3. Use External Research Sparingly To keep your task of writing a case report more manageable, most of your reports will not require external research. When your instructor does request external research, the results of your research should also be presented to add value to the report, making it clear why the research is relevant to the situation. Never append external research to your written report without using that research to help dissect issues or build arguments. Acknowledge the source of any external research with a reference note (e.g., a footnote, endnote, or in-text citation). 4.4. Adhere to Length Constraints Your instructor will usually set a word or page limit for your report. Learning to be concise and efficient with your writing will prepare you for writing excellent reports for busy professionals. The analysis portion of your report should be substantial. Together with the evaluation of alternatives, it will form the bulk of your report. However, because of length constraints, be judicious in deciding how much and which parts of your analysis to include in your written report. Some of the analysis is mainly for your own benefit—helping you understand the organization and its industry—rather than being of value to the reader. Your instructor might ask you to include such analysis in an appendix, with appropriate references to the appendix in the report. Alternatively, your instructor might ask you to exclude such analysis from the report to make room for analysis that will be of more value to the reader. 5. DEVELOP AND EVALUATE YOUR ALTERNATIVES Depending on how long your report is and how complex the issues are, you could evaluate as few as three or four alternatives or as many as seven or eight. It is rarely possible to do a good job of evaluating more than eight alternatives. Sometimes, it can seem expedient to group a few alternatives together and evaluate them as a package. However, it can be difficult to evaluate combined alternatives because each component usually has its own pros and cons. As well, evaluating packaged alternatives often obscures some of the issues and results in an evaluation that is less thorough than if each alternative had been evaluated separately. Therefore, it is usually preferable to wait until the recommendation phase to combine alternatives. Rather than providing a complete evaluation of the pros and cons of all your alternatives, it might be sufficient to only briefly mention some of the alternatives and give a short rationale for why they were discarded early in the evaluation process. Since analysis of alternatives is a key part of any written report, ensure that you sufficiently discuss your selected alternatives in the body of the report. Listing the pros and cons in bullet form or presenting such information in tables is an efficient way to evaluate alternatives. However, avoid using phrases that have ambiguous meanings, such as “requires additional resources” or “uses core competencies.” Such phrases leave the reader to draw inferences. Instead, specify the resources that are required or the core competencies to be used. Using lists and tables can also have disadvantages. Too many lists and tables can lead to a report that appears cluttered and is difficult to read. However, a report that is text-heavy can also be cumbersome to read. Fo
r u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
30
The Student Guide to the Case Method
27
Therefore, strike a balance. For instance, discuss key pros and cons in paragraph form and supplement the text with a table containing additional pros and cons. Avoid duplicating content in both paragraphs and tables. To help evaluate your alternatives, establish a set of decision criteria and use those criteria to identify pros and cons. Measuring alternatives against decision criteria also helps to keep the analysis consistent, reducing bias. (Evaluating alternatives is discussed in detail in Note 2.) 6. MAKE RECOMMENDATIONS In general, avoid introducing new analysis or new alternatives in the recommendations section of your report. Your recommended solution will be one of the alternatives or a combination of the alternatives you evaluated. In some instances, in an effort to keep a report short, you might be asked by your instructor to combine your evaluation of alternatives with your recommendations and present only the solutions you recommend for adoption. Your goal is to develop recommendations that will be useful, given the issues that you are trying to resolve; consistent with your analysis; reasonable, given the organization and its environment; feasible, given the organization’s resources; and convincing to your supervisor or client. Your rationale should capture the main reasons for adopting your recommendations and show how you have mitigated any significant drawbacks. Your recommendations should be specific enough that they provide the organization with an action plan, including who will implement the recommendations, how, when, and in what priority. In addition to discussing the basic plan of action in the body of the report, it is helpful with lengthy cases to provide an implementation chart in an appendix to capture the details at a glance. Some instructors prefer that you separate your recommendations and implementation plan into two sections of your report, and provide a more expansive action plan with priorities for implementation, detailed timelines, and personnel assignments. 7. CONTENT AND FORMAT OF YOUR REPORT 7.1. Length Your instructor will specify the number of pages or words for each case assignment. Adhere to the restricted length by organizing your report effectively, prioritizing your material, avoiding repetition, and choosing your words carefully. As discussed in Section 3.2, select a manageable set of issues and ensure your set of alternatives is also workable. Presenting some of your analysis and findings in figures or appendices is an economical use of space, often allowing you to present more information in less space than you could in the body of your report (see Section 7.11). 7.2. Font Use the font specified by your instructor in the assignment or course syllabus or on the course website. F
o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
31
The Student Guide to the Case Method
28
7.3. Spacing Unless your instructor directs you otherwise, reports should be double-spaced. In business, reports are normally single-spaced; however, double-spacing is usually used in academia to allow room for your instructor to provide feedback. 7.4. Page Numbers The executive summary, which appears directly after the cover page, is not numbered, nor is it calculated in the page count or word count. The remaining pages should be numbered, but the page number should not be shown on the first page. Pages containing appendices should also be numbered, using Roman numerals. Appendices are not included in the page count or word count, although your instructor might set a separate limit on the number of appendices or the number of pages used for appendices. 7.5. Headings and Subheadings Use headings even in short reports; include subheadings in longer reports. Headings and subheadings improve readability by informing your reader what to expect and by keeping your reader oriented within the structure of your report. They make it easier for a reader to return to the report and quickly find needed information. Headings and subheadings also help you to organize your thoughts more carefully, keeping you and, subsequently, your reader focused. 7.6. Cover Page A professional report should include a cover page that identifies the name of the person or persons for whom the report is prepared, the name of the person or persons who prepared the report, the date, and the subject of the report, as shown in the following sample. REPORT TO: Jordan Kerr, President, Kerr Manufacturing Ltd. FROM: Nancy Drake, Eagle Consulting Group DATE: September 20, 2017 SUBJECT: Customer Retention Difficulties
7.7. Executive Summary An executive summary is required unless your instructor specifies otherwise. Write the executive summary after you complete the rest of the report, but place it immediately after the cover page and before the report’s main content. The executive summary is designed to outline the report’s most important issues and recommendations. It should stimulate the reader’s interest in the rest of the report, (e.g. by including profit projections for your recommendations, or for indicating the projected growth in market share) convincing the reader that reading the whole report will be worthwhile and valuable. For the size of report you will produce while a student, the executive summary should not exceed one page (250 words). For a very long report (e.g., 40 or 50 pages), a two-page summary might be justified.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
32
The Student Guide to the Case Method
29
7.8. Introduction The first section in the report is a brief introduction, which should capture the purpose and scope of the report. The purpose of the report states why you have been asked to write the report. The scope identifies what you will do in the report (e.g., identify issues, analyze those issues, and develop and evaluate alternatives). The introduction should never include a salutation, such as “Dear Sir” or “Dear Madam.” The introduction is not a brief summary of the case. Your supervisor or the person who hired you as a consultant is already familiar with the facts. However, a sentence or two in the introduction about the company’s current situation helps to explain the purpose of the report. As discussed in Section 4.1, case facts should be included in the report only to make a specific point. Therefore, do not spend time and words reiterating case facts in the introduction. Depending on the style preferred by your instructor and the complexity of the case, identifying the issues can form a key part of the introduction to your report. Usually, though, you will identify the issues in a subsequent section that focuses exclusively on identifying the issues. The latter approach generally is favoured because it more clearly distinguishes the issues for both you and your reader. In general, the introduction should not exceed a half page in length (125 words). If you identify the issues in your introduction, the introduction could be as long as a page (250 words). 7.9. Body of the Report The body of the report is typically divided into sections for issues, analysis of issues, alternatives, and recommendations. Especially for the analysis and alternatives sections, use subheadings for each issue and each alternative to make your report more readable and user-friendly. Subheadings also help you to organize your thoughts (see Section 7.5). Similarly, use paragraphs to separate each group of related thoughts from the next. Use of many short paragraphs will also make your report more readable. If your report includes figures or appendices, make specific reference to the figure or appendix at the appropriate place in the body of your report. This reference directs the reader to link the content in the body with the supplementary information. 7.10. Conclusion The final section in a written report is the conclusion. This section should provide a very brief (no more than a quarter to a half page) summary of the main findings of the report. The conclusion should also convince the reader that it would be beneficial for the organization to adopt the recommendations in the report. The conclusion should follow strictly from your analysis and avoid introducing any new material, since you will have already clearly built your argument in the analysis section of the report. 7.11. Figures and Appendices 7.11.1. The Purpose of Figures and Appendices Figures or appendices are used to capture some of your analysis or recommendations in a form more succinct than prose. Quantitative analysis is usually best presented in figures and appendices. Some forms
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
33
The Student Guide to the Case Method
30
of qualitative analysis also lend themselves to figures or appendices, such as a complete Porter’s five forces analysis or a resource gap analysis. Appendices are also used to present external research, organizational charts, and other supplementary information. There is no value in reproducing exhibits from the case itself in your report. Instead, refer directly to exhibits contained in the case, using a phrase such as “Exhibit 3 in the materials provided to us” or “case Exhibit 3.” Depending on the size of your report, some items should be incorporated within the body of the report while others should be appended to the back. It is conventional to include relatively short charts or tables or small graphs within the report and to attach longer items to the back of the report. Depending on your instructor’s preferences, small charts, tables, and graphs within the body of a report are referred to as figures, illustrations, or exhibits; exhibits sometimes refer to material appended to the end of a report, but, more commonly, that content is referred to as appendices. Whatever terminology you use, be consistent throughout the report. Each appendix is usually considered to be a stand-alone item that the reader can refer to both during and after reading the body of the report. To help draw the reader into the appendix and to make key information readily accessible in the body of the report, figures can be used to summarize key items from an appendix. For example, a figure can summarize three or four key financial ratios that are provided as part of a comprehensive ratio analysis shown in the appendix. To use figures and appendices effectively, limit their number to suit the size of your report. Also, be sure to refer to material from these items in the body of the report. 7.11.2. Quantitative Figures and Appendices Quantitative figures and appendices should provide a level of detail that is suited to the audience and allows the information to be presented in a readable font (at least 10 points, and depending on the font, preferably 11 or 12 points). For example, a board of directors will not want to review dozens of pages of detailed spreadsheet analysis. The board will expect the report writer to make judicious choices about the number of scenarios and level of detail to present. On an income statement, it is generally sufficient to display four or five expense categories rather than list the 15 or 20 individual expense items, and to state items in thousands or millions of dollars to reduce the number of digits displayed. It will also likely be sufficient to display the most likely, worst-case, and best-case scenarios. However, your supervisor or your instructor might want to see more analysis and a greater level of detail than a board member would require. All quantitative appendices should include a clear trail of assumptions, calculations, and explanations. For example, if your pro forma (forecast) income statement projects a growth in sales of five per cent for each of the next two years, clearly state this assumption and explain why this assumption was used (e.g., it represents the average growth rate for the past three years, or it is the projected increase in demand for the industry). For financial statements, the clearest trail is established when you provide an additional column for assumptions. Alternatively, beside each relevant line item, insert a superscript reference number that corresponds to a numbered note at the bottom of the financial statement. 7.11.3. Numbering of Figures and Appendices Sequentially number (or letter) all figures and appendices to correspond with the order in which they are discussed in the report. Label figures and title appendices to show at a glance what they contain; e.g., “Figure 1: Growth of Market Share, 1995 to 2015” or “Appendix 1: Porter’s Five Forces Analysis.”
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
34
The Student Guide to the Case Method
31
Figures and appendices should also be professional in appearance and format. Word processing software offers a wide range of colours and designs for charts, graphs, tables, and illustrations; however, unless you are providing the printed copy of the report (and thus have control over the final appearance), avoid the use of colour and keep illustrations simple. Also avoid the use of special effects such as drop shadows and special, complex, or elaborate shapes. Use shading (i.e., fill) in tables and illustrations only when absolutely necessary. The width of borders should be between 0.5 and 1.0 points in size. When designing tables, use only the borders you need to separate rows and columns. Too many lines, vertical or horizontal, add clutter to content and often make a table more difficult rather than easier to read. Figures and appendices are typically not included as part of the prescribed word count; however, your instructor might prescribe a separate limit on the number of figures and appendices. 8. WRITING STYLE, GRAMMAR, AND SPELLING 8.1. Basic Criteria of a Well-Written Report Your report should be well-organized and well-written. Careful attention to grammar—including sentence structure, paragraph structure, word usage, and punctuation—and spelling is essential. Your instructor might evaluate this aspect of your report separately or might show an explicit deduction from your overall grade in an effort to emphasize the cost of poor organization, faulty grammar, and misspellings. A poorly written report will have a negative impact on the reader that will adversely colour the reader’s view of the entire report. For your work to be perceived as professional, competent, and credible, your report needs to be well written. While spell-checkers and other electronic tools are of some value, they do not detect all types of errors (e.g., using “weather” instead of “whether”). It is also helpful to have someone else review your report for readability, clarity, spelling, and grammar. However, a review by another person does not replace the need to take the time and effort to carefully review your own work. Plan your time to allow at least a day or two between finishing your first draft and editing your report; otherwise, you might simply see what you saw the last time. It can also be helpful to read your report aloud or to read the paragraphs in reverse order from the end to the beginning. Finally, you should print and proofread your report. Your eyes and brain have the ability to notice things in a printed copy that are not seen on a screen. Prepare and proofread figures and appendices with the same care as applied to the body of the report. 8.2. Use of “I Think” and “I Believe” Avoid the tendency to preface conclusions and recommendations with phrases such as “I think,” “I believe,” or “We are of the opinion that.” The entire report represents your thoughts, beliefs, and opinions. It should be clear from the context whether you are citing facts or drawing a conclusion. While qualifying expressions can be used occasionally for special emphasis, their overuse leads to a report that appears tentative. 8.3. Formal versus Informal Reports When deciding on the tone of a report, consider the audience, the customary style within an organization, and the preferences of your supervisor or instructor. A report to a board of directors of a large corporation should use more formal language than a report to a small business owner. For example, it is more formal to write, “The report recommends that the organization [do X]” than to write, “I recommend that the organization [do Y].”
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
35
The Student Guide to the Case Method
32
If your report is directed to your supervisor or a client who is the owner of a small business, use of “I” or “we” is generally acceptable. As well, when addressing the recipient of the report, it is generally acceptable to use “you.” However, if the sentence refers to the recipient’s department or organization as a whole, use “the department” or “the company” or a shortened version of the company name. Opinions differ on whether it is acceptable in a report to use the passive voice (e.g., “It is recommended that”). In general, the active voice (e.g., “We recommend that”) is more compelling than the passive voice, and it demonstrates more confidence in, and ownership of, the recommendations. The active voice is also easier to read and generally uses fewer words. 9. PROFESSIONAL LANGUAGE, TONE, AND TACT 9.1. Use Professional Language The report should use professional language that is both concise and clear. Say something well the first time, and you will eliminate repetition and make room for new content. Keep your sentences short. Ensure that each word communicates the meaning you intend. Avoid flowery language. Remember that you are writing a business report, not an English essay. Also avoid trite expressions, colloquialisms, and slang. For example, use the word “receive” instead of “get;” use “will earn a profit” instead of “will make money;” use “high risk” rather than “big gamble.” Use words such as never, always, and very sparingly to avoid exaggeration and generalization. Such words are often unnecessarily inflammatory. As such, they might cause the reader to become defensive, and they might reduce your credibility. Avoid the use of technical language that your reader will not understand unless you have explained such terms. This guideline also applies to use of theories and models. While you are required to use course concepts in an academic case report (in your role as a student), you are also required to apply them in a way that makes them understandable and relevant to the report recipient (in your assigned role as a subordinate or a consultant). For instance, in an organizational behaviour case, you might choose to apply expectancy theory to explain why employees are not motivated. It is sufficient to state (with appropriate support) that employees do not believe that behaviours being asked of them will lead to customer satisfaction, or they do not believe that their supervisors will reward improvements to customer satisfaction, or they do not value the organization’s rewards. Simple, clear conclusions are preferable to a theoretical outline of what expectancy theory is and what it says about motivation. Also avoid the use of jargon or “business speak.” Jargon obscures your intended meaning and creates the potential for misunderstanding. Jargon also changes with generations; using jargon that might be understood by a young generation of business people might leave an older businessperson frustrated and feeling excluded. Similarly, jargon does not usually translate well or consistently across languages, and is potentially confusing, excluding, or even offending to an international reader. Instead of “reaching out” or “touching base,” “contact” the person. Rather than pursuing “buy-in,” “seek agreement” on a course of action. Use big words only to the extent that you can do so effectively. In general, clarity and conciseness are more important than trying to impress your supervisor, client, or instructor.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
36
The Student Guide to the Case Method
33
9.2. Use Constructive Language Since a case report culminates in recommended alternatives for action, the goal is to be persuasive. Throughout the report, be positive, constructive, tactful, and considerate of the reader’s feelings, so as not to alienate the reader. Although one important facet of the report is to identify issues, care should be taken to avoid overly negative language, especially when the report is addressed to your superiors. For example, rather than stating that “management has failed to recognize that the current strategy is no longer effective,” state that, “due to significant changes in the external environment, the company has reached the stage where a new strategy is required to ensure its ongoing success.” Avoid accusatory statements such as “poor management” or “management has neglected to.” It is more appropriate to state, for example, that “there were insufficient controls in place” rather than “there was a lack of internal controls” or “management failed to establish internal controls.” Using appropriate language and tone will make the reader more receptive to what you say in the report about various issues. It will also make your analysis and recommendations more credible. 9.3. Use Must and Need Sparingly Also related to tone and tact is the use of the word must. In general, avoid telling the recipient of the report what the person must do. Overuse of that word reflects a lack of distinction between essential actions and suggested recommendations. As well, must has the connotation of ordering or commanding action. Your reader will react more positively, just as you would, to phrases such as “I recommend,” “It would be beneficial to,” or “The company should,” rather than being told what the reader must do. It is also preferable to use wording such as “Your department should” rather than “Your department needs to.” Reserve need to and needs to for actions that are absolutely essential to emphasize their critical nature. Use “I recommend” for actions that would be prudent or wise. 10. CASE REPORTS WRITTEN BY TEAMS 10.1. Team Meetings If you are assigned to complete your case as part of a team, plan to meet at least twice and perhaps three times to discuss the entire case. Set an agenda for each meeting and hold each other accountable for being prepared. For example, the goals of the first meeting might be to identify the issues and begin to analyze them. Prior to that meeting, each member of the team should read the case at least once, preferably twice, and make some preliminary notes. The goals of the second meeting might be to develop and evaluate alternative solutions and to draft recommendations. Prior to that meeting, individual team members might be assigned the task of completing more in-depth analysis (e.g., calculating financial ratios, comparing the firm’s product offering and value proposition to those of key competitors). Some team members might be assigned the role of capturing what was accomplished at the previous meeting by drafting one or more sections of the report. The agenda for the final meeting might be to review the draft for consistency, clarity, grammar, and so on, and to finalize the report.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
37
The Student Guide to the Case Method
34
10.2. Brainstorming One of the key benefits of working in teams is the ability to generate more ideas and to benefit from each another’s ideas. For this advantage to be achieved, it is helpful to use a technique called “brainstorming” when identifying the issues and, especially, when generating alternative solutions. Brainstorming attempts to come up with as many ideas as possible by holding off on any evaluation or criticism of the ideas until a later time. 10.3. The Task of Writing the Report The duty of writing the report can be split or rotated among team members, but the final product should represent a team effort and not simply be a piecing together of several individually-crafted sections. The latter approach usually leads to inconsistencies such as analyzing issues that were not mentioned in the identification of issues, failing to solve issues that were analyzed, or not using much of the analysis contained in appendices. Some editing of a written draft should occur at a subsequent meeting or by means of circulating the draft to all members of the team. The final report is the responsibility of the whole team, not the individuals who are assigned all or part of the writing task. Your instructor might require all members of the team to sign off on the report to acknowledge this shared responsibility. 11. CASE ANALYSIS AND ACADEMIC INTEGRITY Because case analysis is complex, it may often seem helpful to discuss the case informally or formally with other students before participating in a class discussion, writing a report, or making a presentation. Managers and consultants often discuss problems with other people, within the constraints allowed by confidentiality. Therefore, your instructor may allow, encourage, or even require such discussion. However, to ensure academic integrity and to avoid plagiarism, unless your instructor has specifically indicated that some degree of discussion is permissible, you should consult with your instructor before engaging in any collaboration. This restriction on outside discussion is especially necessary when preparing reports and presentations. It may also seem helpful to search the Internet for teaching notes for cases or for case reports or slide presentations prepared by other students. Academic integrity requires that you refrain from using such resources, in full or in part. Any attempt to use the work of others and to pass it off as your own is plagiarism. If the instructor is suspicious that plagiarism might be involved, you may be asked to upload a copy of your case report through Turnitin.com. While using the work of others may appear to provide a shortcut to a good grade, the quality of online sources and the work of other students is often suspect, at best. Most importantly, you deprive yourself of the learning opportunities the case method offers.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
38
The Student Guide to the Case Method
35
NOTE 5: MAKING AN ORAL CASE PRESENTATION
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
39
The Student Guide to the Case Method
36
1. INTRODUCTION TO MAKING AN ORAL CASE PRESENTATION The method for a basic case analysis presented in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054—can be used for various purposes: discussing the case in class, writing a report, making a presentation, or writing a case exam. This note guides you in making an oral presentation to your instructor and class colleagues. The note covers the purpose of a presentation and provides guidelines for preparing and presenting a case to a classroom audience. The note also provides general guidelines related to format, organization, and verbal communication skills. The guidelines in this note are for general use. You should always defer to your instructor’s requirements, which may differ or be more specific. 2. PURPOSE OF A CASE PRESENTATION Especially in the business world, an oral presentation is typically used to highlight the main findings in an accompanying written report. However, the oral presentation is distinct from the written report, largely because information presented orally is perceived and absorbed differently from information provided in writing. An oral presentation should provide a broad overview of the main issues and recommendations. It should not provide the same level of detail as a written report, so be discerning in choosing which elements of your case analysis to emphasize. The overall goal of a presentation is to convince your audience that you understand the key issues and have a logical and feasible action plan for resolving them. 3. CRITERIA OF A GOOD PRESENTATION A good presentation conveys information in a format that enables your audience to comprehend the intended message. With any communication, information is encoded by the sender, transmitted using one or more media, and decoded by the receiver. At any point in the process, communication can be disrupted, hindering the clarity of the message. A communication disruption can occur for a variety of reasons, including the amount of information being conveyed, the presentation tools and techniques being used, and the skills of the presenters. Good presenters are aware of the potential disruptions to a message and craft their delivery to minimize those disruptions. For each case, you will be asked to play a specific role as a student, consultant, employee, or manager who is writing a report or making a presentation to a specific person or group, or both. Depending on the directions of your instructor, you will be presenting to your instructor, a manager, a board of directors, or a client who engages you as a consultant. A good presentation addresses the needs and knowledge of the intended audience. However, while the presentation (and accompanying report) might be intended for one individual, you should present to the entire audience in the room. For instance, if the presentation (and accompanying report) is being directed to the vice-president of marketing, address your presentation to the vice-president and thank the individual for “inviting the rest of the management team to the presentation.” Always use professional tone and tact. However, if you are playing the role of an external consultant, you can be a little bolder in making your points than if you are playing the role of someone from within the organization—especially when presenting to a supervisor.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
40
The Student Guide to the Case Method
37
4. CONTENT OF A CASE PRESENTATION 4.1. Presentation of a Full Case Report Once a case analysis is complete and the report has been written, review the report and identify the key portions that the individuals reading the report need to know. These highlights will form the outline of your presentation and will help you to present what is written in the report and avoid introducing different material. Your audience will read your report to gain greater understanding of the information included in your presentation. A full case presentation typically consists of three parts: the issues, key alternatives, and your recommendation. First, describe the issue or issues you identified as being key to the case. Briefly provide your reasons for selecting those issues, reflecting the theories and models you used during the analysis stage (see Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054). Be mindful of your audience and offer your theoretical analysis only if it adds value. Use of too much theory, especially when it is not well applied, undermines your expertise and credibility. It is inappropriate and impractical to repeat all the theoretical analysis contained in the report or to cover it in detail during a presentation. Second, present the key alternatives you identified as being possible solutions to the issue or issues, providing a brief rationale for each. Restraint is key: do not include in your presentation everything contained in your report. A presentation is a high-level review of your report, mainly focused on what you identified as the issues and ways to resolve them. Finally, offer your recommendation. Persuade the audience that the solutions you have chosen will best resolve the issue. Anticipate objections the audience might raise and counter them in your presentation before they are raised. As you structure your presentation, use the slide sorter capability of the presentation software to bring a logical flow to the content. Once you have the high-level points outlined on slides, you can easily write the script for the presentation since you will be writing with the end of your presentation (i.e., your proposed solution) in mind. 4.2. Presentation without a Case Report In some courses, your instructor will ask you either to complete only specific components of a full case study, or to present the case without writing a full report. If you are presenting only individual components of a case analysis, performing a full analysis, as outlined in Note 2 (identify the issues, analyze the issues, develop and evaluate alternative, and recommend a course of action), will better equip you to present the analysis of the specific components your instructor requires. For example, if you are presenting only the issues, your preparation should include analysis of those issues so you can confidently present the issue statement. If only the presentation is required, it is essential that you have a sufficient understanding of the underlying issues and analysis to select the most appropriate material for your presentation. Because you will not have a written report to use as a roadmap for the presentation, it is crucial that you follow the four case analysis steps in Note 2 so that your understanding is sufficient to present the case in a convincing manner and so you can support your recommendations with sound logic. Provide enough detail in your presentation to assure your instructor that you understand the issues and have applied appropriate theory; at the same time, avoid overwhelming your audience with too much content and theory.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
41
The Student Guide to the Case Method
38
5. AUDIOVISUAL AIDS Your presentation should be accompanied by audiovisual aids, such as presentation slides (e.g., PowerPoint, Prezi, or Google Slides), video clips, a blackboard or whiteboard, a flipchart, or handouts. These audiovisual aids can give your audience an outline of your presentation and show them some details (e.g., a ratio analysis or market share analysis) or an illustration (e.g., an effective advertisement). However, use audiovisual aids thoughtfully; avoid diverting your audience’s attention from both you, as the presenter, and the main message you are communicating. The focus should be on the content, not on the technology being used to present the content. Presentation slides should be simple and use at least 28-point font. Choose a sans serif font for text. It is simpler, cleaner, and easier to read on a screen. It also does not pixelate when enlarged by the projector, making it clearer to read, even for the audience at the back of the room. Use short phrases that supplement—and do not reiterate—what you are going to say. Do not fill the slides with text, or your audience will be more focused on reading the slides than on listening to you. It might be necessary, especially with slides containing financial statements, to break the statements into sections on two or three slides. When communicating a message that contains financial data, consider whether a pie chart or graph might better convey the message. Animations should be used with caution; they can be distracting and cause your audience to focus more on the graphics than on the content of your presentation. Use subtle transitions and animations, with bullet points “appearing” or “wiping in.” Avoid animated graphics or cartoon clip art; they quickly become annoying to the audience and reduce the professionalism of your presentation. If you use a graphic or photograph, use high-quality images that will not pixelate or degrade as they are resized on the screen. Know the room in which you are presenting, especially how the lighting affects the room’s projection screen. The room’s lighting will dictate the colours you choose for the background and font in the presentation. For example, if the room has windows, choose starkly contrasted background and font colours so the text does not get washed out by the light, making it difficult for the audience to read. If you prepare your slides using your own computer and software, preview your presentation in the school’s lab to ensure that your presentation is compatible with the version of software available in the classroom and that your computer is compatible with the projection system. If you have the opportunity, preview the presentation in the room in which you will be delivering the presentation, so you can assess whether the content of the slides is readable. If you intend to use a blackboard or whiteboard, plan how you will use it. Include in your speaking notes a quick sketch of what you intend to write on the board, and the location of each component you will write. This preparation enhances your professionalism and keeps the presentation moving. 6. PRESENTATION SKILLS The role identified for you in the case or by your instructor will guide how you approach your presentation. Nonetheless, some key skills are required for all presentations. During your presentation, speak loudly enough to be heard by all members of your audience. Use an expressive voice, speak at an appropriate speed (which might feel unnaturally slow), pause where appropriate for emphasis or to allow your audience to absorb information, and make regular eye contact with members of the audience. Remember that you are the authority on the subject, so do not just read what you have written in your report.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
42
The Student Guide to the Case Method
39
Choose words and structure your sentences to serve the nature and capacity of the audience. Keep in mind that people’s ability to absorb information is lower when the information is presented orally rather than in writing. While it can be more comfortable to stand behind the podium where you can read from your notes, step out from the podium—at least periodically—to connect with your audience. Be comfortable. Become a professional and polished version of yourself. If you are holding cue cards or speaking notes, keep them still as you refer to them, so they do not draw attention away from the message you are communicating. Presentation skills improve with practice. Script, adjust, and practise your presentation until it fits the time you are allotted. By exceeding the time limit, you reflect a lack of preparation. Your instructor might cut you off, or if more than one presentation is scheduled in the class period, you might infringe on the time allotted to the next presenter.
7. HANDLING AUDIENCE QUESTIONS A presentation usually includes time at the end for questions and answers, but some presenters prefer to take questions throughout the presentation. Whichever you choose, let your audience know at the start of the presentation how you will be taking questions. Some presenters take a mixed approach, responding to brief questions of clarification during the presentation, but reserving more detailed comments and questions until the presentation is finished. This approach works well in classroom presentations when the whole class is responsible for interacting with the presenter. The ability to listen can set you apart as a business professional, and active listening skills enable you to understand what members of the audience are asking. Be present and listen fully to the question; if you start formulating an answer before the audience member has finished asking the question, you risk responding inappropriately or incompletely. Acknowledge the audience member and the question. Move toward the person who asked the question—this is a perfect opportunity to move away from the podium. Establish eye contact with the person during the question and the first part of your answer, then broaden your attention to other audience members. Thank the individual for the question, and if other members of the audience might not have heard the question, repeat it so all can hear. If the question refers to an option you considered but did not discuss during the presentation, respond appropriately and explain why you did not include the topic in the presentation or why you discarded the alternative. If the question raises a point you had not considered, thank the questioner for the input and acknowledge that you did not include it in your evaluation. If time allows, discuss the topic further. Always be gracious, courteous, and professional.
8. TEAM PRESENTATIONS In the case of a team presentation, all members of the team should be involved in some aspect of the presentation, and the transition from one presenter to the next should be as seamless as possible. Each member’s part in the presentation should be agreed on in advance to avoid both duplication and omission of material. As you prepare the presentation, identify each member’s strengths and weaknesses so that you can capitalize on individual presentation skills and specialized understanding of the content. During the presentation, team members who are not speaking should avoid being a distraction. Stand back from the speaker and remain still. Do not whisper among yourselves, stand in an awkward place, or fidget. Where possible, play an appropriate supportive role; for example, distribute handouts or run the slide show to free the speaker of these duties.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
43
The Student Guide to the Case Method
40
To ensure your presentation is professional, script and rehearse the presentation several times, including transitions from one presenter to the next. 9. ROLE OF THE AUDIENCE As a member of the audience, you are actively involved in the presentation. Your preparation of the case for class discussion should equip you to critically evaluate the presenter’s approach to the case. (See Note 2 and Note 3 of the Case Guide Series—“Preparing to Discuss a Case,” No. 9B18M055.) Your instructor might also evaluate your preparation and participation in the class. Just as the presenter plays an assigned role, so, too, should the audience members. For example, if you are taking the role of the board, ask questions that board members would ask. Such questions might ask about the level of risk assigned to a course of action, the estimated return on investment, and the impact on other stakeholders of the organization should the recommended solution be implemented. Listen actively, focus on the speaker, allow the speaker to completely finish, listen for the ideas being presented, and listen critically for the presenter’s main arguments. Good questions are a challenge to formulate, and they should respond to the content you heard from the presenter. Bring a two- or three-page summary of the case to class, and make notes in the margins of that summary to compare what the speaker presents against your own preparation of the case. Ask questions that clarify the presenter’s position so that you can persuasively argue your own position. Again, at all times, be gracious, courteous, and respectful of the presenter and of other audience members. 10. DRESS FOR SUCCESS Attire for presentations should be appropriate for a business setting and should also reflect your audience. Appropriate attire includes dress pants, skirt, dress shirt, blouse, and/or tie. Jackets are optional, except for when you make a formal presentation to a board of directors. Your clothing should not distract audience members from focusing on the content of your presentation; it should also reflect the highest regard for professionalism.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
44
The Student Guide to the Case Method
41
NOTE 6: PREPARING FOR AND WRITING A CASE EXAM
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
45
The Student Guide to the Case Method
42
1. INTRODUCTION TO WRITING A CASE EXAM The method for a basic case analysis presented in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054—can be used for various purposes: discussing the case in class, writing a report, making a presentation, or writing a case exam. This note guides you in preparing for and successfully writing a case exam. The guidelines in this note are for general use. You should always defer to your instructor’s requirements, which may differ or be more specific. 2. PURPOSE OF A CASE EXAM The task of performing a case analysis might form part or all of your examination for a course. If it forms only part of your exam, your instructor will likely use short cases or direct you to restrict your analysis to specific tasks. If performing a case analysis represents the entire exam, you should expect a longer case with less direction, although your instructor might still provide a set of questions to guide your analysis. A case exam is designed to test your ability to apply the case method under constraints of time and resources. If an exam is performed in a closed-book setting, you are expected to remember and understand course concepts, models, and theories well enough to apply them to the assigned case. If an exam is performed in an open-book setting, you must still have sufficient knowledge of concepts, models, and theories to be able to recognize which are relevant to the case and where to find them quickly in your notes or text. Your instructor’s decision to evaluate your performance using a case exam indicates that the main learning outcome is application of the course concepts, models, and theories. Application requires a higher level of understanding than memorization and recall. This approach is also consistent with the classroom discussions if your course has made significant use of cases. 3. PREPARING FOR A CASE EXAM Studying for a case exam is unlike studying for other types of examinations in that the goal of a case exam is application rather than memorization or recall. It also differs in that you do not know what type of questions to expect on the exam. For both of these reasons, you are limited in terms of what you can study before the exam. If the exam is open-book, your preparation should include determining the material you are most likely to want to use and how you will access it quickly. 3.1. Reread Notes and Texts Reread your notes and reread your text in anticipation of the course concepts, models, and theories you are most likely to be asked to apply in the case exam. Your priorities should be guided by the following: Course learning outcomes in your course syllabus or on the course website. The types of cases assigned throughout the course—the size of case, nature of issues, topics covered,
and types of industries. – While a case exam will not ask you to recall specific facts from cases used in class, cases used in
class do provide some important clues regarding the issues you will encounter on the case exam. Types and depth of analysis required during the course—full case analysis, partial case analysis, or
simply answering questions. F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
46
The Student Guide to the Case Method
43
– Due to time limits in a case exam, you will not be expected to apply the same depth of analysis that you would be expected to apply in class discussion, written reports, or presentations. Nonetheless, a case exam will often require that you perform all of the usual steps of analysis. If all steps are not required, your instructor will usually alert you to this requirement before the exam. (For a discussion of partial and full case analysis and directed cases, see Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054.)
Concepts, theories, and models emphasized in class discussions, especially those that were discussed frequently.
Any instructions your instructor provides about the focus of the case exam. 3.2. Practise Writing a Case under Exam Conditions It is useful to review one or two of the cases discussed in the course and redo the analysis under the time constraint imposed by the exam. Because you will be familiar with the case, consider giving yourself less time than will be available for the exam. Also, simulate exam conditions, including whether it is closed- book or open-book. Practising for an exam helps you assess which case analysis steps will require better time management during the exam. Practice also gives you some confidence that you can perform the expected analysis within the allowable time. 4. WRITING A CASE EXAM Writing a case exam can be an anxious time, given the time constraints and the uncertainty of being thrust into a new situation. Successfully writing a case exam requires that you remain calm and manage your time wisely. 4.1. Read the Instructions Carefully read the instructions to maximize your opportunity to excel in the exam. Your instructor will likely provide some questions, either at the end of the case or in a separate document. In a directed case, your assignment might simply be to answer those questions. In a case requiring partial or full case analysis, the questions should help you to identify key issues and the analyses you need to perform. For example, questions such as, “What threats are posed by traditional and non-traditional competitors?” and “Is the company’s competitive advantage sustainable? If not, how can it build a sustainable competitive advantage?” help you to identify potential issues as being increasing competitive threats and lack of a sustainable competitive advantage. The questions also suggest two types of analyses that might be helpful—a competitive position matrix and a competitive advantage analysis. Questions such as, “What are the pros and cons for the company focusing on a niche market?” or “Assess the potential of increasing the number of product lines,” help direct your attention to two potential alternative solutions for evaluation: serving a niche market or increasing the number of product lines. In addition to carefully reviewing any questions provided by your instructor, look for instructions regarding: the role you are to assume when performing the analysis and writing the report; steps in the case method that are required for the exam; key issues; and the format of the report.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
47
The Student Guide to the Case Method
44
For example, consider these instructions:
Acting in the capacity of a consultant, write a report to James Alou, chief executive officer, who has asked you to evaluate the proposed new sales incentive plan for Andover Manufacturing Inc. (AMI).
Your report should identify the issues associated with the new incentive plan, analyze the issues, and present appropriate recommendations. Each recommendation should be justified by clearly identifying which issue or issues the recommendation is designed to address, by presenting its major advantages, and by addressing any significant disadvantages. It is NOT necessary to present possible alternatives that you do not recommend.
An appropriate heading, introduction (which can include identifying the issues), and brief conclusion are required. An executive summary is NOT required.
These instructions specify the role you are to play (a consultant). They direct your attention to evaluation of the new incentive plan, and suggest that there are issues related to that plan. The instructions also restrict the steps you are to perform in completing your analysis. Lastly, the instructions provide guidelines for the report format. Watch for additional instructions regarding numbering of pages, required page headers, and assembly of your exam. 4.2. Read the Case Give yourself time to read through the case twice. In your first read, skim the case. Your goal during the first read is to develop a preliminary understanding of the issues, problems, or opportunities (collectively referred to hereafter as “issues”) facing the decision maker. In the first read, resist the temptation to highlight text in the case, except for key questions raised by the principal actors or characters. Questions raised by the principals are important to note because they help you to identify key issues. (For further information about how to read a case, see Note 1 of the Case Guide Series—“Understanding the Case Method,” No. 9B18M053.) Your second read of the case should be more deliberate to help you gain a better understanding of the issues and any potential solutions proposed by the principals. You should also identify relevant analyses to perform and case facts that you can use when performing those analyses. Highlighting the case at this stage will help you use the case facts effectively. In a three-hour case exam, you should spend no more than 45 minutes reading the case. 4.3. Prepare an Outline While preparing an outline of your report can appear to be an extra step that consumes valuable time, taking 15 minutes to briefly map out key parts of your report helps you to allocate your time and will likely save you time later. An outline provides a valuable roadmap to keep you focused, allowing you to move methodically from one step to the next. It prevents you from losing sight of excellent ideas and becomes especially important as you begin to feel more rushed toward the end of the exam. Your outline should identify the main parts of your report, the key issues, important points for your analysis of the issues and the tools you intend to use, and at least some alternative solutions—particularly those raised by the principals in the case or identified in questions that accompany the case.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
48
The Student Guide to the Case Method
45
Your outline could also include key decision criteria to use when evaluating the alternative solutions you develop (see Section 4.4.5 or Note 2, Section 4.2). 4.4. Write Your Report When writing your report, start each section on a separate page and double-space your answer. This format will allow you to easily add more material later without crowding what you have done so far. Remember to use proper report format, unless otherwise directed. Here, again, it is important that you have carefully read the instructions so that you do not spend time on tasks that do not help you earn marks. Refer to Note 4 of the Case Guide Series—“Preparing a Written Case Report,” No. 9B18M056—for more information about the required components of a report and how to write an effective case report. Bear in mind that an instructor generally scales back the expectations for a report written under the time pressure of an exam. 4.4.1. Prioritize and Manage Your Time Allocate your time to the most important tasks: the analysis of issues and the evaluation of alternative solutions. For the introductory paragraph and the conclusion, do just enough to achieve their required purpose. Provide an executive summary only if your instructor directs you to provide one. During an exam, as long as you identify the key issues and key alternatives, it is generally better to analyze fewer issues and alternatives well than to attempt to deal with too many issues and alternatives, which might result in you running out of time. Here, your report outline will come in especially handy; refer to it to stay on track. 4.4.2. Identify the Issues Keep your identification of issues brief and to the point so that you avoid repeating content when you perform the subsequent analysis. Also ensure that your set of issues is manageable. 4.4.3. Analyze the Issues Use concepts, models, and tools to analyze the issues so that your analysis reflects the necessary rigour to demonstrate your mastery of course concepts. However, here again, adhere to your outline so that you do justice to all of your chosen models and tools. 4.4.4. Identify Alternative Solutions Identify any potential solutions that were considered by the principals in the case or that were suggested by your instructor in the directions and questions provided to you. Since keeping things the same is seldom a viable alternative, you are generally better to allocate your time to alternatives that offer some improvement. Identify other alternatives, as long as your set of alternative solutions is still manageable. 4.4.5. Evaluate Alternative Solutions Evaluate how effectively potential solutions will resolve one or more of the issues you have identified.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
49
The Student Guide to the Case Method
46
Establish your set of decision criteria to help you quickly generate the pros and cons of your proposed solutions and to evaluate your alternatives consistently. For example, in a strategic management case, decision criteria might include the degree to which the action: fits with the organization’s mission, value proposition, and goals; fits with stakeholder preferences; is profitable; capitalizes on specific external opportunities; builds on an existing competitive advantage or helps to create a competitive advantage; or requires additional resources and competencies. It is especially important when performing a case analysis in an exam setting to choose a manageable set of criteria so that you can fully capitalize on a framework for developing pros and cons. (See Note 2 for detailed information about evaluating alternatives.) 4.4.6. Make Your Recommendation In an exam setting, the most important parts of your recommendation are what you recommend and a brief summary of why—specifically how your recommendation resolves the issues you identified. As time allows, you can fill in the who, how, and when. If your instructor requires an implementation plan, consider using a chart, which is the most efficient way to complete this task during an exam, especially as your time draws to a close.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
50
The Student Guide to the Case Method
47
NOTE 7: USING COMMON TOOLS FOR CASE ANALYSIS
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
51
The Student Guide to the Case Method
48
1. INTRODUCTION TO COMMON TOOLS FOR CASE ANALYSIS The method for a basic case analysis presented in Note 2 of the Case Guide Series—“Performing a Case Analysis,” No. 9B18M054—can be used for various purposes: discussing the case in class, writing a report, making a presentation, or writing a case exam. This note provides you with a few of the more popular tools used in case analysis and guides you in using those tools. The guidelines in this note are for general use. You should always defer to your instructor’s requirements, which may differ or be more specific. 2. HORIZONTAL ANALYSIS The data presented by the case author(s) in figures and exhibits will provide you with some of the best opportunities for value-added analysis. Reorganize and summarize the data. Perform additional calculations. Draw new comparisons. In doing so, you will be able to interpret existing information in new ways and provide support for new findings. When data are presented in numerical form, a logical first step in analyzing the data is to compute percentage changes from one year to the next, or to assess the magnitude of the differences between one company and the next. Look for trends such as whether the company is gaining or losing market share compared with its competitors, and whether sales are growing or shrinking, and the rate of change. When calculating year-over-year percentage changes, the earlier year’s number forms the base:
‐ ‐ 2 1
1
For example, suppose you are given the following numbers:
Year Sales
2015 $184,700
2016 $182,500
2017 $179,800
The percentage decrease in sales from 2015 to 2016 , – ,
, 1.19%
The percentage decrease in sales from 2016 to 2017 , – ,
, 1.48%
For the two-year period:
The percentage decrease in sales from 2015 to 2017 , – ,
, 2.65%
From the above horizontal analysis, you can conclude that sales are declining at an increasing rate.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
52
The Student Guide to the Case Method
49
3. VERTICAL ANALYSIS Vertical analysis or common size analysis expresses each item on a financial statement in terms of a percentage of a base amount. The base for income statement items is usually sales. For example, you can calculate cost of goods sold (COGS) or other expenses as a percentage of sales. Potential bases for statement of financial position (balance sheet) items are total assets or total liabilities. For example, you can calculate inventory as a percentage of total assets, or you can calculate current liabilities as a percentage of total liabilities. Vertical analysis facilitates comparison between one business and its competitors of different sizes. It also allows a business to compare its own results from one year to the next. For instance, if sales were higher, one would expect COGS to also be higher. By expressing COGS as a percentage of sales, we can determine whether sales price increases are keeping pace with cost increases. For example, suppose you are given the sales numbers in Section 2.1 and the following numbers:
Year COGS
2015 $85,800
2016 $84,500
2017 $86,200
85,800 184,700
46.4%
Year % of Sales
2015 46.4
2016 46.3
2017 47.9 You might note that for 2015 and 2016, COGS as a percentage of sales was fairly steady, but in 2017 the percentage rose significantly to 47.9 per cent. Referring back to Section 2.1, you might also note that sales had declined from the previous two years, leading to questions about not only the drop in sales but also the reasons for the sharp increase in COGS. 4. RATIO ANALYSIS In many cases, it is beneficial to analyze an organization’s financial performance by performing ratio analysis. Ratios show the relationship among selected items of financial statement data, as expressed by a percentage, rate, or proportion. Ratios are useful only if they are compared to ratios of prior years, ratios of competitors, industry standards, and forecast ratios. Be judicious in both your calculation and interpretation of ratios to ensure that your financial statement analysis adds value to your report. The most valid external comparisons involve companies within the same industry, or industry benchmarks produced by such organizations as J.D. Power or Deloitte. General benchmarks, known as “rules of thumb” are sometimes available; however, industry benchmarks take precedence over general benchmarks, since ratios can be expected to vary considerably from one industry to the next. F
o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
53
The Student Guide to the Case Method
50
When a ratio mixes balance sheet (statement of financial position) values and income statement (statement of earnings) values, use an average of the balance sheet values. (This approach is used because an income statement provides information about a company’s performance over a period of time, whereas a balance sheet is comprised of values at one point in time.) When the value at the beginning of the time period is unavailable (e.g., when only two years’ data are available and you are calculating comparison ratios for two years), use year-end values as a proxy for the average. However, the more asset values fluctuate over that period of time, the more use of a year-end value distorts the picture. The following formula is used to calculate the average of balance sheet values:
2
where one year’s beginning value is the prior year’s ending value. Provided below are the formulas and brief interpretations of three types of ratios—profitability or activity ratios, liquidity ratios, and solvency ratios. 4.1 Profitability or Activity Ratios Profitability ratios measure a business’s ability to generate earnings from providing goods and services. Profitability ratios can be useful for comparing a business’s present and past performance, or comparing a business with that of its competitors or industry benchmarks during the same period in time. The three main profitability ratios are return on assets (ROA), return on equity (ROE), and earnings per share (EPS). As will be shown below in Sections 4.12 through 4.18, changes to ROA can be explained by calculating other ratios. 4.1.1 Return on Assets
Return on assets (ROA) indicates the profitability of a business relative to the assets invested in the business. An ROA of 10 per cent indicates that for every dollar invested in assets, the business earns 10 cents in profit. Instead of net income (also referred to as profit or earnings), income from continuing operations can be used to provide a better benchmark for future comparison, since discontinued operations will no longer be available to generate profit. ROA depends on two factors: profit margin and asset turnover. Thus, the equation for ROA can also be stated as follows:
4.1.2 Profit Margin
Profit margin indicates the profitability of a business relative to its sales revenue, and reflects how well a business is controlling its various expenses. Expressing net income relative to sales revenue provides a more meaningful comparison of the business’s performance from one year to another than merely comparing net income in the two years. A profit margin of 12 per cent indicates that for every dollar of sales revenue, the business has 12 cents left in profit after all expenses are deducted.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
54
The Student Guide to the Case Method
51
Profit margin, in turn, can be dissected to analyze how well individual expenses are being controlled. 4.1.3 Gross Profit Margin
Gross profit is a preliminary measure of profitability. It measures a company’s ability to maintain an adequate selling price above its cost of goods sold (COGS). Gross profit also measures the company’s ability to pay operating and other expenses. If the gross profit margin is 30 per cent, the business has 30 cents left from every dollar of sales revenue to pay operating and other expenses. In other words, for every dollar in sales revenue, it costs the business, on average, 70 cents to make or buy the products it is selling, leaving 30 cents to pay operating expenses, such as wages and rent, and other expenses, such as interest. A declining gross profit margin is a sign that selling prices are not keeping up with increases in COGS. 4.1.4 Expense Ratios
Expense ratios measure the portion of income that is spent on specific expenses. An expense ratio that is higher this year than the previous year could indicate that the company has potential problems with controlling costs in individual expense categories such as selling expenses, administrative expenses, and interest expenses. However, increasing the amount spent on expenses could also be the key to future growth, as would be the case, for example, if the business significantly increased its advertising and promotion expenditures or added new salespeople in an effort to increase sales. Note that although you can calculate an expense ratio using COGS, the result would be the complement of the gross profit margin (i.e., if the gross profit margin is 34 per cent, then COGS is 66 per cent of the net sales). 4.1.5 Asset Turnover
The asset turnover ratio, the second main determinant of ROA, measures how well a business uses its assets to generate sales. If the asset turnover ratio is 8.33 per cent, the business is generating 8.33 cents in sales for every dollar invested in assets. Thus, the two keys to improving a company’s ROA are to improve the profitability of each sale of a good or service and to sell more goods and services in the first place. 4.1.6 Inventory Turnover
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
55
The Student Guide to the Case Method
52
365
The inventory turnover ratio measures the average number of times inventory is sold during the period. The higher this ratio, the more quickly inventory is being sold and, therefore, the more efficiently inventory is being used to generate sales. The days in inventory ratio measures the average age of the inventory—the average number of days products remain in inventory, measured from the time the company produces or purchases the product to the time the product is sold to customers. Days in inventory is an easier ratio to interpret than inventory turnover, but calculating days in inventory relies on first computing inventory turnover. 4.1.7 Receivables Turnover
The receivables turnover ratio measures the number of times, on average, that receivables are collected during the year. The average collection period shows the average number of days it takes a business to collect accounts receivables from customers. The average collection period should be evaluated in relation to the business’s credit terms; for many businesses, accounts are due within 30 days. The average collection period is the easier of the two ratios to interpret, but it cannot be calculated without first computing the receivables turnover. 4.1.8 Return on Equity
Return on equity (ROE) is the second main ratio that helps to assess the profitability of a business. It measures the return on shareholders’ equity—the profit relative to the investment of common shareholders (the true owners of the corporation). Because preferred dividends are reserved for and are paid out to preferred shareholders, they do not belong to the common shareholders and are subtracted from income before calculating ROE.
A ratio of 17 per cent indicates that for every dollar invested by common shareholders, the corporation earns 17 cents in profit. ROE is affected by two factors: ROA and debt to total assets. Thus, to improve its ROE, a firm can improve its ROA, increase its use of debt financing (known as increasing the use of leverage), or both. However, more reliance on debt financing also increases the risk that the organization will be unable to make interest and principal repayments.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
56
The Student Guide to the Case Method
53
4.1.9 Earnings per Share
The third main measure of profitability is earnings per share (EPS), which looks at profitability from the perspective of common shareholders, who are the residual owners of the corporation. It expresses net income on a per share basis. EPS is widely used to compare profitability from one year to the next or to compare actual profitability against expected profitability. The calculation looks simple, but several accounting rules are applied to determine both the numerator (the income available to common shareholders) and the denominator (the weighted average number of common shares). EPS is the only ratio that public companies are required to publish in their financial statements. Announcements of expected or actual EPS can cause stock prices to fluctuate, as the market reacts to the company’s initial projections and its subsequent performance against those goals. However, because companies each have widely varying numbers of common shares, EPS cannot be used for intercompany comparisons. 4.1.10 Price-Earnings Ratio
‐
The price-earnings (P/E) ratio looks at the market price of shares compared with earnings expressed on a per share basis. A P/E ratio of 10 indicates that an investor is willing to pay $10 for every $1 the share currently earns. The P/E ratio is a measure of investors’ beliefs about the company’s future earnings potential. A high ratio indicates investors have confidence in the company and expect significant growth in profitability. Therefore, they are willing to pay a higher price for shares. It might also indicate that the shares are overvalued in the marketplace, making it a good time to sell those shares. A decreasing ratio indicates declining investor confidence. The average P/E ratio over the past 80 years has ranged between 14 and 15. 4.2 Liquidity Ratios Liquidity ratios evaluate a company’s ability to pay its short-term debts as they come due. The ratios can be used within a company to track a business’s performance by comparing the ratios over periods of time. The ratios can also be used to assess a company’s performance compared with the performance of another company or compared with industry benchmarks. 4.2.1 Current Ratio
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
57
The Student Guide to the Case Method
54
Current assets are assets that are expected to be converted into cash, sold, or used up within one year of the organization’s financial statement date. Current liabilities are debts that are expected to be paid within one year of the organization’s financial statement date. The current ratio measures a company’s current assets against its current liabilities. A current ratio of 1.8 means that for every dollar of current liabilities, the business has $1.80 in current assets. A general rule of thumb is that this ratio should be at least 1.5 to 2.0, although as noted earlier, industry benchmarks always take precedence over general rules of thumb. 4.2.2 Acid Test Ratio (Quick Ratio)
The acid test ratio assesses a company’s ability to pay its current liabilities with short-term assets that can be quickly converted to cash. An acid test ratio of 0.9 means that for every dollar a company has in current liabilities, it has 90 cents in highly liquid assets to pay those current debts. As a rule of thumb, a minimum healthy ratio is 0.9 to 1.0. The current ratio and the acid test ratio both measure a business’s short-term ability to pay its current debts as they come due. However, the acid test ratio is a more accurate measure of liquidity because it excludes current assets that are not quickly turned into cash (e.g., inventory) or intended to be turned into cash (e.g., prepaid insurance and supplies). The inventory turnover and accounts receivable turnover ratios, discussed earlier as activity ratios (see Sections 4.1.6 and 4.1.7), are also liquidity ratios because a business’s ability to pay off its own current liabilities depends to a great extent on how quickly it can sell its inventory and, in turn, how quickly it can collect payment from its customers. For example, if days in inventory is 53 days and the collection period is 45 days, the business needs to wait a total of 98 days (days in inventory + collection period) before cash is available to pay its own suppliers and to pay other operating expenses. 4.3 Solvency Ratios 4.3.1 Debt Ratio
The debt to total assets ratio (also referred to as the debt ratio) measures the percentage of a business’s assets that are financed by creditors. The ratio indicates how heavily a business relies on debt financing. A ratio of 0.55 means that for every dollar of assets, 55 cents is financed by debt; or, expressed another way, 55 per cent of a business’s assets are financed by debt. The level of debt that a business can handle depends on its earnings. As well, more capital intensive industries generally use more debt financing. However, in general, as the percentage of debt to total assets increases, the risk also increases that the business may be unable to meet its maturing obligations and ongoing interest payments. In general, 0.60 to 0.70 is an acceptable level.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
58
The Student Guide to the Case Method
55
4.3.2. Debt to Equity Ratio
The debt to equity (D/E) ratio is a variation of the debt ratio. Where the debt to total assets ratio measures how much of a company’s assets are financed by debt, the D/E ratio measures how much of a company’s debt is covered by shareholders’ equity (including retained earnings). A ratio of 0.7 means that for every dollar of shareholders’ equity, there is 70 cents in liabilities. A high D/E ratio usually means that a company is being aggressive in using debt financing to leverage growth. Both the debt to assets and debt to equity ratios are sometimes calculated using long-term liabilities instead of total liabilities. 4.3.3. Times Interest Earned
Where EBIT refers to earnings before interest and taxes.
The times interest earned ratio (also known as the interest coverage ratio) is one measure of a corporation’s ability to generate sufficient earnings to make interest payments as they come due. An acceptable range is typically 2.0 to 3.0, although, again, the suitability of this range varies by industry. 5. ASSESSING PROFITABILITY If you are asked to evaluate the profitability of a specific alternative course of action, your approach should depend on the level of detail provided in the case facts. A simple measure of profitability is to calculate the contribution margin (CM) of individual products.
Variable costs are those costs that vary directly, on a total basis, with increases or decreases in sales, such as labour or materials. As production volume increases, total variable costs increase proportionately; as production volume decreases, total variable costs decrease proportionately. Fixed costs are those costs that do not vary, on a total basis, with changes in sales; rather, they need to be paid regardless of the level of business activity. Total fixed costs remain the same, as long as sales fall within a relevant range of production. Examples of fixed costs include rent, insurance, utilities, and property taxes. Variable costs per unit do not change as production volume changes, while fixed costs per unit do change as production volume changes. You can calculate the contribution margin to compare the profitability of different services or products. Obviously, the larger the margin, the better for the company; but in any event, a positive contribution margin is required to help cover the fixed costs associated with production and distribution.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
59
The Student Guide to the Case Method
56
Another simple measure of profitability is to calculate the gross profit margin (see Section 4.1.3). Contribution margin is the better measure of profitability for decision making purposes—especially because it can be used to perform break-even analysis—but it requires having sufficient information from the case to distinguish between variable and fixed costs. Calculating the gross profit does not require the same detail. Finally, if sufficient information is available in the case, pro forma (forecast) income statements should be prepared for each alternative course of action you are evaluating. 6. BREAK-EVEN ANALYSIS One of the most helpful management accounting tools for case analysis is break-even analysis. While the goal of a business is not to just break even (i.e., earn zero profit), knowing the break-even point for a specific product or a group of products helps to measure how risky a given new product venture might be. If expected sales do not exceed the break-even point, a business will need to reconsider the product’s price, find ways to reduce costs, or both.
‐
‐
A helpful variation on break-even analysis is to calculate the sales (in units or dollars) required to reach a target level of profit.
7. MARKET POTENTIAL AND MARKET SHARE Market potential (MP) is an estimate of the revenue a company can expect to make from a product or service it plans to market.
Where N = total number of customers P = average selling price Q = average annual consumption quantity MS = market share, which is the actual percentage of industry sales captured by a company
Fo
r u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
60
The Student Guide to the Case Method
57
8. SWOT ANALYSIS A SWOT analysis is an evaluation of the strengths (S), weaknesses (W), opportunities (O), and threats (T) faced by an organization. It is a popular tool for analyzing an organization’s internal and external environments to identify various issues. A SWOT analysis can also be used to generate pros and cons when evaluating alternative courses of action. Although strengths and weaknesses are listed first in the acronym, the assessment of opportunities and threats (i.e., the external analysis) is usually performed before the internal analysis. Opportunities represent conditions in the external environment that an organization can take advantage of (by formulating and implementing appropriate strategies) to enhance its competitiveness, profitability, and overall success. Opportunities should not be confused with alternatives. For example, an increase in the demand for dark chocolate because of its cancer-fighting antioxidants and heart-healthy properties represents an opportunity (a favourable environmental condition). To take advantage of this opportunity, a confectionery company might consider alternatives such as switching some of its milk chocolate production capacity to dark chocolate or acquiring a company that specializes in the manufacture of dark chocolate. Threats represent conditions in the external environment that endanger the competitiveness, profitability, and success of the organization. For example, the increasing incidence of obesity and diabetes pose threats to a confectionery company. Opportunities represent possibilities, while threats pose constraints. Both are conditions that are outside an organization’s control. Strengths are activities the organization does very well or characteristics that enhance its competitiveness. Strengths can be found in skills, expertise, physical assets, human assets, or competitive advantages. Weaknesses are activities the organization does poorly (compared with its competitors), resources it lacks, or internal conditions that make the organization vulnerable. These are areas that an organization can improve on; for example, a retail business is vulnerable if it does not have an online sales presence but its competitors do. 9. PESTLE ANALYSIS A PESTLE analysis (see Figure 1) identifies changes and trends in six segments of the general, societal, or macro environment: political (P), economic (E), socio-cultural (S), technological (T), legal (L), and environmental (E). The analysis is also variably referred to as PESTEL (or PEST analysis if only the first four factors are considered). It evaluates the potential impact of changes and trends in the environment on both the industry and the organization, considering how the changes and trends affect supply, demand, competition, and each element of the company’s value chain. A PESTLE analysis can be used as a stand-alone tool, or it can be used in conjunction with a SWOT analysis to enhance the thoroughness of external analysis by more methodically identifying opportunities and threats.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
61
The Student Guide to the Case Method
58
Figure 1: PESTLE Analysis
Force Examples
Political Tariffs, trade agreements, and special interest groups that promote or oppose specific products (e.g., tobacco) or marketing practices (e.g., promotion of healthy body image)
Economic
Interest rates, inflation rates, stock market trends, unemployment rates, gross domestic product, productivity levels, disposable income levels, government deficits, monetary policies, tax policies
Socio-cultural
Society’s values, beliefs, attitudes, lifestyles, and demographics; e.g., having children later in life, desire to live in the suburbs, attitudes toward saving and investing, attitudes toward leisure and careers, desire for healthy lifestyle; gender, age, and income distribution; ethnic makeup; education levels
Technological developments
Developments that lead to new or improved products or services, and changes in how products are delivered and marketed; e.g., social media, computer-aided manufacturing, artificial materials
Legal Laws and regulations; e.g., competition, labour, taxation, intellectual property, product safety, corporate governance
Environmental Trends related to pollution, global warming, and sustainable development; e.g., recycling programs, packaging, energy conservation, and reforestation
In the body of a report, use PESTLE to identify only the most important external forces. For example, for an automobile manufacturer, the most relevant forces might be abandonment of free trade agreements (P); increasing interest rates for car loans (E); pressure to use rapid transit systems (S); development of self- driving cars (T); higher damage awards for product safety violations (L); and lower emissions requirements (E). If it adds value to your report, a more extensive description of external forces can be put in an appendix. 10. PORTER’S FIVE FORCES FRAMEWORK1 Porter’s five forces framework (see Figure 2) is used to evaluate five competitive forces that influence an industry’s profit potential or attractiveness, and to identify where economic profit lies in an industry’s value chain (see Section 133.1). A five forces analysis can also be used to identify specific opportunities and threats in the industry, such as introduction of a substitute product or increased competitive rivalry.
1 Michael E. Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review, March 1979, 137–145; Michael E. Porter, “The Five Competitive Forces That Shape Strategy,” Harvard Business Review, January 2008, 57–71. Available from Ivey Publishing, product no. R0801E.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
62
The Student Guide to the Case Method
59
Figure 2: Porter's Five Forces
The threat of new entrants increases when barriers to entry are low, for example, when there are no economies of scale related to production, marketing, or distribution; product differentiation is low, so new firms do not have to spend heavily on branding; capital requirements are low, which makes entry into an industry less risky; switching costs are low, so new firms do not need to offer major improvements to get a customer to
switch brands; or firms have easy access to distribution channels. Intensity of industry rivalry increases, for example, when the number of competitors increases; competitors are equal in size and capability; demand for the product is growing slowly; or customers’ costs to switch brands are low. Threat of substitutes (products that provide similar benefits) is high, for example, when the relative price of substitute products decreases; or customer switching costs are low. Supplier power is high, for example, when a supplier group is dominated by few companies; the supplier group’s product is unique; there are no or few substitute inputs; or suppliers pose a credible threat of integrating forward into the organization’s business. Buyer power is high, for example, when the buyer group is concentrated or buyers purchase in large volumes; products purchased are undifferentiated; buyers earn low profits, which creates pressure to lower purchasing costs; or buyers pose a credible threat of integrating backward to make the organization’s product. In the body of a report, Porter’s five forces analysis should be used judiciously to highlight key forces that make an industry attractive or unattractive to enter. For example, in analyzing whether a restaurant should
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of New Entrants
Intensity of Rivalry between Competing
Firms
Threat of Substitute Products
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
63
The Student Guide to the Case Method
60
expand into catering, an organization would encounter an unattractive industry characterized by high threat of new entrants (capital requirements are relatively low and product differentiation is hard to achieve); fierce rivalry (many restaurants are doing catering, and demand for catered meals is growing slowly); high supplier power (there are only a few commercial food service companies); high buyer power (there are many caterers for buyers to choose from, and often they offer the same type of food); and a moderately high threat of substitutes (going to a restaurant, cooking yourself). A more complete Porter’s five forces can be placed in an appendix, if you deem this to be value-added. 11. STAKEHOLDER ANALYSIS A stakeholder analysis identifies the relevant internal and external stakeholders (e.g., customers, shareholders, employees, distributors, suppliers, and the local community) and what they need or expect from an organization as it pertains to the dilemma under consideration. After identifying potential stakeholders and their interests, a company can either align its actions to meet the interests and needs of the stakeholders, or it can manage its relationships with stakeholders by addressing the consequences of the company’s actions on the stakeholders. A grid similar to that shown in Figure 7 for resource gap analysis can be used to summarize the existing preferences of various stakeholders, the new required preferences (i.e., to align with a particular alternative), major gaps between stakeholder expectations and corporate actions, and ways to reduce those gaps. 12. INDUSTRY KEY SUCCESS FACTORS Industry key success factors (KSFs) identify what a company needs to succeed or win in the industry. KSFs include product qualities, organizational capabilities, resources, and market achievements that combine to create value for customers and are critical for long-term competitive success in the industry. An industry usually has only two or three KSFs; rarely are there more than five or six. Identifying KSFs allows a company to assess its performance against industry KSFs. A company wants to perform well on all KSFs and be distinctively better on one or two to develop a competitive advantage. 13. VALUE CHAIN ANALYSIS 13.1. Industry Value Chain An industry value chain2 (see Figure 3) consists of the activities that contribute to the process of firms within an industry providing a valuable product or service. Most businesses buy products or supplies from another company, transform them, and then sell them to customers. Therefore, an industry value chain includes the firms’ own value chains as well as the value chains of their suppliers and distributors.
2 Based on Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York, NY: Free Press, 1985).
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
64
The Student Guide to the Case Method
61
Figure 3: Industry Value Chain
13.2 Organization Value Chain An organization can use a value chain analysis to systematically identify its own capabilities and competitive advantages. Part of a sample value chain analysis for an organization is provided in Figure 4. The analysis is designed to evaluate the value chain of Birks Group, a Canadian jewellery company. Analyzing Birks’ value chain identifies where the company’s primary and supporting activities can be leveraged and integrated to add value and build an advantage over a competitor. Figure 4: Value Chain Analysis, Birks Group
Primary Activities
Operations Jewellery factory: making models of jewellery, casting metals, mounting and setting jewels, polishing completed jewellery Watch factory: limited reassembly and customization of watches
Outbound logistics Shipping of jewellery and watches
Marketing and sales 38 corporate stores in 15 Canadian markets
Service Polishing and repairing of jewellery and watches
Secondary Activities
Human resource management
Internationally renowned, award-winning, in-house design team
Firm infrastructure Head office support by 62 managers in Montreal
Procurement Sourcing metal and jewels for jewellery Sourcing watch components for limited reassembly
14. COMPETITIVE POSITION MATRIX A competitive position matrix identifies competitive dimensions that add value and are important to the customer. Potential dimensions include price, delivery, price/quality mix, product/service characteristics, product/service scope, and geographical scope. The matrix uses these dimensions to compare the positions of competitors in an industry (see Figure 5). Competitors with similar characteristics and market positions can be grouped to make competitive analysis more manageable.
Inbound Logistics
Operations Outbound Logistics
Marketing & Sales
Service
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
M a rg
in
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
65
The Student Guide to the Case Method
62
Figure 5: Competitive Position Matrix, Canadian Furniture Retail
Geographical
Scope Price Relative
to Quality Selection
Service and Delivery
IKEA National, in urban centres
Low to moderate Low—only knock- down furniture
Low—consumers transport and assemble
The Brick National Low to moderate High Moderate—includes financing
Hudson’s Bay (Home Outfitters)
National Low to moderate Moderate to high Moderate to high
Independents Local Moderate to High Low to high High
15. STRATEGIC CLUSTER MAP A strategic cluster map (or strategic group map) provides a convenient visualization of the competitive position of various firms in the industry, but the map limits the choice of competitive dimensions to two (see Figure 6).
Figure 6: Strategic Cluster Map, Canadian Furniture Retail
16. RESOURCE GAP ANALYSIS A resource gap analysis identifies an organization’s major gaps in resources and skills. It can be used to analyze issues and to develop the pros and cons for alternative courses of action. In Figure 7, a partially completed template for a resource-gap analysis identifies gaps in a university’s ability to serve adult learners through a continuing education program.
National Chains (e.g., Hudson’s Bay)
Discount Furniture Chains (e.g., Leon’s, The Brick)
Local Specialty Stores
IKEA (knock- down Euro- styled)
Local Antique Stores
High
Low
Full-Line Mass Merchandiser Full-Line Specialty
Width of Product Line, Range of Merchandise Mix
P ri
c e
R e
la ti
v e
t o
Q u
a li
ty
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
66
The Student Guide to the Case Method
63
Figure 7: Resource Gap Analysis
Resource Category
Required Resources
Available Resources
Resource Gaps Ways to Reduce Resource Gaps
Human Resources Course instructors
Existing full-time and part-time faculty; alumni with experience in a variety of fields
Instructors who have experience with adult learners
Hire and train instructors
Operations Curriculum Existing courses
Material tailored to an adult audience with on-the-job experience
Have faculty adjust existing course material; have faculty develop new course material
17. CORE COMPETENCIES Core competencies are skills and capabilities that an organization uses exceptionally well, such as developing curriculum for a diverse audience or delivering instructional content using user-friendly online platforms. Analysis of an organization’s core competencies can be used to identify strengths, as part of a SWOT analysis. When core competencies involve competitively important value chain activities, the competencies can evolve into competitive advantages. 18. COMPETITIVE ADVANTAGE ANALYSIS: VRIO3 The VRIO framework developed by Jay Barney suggests that resources and capabilities may offer a competitive advantage if they are valuable (V), rare (R), and inimitable (I) (i.e., difficult to imitate), and the firm is organized (O) to capitalize on those resources and capabilities. Resources are valuable if they contribute to meeting customers’ needs at the price that customers are willing to pay. Resources are also valuable if they enable a company to develop alternatives to exploit opportunities, mitigate threats, and improve efficiency or effectiveness. Resources and capabilities are rare if only a few competing firms possess them. Resources and capabilities are inimitable if they are costly and difficult to imitate. Resources could be inimitable because they are physically unique; have been built up over time based on specific experiences (e.g., unique historical conditions); result from interpersonal relationships, group norms, or culture (social complexity); or because it is difficult to identify the resource, its value, or its competitive advantages (causal ambiguity). Finally, resources and capabilities provide a competitive advantage only if the firm is organized—that is, the firm has the necessary structure, such as the appropriate employees, management, organization, control systems, reward systems, and culture—to capitalize on its resources and capabilities. 3 Jay Barney, “Firm Resources and Sustained Competitive Advantage,” Journal of Management 17, no. 1 (1991): 99–120.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
67
The Student Guide to the Case Method
64
19. CASE ANALYSIS AND ACADEMIC INTEGRITY Because case analysis is complex, it may often seem helpful to discuss the case informally or formally with other students before participating in a class discussion, writing a report, or making a presentation. Managers and consultants often discuss problems with other people, within the constraints allowed by confidentiality. Therefore, your instructor may allow, encourage, or even require such discussion. However, to ensure academic integrity and to avoid plagiarism, unless your instructor has specifically indicated that some degree of discussion is permissible, you should consult with your instructor before engaging in any collaboration. This restriction on outside discussion is especially necessary when preparing reports and presentations. It may also seem helpful to search the Internet for teaching notes for cases or for case reports or slide presentations prepared by other students. Academic integrity requires that you refrain from using such resources, in full or in part. Any attempt to use the work of others and to pass it off as your own is plagiarism. If the instructor is suspicious that plagiarism might be involved, you may be asked to upload a copy of your case report through Turnitin.com. While using the work of others may appear to provide a shortcut to a good grade, the quality of online sources and the work of other students is often suspect, at best. Most importantly, you deprive yourself of the learning opportunities the case method offers.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
68
3.
9B18M183
TELUS: ETHICS AND CELLPHONE TOWER SITES1
Xiaoyu Liu and Hao Lu wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2018, Ivey Business School Foundation Version: 2018-12-03
Following its installation of a cellphone tower on the University of Calgary property near the West Campus Child Care Centre on June 11, 2015, TELUS Corporation (TELUS) faced protests from dozens of worried parents who petitioned to have the tower relocated.2 The increase in demand for good cellphone reception in the University of Calgary area had resulted in TELUS’s decision to install a new cellphone tower near the university. The tower, which had yet to be activated, was installed according to all legal protocols, but its location near the child care centre corresponded to the list of “discouraged locations” under the City of Calgary’s Telecommunication Antenna Structures Siting Protocols (the Protocols).3 Facing the conflicts of interests from different stakeholder groups and considerable social media attention, TELUS and the University of Calgary needed to decide what to do with the tower. BACKGROUND INFORMATION TELUS and the Telecommunications Industry All wireless service providers in Canada were regulated by the Canadian Radio-television and Telecommunications Commission (CRTC).4 In the Canadian telecommunications industry, consumers’ choice of cellphone service was limited. Three mobile network operators owned and operated transmission facilities that covered most of the country, and approximately 90 per cent of Canadian cellphone users subscribed to one of the three largest national telecommunication companies, (i.e., Rogers Communications, BCE Inc. (Bell), and TELUS).5 Exhibit 1 lists the top five telecommunication companies and their business sectors and operating revenues in 2014. Cellphone Towers Telecommunications companies needed to install cellphone towers to provide cellphone service and to improve reception quality in a large geographic area. Because of the increasing number of cellphone users in the past 10 years, it was necessary to install cellphone towers in many residential communities to generate and enhance signals. A typical cellphone tower had electronic equipment and antennas that constantly received and transmitted signals at certain radio frequencies. The towers were usually 15–60 metres tall, as the antennas needed to be placed high enough to adequately cover the area. It usually took a year or more to complete the installation of a cellphone tower, at a cost of approximately CA$150,000–$350,000.6
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
69
Page 2 9B18M183 Generally, the construction process of a cellphone tower comprised four steps:7 (1) power and phone services needed to be established before the construction of the tower; (2) equipment such as a base transmission station, transmitters, and receivers needed to be installed nearby; (3) the type of tower—lattice tower, monopole tower, guyed tower, or concealed tower—and its various requirements needed to be considered and constructed; and (4) antennas needed to be placed and activated to send signals. The higher the antennas, the better the signal and the wider the coverage. Health Research Regarding Exposure to Radio Frequency Waves To communicate with cellphones, cellphone towers sent out radio frequency (RF) waves, a form of energy in the electromagnetic spectrum between FM radio waves and microwaves. The waves could be dangerous, as a high level of RF waves could heat up body tissues. However, the levels of energy used by cellphones and cellphone towers were much lower than the dangerous RF level. Nonetheless, scientific research suggested inconsistent results regarding the relationship between RF exposure and health issues.8 The World Health Organization (WHO) and the International Agency for Research on Cancer (IARC) classified exposure to RF waves as being “possibly carcinogenic.” In 2001, the WHO and the IARC reported an increased risk of brain tumours in people who used cellphones more often.9 Although these researchers failed to find a consistent trend between the usage of cellphones and an increased health risk, the risk of brain tumours raised concerns for the public.10 Furthermore, RF waves could cause more damage to children than adults. The major reason for children’s greater vulnerability lay in the structure of children’s brains: compared with adults’ brains, children’s brains were smaller and more absorbent because their skulls were thinner. For example, given the same amount of exposure, the brain of a 10-year-old child could absorb two times more RF waves than an adult brain.11 To address the public’s increasing concerns, the WHO made research on the long-term effects of children’s exposure to RF waves a high priority.12 In 2015, the House of Commons’ Standing Committee on Health called for more research by the federal government and research institutions to examine the effects of radiation on children.13 Regulations on Telecommunication Antenna Structures Various protocols from Health Canada, Industry Canada, the provincial governments, and the municipality regulated the placement of cellphone towers. The generally accepted requirements were documented in Safety Code 6 (SC6), which was issued by Health Canada to protect the public. SC6 regulated the maximum level of human exposure to RF fields, but allowed some flexibility for companies. For example, SC6 suggested that “in a field where technology is advancing rapidly and where unexpected and unique exposure scenarios may occur, this code cannot cover all possible situations.”14 In 2014, the City of Calgary also released the Protocols, which proposed guidelines for the minimum distance between a cellphone tower and any residential development (see Exhibit 2). In particular, the Protocols categorized locations within 100 metres of the nearest portion of a school building or the nearest classroom as “discouraged locations.”15 The procedure to implement such a protocol had its limitations. According to the Protocols, the City of Calgary would issue a letter showing its attitude of either support or non-support after evaluating a proposal for a telecommunication antenna structure. However, even if the City of Calgary issued a non-support letter when the structure violated the Protocols, it could not prevent a proponent from receiving permission from Industry Canada to install the structure. As clearly acknowledged by the Protocols, the City of Calgary “is not the approving authority for telecommunication antenna structures” (cell tower) submissions.16
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
70
Page 3 9B18M183 In 2013, Noor Javed, a reporter with the Toronto Star, said that nobody in the neighbourhood wanted the cellphone towers, but “local governments have long been frustrated that they have almost no say in where a cellphone tower can go or not go, since approval fell under the jurisdiction of Industry Canada.”17 THE SITUATION The Choice of Location In Canada, residents had the right to protest against cellphone towers when they had concerns over the installation of the towers within their communities. When TELUS first initiated its new cellphone tower project and chose a location in a community near the university, residents in that community expressed their concerns over the tower’s appearance and objected to the installation in a consultation meeting. Bart Becker, vice-president of Facilities at the University of Calgary, said, “There were a number of aesthetic issues . . . as it [the tower]’s very close to family housing units,” referring to the University of Calgary’s residential accommodations for students and faculty members with families.18 After reviewing potential site locations, TELUS chose a new location at the University of Calgary that was 90 metres from the West Campus Child Care Centre despite protests from concerned parents. According to TELUS, the current location had two major advantages for the establishment of cellphone towers. First, the population density was very high in that area. Second, students and faculty members had a great need for high-quality signals. As indicated by TELUS’s spokeswoman, Liz Sauve, “It’s critical that we relocate it [the tower] to ensure that students, staff and visitors to the campus have wireless service. . . . They need to stay connected, not only to study and make phone calls home, but also in the case of an emergency. . . . The current location was the only best option.” Sauve further announced, “Our sites come hundreds, if not thousands, of times below what’s deemed safe by Health Canada . . . because they are low-powered.”19 PARENTS’ CONCERNS The location of the tower was 90 metres from the West Campus Child Care Centre, and the centre’s nearest playground was only 84 metres away.20 The parents of children in the centre included professors and students and students along with medical doctors.21 After they received notice of the activation of the cellphone tower, the parents had expressed concern. They had not been consulted or notified of the tower prior to its construction. They organized parents’ meetings at the child care centre and drafted pleading letters, calling for attention from the City, the university, and the media. In their outreach, parents mentioned that the scientific uncertainty regarding the safety and health issues brought about by cellphone towers was an ethical issue if the tower was placed so closely to young children, a group of particularly vulnerable stakeholders.22 As listed in the City of Calgary’s Protocols, a public consultation meeting was required only when residential properties were situated within a 300-metre radius of a proposed telecommunication antenna structure. The current location did not meet this requirement; hence, a public consultation meeting was not required.23 The university’s representatives asserted that the university had made every possible effort to locate the cellphone tower “as far away from the Child Care Centre as possible.”24 Before the establishment of the tower, the University of Calgary had consulted the City and obtained approval for its proposal.25 Many parents, who were well educated and understood the potential risk, were concerned for their children’s health, especially when the tower would emit RF waves 24 hours a day and seven days a week. One mother said,
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
71
Page 4 9B18M183 “We don’t have a problem with what it looks like. It’s a tower. We have problems with what it’s doing, potentially, to our children who are right here.” She added, “Even if the tower is legal, it’s not ethical.”26 Another stated, “It is bad public relations. You will have a lot of parents with advanced education pushing back very hard.”27 In a letter sent to the Canadian Charger, another mother asserted, “If they need to put ‘it in my backyard,’ then at least they could put it further than 84 metres away (the West Campus is mostly empty land).”28 Given the controversy over the placement of the tower, what should TELUS and the University of Calgary do? What choices did TELUS have in this situation? What were the costs and benefits associated with the different choices? Was the socially responsible way the best way of addressing the situation?
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
72
Page 5 9B18M183
EXHIBIT 1: FIVE BIGGEST COMPANIES IN CANADA’S TELECOMMUNICATIONS INDUSTRY (2014)
Company Market
Share (%) Subscribers (Millions)
Operating Revenue
(CA$ Millions )
BCE Inc. (Bell) 27.9
Wireless: 8.1 High-Speed Internet: 3.3
Television: 2.6 Local Telephone Services: 7.1
$21,042
Rogers Communications Inc.
16.4
Wireless: 9.45 Internet: 2.011
Television: 2.024 Telephone: 1.15
$12,900
TELUS Corporation
15.9
Wireless: 8.1 Internet: 1.49
Television: 0.916 Network Access Lines: 3.2
$12,000
Shaw Communications Inc.
7.8 Internet: 1.93 Phone: 1.375 Video: 1.957
$878
Quebecor Inc. 5.3 Internet: 1.538 Television: 1.56
Telephone: 1.349 $444.8
Source: BCE Inc., BCE Inc. 2014 Annual Report, 2014, accessed February 8, 2018, www.annualreports.com/HostedData/AnnualReportArchive/b/NYSE_BCE_2014.pdf; Rogers Communications Inc., Rogers Communications Inc. 2014 Annual Report, 2014, accessed February 8, 2018, www.annualreports.com/HostedData/AnnualReportArchive/r/NYSE_RCI_2014.pdf; TELUS Corporation, TELUS 2014 Annual Report, 2014, accessed February 8, 2018, http://about.telus.com/servlet/JiveServlet/previewBody/5696-102-2- 6257/TELUS%202014%20Annual%20Report.pdf; Shaw Communications Inc., 2014 Annual Report, 2014, accessed February 8, 2018, www.annualreports.com/HostedData/AnnualReportArchive/s/TSX_SJR-B_2014.pdf; Quebecor Inc., Annual Information Form: Financial Year Ended December 31, 2014, March 31, 2015, accessed February 8, 2018, www.quebecor.com/documents/20143/72775/QI_Notice_2014_EN.pdf/9d0ecee1-4c26-2846-cf37-4e285c139957.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
73
Page 6 9B18M183
EXHIBIT 2: GUIDELINES—DISTANCE TO RESIDENTIAL DEVELOPMENTS AND DISCOURAGED LOCATIONS
1. As a guideline, it is recommended that any tower proposed to be placed on a site abutting existing
dwellings should be located: at least three times the height of the proposed tower away from those dwellings for towers less than 15
metres in height; at least 75 metres away from those dwellings for towers 15 to 30 metres in height; at least 100 metres away from those dwellings for towers 31 to 45 metres in height; at least 122 metres away from those dwelling units for towers 46 to 55 metres in height; and at least three times the height of the proposed tower away from those dwellings for towers 56 metres
or greater in height. 2. Discouraged Locations Close proximity to residences (see subsection 7.6 Residential Development Setback Guidelines) Ecologically significant natural lands Riverbank lands Sites of topographical prominence Heritage areas Heritage structures (unless forming an integrated part of that structure’s overall design through the use
of camouflaging or other hidden stealth structures, features and forms) Pitched roofs (unless screened or housed to hide the antenna array) Proximity to schools (towers should be no closer than 100 metres away from the nearest portion of a
school building or the nearest portable classroom, whichever is closer to the proposed installation) Source: City of Calgary, Telecommunication Antenna Structures Siting Protocols, November 17, 2014, accessed November 10, 2017, www.calgary.ca/PDA/pd/Documents/development/telecommunication_antenna_structures_siting_protocols.pdf?noredirect=1.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
74
Page 7 9B18M183 ENDNOTES
1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of TELUS Corporation or any of its employees. 2 Emma McIntosh, “Parents Push Back against Cellphone Tower Next to Daycare,” Calgary Herald, July 17, 2015, accessed November 10, 2017, http://calgaryherald.com/news/local-news/parents-push-back-against-cellphone-tower-next-to-daycare. 3 City of Calgary, Telecommunication Antenna Structures Siting Protocols 2014, November 17, 2014, accessed November 10, 2017, www.calgary.ca/PDA/pd/Documents/development/telecommunication_antenna_structures_siting_protocols.pdf?noredirect=1. 4 Michael Geist, “CRTC Falls Short on True Wireless Competition,” Toronto Star, May 8, 2015, accessed October 5, 2017, www.thestar.com/business/2015/05/08/crtc-falls-short-on-true-wireless-competition-geist.html. 5 Emily Jackson, “‘Insatiable Appetite’: Canada’s Big Three Telecoms End 2016 with Strong Wireless Results,” Financial Post, February 9, 2017, accessed February 8, 2018, http://business.financialpost.com/technology/insatiable-appetite-canadas-big- three-telecoms-end-2016-with-strong-wireless-results. 6 Nick Foster, “How Much Does a Cell Tower Cost?,” Airwave Advisors, June 9, 2015, accessed October 6, 2017, www.airwaveadvisors.com/how-much-does-a-cell-tower-cost/ . 7 “Cell Phone Tower Construction,” Tower Point Capital, accessed October 6, 2017, http://towerpoint.com/cell-phone-tower- construction/. 8 The American Cancer Society Medical and Editorial Content Team, “Cellular Phone Towers,” American Cancer Society, May 31, 2016, accessed 2017 October 5, www.cancer.org/cancer/cancer-causes/radiation-exposure/cellular-phone-towers.html. 9 “Electromagnetic Fields and Public Health: Mobile Phones,” World Health Organization, October 2014, accessed November 11, 2017, www.who.int/mediacentre/factsheets/fs193/en/index.html. 10 The American Cancer Society Medical and Editorial Content Team, op. cit. 11 BC Centre for Disease Control and National Collaborating Centre for Environmental Health, 2016 Review: Radiofrequency and Health, BC Centre for Disease Control, April 14, 2016, accessed November 10, 2017, www.bccdc.ca/resource-gallery/Documents/ Guidelines%20and%20Forms/Guidelines%20and%20Manuals/EH/RPS/BCCDC%20RF%20Health%20Report.pdf. 12 “Electromagnetic Fields and Public Health: Mobile Phones,” op. cit. 13 Ben Lobb, The Standing Committee on Health, Radiofrequency Electromagnetic Radiation and The Health of Canadians, House of Commons Canada, June 2015, accessed November 10, 2017, www.c4st.org/images/hesa- 2015/412_HESA_Rpt13-e.pdf. 14 Health Canada, “Safety Code 6: Health Canada’s Radiofrequency Exposure Guidelines,” Government of Canada, June 3, 2015, accessed November 11, 2017, www.canada.ca/en/health-canada/services/environmental-workplace-health/reports- publications/radiation/safety-code-6-health-canada-radiofrequency-exposure-guidelines-environmental-workplace-health- health-canada.html. 15 City of Calgary, op. cit. 16 Ibid. 17 Noor Javed, “Cellphone Towers Often Unwelcome Neighbours,” Toronto Star, June 17, 2013, accessed November 10, 2017, www.thestar.com/news/insight/2013/06/17/cellphone_towers_often_unwelcome_neighbours.html. 18 McIntosh, op. cit. 19 Ibid. 20 Carol, “Cell Tower 84 Meters from Daycare at The University of Calgary,” The Canadian Charger, August 11, 2015, accessed November 10, 2017, www.thecanadiancharger.com/page.php?id=5&a=1908. 21 McIntosh, op. cit. 22 Ibid; McIntosh, op. cit. 23 Carol, op. cit. 24 Ibid. 25 City of Calgary, op. cit. 26 McIntosh, op. cit. 27 Ibid. 28 Carol, op. cit.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
75
4.
9B16M077
BUILDING A “BACKDOOR” TO THE IPHONE: AN ETHICAL DILEMMA1
Tulsi Jayakumar and Surya Tahora wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2017-08-16
In February 2016, Tim Cook, Apple’s chief executive officer (CEO), took a stance on a matter that drew strong public debate. Involving Apple’s flagship product, the iPhone, the debate pitted on either side of the fence proponents of two rights.2 On the one side were Apple and digital rights groups advocating protection of customer digital privacy, while on the other were the U.S. government and the Federal Bureau of Investigation (FBI) seeking support from Apple and from other technology companies in protecting national security. Specifically, the U.S. government and the FBI sought and demanded Apple’s help in unlocking the iPhone of a terrorist involved in a terrorist attack in San Bernardino, California. The phone, which had been recovered from the slain terrorist, was expected to provide vital insights into the motives of the attack, as well as to provide crucial evidence regarding terrorist networks and activities. The FBI demanded that Apple build a “backdoor” to the terrorist’s iPhone — essentially, a new version of its iPhone operating system (iOS) software — that could help FBI agents unlock the phone and access the information on it as a one-off case. Cook, however, refused to acquiesce to the government’s demand, citing Apple’s commitment to customer digital privacy and security. Was Cook justified in his refusal to heed the U.S. government’s demand to build a one-time access to the iPhone retrieved from the terrorist on grounds of protecting customer digital privacy? Was Apple’s obligation to protect customer privacy greater than its obligation to contribute to national security? What dilemmas did Cook and the Apple management team face in this decision? How could the dilemmas be resolved? APPLE’S IPHONE AND IOS Steve Jobs and Steve Wozniak, both college dropouts, founded Apple Computers, Inc. (Apple) in 1976 with a vision to make small, user-friendly computers to be used in homes and offices. Apple’s initial products — Apple I and Apple II — revolutionized the computer industry. The company’s sales increased from US$7.8 million3 in 1978 to $117 million in 1980, the year Apple went public.4 In 1990, the company posted its highest profits yet; however, the company’s market share waned after this peak.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
77
Page 2 9B16M077 Jobs, who had left the company in 1985, rejoined it in 1997.5 Apple subsequently launched a host of products, which included personal computers (iMac), portable digital music players (iPod), mobile communication and media devices (iPhone and iPad), various related services and software (iOS, iTunes Store, and iCloud), and ancillary products (Apple TV and Apple Watch).6 However, the iPhone, accounting for two-thirds of Apple’s revenue in 2016, was Apple’s flagship brand — the brand that contributed to Apple gaining and maintaining its status as the world’s most valuable brand through the period 2011 to January 2016.7 The first iPhone was launched on June 29, 2007, in a 4- and 8-gigabyte version. Apple’s mobile revolution, however, could be credited to creation of the iOS (previously iPhone OS) — a mobile operating system. Apple initially developed the iOS in 2007 and distributed it for the iPhone and iPod Touch. Apple developed later versions of the iOS to support other devices such as the iPad and Apple TV. By Q3 2015, Apple had sold more than 1.1 billion iOS devices.8 As of June 2015, Apple’s App Store contained more than 1.5 million available iOS-based applications,9 which had been collectively downloaded more than 100 billion times.10 Apple provided major updates to the iOS operating system approximately once a year. The update most recent to the “backdoor issue” was iOS 9, released on September 16, 2015. As of February 8, 2016, 77 per cent of devices were using iOS 9, 17 per cent were using iOS 8, and the remaining 6 per cent were using earlier operating systems.11 In the fiscal quarter ending December 2015, Apple experienced a slowdown in its sales. The iPhone, as well as other Apple products, exhibited weak performance. Sales of the iPhone grew by less than 1 per cent year-on-year, compared to a 50 per cent growth in the previous year. Unit sales of the iPad tablet fell 25 per cent from the previous year, and sales of iMac computers fell by 4 per cent.12 Even so, Apple’s faith in its flagship product, the iPhone, remained strong. Cook maintained that the popularity of the iPhone provided the company with a “long-lasting foundation.”13 CUSTOMER PRIVACY AND APPLE Apple’s business model was based on selling products, not harvesting data. This business model was unlike others in the industry, such as Google’s, which generated revenue through targeted ads developed with the assistance of harvested data. Cook had long been a champion of customer privacy. Speaking at a technology conference in 2010, Cook made his views on customer privacy clear: “[Apple] has always had a very different view of privacy than some of our colleagues in the [Silicon] Valley.” Thus, after building a feature into the iPhone that showed where the phone and its user were located, the company, citing customer privacy, left the choice of whether to use this feature entirely to users, who could control whether apps were able to use the phone’s location data.14 The increasing use of iPhones as a store of personal information, and consumer sensitivity regarding the potential use and abuse of personal information, prompted Cook to take a hard stance on customer privacy. The matter came to a head in June 2013 following revelations of massive U.S. government surveillance, exposed by Edward Snowden, a former Central Intelligence Agency (CIA) employee and U.S. government contractor. Called Prism, the surveillance system — essentially a counter-terrorism data collection effort launched in 2007 — “allowed the U.S. National Security Agency (NSA) to receive emails, video clips, photos, voice and video calls, social networking details, logins, and other data held by a range of U.S. Internet firms,”15 which included Apple.16
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
78
Page 3 9B16M077 More specifically, Snowden’s disclosures included revelations that questioned the ability of Apple products to withstand tampering and ensure customer privacy. It appeared that the CIA had, for more than a decade, tampered with Apple products, embedding spy tools in the hardware and modifying Apple software updates in order to collect data about app developers and carry out systematic surveillance of their customers. Irate Apple customers wrote to Cook, expressing concerns regarding Apple’s commitment and ability to ensure users’ privacy.17 Meanwhile, the Internet and social media were being increasingly used to plan and coordinate international terror attacks and to “spread propaganda, incite violence, and attract new recruits.”18 The use of secret, private chat rooms and encrypted Internet message boards prompted the advent of surveillance programs like Prism. In a world faced with growing threats of terrorism, Apple and other technology companies faced increased pressure from law-enforcement agencies to share information about their customers and devices. Justifying Prism, President Obama stated, “You can’t have 100 per cent security and also then have 100 per cent privacy and zero inconvenience.”19 Technology companies, especially Apple, viewed information- sharing requests as compromising customer security and privacy. One of the ways technology companies like Microsoft, Yahoo, Facebook, and Apple handled the conflicting dimensions of the government requests was to share with the public (to the extent allowed under the law) the details and scope of the government’s periodic requests.20 For instance, Apple disclosed that, in the first six months of 2015, it had received between 750 and 999 national security-related requests from the U.S. government, affecting 0.00673 per cent of Apple’s customers.21 Nonetheless, customers remained concerned, and in response, Apple implemented increasingly stringent encryption measures.22 Until iOS 6, only resident Apple apps were encrypted by default; developers of third party applications had to opt in to encryption. By 2013, however, Apple had taken measures to ensure that third party application data was also protected. With iOS 7, Apple began “encrypting all third party data stored on customers’ phones by default, until [customers] first unlocked [the phone] after rebooting.”23 When the company designed iOS 8, it ensured that even its own engineers would be unable to extract data from the mobile phones and tablets.24 In an open letter to Apple customers in September 2014, Cook reiterated Apple’s concern regarding privacy: “Security and privacy are fundamental to the design of all our hardware, software, and services, including iCloud and new services like Apple Pay.”25 He added:
Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don't “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.26
Addressing the issue of trust, Cook stated, “Our commitment to protecting your privacy comes from a deep respect for our customers. We know that your trust doesn’t come easy. That’s why we have and always will work as hard as we can to earn and keep it.”27
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
79
Page 4 9B16M077 THE SAN BERNARDINO BOMBING AND APPLE On December 2, 2015, a married couple, Syed Rizwan Farook, 28, and Tashfeen Malik, 29, shot at and killed 14 people and injured 22 at the Inland Regional Center in San Bernardino, California. The victims were employees of the San Bernardino health department who had gathered for a holiday party in a conference room at the centre, which provided services to disabled people. The FBI stated it had evidence that the attack was based on “extensive planning” and that it was investigating the attack as an act of terrorism.28 Farook was an inspector with the county health department and had left the party in progress, returning with his wife to shoot at his co-workers. The couple were later killed in a gun battle with the police. The terror group Islamic State of Iraq and the Levant (ISIS or ISIL) claimed that the two slain suspects were supporters of the group. A key focus of the investigation involved checking the couple’s phone, travel, computer, and other records to ascertain the motive behind the attack and to determine the reasons for the makeshift bomb lab found in the couple’s rented home.29 The shooters had tried to destroy any evidence that could track their digital footprints. Their computer’s hard drive was missing, and the authorities found two relatively new cellphones lying smashed in a garbage can near the shooting scene.30 However, an iPhone, provided to Farook by his employer, was found in the vehicle in which the couple had been killed in the aftermath of the attack.31 The iPhone was not Farook’s property but that of his employer, San Bernardino County, which consented to a search of the phone,32 but the investigators feared that the data stored on the iPhone would be completely and permanently erased in their attempts to unlock the phone. The FBI sought Apple’s assistance in the days following the attack, and Apple “provided data that was in [its] possession, complied with valid subpoenas and search warrants . . . made Apple engineers available to the FBI to advise them, and offered [its] best ideas on a number of investigative options at their disposal.”33 However, the FBI wanted Apple to go a step further. It sought Apple’s assistance in unlocking the encrypted iPhone used by Farook. The FBI wanted Apple to build what became known as “a backdoor” to the iPhone. Talks between lawyers of the Obama administration and Apple went on for two months,34 but in the end, Apple refused to acquiesce to the FBI’s demand. THE GOVERNMENT’S STANCE A dispute had been building between the U.S. government and technology companies for more than a decade regarding the latter’s encryption practices. In 2010, the Obama administration proposed draft legislation that would have forced technology companies like Google and Apple to provide unencrypted data to the government. The draft legislation was similar to the legislation forced on phone companies during the Clinton administration, which made it mandatory for such companies to build digital networks that government agents could tap. If the new draft legislation was accepted as law, it would have been a blow to customer privacy activists. However, the Snowden disclosures in 2013 led to a large-scale criticism of the U.S. government, and the Obama administration decided not to move on the proposed legislation.35 The San Bernardino case proved to be a flashpoint in the dispute. The U.S. government stated that it would “attempt to exhaust every investigative lead in the case,” since it owed resolution to the victims and their families. Consequently, when the talks between the government lawyers and Apple failed, the U.S. Justice Department filed an application in the Federal District Court for the District of Central California to “learn everything possible about the attack in San Bernardino.”36 F
o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
80
Page 5 9B16M077 Federal prosecutors, in their initial filing, stated:
The government requires Apple’s assistance to access the . . . device to determine, among other things, who Farook and Malik may have communicated with to plan and carry out the IRC shootings, where Farook and Malik may have travelled to and from before and after the incident, and other pertinent information that would provide more information about their and others’ involvement in the deadly shooting.37
Prosecutors further claimed that Farook’s device could be encrypted to the point that its content would be “permanently inaccessible” and that “Apple has the exclusive technical means which would assist the government in completing its search.”38 Based on this request, a U.S. Federal Court judge passed an order directing Apple to provide “reasonable technical assistance” to the FBI. Such assistance was to be in the form of software that could disable the security features that erased data from the iPhone after 10 unsuccessful attempts to unlock the phone.39 If the security feature was disabled, the investigators could attempt as many combinations as necessary to unlock the phone. APPLE’S STANCE Apple’s position on customer privacy was largely driven by its chief executive officer, Tim Cook. Cook, who joined Apple as a senior executive in 1998 and worked largely as a behind-the-scenes executive, had evolved to become one of the most outspoken corporate executives in recent times. Tim Cook Cook took charge as Apple’s CEO in October 2011. Since then, he had spoken out on various issues pertaining to human rights and corporate responsibility toward the environment, society, and employees, even if some of the initiatives adversely affected the corporate bottom line. This approach to leadership was in keeping with Cook’s values and personal principles, which could be discerned from his commencement address to the graduating class of George Washington University in May 2015. Cook’s speech referred to justice and injustice, outlining his opinion that personal values did not exist independently of the workplace: “It’s about finding your values, and committing to them. It’s about finding your North Star. It’s about making choices. Some are easy. Some are hard. And some will make you question everything.”40 Cook also referred to his choice to keep his values out of his work sphere until he joined Apple. It was at that point, Cook claimed, that he realized the practice of treating work as work and keeping values out of it left him “feeling adrift and rudderless, like Apple [before Steve Jobs rejoined Apple].”41 Exhorting the young graduates not to remain silent and passive observers, Cook said, “The sidelines are not where you want to live your life. The world needs you in the arena. There are problems that need to be solved. Injustices that need to be ended. People that are still being persecuted.”42 Cook believed in the maxim “To whom much is given, much is required.” He was aware of his own responsibility to give back, especially since, by his own admission, he had “been given a lot.”43 In 2014, Cook revealed that he was gay, acknowledging that his desire for personal privacy had held him back from disclosing until then.44 Apple’s annual report on suppliers and working conditions for its factory
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
81
Page 6 9B16M077 workers, published under Cook’s leadership, was a first-of-its-kind initiative, signifying the new culture of openness at Apple. Further, under Cook, Apple undertook non-business initiatives, including some environmental initiatives, which were criticized by investors.45 Cook defended these initiatives in a shareholder meeting, saying that Apple should do things because “they’re just and right.”46 He believed he was merely representing Apple’s long-standing culture of caring for these issues, even if these issues had not previously been openly discussed. Cook proclaimed, “You want to be the pebble in the pond that creates the ripple for change.”47 As a CEO, Cook laid great importance on cultural fit, going so far as firing senior team members who did not fit with Apple’s culture. In October 2012, Cook fired Scott Forstall, the creator of the iOS and one of the most important people at Apple, and John Browett, who was in charge of running retail operations, citing their “lack of collaboration,” which according to Cook was “essential for innovation.”48 Further, Browett had been reducing the number of Apple store employees throughout 2012, which was seen as detracting from customer experience, despite making stores profitable.49 More importantly, Apple’s culture itself was being changed, slowly and subtly. Cook, unlike Jobs, believed in sharing the limelight with his senior leaders. Again, unlike Jobs, who dismissed corporate philanthropy, Cook advocated it and encouraged employee giving. The company was becoming more open and transparent under Cook than it had been under the publicity-seeking Jobs.50 In 2013, the company came up with a new mission statement, which read:
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.51
Despite criticism that Cook would be unable to replicate Job’s magic, Apple continued to innovate. Under Cook’s direction as CEO, the Apple Watch was launched in March 2015, and the company’s financials remained “fundamentally sound,”52 with its split-adjusted stock price increasing from $54 in August 2011, when Jobs died, to $126 in March 2015.53 Its market capitalization was above $700 billion —double that of companies like Exxon Mobil and Microsoft. Apple was the first company to cross that level. Its cash management record under Cook was also enviable. Thus, despite distributing $92.6 billion in dividends and buybacks under Cook, Apple’s cash reserves, at more than $150 billion, were still triple the level of 2010.54 However, since July 2015, its stock prices had been going down, dropping from $126 in March 2015 to $96.76 on February 25, 2016.55 In fact, in February 2016, share prices of Alphabet — Google’s parent company — rose by 3 per cent. The resultant higher market capitalization led Alphabet to displace Apple as the world’s “most valuable public company,” a title it had held since 2011.56 Was there a contradiction between Cook’s various commitments — to himself, his shareholders, his employees (as a company leader), and to the larger society beyond Apple’s boundaries? Cook’s Customer Letter Apple responded to the federal court order with a 1,100-word open letter written by Cook to Apple customers, outlining why Apple refused to acquiesce to the government’s demands.57 Cook’s letter warned of the “chilling” breach of privacy posed by the government’s demands, “undermining the very freedoms and liberty our government is meant to protect.” Cook described the government’s demands as a case of
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
82
Page 7 9B16M077 “overreach by the U.S. government.”58 The key points, which expressed Apple’s stance, included the following:59 The U.S. government asked Apple to create something (i.e., a backdoor to the iPhone) the company
“simply [did] not have” and “something [it] considered too dangerous to create.” The software (a version of the iOS) that the FBI wanted Apple to create for one iPhone (the Bernardino
terrorist’s phone) — software did not exist as of that day — “would have the potential to unlock any iPhone in anyone’s physical possession.”
There was no guarantee that the use of the backdoor would be limited to the given case. “Once created, the technique could be used over and over again, on any number of devices.” Apple referred to the backdoor as the equivalent of a master key in the physical world, “capable of opening hundreds of millions of locks.”
The building of a backdoor would defeat the very purpose of encryption. “Once the information for unlocking the encrypted data [was] known, or a way to bypass the code was revealed, the encryption could be defeated by anyone with that knowledge.”
Apple had worked hard to put customer data out of “even . . . our own reach, because we believe that the contents of your iPhone are none of our business.”
Apple faced an ethical dilemma in that “the government was asking it to hack its own users and undermine decades of security advancements that protected its customers from sophisticated hackers and cybercriminals. The same engineers who built strong encryption into the iPhone to protect Apple users would, ironically, be ordered to weaken those protections and make [its] users less safe.”
Ultimately, Apple’s refusal to “comply with the court orders, despite the technical feasibility of doing so,” was viewed as “based on its concerns for its business model and public brand marketing strategy.”60 THE DIRTY-HANDS PROBLEM61 The dilemma faced by Cook and by Apple’s management team — people with power and complex responsibilities — could be characterized as “the dirty-hands problem.” The expression was used by Badaracco, an ethics professor at Harvard University, to refer to the hard, moral choices involving the “right-versus-right” dilemmas faced by management. As stated by Badaracco, “The moral dilemmas of management are, at bottom, clashes among different, conflicting moralities, among very different spheres of responsibility.” The Four Spheres of Managers’ Commitment The Commitments of Private Life: At an individual level, in the sphere of their private lives, managers were committed to abstract, universal principles, such as telling the truth and avoiding injuries to others. The morality of private life differed from person to person, shaped by factors varying from “religious beliefs [to] philosophy, literature, the lives of people they admired, or the convictions born of their own lives and reflections.” The Commitments of Economic Agents: A second sphere of managers’ moral claims, in their role as economic agents, was to serve the interests of shareholders and maximize their wealth. The Commitments as Company Leaders: Another sphere of responsibility existed because managers, as company leaders, shaped the lives and welfare of human beings employed within those companies.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
83
Page 8 9B16M077 Responsibilities Beyond the Firm’s Boundaries: Managers also had responsibilities toward people and organizations outside their own firm’s boundaries, since “companies had complex relationships with government agencies, labour unions, or — through strategic alliances — with customers, suppliers, and even competitors.” As a framework for assessing resolution of right-versus-right dilemmas, Badaracco recommended four questions: Which course of action will do the most good and the least harm? Which alternative best serves others’ rights, including shareholders’ rights? What plan can I live with, which is consistent with the basic values and commitments of my
company? Which course of action is feasible in the world as it is? The first question had to do with consequences. Attributed to John Stuart Mill, the moral decision was one that resulted in the greatest good to the greatest number of people, with the least cost, risk, and harm. The second question focused on rights. For Americans, this question, which was attributed to Thomas Jefferson’s draft of the Declaration of Independence, was one of human rights to life, liberty, and the pursuit of happiness. Thus, when business executives considered various ways of resolving a dilemma, they were required to consider the various rights at stake. The third question, with its roots in Aristotle’s philosophy and in several religions, had to do with the interplay of conscience and values. Business executives, faced with “wrenching situations,” would ask themselves “what course of action they could live with, as individuals and leaders of a particular company.” The fourth question was attributed to the father of modern political theory, Niccolo Machiavelli, and was pragmatic in its approach. In his own writing on the subject, Badaracco stated:
In any situation, there may be several options that could, in theory, reconcile the competing claims. The crucial question then becomes: What is actually feasible — in view of a manager’s actual power in an organization; a company’s competitive, financial, and political strength; the likely costs and risks of various plans of action; and the time available for action?
Apple was given five days to respond to the federal court order. What were the moral dilemmas facing Cook, and how would he choose to address them? Which was right: favouring customer privacy or favouring national security and the right to live in a world increasingly threatened by international terrorism that operated across the seamless borders afforded by digital technology? How should Cook handle this “right-versus-right” problem? How did Cook’s choice fit with Apple’s mission statement? Would his decision to safeguard his clients’ digital privacy become a defining moment for Cook, the chief executive officer of the world’s hitherto most valuable company?
The authors wish to thank Derrick Neufeld, Associate Professor of Information Systems at Ivey Business School, for suggesting useful video links, which have been added to this case as additional supplementary references.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
84
Page 9 9B16M077 ENDNOTES
1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Apple or any of its employees. 2 Joseph L. Badaracco, Jr., “Business Ethics: Four Spheres of Executive Responsibility,” California Management Review 34, no. 3 (Spring 1992): 64–79. The word “right” has been used in its sense of “morally good, justified or acceptable.” According to Badaracco, management decisions often involve conflicts of “right versus right, of responsibility versus responsibility” and not issues of right versus wrong. Throughout the case, “right” is used in this sense. 3 All currency amounts are in U.S. dollars unless otherwise specified. 4 Angelique Richardson and Ellen Terrell, “Apple Computer, Inc.,” Library of Congress Business Reference Services, April 2008, accessed February 19, 2016, www.loc.gov/rr/business/businesshistory/April/apple.html. 4 Richardson and Terrell, op. cit. 6 To understand how the company introduced a range of innovative products after 1976, see The Apple Timeline, www.theappletimeline.com, accessed February 21, 2016. 7 “The World’s Most Valuable Brands,” Forbes, accessed April 6, 2015, www.forbes.com/powerful-brands/list. On February 2, 2016, Google’s Alphabet, with a market cap of $547.1 billion, overtook Apple, with a market cap of $529.3 billion, to become the world’s most valuable public company; Ari Levy, “Google Parent Alphabet Passes Apple Market Cap at the Open,” CNBC.com, February 2, 2016, accessed February 19, 2016, www.cnbc.com/2016/02/01/google-passes-apple-as- most-valuable-company.html. 8 Evan Niu, “How Many iOS Devices Has Apple Sold?” Motley Fool, November 16, 2015, accessed February 21, 2016, www.fool.com/investing/general/2015/11/16/ios-devices-sold.aspx. 9 Sam Costello, “How Many Apps Are in the App Store?” About Tech, September 10, 2015, accessed February 21, 2016, http://ipod.about.com/od/iphonesoftwareterms/qt/apps-in-app-store.htm. 10 “Cumulative Number of Apps Downloaded from the Apple App Store from July 2008 to June 2015 (in Billions),” Statista, accessed February 21, 2016, www.statista.com/statistics/263794/number-of-downloads-from-the-apple-app-store. 11 Developer App Store, Apple, accessed February 21, 2016, https://developer.apple.com/support/app-store. 12 Brett Howse, “Apple Reports Q1 FY2016 Results: Record Revenue Despite Flat iPhone Sales,” AnandTech, January 26, 2016, accessed February 17, 2016, www.anandtech.com/show/9991/apple-reports-q1-fy-2016-results-record-revenue- despite-flat-iphone-sales. 13 Katie Benner, “Apple Says Sales of iPhones Have Slowed, “New York Times, January 26, 2016, accessed February 17, 2016, www.nytimes.com/2016/01/27/technology/apple-earnings-iphone-sales.html. During this quarter, however, revenue from Apple services grew by 26 per cent, and that from a category known as “other products” — which included the Apple Watch — increased by 62 per cent. 14 Katie Benner and Nicole Perlroth, “How Tim Cook, in iPhone Battle, Became a Bulwark for Digital Privacy,” New York Times, February 18, 2016, accessed April 5, 2016, https://www.nytimes.com/2016/02/19/technology/how-tim-cook-became- a-bulwark-for-digital-privacy.html. 15 Leo Kelion, “Q & A: NSA’s Prism Internet Surveillance Scheme,” BBC.com, June 25, 2013, accessed February 21, 2016, www.bbc.com/news/technology-23027764. 16 Other firms involved in this surveillance scheme included Microsoft and its Skype division, Google and its YouTube division, Yahoo, Facebook, AOL, and PalTalk (a lesser-known chat service owned by AVM Software). 17 Benner and Perlroth, op. cit. 18 See Adam Goldman and Lara Jakes, “Online Forums Provide Key Havens for Terror Plots,” Times of Israel, August 15, 2013, accessed April 5, 2016, www.timesofisrael.com/online-forums-provide-key-havens-for-terror-plots; Dan Rivers, “How Terror Can Breed Through Social Media,” CNN.com, April 28, 2013, accessed February 19, 2015, http://edition.cnn.com/2013/04/27/world/rivers-social-media-terror. 19 Kelion, op. cit; “Obama Explains the Apple/FBI iPhone Battle,” YouTube video, 11:35, posted by The Daily Conversation, March 11, 2016, accessed August 15, 2017, https://www.youtube.com/watch?v=ZjvX5zq7BXg. 20 Ibid. 21 “We Believe Security Shouldn't Come at the Expense of Individual Privacy,” Apple, accessed February 21, 2016, www.apple.com/in/privacy/government-information-requests. 22 Encryption referred to encoding information so that only people with the key to un-encode the information could read it. Encrypted phones could be unlocked with the passcode used to unlock the phone on its home screen. Some phones, including newer iPhones, also included a secure computer chip that carried a key-in hardware. Apple was the first major smartphone producer to make encryption an option, beginning with the iPhone 3. Encryption became the default as of the release of the iPhone 5. Elizabeth Weise, “What Does It Mean that a Phone is Encrypted?” USA Today, February 20, 2016, accessed February 21, 2016, www.usatoday.com/story/tech/news/2016/02/20/phone-encryption-iphone-apple-qa/80623208. 23 Henry Hoggard, “Privacy, Enterprise, and Security Changes in iOS 7,” MWR Infosecurity, November 23, 2013, accessed February 20, 2016, www.mwrinfosecurity.com/our-thinking/privacy-enterprise-and-security-changes-in-ios-7. 24 Benner and Perlroth, op. cit. 25 Mikey Campbell, “Tim Cook Touts New Apple Privacy Policies in Open Letter to Customers,” Apple Insider, September 17, 2014, accessed February 21, 2016, http://appleinsider.com/articles/14/09/17/tim-cook-touts-new-apple-privacy-policies- in-open-letter-to-customers. 26 Campbell, op. cit.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
85
Page 10 9B16M077 27 Ibid; “Tim Cook Defends Apple’s Encryption Policy,” YouTube video, 8:17, posted by Wall Street Journal, February 18, 2016, accessed August 15, 2017, https://www.youtube.com/watch?v=BZmeZyDGkQ0. 28 “What Investigators Know About the San Bernardino Shooting,” New York Times, December 10, 2015, accessed February 21, 2016, www.nytimes.com/interactive/2015/12/02/us/california-mass-shooting-san-bernardino.html. 29 Faith Karimi, Jason Hanna, and Yousuf Basil, “San Bernardino Shooters ‘Supporters’ of ISIS, Terror Group Says,” CNN.com, December 6, 2015, accessed February 18, 2016, http://edition.cnn.com/2015/12/05/us/san-bernardino-shooting. 30 Karimi, Hanna, and Basil, op. cit. 31 Kevin Johnson and Jessica Guynn, “Apple Ordered to Break into San Bernardino Shooter’s iPhone,” USA Today, February 17, 2016, accessed February 21, 2016, www.usatoday.com/story/tech/news/2016/02/16/apple-san-bernardino- iphone-magistrate-order/80478844. 32 Johnson and Guynn, op. cit. 33 Tim Cook, “A Message to Our Customers,” Apple, February 16, 2016, accessed February 17, 2016, www.apple.com/customer-letter. 34 Eric Lichtblau and Katie Benner, “Apple Fights Order to Unlock San Bernardino Gunman’s iPhone,” New York Times, February 17, 2016, accessed February 18, 2016, www.nytimes.com/2016/02/18/technology/apple-timothy-cook-fbi-san- bernardino.html. 35 Lichtblau and Benner, op. cit. 36 Johnson and Guynn, op. cit. 37 Mike Levine, Jack Date, and Jack Cloherty, “DOJ Escalates Battle with Apple Over San Bernardino Shooter’s Phone,” ABC News.com, February 19, 2016, accessed February 21, 2016, http://abcnews.go.com/US/doj-escalates-battle-apple- san-bernardino-shooters-phone/story?id=37056775. 38 Levine et al., op. cit. Apple phone systems had a function that automatically erased the access key and rendered the phone permanently inaccessible after 10 failed attempts. 39 Kim Zetter, “Apple’s FBI Battle is Complicated: Here’s What’s Really Going On,” Wired, February 18, 2016, accessed February 24, 2016, www.wired.com/2016/02/apples-fbi-battle-is-complicated-heres-whats-really-going-on. 40 Dylan Tweney, “Apple CEO Tim Cook Tells Graduates: Values and Justice Belong to the Workplace,” Venture Beat, May 17, 2015, accessed February 24, 2016, http://venturebeat.com/2015/05/17/apple-ceo-tim-cook-tells-graduates-values-and- justice-belong-in-the-workplace. 41 Tweney, op. cit. 42 Ibid. 43 Adam Lashinsky, “Apple’s Tim Cook Leads Different,” Fortune, March 26, 2015, accessed February 24, 2016, http://fortune.com/2015/03/26/tim-cook. 44 Timothy Donald Cook, “Tim Cook Speaks Up,” Bloomberg, October 31, 2014, accessed February 19, 2016, www.bloomberg.com/news/articles/2014-10-30/tim-cook-speaks-up. 45 Benner and Perlroth, op. cit. 46 Ibid. 47 Lashinsky, op. cit. 48 Jay Yarow, “Tim Cook: Why I fired Scott Forstall,” Business Insider, December 6, 2012, accessed August 12, 2017, http://www.businessinsider.com/tim-cook-why-i-fired-scott-forstall-2012-12?IR=T 49 Buster Hein, “Why Scott Forstall and John Browett Got Fired from Apple Today,” Cult of Mac, October 29, 2012, accessed August 12, 2017, https://www.cultofmac.com/198726/why-scott-forstall-and-john-browett-got-fired-from-apple-today/ 50 Lashinsky, op. cit. 51 Henry Blodget, “Apple’s New ‘Mission Statement’ Is Making People Worry that the Company Has Gone to Hell,” Business Insider, August 3, 2013, accessed August 12, 2017, www.businessinsider.in/Apples-New-Mission-Statement-Is-Making- People-Worry-That-The-Company-Has-Gone-To-Hell/articleshow/21581584.cms. Apple’s mission statement during Steve Jobs leadership, on the other hand, read “To make a contribution to the world by making tools for the mind that advance humankind.” 52 Lashinsky, op. cit. 53 Split-adjusted stock prices referred to the share prices after adjusting for stock splits over the company’s lifetime. This process facilitated an accurate comparison between the historical and current stock prices. Each time a stock was split, the cost of a single share went down. Hence, share prices had to be adjusted appropriately to reflect true performance. 54 Lashinsky, op. cit. 55 “Apple Inc. (AAPL),” Yahoo! Finance, accessed February 26, 2016, https://in.finance.yahoo.com/echarts?s=AAPL #symbol=AAPL;range=. 56 Ari Levy, “Google Parent Alphabet Passes Apple Market Cap at the Open,” CNBC.com, February 2, 2016, accessed February 19, 2016, www.cnbc.com/2016/02/01/google-passes-apple-as-most-valuable-company.html. 57 Cook, op. cit. 58 Ibid. 59 Ibid. 60 This was the view expressed by the government in its filing to the federal court. Levine et al., op. cit. 61 Badaracco, op. cit.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
86
5.
9 - 9 1 8 - 0 0 9 A U G U S T 2 8 , 2 0 1 7
HBS Professors Michael Luca and Joshua Schwartzstein and Doctoral Student Gauri Subramani (University of California, Berkeley) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2017 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
M I C H A E L L U C A
J O S H U A S C H W A R T Z S T E I N
G A U R I S U B R A M A N I
Managing Diversity and Inclusion at Yelp
In 2014, the tech sector received a wakeup call as awareness grew of the lack of diversity within the industry. Following calls for transparency, leading companies (including Yelp) began to explore the breakdown of demographics of their employees. Public reports showed that among major tech companies that volunteered the information, more than 80% of technical positions were filled by men.
Dissatisfied with the industry-wide lack of diversity, Yelp CEO Jeremy Stoppelman and COO Geoff Donaker wanted the company to become a leader in understanding and addressing this challenge. They reached out to Rachel Williams, a UC Berkeley alum and early Yelp employee who had left the company to work as a talent acquisition manager at tech startup ClearSlide. They asked Rachel to rejoin Yelp as the company’s first Head of Diversity and Inclusion. Rachel was excited about the opportunity, but also aware of the challenges that came with the position. She knew that she had support from the company’s leadership team, and that she had the benefit of already having proven herself as a high achiever at Yelp. However, there was no blueprint for the role she was stepping into, and Yelp had done little to address issues of diversity up until that point. She would need to understand the complex forces - many outside of the company’s control - that had led to the status quo.
Rachel was given free rein to recommend changes to the recruiting, interviewing, hiring, and promotion process, as well as freedom to explore ways to ensure an inclusive work environment. But she would ultimately need to make the case that these changes would also be good for the bottom line, and to convince stakeholders to accept her recommendations. Moreover, much of the tech industry was struggling with similar issues, meaning that she would need to develop best practices as she went along, rather than adopt practices that seemed to work elsewhere.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
87
918-009 Managing Diversity and Inclusion at Yelp
2
About Rachel
Rachel Williams grew up in San Mateo, CA. She enjoyed her childhood town, which has a pleasant, walkable downtown and a wide variety of restaurants and shops. While she valued her time there and the friendships she made, there were few African-American families in her neighborhood and school - which got her thinking about diversity and inclusion at a young age.
After high school, Rachel was accepted at UC Berkeley, where she studied psychology. Her psychology training made her well aware of the myriad of biases that can creep into the hiring and management process. Always an optimist, Rachel saw opportunity to use insights from psychology to overcome these biases through better hiring processes. After college, she began working in recruiting.
Rachel’s first stint with Yelp was in 2010-2011, before the company’s IPO and at a time of rapid expansion for the company. After a year at Yelp, Rachel left the company for another recruiting position in the Bay Area. Having been a star employee and a good colleague, she received a call from Yelp’s then COO, Geoff Donaker, to whom she had briefly reported. Geoff wanted to know why Rachel had left. The conversation was far-reaching and frank. There was a lot that Rachel liked and respected about the company, especially about working with Geoff. She was particularly appreciative that he, as a very senior person at the company, took the time to reach out to her. But she also felt a degree of dissatisfaction with the company’s approach to and engagement with diversity. The company was in full growth mode, which at times seemed to put important process changes that might increase diversity on the back burner. “It wasn’t that people at Yelp were intentionally biased, but they were trying to build a financially successful company, and that was the top priority,” Rachel explained.1
So when Rachel received a call from leaders at Yelp in 2014, she wanted to make sure she would be empowered to make real progress on debiasing the hiring process and pushing for a productive, diverse, and inclusive workforce. After speaking to executives and understanding the latitude she would have, she felt confident that this was the case. As she began exploring issues at the company, Geoff frequently joined her at meetings, setting the tone that diversity and inclusion are core management issues for the company.
Jesse Jackson and the Broader Push for a More Diverse Tech Sector
Calls for diversity in tech began long before Yelp was founded, led by a variety of civil rights activists including Rev. Jesse Jackson, who founded the National Rainbow Coalition - an organization dedicated to achieving equal rights for all Americans. In 1996, the National Rainbow Coalition merged with Operation PUSH (another Jackson-founded organization) to become Rainbow/PUSH. While the organization pursues a variety of different issues, it has been particularly active in the financial and tech sectors.
Jackson raised the issue of diversity in the tech sector as early as the late 1990s, when the Rainbow/PUSH launched its Silicon Valley Connections Initiative. But there was little progress through the early efforts, which petered out over time. In 2014, the organization relaunched the initiative, and Jackson joined a growing chorus of voices calling for more transparency around the diversity of workforces at tech companies. Members of Jackson’s organization, Rainbow/Push Coalition, engaged with tech companies directly by attending shareholder meetings, having private
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
88
Managing Diversity and Inclusion at Yelp 918-009
3
meetings with C-level executives, writing an open letter to tech leaders, and organizing a summit to discuss diversity in tech.
Jackson’s push for public statistics regarding racial diversity coincided with calls for companies to release data on the proportion of women on their engineering teams. At the end of 2013, Tracy Chou, an engineer at Pinterest, wrote a Medium post arguing that tech companies intentionally obscured data regarding the presence of women in technical roles. She turned to employees at tech companies, encouraging them to self-report information about the number of female employees on their teams. Her online data repository grew quickly, and within a week, she had snapshots of more than 50 companies.
Figure 1 Tracy Chou’s open-sourced gender data
Source: https://docs.google.com/spreadsheets/d/1BxbEifUr1z6HwY2_IcExQwUpKPRZY3FZ4x4ZFzZU-5E/edit#gid=0, accessed on August 29, 2017.
In May of 2014, Google published data about the racial and gender composition of its workforce. The data showed that women comprised 17 percent of the company’s tech employees globally. Only
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
89
918-009 Managing Diversity and Inclusion at Yelp
4
three percent of the company’s U.S. employees were Hispanic, and only two percent were black. Google’s public disclosure confirmed critics’ suspicions; employees at tech companies were overwhelmingly male and there was little racial diversity, particularly at senior levels. Other leading tech companies, including LinkedIn, Facebook, and Yelp, followed suit and published their diversity data. The disparities at Google were present at other firms as well, which suggested that a lack of diversity was an industry-wide problem. At Yelp, roughly 10% of employees in technical roles were women, and 7% and 4% of all employees were Hispanic and black, respectively.
Background on Yelp and the Yelp Engineering Workforce
Yelp was founded in 2004 - a quirky idea dreamed up by HBS MBA student Jeremy Stoppelman. By 2014, the idea had grown from a pipe dream to a public company and leading source of online reviews for local businesses. The online review platform operated in parts of Europe, Asia, and South America, with the strongest presence in the United States. There was no cost for a business to have a Yelp page, and business owners or Yelp users could create a new listing.
In the United States, Yelp was a preeminent review site. In 2014, it had over 2 million active business listings2 and over 135 million unique visitors per month.3 Many major metro areas also had a Community Manager whose tasks included connecting with business owners to understand their needs and motivations, making sure new businesses made their way onto Yelp, and identifying users who frequently posted high-quality reviews to join a “Yelp Elite Squad” that got access to exclusive events hosted by Yelp at local businesses.
Yelp’s revenue came primarily from ads that businesses could purchase so that their listings appeared at the top of specific search results and in the sidebar on competitors’ Yelp pages. Yelp also offered paid upgrade options that allowed business owners to add more content to their pages, like a photo slideshow, and to remove competitor ads. As of 2017, Yelp employed close to 3,000 salespeople4, many of whom regularly spoke on the phone with local businesses about advertising options.
Yelp’s workforce had grown quickly, from 250 employees in 2009 to 4,600 in 2017.5 The company maintained its startup ethos with a culture that eschewed hierarchy; all employees sat at desks in rows in an open floor plan, including the CEO (and his dog, Darwin). There were quarterly all-hands meetings, during which the CEO directly addressed employees, and the company threw monthly employee work anniversary parties that celebrated employees’ “Yelpiversaries”. Most employees worked from 9-6, and many managers allowed their teams the flexibility to work from home.
Yelp made an effort to provide amenities and benefits that were competitive in the tech industry. Each floor at Yelp had a kitchen stocked with snacks like Greek yogurt, KIND bars, and organic frozen burritos. At Yelp HQ, there was a gratis coffee shop, staffed by baristas who drew foam art on top of coffee drinks. All full-time Yelp employees received comprehensive health, dental, and vision insurance, along with maternity and paternity leave.
Yelp relied heavily on expert engineering to ensure that the website and app operated quickly and at scale. The company invested significantly in attracting and retaining a team of over 600 top-tier engineers to continuously refine the product. Yelp offered a competitive salary, promising career path, and exciting product. But, the best engineers were always in demand, and Yelp vied heavily for top talent against other companies like Airbnb, Google, and Uber.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
90
Managing Diversity and Inclusion at Yelp 918-009
5
Yelp hired roughly 30 entry-level engineers each year out of an applicant pool of several thousand. At the junior level, an engineer was typically assigned to work on a team that is responsible for one part of the product. For example, there was a team dedicated to operating and improving Yelp’s proprietary algorithm that filtered out reviews that may have been fake or illegitimately solicited. Another team was responsible for managing and refining the algorithm that determined the order in which businesses were shown.
More senior engineers managed these teams, and help shaped the vision of the product. Given the central role of engineering at Yelp, there were engineers at virtually every level of the organization. While Yelp occasionally hired senior engineers from other companies, it had a strong culture of promoting from within. Many of the senior engineers in the company, including Jason Fennell (SVP of Engineering), Eric Singley (VP of Consumer and Mobile), and Travis Brooks (Head of Data Science), were promoted from within the company.
Recruiting Yelp Engineers
Yelp typically hired entry-level engineers through its campus recruiting program. Every fall, Yelp visited a set of schools with strong engineering and computer science programs. During campus visits, recruiters and engineers connected with students at campus career fairs and hosted on-campus “tech talks”, where a Yelp engineer talked about his or her experience at the company. Figure 2 shows schools that Yelp made campus visits to in 2014.
Students were encouraged to apply to Yelp online by submitting their information at Yelp recruiting events. Yelp received several thousand resumes for engineering positions in 2014, looking to fill 30 or so open spots.
Figure 3 illustrates the recruiting process, as it was in 2014. A recruiter within Yelp’s human resources group did an initial screen of resumes to ensure that applicants were in their final year of school and to weed out individuals who did not seem like good fits--for example, history majors with no coding experiences. All remaining applicants were then emailed a link to a code test which they were asked to complete within a few days.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
91
918-009 Managing Diversity and Inclusion at Yelp
6
Figure 2 Campuses Yelp engineering recruiters visited in 2014
Source: Casewriter interviews with employees at Yelp.
Figure 3 Yelp’s campus recruiting process in 2014
Source: Casewriter interviews with employees at Yelp.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
92
Managing Diversity and Inclusion at Yelp 918-009
7
Those who passed the code test were then re-evaluated by a recruiter, who looked over their resumes and assigned a point value between one and three to each candidate based on coursework and prior experiences. Most applicants with a score above two then had a 45 minute Skype audio interview with an engineer, during which they discussed their background and interests and then worked through a coding problem on Skype. Using a performance rubric for the code test, the interviewer assigned a score between 1 and 4 to candidates, and those with scores over 3 were invited to have an onsite interview.
The final interview stage was a half-day onsite at the Yelp office, during which candidates had four 45-minute interviews, two with engineers and two with engineering hiring managers. Half of each interview was spent discussing general questions and Yelp’s culture, and half was a collaborative coding portion commonly referred to as “whiteboarding”. Interviewers did not necessarily coordinate interviews with the same candidate, and could ask very similar questions to evaluate the candidate’s fit at Yelp. Before being permitted to conduct interviews, interested engineers sat in on two interviews to learn what types of questions to ask. Experienced interviewers shadowed engineers during the first interviews they conducted, and afterwards would provide feedback and bring up any concerns. The hiring managers, colloquially known as “Stoppelgangers” because they were intended to be decision- making “doppelgangers” for Michael Stoppelman, Yelp’s SVP of Engineering in 2014, were managers who had been at Yelp for some time and whose judgment Stoppelman trusted.
Following the final round interview, interviewers provided the recruiter with their written feedback. The recruiter reviewed this feedback and then sent it to an email alias that hiring decision makers had access to. If there was disagreement among the four interviewers or ambiguity regarding a hiring decision, the two hiring managers had final decision-making authority.
The Task at Hand
Rachel’s first priority upon arriving at Yelp was to do a “listening tour” to understand employees’ perspectives and concerns. She spent two months talking with groups and conducting one-on-one meetings. She heard from employees who worried that their managers might view them differently because of their background. She heard from employees who were hesitant to be their full selves at work, for fear of how their colleagues and bosses might react. She learned about a number of unofficial clubs that had formed within groups, like an email thread of LGBT coworkers and women-only book club for Yelp employees. “Coming from recruiting, I was interested in diversifying the pipeline at the source,” Rachel explained, “and the listening tour really helped me identify other priorities.”6
Rachel thought through the many options she could pursue in her initial set of proposals to address the issues that had been raised during her listening tour. For example, the company could revamp the rookie engineer hiring process. It could set explicit diversity targets or hiring quotas. It could blind resumes by removing names and other identifying information. She had even heard of a service that would change voices during phone screens, so that the interviewer would not know the gender of the applicant. The company could instead focus on more senior positions, aiming to promote a more diverse set of candidates from within, or look externally for senior hires. Lastly, Rachel also worried about ensuring that Yelp was a welcoming place for people who joined. She thought about the possibility of creating affinity groups within the company, or about doing diversity or bias training for managers. “It was clear that we needed to focus on inclusion, and not only having a diverse workforce, but creating an environment in which everyone felt welcome,” she commented.7 She now needed to
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
93
918-009 Managing Diversity and Inclusion at Yelp
8
finalize a set of recommendations to send to Jeremy and Geoff, taking into account the fact that many of these changes would take time, effort, and a compelling case for the value they would create.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
94
Managing Diversity and Inclusion at Yelp 918-009
9
Endnotes
1 Rachel Williams, interview by casewriter, August 24, 2017.
2 Yelp, http://www.yelp-ir.com/static-files/9f006056-95ab-4e2a-98d0-4cd860bfe90e, accessed September 1, 2017.
3 Yelp, https://yelpinc.gcs-web.com/news-releases/news-release-details/yelp-announces-fourth-quarter-and-full-year-2014- financial, accessed September 1, 2017.
4 Yelp, http://www.yelp-ir.com/static-files/1e5a19b1-4cca-4da9-ba71-7aebe57c6cca, accessed September 1, 2017.
5 Yelp, https://www.yelpblog.com/2010/12/2010-yelp-by-the-numbers, accessed August 29, 2017.
6 Rachel Williams, interview by casewriter, August 24, 2017.
7 Rachel Williams, interview by casewriter, August 24, 2017.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
95
6.
UVA-OB-1046
Rev. Jun. 30, 2014
This case was compiled from various accounts of actual events and prepared as a composite case by Kristin J. Behfar,
Associate Professor of Business Administration; Gerry Yemen, Senior Researcher; and Martin N. Davidson, Professor
of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective
handling of an administrative situation. Copyright 2013 by the University of Virginia Darden School Foundation,
Charlottesville, VA. All rights reserved. To order copies, send an e-mail to [email protected]. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any
form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the
Darden School Foundation.
TEAM CONFLICT:
THE “CHATTY” ACCUSATION AT THE CUSTOMER SUPPORT CALL CENTER
In a rare moment alone in her office, Jennifer Ames reflected on the past 10 years of her
career at BabyProduct Corporation (BPC).1 She could easily chart her successes: She had taken on
challenges and produced results where her colleagues had failed; she had increased the diversity
of the work force in every unit she had led; she had successfully launched new products and
developed several new markets. In fact, just a few months before, Ames had been part of a team
that had led a highly successful launch of several BPC product lines into the Latin American
market. That success and the ensuing demand for its products drove BPC to centralize customer
support in a call center in Austin, Texas—and to create Ames’s new position: senior director for
global customer support. Ames had studied other call-center models and created a team of four as
a prototype for customer support. She had a goal of scaling up as the business expanded.
But as she sat in her office, looking at the latest financials and mentally reviewing the
events of a disturbing meeting earlier that morning, she saw the failure of her prototype looming
large. The call response times were on an upward trajectory that would quickly plunge her budget
into the red if the trend continued. Even worse, only one short month into her new position, Ames
was worried that her team was stonewalling her. She was deeply troubled by the interaction she
had just observed: there was friction among her staff members that was dividing them along
American-versus-non-American lines.
The team consisted of three Americans from the Austin, Texas, headquarters and one Costa
Rican from the Central American sales office. The three Americans, already thinking about
customer support, had spent the past few months working with product developers to create the
web-based training videos that provided step-by-step product use information, as well as testing
competitor products. The employee from Costa Rica had also spent time with the product
development team and had been an outstanding sales representative. She had transferred from the
Central American sales office to join the Austin call center.
1 BabyProduct Corporation is a fictitious company name that does not intentionally represent any real company.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
97
-2- UVA-OB-1046
The problem was that the Americans were angry about the work habits of the Costa Rican
member whose call times were longer than theirs, so they accused her of effectively lowering their
pay. During that morning’s meeting, things had deteriorated into a verbal onslaught that
culminated in one of the American members calling the Costa Rican member a “chatty Latina.”
After that, the conflict got personal and highly emotional. Was this the “cultural iceberg” she’d
heard so much about? And what exactly should she do to steer the team away from it?
Products in the Baby Space
When Ames had joined BPC 10 years earlier, it was a small U.S. company selling baby
formula. Since then, it had expanded to sell various maternal and infant-care products. Aside from
baby formula, BPC’s most profitable product lines included phototherapy devices for the treatment
of jaundice (often called light boxes) and a sophisticated line of neonatal heart and breathing
monitors. BPC’s institutional customers included hospitals and nongovernmental organizations
that cared for at-risk populations. The company also sold smaller versions of the phototherapy
devices and baby monitors to families at home and for midwives to use. All manufacturing and
distribution took place in the United States.
By 2011, BPC executives were ready to expand sales of phototherapy and monitoring
devices into Latin American markets. The decision was based largely on the region’s lack of
competitors in the maternal and infant-care product segments and a low entry barrier. Ames had
been part of the team that executed the launch. They had decided to hire locals in each of their
markets to create a Latin American sales unit and to focus on direct-marketing distribution
channels to institutional customers (hospitals and NGOs).
The channel choice was important because many international organizations, such as
UNICEF and the World Health Organization, had international codes of responsible marketing
that BPC had decided were in line with its values. The codes, which primarily targeted food and
milk-substitute products, were not law in the United States, but they offered guidelines that BPC
considered good business practices; they would be used to guide executive decisions, avoid bad
press (there were many international watchdogs in the baby product space), ensure the correct use
of BPC products, and avoid international lawsuits. Following these codes meant adopting practices
such as never marketing directly to mothers or families, training retailers and asking them to
provide a point-of-purchase demonstration of the equipment, and having customer support
available after the point of purchase to provide training and consistent and objective advice, and
further information—including information about the potential benefits of competing products.
The product rollout to institutional customers in Latin America was a huge success. Within
a year, BPC had established ten sales units: two in Mexico, three in Central America, and five in
South America. During the first few months of the expansion, the sales representatives were able
to provide some degree of customer support because their clients tended to be large hospitals—
sales representatives would train a few hospital employees who, in turn, would be the support
people in their hospitals (a train-the-trainers model). By the end of that year, however, the F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
98
-3- UVA-OB-1046
management team realized that it did not have the infrastructure to provide customer support for
all of the sales it was generating. As customer volume grew, the sales force was too busy to provide
reliable customer support. The sales force was paid on commission, so was less interested in
providing adequate customer support and was not necessarily made up of the best people to do so.
Employees in the U.S.-based manufacturing plant were more privy to company information about
competitors and infant-care guidelines as well as warranty and care information.
Instead of relying on its sales force, the management team decided to provide customer
support via call centers and, after much discussion, to establish these call centers in-house instead
relying on outsourcing. During BPC’s original market research, potential Latin American
customers made it clear that being able to speak directly to the company—to talk to the same two
or three people about their case rather than having to rely on retailers or third-party support—
would make them more likely to buy BPC products. Given that the consistency and accuracy of
information from customer service was essential to follow code and avoid lawsuits and high
insurance premiums, BPC decided to first establish a U.S.-based call center supplemented by web-
based video training. The company did this for two reasons. First, the management team wanted
to closely monitor the calls to be able to communicate quickly with quality control in order to
provide onsite training that was updated on a monthly basis. Second, it wanted to build trust with
its customers. Ames was in charge of making this happen. She immediately pulled four people,
who spoke fluent Spanish, from the sales side of the organization to serve as customer support
representatives in the call center.
Differences in the Call Center Team
As with most call centers, the team was rewarded based on how many calls it handled. In
light of their large and growing customer base, the team found itself with high call volume. Ames
believed it was important to keep calls short for two reasons. First, it was important to avoid long
customer hold times in order to create greater ease for customers. Second, she had been given a
fixed percentage of company profit to devote to call-center compensation. She did extensive
analysis over a six-month period about realistic estimates of the length of time that her team of
four could spend with each customer. She had the sales team document the time spent on customer
support, used new customer forecasts and did a handful of scenarios with existing customers to get
an average time estimate for a typical call. She then divided the amount of money she had to spend
by the number of customers she anticipated would call each day, and determined that she could
afford to have representatives spend about seven minutes with each customer. This number was
roughly the same as her event-by-event “scenario trials.”
In order to stay within her budget, she decided that each representative’s pay would be
docked by $1.00 per minute after seven minutes of conversation with a customer. While the
representatives were compensated with an annual salary, which was paid to them in monthly pay
periods, she decided to make their monthly pay contingent on the team maintaining a daily seven-
minute call average. So the team members’ monthly pay was calculated as their salary minus $1.00
for each minute of each day that the team average was over seven minutes. She believed this would F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
99
-4- UVA-OB-1046
encourage the call-center members to collaborate (rather than compete) with one another about the
best strategies for quick and helpful service. Ames was discouraged that, at the end of their first
month of working together, the team members’ call response average was a little over two minutes
off target. (See Table 1 and Figure 1 for a sample of the first month’s averages Ames put together
to track call-center metrics.)
She was also getting complaints from the three American team members. They calculated
that together the three spent an average of five and a half minutes with each customer; when
customers wanted further information, the employees referred them to the training videos. In
contrast, they observed that the Costa Rican member, Sonia Enriquez, spent about 15 minutes with
each customer, often walking the customer through the videos over the phone. These longer calls
were affecting the compensation of all members, and the Americans were angry.
Table 1. Sample metrics from the first month of operations.
Week 1 Week 2 Week 3 Week 4
Monthly
Call
Average
Monthly Customer
Satisfaction
(1 = Poor, 10 =
Excellent)
Henley 5.1 4.4 5.2 7.3 5.5 5.5
Garvey 3.3 4.5 6.3 8.3 5.6 6.1
Burton 5.2 3.8 5.3 7.1 5.4 5.3
Enriquez 12.5 10.2 13.9 15.5 13.0 9.5
Daily team average 6.5 5.7 7.7 9.53 7.4
Average team pay penalty $0.00 $0.00 $0.12 $2.88
Source: Created by case writer.
Figure 1. Graphic depiction of weekly call averages in minutes.
Source: Created by case writer.
At the most recent weekly team meeting, the tension had been palpable. The Americans on
the team understood Enriquez’s point about the need for customer satisfaction, but they believed
that helping customers solve problems and referring them to the training video was good enough.
The complaints in the meeting went like this:
0
2
4
6
8
10
12
Week 1 Week 2 Week 3 Week 4
Team Average
Team Target
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
100
-5- UVA-OB-1046
Jill Henley: This goes beyond being annoyed about how much Sonia talks, it now affects
my pay—it’s being docked. When she does a call, it goes way past product
information; she carries on about family, gets wrapped up in their problems,
laughs and jokes—but the thing that really put me over the edge was when she
told someone she’d put the kids who used our equipment on her prayer list!
Sonia acts like a therapist instead of providing technical support. For the love
of Pete, we sell medical equipment! The less you talk, the more you listen, and
the better you do your job.
Jordan Burton: Sonia talks so much that my mouth hurts—and I’m being penalized because of
it. There is no off switch. She thinks her approach is a success. So she builds
relationships with her customers, but we’re here to provide information. We
have training videos for a reason—and she needs to refer customers to those
videos, not watch the things with the caller while she’s got them on the phone!
Jeff Garvey: I find myself increasingly angry at Sonia for prioritizing her need to talk over
any work that needs to get done. She couldn’t care less that our pay is being
reduced because of her. She has it in her head that any conversation under 15
minutes is rude and to cut calls shorter is bad manners. Callers don’t need to
feel special, they need information to solve their problem, and that takes five
minutes tops for all the rest of us. We are helping solve problems and providing
good care too.
Sonia Enriquez: We don’t do things that way in my country. You should have studied my culture
before you joined this team. This is serious business. The lives of many children
depend upon our equipment, and their caregivers need to know our company
cares about them. We have to build trust that we aren’t going to sell them
something and then hit the road. No one else on this team takes the time to earn
health care providers’ respect. We need to make them feel confident in their
decision to buy our monitors and not someone else’s. But don’t take my word
for it—have a look at the how customers have rated me: my satisfaction scores
are exponentially higher than anyone else’s on this team.2
Ames worried that both she and the team were at a breaking point.
2 Customer satisfaction with customer support was assessed by the sales department based on three questions
during their periodic visits to the customer. This information was sent to Ames by the director of the sales department
on a monthly basis.
F o r
u se
o n
ly in
t h e c
o u rs
e A
d va
n ce
d B
u si
n e ss
C o m
m u n ic
a tio
n a
t C
a lif
o rn
ia S
ta te
U n iv
e rs
ity -
F u lle
rt o n t a u g h t b y
D e b ra
D a n ie
ls e n f ro
m J
a n u a ry
2 4 , 2 0 2 1 t o M
a y
2 7 , 2 0 2 1 .
U se
o u ts
id e t h e se
p a ra
m e te
rs is
a c
o p yr
ig h t vi
o la
tio n .
101
NOTICE REGARDING COPYRIGHT This custom course package contains intellectual property that is protected by copyright law. It is illegal to copy the material within this package without the written consent of the holder(s) of the copyright. This material has been copied under licence from Access Copyright or with permission from the copyright owner. Resale or further copying of anything in this package is strictly prohibited.
Unless otherwise stated, Copyright © Ivey Business School Foundation.
www.iveycases.com
- Advanced Business Communication
- The Student Guide to the Case Method
- Telus: Ethics and Cellphone Tower Sites
- Building a Backdoor to the iPhone: An Ethical Dilemma
- Managing Diversity and Inclusion at Yelp
- Team Conflict: The Chatty Accusation At The Customer Support Call Center
