Task:
The case analysis framework presented here is a synthesis of the frameworks used by your professor and other marketing professors who use case analysis in their courses. It will provide a solid structure to organize the diverse information presented in a case.
As you work your way through this framework, or a similar approach to case analysis, we offer the following hints to increase your probability of success:
1.No one can analyze a case after reading it only one time, or even worse, doing the analysis during the first reading of the case. You should read through the case once just to get an understanding of the nature of the case. During the second reading, you can begin to structure and classify the issues as they appear. A truly comprehensive case analysis will probably require at least three readings.
2.Donât get trapped into thinking the âanswerâ to the case is hidden somewhere in the case text. There is never a single answer to a case just as there is never a single marketing strategy that is appropriate for all situations. Each case is unique. Looking for tricks or shortcuts is not appropriate.
3.Make an effort to put yourself in the shoes of the decision maker in the case. The use of role-playing as part of the analysis can be very useful. It helps you gain some feeling for the perspective of the key parties at the time the case took place. After you have done several analyses, you will likely come up with your own additional procedures or guidelines that assist you with this process.
Step 1: Situation Analysis
The material presented in a case is much like the communications we have in our daily lives. Usually our conversations involve the selection of a topic and then the discussion of that topic, and so it is with cases. The problem is that we end up with bits and pieces of information that by themselves are not very useful, but once organized, can be quite valuable in our assessment of the situation. The first step in the framework helps you organize the pieces of information into more useful topic blocks.
The process of assessing a situation is widely accomplished through the use of SWOT Analysis (strengths, weaknesses, opportunities and threats). Looking at an organizationâs strengths and weaknesses is the first half of Step 1. This involves looking at the organizationâs internal environment. Strengths are those aspects of the internal environment that can help the firm address a present problem, issue, or opportunity, while weaknesses are negative factors or deficiencies that do not allow the firm to reach its full potential. One topic that should be addressed is the content and appropriateness of the current marketing or sales plan. Is the plan current? Do the key parties understand and utilize it? Was it developed with input from all levels of the organization? The organizationâs financial condition may also present strengths and weaknesses. Is it in a solid position, and does it have, or can it acquire, needed funds at a reasonable cost of capital? Other possible strengths and weaknesses might include managerial expertise, human resources, product reputation and customer loyalty, patents and trademarks, age and capacity of production facilities, channel relationships, and promotional programs (sales force, advertising program, publicity, and sales promotion efforts). These are all issues that we want to consider in terms of both the present state of the firm and identifiable trends.
Students assessing a case situation see the importance of considering the organizationâs internal environment fairly naturally. The aspect of SWOT analysis that gives students the most difficulty is the external environment where all opportunities and threats reside. These are issues that exist outside the boundaries of the firm. All opportunities and threats will exist at their present levels even if the organization in question does not exist. Technology, competition, the macroeconomic environment, regulation, and social and cultural trends are all issues that affect the success of an organizationâs strategies, but the organization has only limited influence on them.
Because the power to affect the external environment significantly is usually absent, management must view the factors and forces present in the external environment as issues to be considered, but not usually controlled. Managers should take steps to minimize the exposure to threats and to take full advantage of the opportunities. You might think of opportunities and threats as currents in a river. It is much easier to find a river whose currents will help take you where you are going than to try to make headway going against the force of the river.
You may get hung up on several points when conducting a SWOT analysis. First, while a factor will usually fall into only one of the four categories, this is not always the case. A factor can be both a strength and a weakness, or an opportunity and a threat. For example, excess capacity in a factory would be a weakness from a production efficiency standpoint. But, it could be a strength if the firm is looking to introduce a new product because it will not have to build a new factory.
The second and more serious issue is the difficulty in identifying opportunities. There is a tendency to confuse opportunities with possibilities. Something the company might do, such as franchise its operations in an effort to expand, is not an opportunity. The mention of the organizationâs name in the opportunity is a clear indication that it is not an issue from the external environment. Both threats and opportunities would be present even if the organization did not exist.
Finally, you are accustomed to the material in a textbook containing accurate information that should be believed and remembered. However, in some cases, you will find statements of opinion that are often biased by a personâs motives and position in a firm. The organizationâs CEO who has just recently given approval to the firmâs strategic plan might say, âThis is an excellent mission statement that will effectively direct our firmâs efforts for the next decade.â Is this really true? It might be, but it will be up to you to determine what is fact as opposed to someoneâs opinion. Opinions will need to be assessed in your case analysis to determine their accuracy.
Step 2: Assumptions and Missing Information
As with life, it is neither possible nor realistic for cases to contain all the information a decision maker might wish to have available. Usually a decision maker has only bits and pieces of information. He or she must either fill in the gaps, or make the decision that the information is not critical, fairly predictable, or simply too costly and time-consuming to justify collecting for the decision at hand. A marketing manager might want to know the history of competitive reactions to price cuts by his firm. This information may be present in company files. It also might be available from trade sources or other noncompetitive channel members.
In step two you will list important information not contained in the case, why that information might be useful, and how you might go about acquiring it. This is more than just a wish list. The items included here should considered thoroughly. The list should contain pieces of information that would help shore up or fill gaps in your SWOT analysis.
Some of the information that is not available can be addressed through assumptions. One might assume that if information about the firmâs advertising budget is not available, it would be equal to industry averages. The same assumptions might be made for other costs and revenues. It is critical that these assumptions be realistic and clearly identified before and during the case analysis. This list should contain only those items that will be truly useful in enhancing the quality of the decisions made. It should not be a list of things that would be interesting to know. The quality of your analysis will depend on your coverage of the framework, the depth of your analysis, and the degree to which you can defend your recommendations.
Step 3: Problem Definition
The identification and clear presentation of the problem(s) or issue(s) facing the company is the most critical part of the analysis framework. Only a problem properly defined can be addressed. Define the problem too narrowly, or miss the key problem all together, and all subsequent framework steps will be off the mark. Getting a clear picture of the problem is one major benefit derived from SWOT analysis.
The process of identifying problems is similar to the one people go through with their doctors. A nurse or assistant comes in to conduct a strength and weakness assessment on you. Your vital signs are taken and you are asked about any symptoms you may be experiencing. Symptoms are observable manifestations or indications that a problem may be present. Symptoms are not the problem themselves. If you have a temperature of 103 degrees, that is a symptom. If the medical staff were to pack you in ice for several minutes, that reading would probably approach 98.6 degrees. Would that make you well? It might make your condition worse! The doctor uses the information collected from you, with knowledge of the viruses and diseases that are present in the external environment, to identify what has led to your high fever. The doctor will attempt to diagnose the real problem, then prescribe treatment from a set of feasible alternatives (make recommendations about what steps will help solve the problem) and provide you with a prognosis (an indication of the things you can expect to occur as you are recovering).
The case analysis process is similar to the doctorâs analysis and treatment of a patient in several basic ways. First, symptoms are the most observable indication that a problem exists. Many students are very quick to start treating the symptoms found in a case, as opposed to digging deeper to find the underlying problem(s). A symptom may be that sales are down from previous periods. If this is how you define the problem, your answer might be to cut the price. This might be an appropriate step, but not based on the analysis to this point. Sales might pick up, but will this reaction make the company healthier? This is a clear case of prescription without adequate diagnosis.
The most important question in the identification of any problem is âWhy?â The Why question should always be asked after a potential problem has been proposed. To illustrate, pinpointing the problem associated with the sales decline in our previous example might progress like this:
The problem is that sales have declined.
Why have sales declined?
Sales have declined because there are too many sales territories that are not assigned to a salesperson.
Why are so many sales territories unassigned?
Sales territories are unassigned because sales force turnover has doubled in the past year.
Why has sales force turnover doubled?
Turnover began to increase over a year ago when the sales force compensation plan was altered in order to reduced variable expenses.
When you can no longer devise a meaningful response to the Why? question, you have probably found the problem. In this instance, the problem statement might read:
The current sales force compensation plan at XYZ Company is inadequate to retain an acceptable percentage of the firmâs salespeople, resulting in lost customers and decreased sales.
The problem statement should be briefâalmost always one or two sentences. It should be to the point, and it should provide a clear indication as to what must be addressed to improve the performance of the organization.
Given this problem statement, our first reaction, to work on the symptom of reduced sales by cutting prices, would clearly not solve the problem. When we work on symptoms, the symptom may go away, but the problem will always manifest itself again with the same symptom, or a related one. Cutting prices would enhance sales, but would it be profitable? And, with an understaffed sales force, could the firm serve customers at a level that would keep them satisfied?
Step 4: Development of Alternatives
Once we have the problem clearly and succinctly defined, we are in a position to develop a set of strategic alternatives that have a reasonable potential to solve the problem. A key problem students face in this step is that they generate a laundry list of a dozen fairly detail-oriented items. These items have a lot more to do with the tactics of implementing a strategy than with presenting alternative strategies from which we will make our selections. Going back to the sales force example above, the list may include ideas such as:
Take candidates through a more rigorous interview process
Lengthen the training program
Give every salesperson a company car
Offer both individual and regional bonuses
Increase company contribution to the retirement program for each year of employment
Conduct an employee-evaluation training program for the firmâs sales managers
While these may all be good ideas, they are not strategic alternatives. The term alternative suggests an either/or situation. From the list above, you might include several items in your recommendation section. Strategic alternatives should identify basic directions the firm might go with the sales force support of its product.