CH-13 Analyzing Strategic Management Cases – Strategic Management: Creating Competitive Advantages : Book Guide

Chapter 13 Analyzing Strategic Management Cases Summary/Objectives Case analysis uses real-life situations to present the processes of analysis, formulation, and implementation that have been addressed in this textbook. By studying and analyzing the strategic predicaments posed by a case, students can see that the circumstances businesses confront are often difficult and complex. Case analysis also challenges students to make decisions that address the dilemmas in the case and evaluate how their recommendations will affect the situation in the case. The chapter is divided into five major sections. 1. The first section addresses the question why analyze strategic management cases. It describes how case analysis can develop proficiencies in critically evaluating business situations and improves the ability to differentiate, speculate, and integrate. 2. The second section addresses how to conduct a case analysis. It describes five steps — become familiar with the material, identify problems, conduct strategic analyses, propose alternative solutions, and make recommendations. 3. The third section discusses how to get the most from case analysis. It provides ten guidelines for using case analysis to enhance learning. 4. The fourth section addresses integrative thinking conflict-inducing discussion techniques that are often used to stimulate conversation. It describes how these approaches can lead to better decisions. 5. The fifth section illustrates the parallels between the analysis — decision — action sequence used to organize this text and the case analysis process. Questions from each chapter that may be salient to a case analysis are introduced. 6. Lecture/Discussion Outline I. Why Analyze Strategic Management Cases? Strategic managers and business leaders evaluate options, make choices, and find solutions to the challenges they face every day. To do so, they must learn to ask the right questions. These include: 1. Why do some firms succeed and others fail? 2. Why are some companies higher performers than others? 3. What information is needed in the strategic planning process? 4. How do competing values and beliefs affect decision-making? 5. What skills and capabilities are needed to implement a strategy effectively? How does a student of strategic management answer those questions? By strategic case analysis. Case analysis simulates the real world experience that strategic managers and company leaders face. A case is a detailed description of a challenging situation faced by an organization. It usually includes a chronology of events and extensive support materials such as financial statements, product lists, and transcripts of interviews. Cases usually report the facts of a situation as authentically as possible. One of the main reasons to analyze strategic management cases is to develop an ability to critically evaluate business situations. Three capabilities that can be learned by conducting case analysis are the ability to differentiate, speculate, and integrate: 1. Differentiate Effective strategic management requires that many different elements of a situation be evaluated at once. When analyzing cases, it is important to isolate critical facts, evaluate whether assumptions are useful or faulty, and to distinguish between good and bad information. 2. Speculate Being able to imagine different scenarios or contemplate the outcome of a decision can aid the analysis. Case materials often seem to be missing data or the information provided is contradictory. An ability to speculate about details that are unknown or the consequences of an action can be helpful. 3. Integrate Strategy involves looking at the big picture and having an organization-wide perspective. Integration involves comprehending how all the factors of a case will interact. Changes made in one part of an organization affect other parts. Thus, a holistic perspective that integrates the impact of various decisions and environmental influences on all parts of the organization is needed.  Discussion Question 1: How can you both differentiate and integrate at the same time? These seem like “opposite” tasks. Can it really benefit an organization to simultaneously engage in these opposites? Answer: Differentiating and integrating can benefit an organization by enabling it to offer unique products or services while leveraging synergies across different areas. For instance, Apple differentiates its products through innovation while integrating hardware and software for a cohesive user experience, enhancing overall competitiveness. Discussion Question 2: What are some examples of executives who have used these abilities — differentiating, speculating, and integrating — to strengthen or transform their companies? Answer: Executives like Steve Jobs (Apple) and Elon Musk (Tesla) exemplify the use of differentiating, speculating, and integrating to transform their companies. Jobs differentiated with design and user experience, speculated on future tech, and integrated software and hardware, while Musk integrates futuristic goals with bold speculations in diverse industries. In summary, case analysis asks students to “walk a mile in the shoes” of the strategic decision-maker and learn to critically evaluate situations. STRATEGY SPOTLIGHT 13.1 describes how Sapient Health Networks, a business faced with an immediate crisis, analyzed its situation, made tough decisions, and took strategic action. The SUPPLEMENT below emphasizes that companies use strategic analysis techniques in every day practice. It presents the example of Butterfield Fabrics, a British manufacturing firm, and the process it went through to analyze, formulate, and implement new strategies.  Extra Example: Analysis, Decision, and Action at Butterfield Fabrics Butterfield Fabrics (a disguised name) is the largest producer in Europe of coated and laminated fabrics. But in 1995, amid a growing market, the company’s sales were stagnant. More nimble competitors were out-flanking Butterfield’s high-margin specialty products, and lower cost rivals were seizing market share in the standard price-competitive end of its product line. Butterfield had never formalized a strategy, but it clearly had one: to reap the economies of scale, scope, and reputation that come from being the largest competitor in its industry. By the mid-1990s, however, the strategy was no longer working. After several failed attempts to reinvigorate the company, Butterfield finally engaged in an intense process of analysis that led to a detailed strategy which included explicit guidance about what the company would and would not do, and generated the support of key players responsible for implementing the many interrelated parts of the strategy. The process Butterfield went through included three major stages: Stage 1: Identify the driving forces in the company’s competitive environment. Stage 2: Formulate strategy that addresses the driving forces. Stage 3: Create a plan to implement the strategy. In the process of going through these stages, Butterfield used several analytical techniques that helped it assess and keep track of the many issues involved with the change. One of these was to map the driving forces. Mapping is a visual tool that makes managers’ assumptions explicit. Once the mapping process is complete, the implications for strategic action are often quite obvious. A second technique was to create a strategy matrix. The matrix shows how the company might address each driving force. Across the top of the matrix are listed all of the driving forces. Down the side are the functional areas or projects that are involved in implementing action. The matrix is used to identify responsibilities and allocate resources across all the functional areas. Here is one example (not in matrix format): Driving Force 1: “Butterfield’s costs are high relative to competitors because new technologies enable cost-effective manufacturing at low volumes and because of the complexity of managing our broad product line.” Response: Manufacturing: Divide plant into three “factories within a factory” each focusing on a few product families. Buy new equipment to reduce set-up and waste costs in low-volume runs. Marketing and Sales: Broaden product line further as soon as process capability and plant configuration are ready. Business Development: Where local volumes are sufficient, open small regional plants that are close to the customer. Finance and accounting: Implement an activity-based costing system. Quality and process Develop expertise in fast set-up and changeover on existing and new equipment to engineering: handle greater variety without suffering cost penalties. The point of the lengthy strategic process undertaken by Butterfield was to create a plan of action that would lead to renewed strengths and new core competencies. Whether the recommended actions will lead to the desired outcomes will depend on the commitment and cooperation of the entire organization. Source: Christensen, C. M. 1997. Making strategy: Learning by doing. Harvard Business Review, 75(5): 129-143.  Discussion Question 3: What are the benefits of engaging in a strategic process such as Butterfield undertook? Are there any disadvantages? Explain? Answer: Engaging in a strategic process, like Butterfield's, helps clarify goals, align resources, and anticipate challenges. Benefits include clearer direction and better alignment, but disadvantages might include overanalysis or delays in decision-making. Discussion Question 4: How could the steps that Butterfield used be applied in the case analysis process? Answer: The steps Butterfield used—analyzing data, brainstorming, and aligning resources—can structure case analysis by ensuring a thorough examination of facts, generating multiple perspectives, and aligning recommendations with strategic goals. Teaching Tip: Many instructors present the case analysis chapter to students early in the course as a way to introduce the case method approach to learning strategy. This is often useful for providing students with not only a method for analyzing cases but also a means to understand the context and purpose of in-depth evaluations of business situations. The Sapient Health Network spotlight in the chapter and the Butterfield Fabrics example in the Instructor's Manual are examples of real world situations that demonstrate how companies actually use a process very much like case analysis to solve strategic problems. II. How to Conduct a Case Analysis The process of analyzing strategic management cases involves several steps. In this section, we review five steps to follow in preparing a case analysis. Before beginning, point out that there are two prerequisites for effective case analysis. First, unless students prepare for a case discussion, there is little they can gain from the discussion and even less that they can offer. Second, to get the most out of case analysis, students need to place themselves “inside” the case in order to think like an actual participant in the case situation. Before beginning the analysis, it may be helpful to envision assuming one of these roles: 1. Strategic Decision-Maker The position of the senior executive responsible for resolving the situation that the case describes. It may be the CEO, the business owner, or a strategic manager in a key executive position. 2. Board of Directors The Board of Directors has a responsibility to step in when a management crisis threatens the company. A board member may be in a unique position to solve problems. 3. Outside Consultant Consultants often have an advantage because they can look at a situation objectively. But they may also be at a disadvantage since they have no power to enforce changes.  Discussion Question 5: Why would participants in a case analysis interpret the facts or see the situation differently? For example, how might an outside consultant see the problem in a case differently than a CEO or owner? What would make a board member have a different perspective than a top executive? (One reason might be the existence of an agency problem — Chapter 4) Answer: Different participants interpret cases based on their roles and perspectives; an outside consultant might focus on market trends, while a CEO might emphasize operational challenges. Agency problems, such as conflicting interests, can also lead to differing views. STRATEGY SPOTLIGHT 13.2 draws a parallel between the task of preparing a business plan and the steps involved in conducting a case analysis. A. Become Familiar with the Material Written cases often include a lot of material. The following technique can enhance comprehension: 1. Read through the case once quickly to get an overall sense of the material. 2. Use the initial read-through to assess possible links to strategic concepts. 3. Read through the case again, in depth. Make written notes as you read. 4. Evaluate how strategic concepts might inform key decisions or suggest alternative solutions. 5. After formulating an initial recommendation, thumb through the case again to assess the consequences of the actions you propose. B. Identify Problems One of the main reasons to conduct case analysis is to find solutions. Unless you know the problem, however, it is meaningless to attempt to find an answer. Some cases have more than one problem. Even so, emphasize that the problems are usually related. When trying to determine the problem, it is easy to get hung up on symptoms. Emphasize the importance of seeing beyond the immediate symptoms to the more fundamental problems. Another tip when preparing a case analysis is to articulate the problem. Point out that writing down a problem statement provides a reference point to turn to as the case analysis proceeds. Sometimes, problems are not apparent until after the case has been analyzed.  Discussion Question 6: How can writing down the problem(s) in a case help with the analysis? Explain. Answer: Writing down the problems helps clarify and prioritize issues, ensuring a structured approach to analysis. It also aids in tracking progress and maintaining focus throughout the problem-solving process. Discussion Question 7: Why is it that a company’s problems would emerge only after the case analysis? Aren’t they immediately apparent? Answer: Problems may emerge after case analysis due to the initial focus on surface-level issues. In-depth analysis often uncovers underlying issues not immediately apparent, revealing complexities as more data and perspectives are considered. C. Conduct Strategic Analyses This textbook has presented numerous analytical tools (such as five forces analysis and value chain analysis), contingency frameworks (such as when to use related rather than unrelated diversification strategies), and other techniques that can be used to evaluate strategic situations. Emphasize that the best way to understand these methods is to apply them by conducting case analyses. The first step is to determine which strategic issues are involved. Remind students that most real-life case situations involve issues that are highly interrelated. Even in cases where there is just one major problem, the strategic processes required to solve it may involve several parts of the organization. Once the issues that apply to the case have been identified, conduct the analysis. That means to actually apply the tools of analysis (such as five forces analysis, value chain analysis, etc.). In this part of the analysis, point out that it is important to test one’s assumptions about the case. First, what assumptions are being made about the case content? Second, what assumptions are being made about the best way to resolve the problems?  Discussion Question 8: Why is it important to understand the assumptions that are being used to make decisions and take action? Answer: Understanding assumptions is crucial because they underpin decisions and strategies. Challenging assumptions can uncover biases and lead to more robust, evidence-based decisions. The SUPPLEMENT below presents Peter F. Drucker’s views about the critical importance of making valid and informed assumptions in resolving the strategic issues that many businesses face.  Extra Example: How Assumptions Drive the Theory — and Success — of a Business Peter F. Drucker is a highly notable management expert whose books and articles on management have had an enormous impact on modern management practices. In this article, Drucker describes how important it is for businesses to understand the assumptions that underlie the actions they take. “The root cause of nearly every [management crisis] is not that things are being done poorly. It is not even that the wrong things are being done. Indeed, in most cases, the right things are being done — but fruitlessly. What accounts for this apparent paradox? The assumptions on which the organization has been built and is being run no longer fit reality. These are the assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company’s theory of the business.” “It usually takes years of hard work, thinking and experimenting to reach a clear, consistent, and valid theory of the business. Yet to be successful, every organization must work one out. What are the specifications of a valid theory of the business? There are four: 1. The assumptions about environment, mission, and core competencies must fit reality. 2. The assumption in all three areas [in #1] have to fit one another. 3. The theory of the business must be known and understood throughout the organization. 4. The theory of the business has to be tested constantly.” Source: Drucker, P. F. 1994. The theory of the business. Harvard Business Review, 72(5): 95-104.  Discussion Question 9: What are some examples of assumptions that businesses make? Pick a company and research their assumptions about customers, competitors, suppliers, buyers, and so forth. Answer: Companies often assume stable customer preferences, predictable competitor behavior, and reliable supplier performance. For example, Amazon assumes continued growth in online shopping and logistical efficiency. Discussion Question 10: What might be the consequences if you interpreted the content of a case differently — or made different assumptions — than your team members or classmates? How might similar consequences affect a business decision if you were an executive in the business you are analyzing? Answer: Diverging interpretations or assumptions can lead to conflicting strategies or decisions. In business, differing perspectives might result in suboptimal strategies if not reconciled, impacting the effectiveness of decisions and outcomes. EXHIBIT 13.1 presents a summary of the financial ratio analysis techniques that are presented in APPENDIX 1 to Chapter 13. By the end of this stage in the process, the problem(s) should be identified and a thorough analysis should have been conducted. D. Propose Alternative Solutions Emphasize that in strategic management case analysis there is rarely one right answer or one best way. Therefore, it is helpful to consider several different solutions. After conducting strategic analysis and identifying the problem(s), develop a list of options. What are the possible solutions? What are the alternatives? Point out that it is during this step of a case analysis that choices and the implications of those choices are evaluated. The aim of considering the implications of various alternative solutions is to find a solution that both solves the problem and is realistic.  Discussion Question 11: What is the point of developing alternative solutions? Discuss. Answer: Developing alternative solutions allows for a range of options to be evaluated, ensuring that the most effective strategy is chosen. It also helps mitigate risks by preparing for different potential scenarios. Discussion Question 12: Is it possible to have more than one solution that is realistic and viable? Why or why not? Answer: Yes, multiple realistic and viable solutions can exist as different approaches may achieve similar goals through varied methods. This flexibility allows organizations to adapt to changing conditions and preferences. E. Make Recommendations The basic aim of case analysis is to find solutions. Emphasize that the analysis is not complete until a course of action has been recommended. The task is to make a set of recommendations that is consistent with the analysis and explain why the recommended course of action will solve the problem. The recommendation should also include suggestions for how best to implement the proposed solutions. Remind students that the proposed solution must solve the problem that was identified. This point cannot be overemphasized — too often students make recommendations that only treat symptoms or fail to tackle the central problems in the case. Encourage students to make a logical argument that shows how the problem led to the analysis and the analysis led to the recommendations.  Discussion Question 13: What is meant by the phrase “an analysis is not an end in itself?” Why is it important to follow an analysis with a set of recommendations? Answer: “An analysis is not an end in itself” means that analysis should lead to actionable recommendations. It’s important to move from understanding problems to implementing solutions that address the identified issues. Discussion Question 14: Research examples of action plans that companies have developed in order to implement a new strategy or undertake a company renewal. Answer: Examples of action plans include Starbucks’ expansion strategy to enter new markets or Microsoft’s cloud-first strategy. These plans outline specific steps, resources, and timelines for achieving strategic goals and improving performance. EXHIBIT 13.2 provides some guidelines for preparing an oral case presentation. III. How to Get the Most from Case Analysis Strategic management is a highly integrative task that draws on many areas of specialization at several levels, from the individual to the whole society. Thus, case analysis is enriching as a learning tool because it taps into many resources and skills besides what’s in the textbook. Encourage students to go beyond the concepts in this text and seek insights from their personal reservoirs of knowledge when conducting case analysis. In this section we present ten guidelines for how to get the most from case analysis: 1. Keep an open mind. 2. Take a stand for what you believe. 3. Draw on your personal experience. 4. Participate and persuade. 5. Be concise and to the point. 7. Think out of the box. 7. Learn from the insights of others. 8. Apply insights from other case analyses. 9. Critically analyze your own performance. 10. Conduct outside research. (NOTE: We caution students to check with the instructor first to be sure outside research is encouraged since it may conflict with the learning objectives). APPENDIX 2 to Chapter 13 provides an overview of important and widely available sources of company and industry information. This has been extensively updated for the Seventh Edition. EXHIBIT 13.3 provides several suggestions for how to apply these guidelines, and other techniques suggested in this chapter, to the preparation of a written case analysis. Teaching Tip: It is often difficult for students to appreciate a “how-to” chapter such as the one on Analyzing Strategic Management Cases until they have actually done it — that is, actually analyzed a case. However, the section in Chapter 13 on How to Get the Most From Case Analysis can be used to draw out students about the importance of discussion and debate in general. Using the ten guidelines as a framework, engage the students in a discussion of “why?” That is, ask students to explain why the need to keep an open mind (#1), why they need to take a stand for what they believe (#2), why they need to draw on personal experience (#3), and so forth. This can be done in student dyads, student teams, or as a discussion by the whole class. The SUPPLEMENT below addresses several of the reasons why conducting strategic case analysis is important. Case analysis requires decision making and the choices that are made reveal a great deal about one’s outlook and attitudes. Likewise, the outcome of most business situations eventually comes down to how businesses and business leaders make choices.  Extra Example: Making Tough Choices – Jim Collins on Decision Making Jim Collins, author of the best-selling business book Good to Great, believes that good decisions often begin by saying, “I don’t know.” That is, executives who approach situations by asking good questions, doing some research, and getting multiple opinions typically make better decisions. He learned this from studying leaders when writing Good to Great. “They were just marvelous at igniting dialogue and debate,” says Collins. For example, “When Colman Mockler at Gillette is trying to decide whether to go with cheaper, disposable plastic razors or more expensive ones, he asks marvelous questions. He’s Socratic. He pushes people to defend their points of view.” In other words, analysis and debate are critical aspects of business decision-making. Once the debate is finished a decision must be made. And it’s rarely, if ever unanimous. “No major decision we’ve studied was ever taken at a point of unanimous agreement,” says Collins. “There was always some disagreement in the air.” Behind those executive decisions is another factor that also makes a huge difference in how decisions are made. It has to do with the decision-makers outlook on life. Some refer to it as “locus of control.” When asked about the role of “psychology” in business decision making, Collins mused: “Do you believe that our ultimate outcomes in life are externally determined – for example, ‘I came from a certain family, I got the right job’? Or do you believe that how your life turns out is ultimately up to you, that despite all the things that happen, you are ultimately responsible for your outcomes?” “Consider the airline industry, and think of all the events and factors outside managerial control that have hit it since 1972: fuel shocks, interest rate spikes, deregulation, wars, 9/11. And yet the No. 1 performing company of all publicly traded companies in terms of return to investors for a 30-year period from 1972 to 2002 is an airline. According to Money magazine’s retrospective look in 2002, Southwest Airlines beat Intel, Wal-Mart, GE – all of them! Now what would have happened if the folks at Southwest had said, ‘Hey, we can’t do anything great because of our environment’? You could say, ‘Yeah, the airline industry is terrible. Everyone in it is statistically destined to lose money.’ But at Southwest, they say, ‘We are responsible for our own outcomes.’” Source: Useem, J. 2005. Jim Collins on Tough Calls. Fortune, October: 89-94. IV. Useful Decision-Making Techniques in Case Analysis A. Integrative Thinking We introduce the concept of “integrative thinking” that was developed by Roger Martin in his recent book, The Opposable Mind. Rather than make choices between competing ideas from a limited set of alternatives, the objective is to identify more creative solutions. EXHIBIT 13.4 illustrates the four stages of integrating thinking and deciding processes. STRATEGY SPOTLIGHT 13.3 provides the example of integrating thinking by the founder of Red Hat, Bob Young. Teaching Tip: We have found that it can be very illuminating for students to apply integrative thinking to a decision that they have encountered in the past—or are presently faced with. Assign them to groups of four or five and ask them to come up with a decision situation—and then ask them how using integrative thinking may have helped. One example that students occasionally come up with is deciding what job offer to take. Such a decision context serves to illustrate the importance of all of the four steps in the decision process. For example, what are the key elements of “salience”? (e.g., challenge, growth opportunities, compensation, location, etc.) And, regarding “causality”, what might be some nonlinear relationships? (e.g., although compensation may be important, after a certain level the utility may “level off”; some travel may be exciting and enjoyable, but too much time on the “road” may be burdensome, etc.). B. Conflict Inducing Techniques Although the word “conflict” often has a negative connotation, it can be very helpful in arriving at better solutions to cases. It can provide an effective means for new insights as well as rigorously questioning and analyzing assumptions and strategic alternatives. In fact, if you don’t have constructive conflict, you may only get consensus. When this happens, decisions tend to be based on compromise rather than collaboration. STRATEGY SPOTLIGHT 13.4 provides guidelines for making team-based approaches to case analysis more effective. In this section, we look at the phenomenon known as “groupthink” and suggest ways of preventing groupthink. Then, we will suggest some conflict-inducing decision-making techniques — devil’s advocacy and dialectical inquiry — that can help to prevent groupthink and lead to better decisions. 1. Symptoms of Group Think and How to Prevent It Irving Janis identified several symptoms of groupthink. These include: 1. An illusion of vulnerability. 2. A belief in the inherent morality of the group. 3. Stereotyped views of members of opposing groups. 4. The application of pressure to members who express doubts about the group’s shared illusions or who question the validity of arguments proposed. 5. The practice of self-censorship. 6. An illusion of unanimity. 7. The appointment of mindguards. Janis also provided several suggestions for preventing groupthink: 1. Leaders must encourage group members to address their concerns and objectives. 2. When higher-level managers assign a problem for a group to solve, they should adopt an impartial stance — not mention their preferences. 3. Before a group reaches it final decision, the leader should encourage members to discuss their deliberations with trusted associates and then report the perspectives back to the group. 4. The group should invite outside experts and encourage them to challenge the group’s viewpoints and positions. 5. The group should divide into subgroups and various times, under different chairpersons, and then get together to resolve differences. 6. After reaching a preliminary agreement, the group should hold a “second chance” meeting, which provides members a forum to express any remaining concerns and rethink the issue prior to making a final decision. 2. Using Conflict to Improve Decision-Making Two conflict-inducing decision-making approaches that have become quite popular include devil’s advocate and dialectical inquiry. With the devil’s advocate approach, the devil’s advocate tries to come up with problems with a proposed alternative and suggest reasons as to why it should not be adopted. The role of the devil’s advocate is to create dissonance and bring out criticisms that might otherwise not be made. Dialectical inquiry attempts to accomplish the goals of the devil’s advocate in a more constructive manner. Here, a problem is approached from two alternate points of view. The goal is that by critiquing opposing perspectives — a thesis-antithesis approach — a creative synthesis will occur. Dialectical inquiry involves the following steps: 1. A proposal and the information that was used to derive it are identified. 2. The underlying assumptions of the proposal are stated. 3. A counter plan (antithesis) is identified that is believed to be feasible, politically viable, and generally credible. However, it rests on assumptions that are opposite to the original proposal. 4. A debate ensues in which individuals favoring each plan provide their arguments and support. 5. A “synthesis” emerges, which, hopefully, includes the best components of each alternative. EXHIBIT 13.5 provides a graphical representation of the devil’s advocate and dialectical inquiry decision-making techniques. The SUPPLEMENT below presents four different methods of conducting a class discussion that can be used to enhance learning in the case analysis process.  Extra Example: Approaches to Structuring Class Discussion (Excerpt) 1. Discussion Question Format: When the class begins, the instructor may call the names of the two students who have been chosen to open the class (the student’s chosen normally do not know the instructor’s choice ahead of time). Each is asked a separate question drawn from the prepared assignment. By having initial questions limited to those assigned, students learn that homework preparation pays off. The quality of the opening is of primary importance, because a good initial contribution made by well-prepared students can substantially improve the depth of the class session. The instructor can help ensure a successful opening by carefully choosing the two students who begin each class, reviewing the class cards and seating chart to identify the most appropriate choice. 2. The Vote Format: Some cases lead to clear cut “yes” or “no” decisions. A few may lead to three or four mutually exclusive or clear-cut decisions. In such situations, the instructor can heighten the students’ commitment to a decision by having them vote. During the vote, the instructor should note those taking an “unpopular” view or who are on the minority side as well as those who are abstaining. The instructor usually draws a laugh upon asking, “Who are the diplomats? Who did not vote?” The two opening contributors can then be chosen on the spot, usually a student representing the minority viewpoint as the first opener and the second contributor from the majority. The tone of the discussion is then set and contributors are encouraged to argue persuasively in order to influence peers to change their positions on the issue. Some students will change their minds, and their explanations of the change often prove to be a tremendous learning experience. Before class is concluded, the teacher should take another vote to determine whether the class is shifting its position. 3. Role Playing Format: Prior to class or spontaneously, class members can be assigned different managerial roles and asked to discuss a case from the viewpoint of their assigned roles. Such an approach is likely to bring out the interpersonal aspects of the situation more effectively than other formats. While role playing is often exciting, it may be inefficient because it is extremely time-consuming. For this approach to be effective, the instructor should summarize or ask students to summarize the key insights and concepts derived from such a class discussion. 4. Audio-Visual Format: Another format that is especially useful toward the end of the course is to have small study groups tape their case analyses. The tapes can be evaluated either by the group that made the tape or by the entire class. Such presentations provide students an opportunity to work in groups, supplement the preparation they must do for the comprehensive written analysis of cases, and improve their presentation skills. In the absence of audio-visual taping equipment, the same objectives can be achieved by having students make flip charts or slide presentations for class review. Source: Charan, R. 1976. Classroom techniques in teaching by the case method. Academy of Management Review, 1: 116-123. V. Following the Analysis-Decision-Action Cycle in Case Analysis In Chapter 1, we defined strategic management as the analyses, decisions, and actions that organizations undertake in order to create and sustain competitive advantages. Emphasize that the analysis – decision – action sequence of words was chosen because it corresponds to the sequence of events that typically occurs in the strategic management process. Each of the thirteen chapters of this book includes techniques and/or information that may be useful in a case analysis. However, not all of the issues presented will be important in every case. Remind students that one of the challenges of case analysis is to identify the most critical points and sort through material that may be ambiguous or unimportant. In this section, we draw on the material presented in each of the thirteen chapters of the text to show how it informs the case analysis process. 1. Analyzing organizational goals and objectives. A company’s vision, mission, and objectives keep organization members focused on a common purpose. They also influence how an organization deploys it resources, relates to its stakeholders, and matches its short-term objectives with its long-term goals. The goals may even impact how a company formulates and implements strategies. 2. Analyzing the external environment. The business environment has two components. The general environment consists of demographic, sociocultural, political/legal, technological, economic, and global conditions. The competitive environment includes rivals, suppliers, customers and other factors that may directly affect a company’s success. Strategic managers must monitor the environment to identify opportunities and threats that may impact on performance. 3. Analyzing the internal environment. A firm’s internal environment consists of its resources and other value-adding capabilities. Value chain analysis and a resource-based approach to analysis can be used to identify a company’s strengths and weaknesses and determine how they are contributing to its competitive advantage. Evaluating firm performance can also help make meaningful comparisons with competitors. 4. Assessing a firm’s intellectual assets. Human capital is a major resource in today’s knowledge economy. As a result, attracting, developing, and retaining talented workers is a key strategic challenge. Other assets such as patents and trademarks are also critical. How companies leverage their intellectual assets via social networks and strategic alliances, and how technology is used to manage knowledge may be a major influence on a firm’s competitive advantage. 5. Formulating business level strategies. Firms use the competitive strategies of differentiation, focus, and overall cost leadership as a basis for overcoming the five competitive forces and developing sustainable competitive advantages. Combinations of these strategies may work best in some competitive environments. Additionally, an industry’s life cycle is an important contingency that may affect a company’s choice of business level strategies. 6. Formulating corporate level strategies. Large firms often own and manage portfolios of businesses. Corporate strategies address methods for achieving synergies among these businesses. Related and unrelated diversification techniques are alternative approaches to deciding which business should be added to or removed from a portfolio. Companies can diversify via mergers, acquisitions, joint ventures, strategic alliances, and internal development. 7. Formulating international level strategies. Foreign markets provide both opportunities and potential dangers for companies that want to expand globally. To decide which entry strategy is most appropriate, companies have to evaluate the tradeoffs between two factors that firms face when entering foreign markets – cost reduction and local adaptation. To achieve competitive advantages, firms will typically choose one of three strategies: global, multidomestic, or transnational. 8. Entrepreneurial strategy and competitive dynamics. New ventures add jobs and create new wealth. To do so, they must identify opportunities that will be viable in the marketplace as well as gather resources and assemble an entrepreneurial team to enact the opportunity. Entrepreneurial strategies are needed to successfully enter new markets. However, new entrants often evoke a strong competitive response from incumbent firms in a given marketplace which requires them to alter their initial strategies. 9. Strategic control and corporate governance. Strategic controls enable a firm to implement strategies effectively. Informational controls involve comparing performance to stated goals and scanning, monitoring, and being responsive to the environment. Behavioral controls emerge from a company’s culture, reward systems, and organizational boundaries. 10. Creating effective organization designs. Organizational designs that align with competitive strategies can enhance performance. As companies grow and change, their structures must also evolve to meet new demands. In today’s economy, firm boundaries must be flexible and permeable to facilitate smoother interactions with external parties such as customers, suppliers, and alliance partners. New forms of organizing are becoming more common. 11. Creating a learning organization and an ethical organization. Strong leadership is essential for achieving competitive advantages. Two leadership roles are especially important. The first is creating a learning organization by harnessing talent and encouraging the development of new knowledge. Second, leaders play a vital role in motivating employees to excellence and inspiring ethical behavior. 12. Fostering corporate entrepreneurship. Many firms continually seek new growth opportunities and avenues for strategic renewal. In some corporations, autonomous work units such as business incubators and new venture groups are used to focus corporate venturing activities. In other corporate settings, product champions and other firm members provide companies with the impetus to expand into new areas. Real options analysis may be used to make better quality decisions in entrepreneurial contexts.  VI. Summary Strategic management case analysis provides an effective method of learning how companies analyze problems, make decisions, and resolve challenges. Strategic cases include detailed accounts of actual business situations. The purpose of analyzing such cases is to gain exposure to a wide variety of organizational and managerial situations. By putting yourself in the place of a strategic decision-maker, you can gain an appreciation for the difficulty and complexity of many strategic situations. In the process, you can learn how to ask good strategic questions and enhance your analytical skills. Presenting case analyses can also help develop oral and written communication skills. In this chapter, we have discussed the importance of strategic case analysis and described the five steps involved in conducting a case analysis — becoming familiar with the material, identifying problems, analyzing strategic issues, proposing alternative solutions, and making recommendations. We have also discussed how to get the most from case analysis. Finally, we have described how the case analysis process follows the analysis – decision – action cycle of strategic management and outlined issues and questions that are associated with each of the previous twelve chapters of the text. Solution Manual for Strategic Management: Creating Competitive Advantages Gregory G. Dess, Alan Eisner, G.T. (Tom) Lumpkin, Gerry McNamara 9780077636081, 9781259245558