BUSINESS CASE ANALYSIS (BCA) Conducted by Nadun Kumara Executive - PowerPoint PPT Presentation

SESSION 01 EDABS 10 BUSINESS CASE ANALYSIS (BCA) Conducted by – Nadun Kumara Executive Diploma in Accounting & Business Strategy

2 01. Introduction to Business Case Studies Let’s begin with the end in mind…

“ 3 Case study analysis is an integral part of a course in strategic management . The purpose of a case study is to provide students with experience of the strategic management problems that actual organizations face… ”

4 01.01 - INTRODUCTION to Business Case Studies ▸ A case study is a particular account of a set of circumstances faced by an industry, specific organization or individual . ▸ It provides information about a real life business situation and gives examples of how strategic issues are managed by real organizations. ▸ A case study describes an actual situation, such as the current state of an industry and factors influencing it or, for example, specific problems facing an organization. ▸ When undertaking such analysis, you would be expected to utilize relevant theoretical concepts and frameworks .

5 01.02 - OBJECTIVES of Business Case Studies 1. Increase your understanding of what managers should and should not do in guiding a business to success. 2. Build your skills in sizing up company resource strengths and weaknesses and in conducting strategic analysis in a variety of industries and competitive situations. 3. Get valuable practice in identifying strategic issues that need to be addressed, evaluating strategic alternatives, and formulating workable plans of action. 4. Enhance your sense of business judgment, as opposed to uncritically accepting the authoritative crutch of the professor or “back -of-the- book” answers. 5. Gaining in-depth exposure to different industries and companies, thereby acquiring something close to actual business experience.

6 02. Process of Business Case Analysis (BCA) How it is done…

7 02.01 – PROCESS of BCA Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information R S A P S A R

8 02.01 – PROCESS of BCA (contd.) Read Assumptions Situational Problem Strategic Recommen- & Missing Alternatives Analysis Definition Analysis dations information ▸ 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. ▸ Don’t get trapped into thinking the “answer” 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. ▸ 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.

9 02.01 – PROCESS of BCA (contd.) Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information Situational Analysis Internal External Ratio “SW”OT SW“OT” PESTEL P5Fs Analysis

10 02.01 – PROCESS of BCA (contd.) Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ There can be a plethora of information that is missing as you feel. ▸ The way forward is … Identify the State VALID State missing and LOGICAL restrictions in information assumptions the analysis

11 02.01 – PROCESS of BCA (contd.) Assumptions Problem Situational Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ 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. ▸ Tools used in Step 02 can help you to identify the problems / issues of the organization.

12 02.01 – PROCESS of BCA (contd.) Assumptions Problem Situational Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ The most important question in the identification of any problem is “WHY?” ▸ The “WHY?” question should always be asked after a potential problem has been proposed. ▸ Example – To illustrate, pinpointing the problem associated with a sales decline might progress like this: 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.

13 02.01 – PROCESS of BCA (contd.) Assumptions Problem Situational Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information When you can no longer devise a meaningful response to the “WHY?” question , you have probably ▸ found the problem. Example – ▸ 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 firm’s salespeople, resulting in lost customers and decreased sales. ” ▸ The problem statement should be brief — almost 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.

14 02.01 – PROCESS of BCA (contd.) Assumptions Strategic Situational Problem Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ Vision / Mission / Goals / Objectives / KPIs ▸ Porter’s Generic Strategies ▸ Ansoff’s Matrix ▸ BCG Matrix ▸ Value Chain Analysis

15 02.01 – PROCESS of BCA (contd.) Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ Once we have the problem clearly and sufficiently defined and the strategy clearly identified, 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.

16 02.01 – PROCESS of BCA (contd.) Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ Example – ▸ 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 firm’s 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.

17 02.01 – PROCESS of BCA (contd.) Assumptions Situational Problem Strategic Recommen- Read & Missing Alternatives Analysis Definition Analysis dations information ▸ Once you have developed a set of realistic alternatives, it is time to do a thorough evaluation of each of the options. ▸ Three major criteria should be used in this evaluation process: 01 – How well does the alternative address the problems or issues as stated in Step 4? 02 – Does it meet the “Strategy” of the organization as analyzed in Step 5? 03 – Does it have a cost-benefit impact to the organization in the short run or long run?

18 BIG PICTURE Like anything else, the learning benefits of case analysis are dependent on the amount of effort you put into the analysis . Learning to think critically and see the big picture are important lessons to be learned in a case course.

19 03. Tips & Hints What to do & What not to do…

20 03.01 – Tips & Hints – WHAT TO DO? • ALWAYS try to relate to and apply theoretical models, concepts, frameworks…etc. When reading the case study, put yourself in the situation of the case study and • imagine how you would have felt • Highlight/underline key names, key phrases, and, statistics, pointers, issues, strategy Make notes in an orderly manner • • Apply the case study info as well This means, using names, phrases, statistics, examples, actions, activities, issues, situations, and any sort of details from the case study, back in your answer to help justify your answer