Situation Analysis

Writing a Case Study: Sullair

Executive Summary

The Problem

Follow along with the spirit of this example:

“I have been asked to evaluate the marketing strategy for Acme widgets. Specifically, which actions should they take to defend their leadership position. Acme is the market leader in widget manufacturing, and the market is being threatened by its chief competitors, Baker Company and Charlie Company……” (Add a few more sentences explaining the nature of this decision forcing moment.) Obviously, this example is about defending leadership position, that may not be the problem in the Sullair case. The preceding was just an example of how to clearly and robustly state the problem. Remember, when you “frame” a problem you are stating what the problem is and why it is. I.E. what is going on here? What is the essence of the issue involved?

The Answer

“Acme should extend its line to include……” (add 2 or 3 sentences to explain in moderate detail what actions should be executed in the marketing campaign). Again, that’s just an example. This is where you state your solution – what should be done.

Rationale

“Acme has an established and strong brand image and…..” (add a short paragraph explaining the principal reasons for the actions you are recommending…..) . Think of excellent argumentation. You state the problem, then your solution, and then your rationale for your solution (like the “warrant” in an argument that connects the evidence to the conclusion/solution). Here is where you make the broad brush stroke statements about WHY this solution can fix the problem. You’ll get into finer details later. This is the articulation of the argument as to why this solution is the best choice/route to take.

This whole section should be no longer than a page. If you can’t say it on a single page, you probably don’t have your arms around the problem yet.

Situation Analysis

The facts of the case. This is a brief synopsis of any salient details that might be impactful in your later discussion. This could be a paragraph, maybe a few more, but definitely one page or less. For example, you might note that Red Bull had undergone unsuccessful market entries in the past if you think this is relevant to decision making.

It is important to note here that the situation analysis is not the place to begin arguing your final decision. It is merely an analysis of facts. You need to stay as impartial and objective as possible. Sometimes students will craft a situation analysis to support a decision, and this is usually very transparent. For example, if you decide Acme Co. should start selling energy drinks, you might cite “Acme is not in the energy drink market” as the principle opportunity, thus making your decision “air tight” because it agrees with your SWOT. There are thousands of products Acme does not sell, so that argument falls apart under scrutiny because it is not sound argumentation to say that a company should sell something just because they currently don’t sell it. (Again, that’s just an example).

(Please note: what follows are EXAMPLES of possible strengths, weaknesses, etc. These may or may not have anything to do with the case in question. In fact, the Sullair case is NOT about brand image…)

Strengths

· Strong brand image. A note of explanation as to what exactly this means to you.

· Advertising expertise. Give evidence here of the marketing prowess of the company, for example. A couple sentences should do it

· Acme has a good core customer base. Again, explanation….

· Acme is financially sound. Again, a few notes of explanation…..

SWOT should be longer than a list, but shorter than an essay. It is important after initial list that you explain the stuff. A paragraph here explaining, for example, “why financial soundness” is a strength will help. Think of when you interview. If the interviewer asks you, “Are you good at working in teams?” you never just say “Yes.” Every interviewee says “Yes.” You must support your “Yes” with evidence!

Weaknesses

· Acme is slow to market with advertising efforts. A sentence or two explaining what you mean, when it happened, and why it is important now.

· Acme has a narrow product offering. This may make the company, for example, vulnerable to attack, and it would be good to point out how significant this exposure is.

· Acme is vulnerable to market changes such as inflation, market intrusion…..

· Acme has upstream distribution problems…..Again, a note of explanation as to what the problems are and why they might negatively affect the company going forward

This is a good place to summarize weaknesses and analyze them as to the relevance to the case. A short paragraph is fine. Remember Strengths & Weaknesses (SW of SWOT) are INTERNAL to the company.

Favorable Conditions (Opportunities): (External)

· Acme’s widgets will likely become more profitable with decreases in the pricing of raw materials. A few sentences explaining the magnitude of this potential opportunity will help here.

· Acme’s rival company has slowed its manufacturing…….

· The core customer is a growing demographic …..

“Opportunities” is NOT a list of things the company is not doing. “Opportunities” are things external to the business that are favorable for doing business. In fact, I often call this SWFT analysis (“F” stands for ”Favorable conditions”) rather than SWOT analysis.

This is not the place to spell out the company’s options. These are the systemic things that are going on that potentially may benefit the company. For example, Progressive Insurance benefits from the increased safety standards of automobiles making their payouts lower and making the company more profitable. It is fair to point out as well that this is an opportunity that might also be a threat that may/will attract competitors into the market.

Threats: (External)

· Federal legislation is likely to affect…….

· Competition has attacked the widget market…….

· Import duties in primary foreign markets will likely…….

Overall SWOT Analysis:

This section should not be simply repeating your SWFT items . You need to be analyzing them. In the Sullair case, you should be answering the following questions:

1. Even though they have a superior product, they are #3 in the market.

2. What do the distributors do for Sullair? That is, what functions do they perform? How important are they?

3. Analyze the power being exercised in the channel.

4. Analyze the conflict in the channel.

5. So what exactly is going wrong?

6. What is their sustainable competitive advantage?

I’m not counting pages, but a couple pages here seems appropriate. Again, don’t repeat your SWOT items here. This Analysis section is for ANALYSIS. What does it all mean?

Alternatives

1. Do Nothing

A brief description of this alternative should follow.

Pluses:

· Will not interfere with the customer base…

· Easy to execute

Minuses:

· Does not address the…..

· Market share is likely to erode further

· Threats from ……will still exist

Analysis: You should start making some judgements here. For example, simply stating, “On the one hand, this good stuff would happen, but on the other hand, this bad stuff would happen” is not strategic. You should have a feel for which outweighed the other and why – but brief!

2. Own the channel.

A brief description of this alternative should follow. As you know by now, very few businesses own their entire distribution channel. Most businesses use partners to get their products to market. Sullair has the option of owning their distribution channel instead of using partners.

Here is an example of a poor rationale: “Their competitors who own their channels do better than Sullair, therefore Sullair should own theirs.” A much stronger analysis would include pluses and minuses of owning the channel. A much stronger analysis would weigh the positives against the minuses and result in an informed decision with why certain ones outweigh others – brief!

3. Use coercive power to achieve alignment

Here you should have a brief description of what this option would look like.

Pluses:

· Existing customers will have the option…..

· The Marketing Group is skilled at ……

· The Distribution network is exceptional at……

Minuses:

· The existing ad efforts have been slow to market

· The threat of competitive entry might affect……

Analyses: Again, you should be ready to make some judgements here. Saying, “On the one hand the following good things will happen, but on the other hand, etc…” lacks analysis.

4. Use one of the gentler power bases to achieve alignment.

Etc…………

5. Anything else?

(If you have an additional option, it should be included here.)

Recommendation

Here is where the real arguing starts.

Pick one of your recommended options, and start explaining why the pluses get the job done and the minuses are acceptable risks. Don’t just say why, back up with rationale, argumentation, evidence, and more! It is important here to keep your decision consistent with your Situation Analysis. If, for example, you identify the most significant “weakness” is the company’s ability to penetrate the marketing channel, but your recommendation is to attack the market through a new channel, then there is a serious inconsistency with your decision. A good solution should take advantage of the company’s strengths and opportunities, and minimize or mitigate its weaknesses and threats.

When you are through with that explanation, then recommend a detailed plan of execution. For example, if you recommend a “line extension,” then describe what the ad plan should look like and/or what changes need to be made to the distribution network to accommodate the line extension. (just an example).

Also, it is likely that your recommendation is not quite the “perfect” recommendation (as humans, very few things we actually try are “perfect”), so what else do you have to do to make up for the imperfections? If there were perfect and obvious solutions, then they wouldn’t need you to solve them, would they? For example, if your decision means you are likely to have brand image problems, what are you recommending you do to mitigate the negative brand image? (Again – just example).

Two to three pages here seems appropriate.

Think of yourself as a consultant who was paid to analyze the company. Now look at what you wrote through the eyes of the company executives and see if it is something you would pay money for.