Case Analysis Methodology

PASCUAL B. SAN JOSE, JR., CPA, MBA, DBA (Cand.)

CASE STUDY ANALYSIS

Rational Thinking Approach to Case Study Analysis

Means making full use of a person’s thinking ability in analyzing a problem and arriving at a rational decision statement.

Premises of Rational Thinking

• Four Basic Patterns of Thinking:• Are reflected in these four basic questions:• • 1. WHAT’S GOING ON?-Situation Appraisal• 2. WHY DID THIS HAPPEN?-Problem Analysis

3. WHICH COURSE OF ACTION SHOULD WE • TAKE? –Decision Analysis• 4. WHAT LIES AHEAD? –Potential Problem • Analysis•

Basic Patterns of Thinking….

1. WHAT’S GOING ON? Demands Assessing and Clarifying.

Separating a complex situation into its component.

Assessing, clarifying, sorting out and imposing order on a confusing situation.

Why Did This Happen?

• Indicates the need for “cause and effect” thinking.

• Enables observation of the effect of the problem and understanding its cause so that we can take appropriate action to correct the problem or lessen its adverse effects.

Which Course of Action Should We Take?

• Implies that some choice of decisions must be made.

• Enables a person to decide on the course of action most likely to solve the problem.

What Lies Ahead?

• Looks into the future.

• Assessing the probable or potential problem that might happen in the future and the possible consequences.

Case Study Analysis Outline• 1. Viewpoint• 2. Time Context• 3. Problem Statement• 4. Statement of the Objective• 5. Areas of Consideration • (SWOT Analysis)• 6. Assumptions• 7. Alternative Courses of Actions (ACAs)• 8. Analysis of ACA• 9. Conclusion• a. Decision Matrix• b. Selection of Best ACA• 10. Plan of Action• 11. Implementation and Control

Case Analysis Outline…

• VIEWPOINT

• Refers to the person who is the decision maker or who can effectively recommends the solution to the case or problem under study. It can also refer to a consultant hired to recommend a solution to the problem.

Case Analysis Outline…

• TIME CONTEXT

• Delineates the take-off point of the analysis.

Problem Statement

• Refers to the concise statement of the existing problem.

• Should be objective and written in clear and simple terms.

• We define the problem by a “Deviation Statement”.

Structure of a Problem

Desired State Should

Should Change Deviation Present (Actual)

Structure of a Problem

• Deviation Statement• The deviation statement is the precise

description of the “change” from the “should” to “actual” situation.

• “ A problem well-defined is a problem half-solved.”

• Develop a problem statement that actually and clearly describes the current situation you want to change.

Problem Statement

• Consider the following questions:

• 1. Is the problem stated objectively?

• 2. Is the problem limited in scope?

• 3. Does everyone involved have a common understanding of the problem?

Problem Statement…

• When developing problem statement:• 1. Avoid including any “implied cause” in

the problem statement.• 2. Avoid including any “implied solution” in

the problem statement.• Example of Problem Statement:• “The customer satisfaction index has

declined from 89% to 81% in the last 12 months.”

Statement of the Objective

• Refers to the “desired state” or where you want to be or what you want to achieve after the problem has been resolved.

• Should satisfy the criteria of SMART:• S-pecific• M-easurable• A-ttainable• R-ealistic• T-Time-bound

Statement of the Objective

• Example of Statement of the Objective:• “The customer satisfaction Index should be

at least 89% by the end of 2006”

• It should be able to pass the “so what” test. Meaning is the problem worth solving and why?

• “The problem is important to solve because the decline in the customer index will eventually lead to a loss in sales and market share”.

Areas of Consideration(SWOT ANALYSIS)

• Refer to internal and external factors or environment mentioned in the case study and that can positively or negatively affect the resolution of the problem or case under study.

• Factors for consideration is the SWOT criteria:• Internal Factors:• -Strength• -Weaknesses• External Factors:• -Opportunities• -Threats• From the SWOT analysis, you can identify factors that

are the most likely root causes of the problem.

SWOT-STRENGTHS• Potential resource strengths and competitive opportunities (present

& future):• - A powerful strategy supported by good skill and expertise in key

areas.• - Ability to keep talent.• -Proven skills in key areas.• -A strong financial condition; ample financial resources.• -Strong brand name/image/company reputation.• -Efficient operations/economies of scale.• -Proprietary technology/superior technological skills/ important

patent cost advantage.• -Strong advertising and promotions.• -Product innovation skills and high product quality.

SWOT-WEAKNESSES• Potential resource weaknesses and competitive deficiencies

(present & future):• -No clear strategies.• -Inability to keep talent.• -Missing some skills or competencies/lack of management depth.• -A weak balance sheet: burden with heavy debts.• -Weak brand image/reputation.• -Plagued with internal operating problems.• -Falling behind in R & D.• -Higher overall unit cost relative to key competitors.• -Sub-par marketing skills relative to rivals.• -Behind in product innovation and quality.

SWOT-OPPORTUNITIES

• Potential Present and Future Opportunities:• -New customer groups or expanding into new

geographic markets or product segments.• -Expanding product line to meet broader range of

customers’ needs.• -Falling trade barriers in attractive foreign markets.• -Openings to take market share from rival firms.• -Alliances or joint ventures to expand market coverage

and competitive capability.• -Acquisition of rival firms, customers, or suppliers.• -Openings to explore emerging new technologies.

SWOT-THREATS• Potential external threats (Present & Future):• -Likely entry of potent competitors through existing or new channels

of distribution.• -A shift in buyers’ needs and tastes away from the industry’s

products.• -Adverse demographic changes narrowing demands for products.• -Loss of sales to substitute products or new channels of distribution.• -Adverse shifts in foreign exchange rates and trade policies of

foreign governments.• -Slowdowns in market growth.• -Growing bargaining power of customers or suppliers.• -Takeover by another firm.• -Unanticipated changes in the value of core technology.• -Vulnerability to recession and business cycle.

ASSUMPTIONS (Optional)

• Refers to factors that are not specifically mentioned in the case study but need to be stated to either limit or enhance the scope of the analysis.

ALTERNATIVE COURSES OF ACTIONS (ACAs)

• Refer to possible solutions to the defined problem.

• Each ACA must be able to solve the problem and attain the objective.

• Must be able to come up with at least two or three ACAs from which to choose the best solution/ACA.

ANALYSIS OF THE ACAs

• Refers to the analysis of each ACA considering the factors stated in the areas of consideration (SWOT) and assumptions.

• State the PROs and CONs of each ACA.

CONCLUSION/SELECTION OF THE BEST ACA

• DECISION MATRIX• Preparing a decision matrix will ensure that you

reach the best solution/ACA for the problem.• -Determine decision criteria that are

appropriate for selecting the best ACA.• -Define clearly the decision criteria.• -Assign weights to the criteria to show how

important they are relative to each other. (This can be done by assigning a number or percentage to each criterion so that all the criteria shall total to 100%).

Decision Matrix• Example of Decision Matrix:• Decision Criteria Defined As Weight• 1. Ease of Imple- How easy would • mentation. It be to implement• the solution/ACA 30%• 2 Probability of How likely is it that• Success. the ACA could be • successfully imple-• mented. 50%• 3. Relative How much resistance• Resistance might there be to imple-• menting the ACA. 20%• Total Weights 100%

Decision Matrix

• Decision Criteria ACA 1 ACA 2 ACA 3

• 1. Ease of Imple-• mentation- 30% 15% 10% 5%• 2. Probability • of Success- 50% 25% 15% 10%• 3. Relative • Resistance- 20% 10% 5% 5%• Total 100% 50%** 30% 20%• The best ACA is ACA # 1

ACTION PLAN

Refers to the detailed plans to efficiently and effectively implement the selected ACA. The action plan shall indicate the:

1. WHAT activities to undertake? 2. WHO (persons/groups) will perform the

specific activities? 3. WHEN (time frame) will be the start and

completion of the activities? 4. HOW MUCH (cost/budget) is alloted to

implement the activities of the action plan.

Action Plan

Task/ Responsible Begin EndActivities Person/Unit Date Date Costs1.Design HRD Training Dept. 7/1/06 8/31/06 P50,000 ProgramNote: Tied with your action plan is the contingency plan,

just in case some of your action plan activities get stalled, sidetracked, or had to be changed midstream, because of something that came up along the way. Even the best of plans could go wrong, so you should be ready what to do.

Implementation & Control

• Refers to the actual implementation and monitoring of the action plan to ensure:

• 1. That the action plan is implemented as • planned.• 2. That the best ACA is achieved.• 3. That the stated problem is solved.• 4. That the defined objective is attained.• 5. That the corrective measures are • made (if necessary)

• • THE END

• THANK YOU AND GOOD DAY

• PROF. P. B. SAN JOSE, JR.• CPA, MBA, DBA (Cand.)