Chapter 3 How to Analyze a Case

A case is a text that refuses to explain itself. A case first recognizes factors that help limit and narrow the analysis. ▫A marketing case requires you to think as a marketer, not a strategist or finance manager ▫Cases are often divided into different modules or themes.

Starting Point for Understanding Case Method is “heuristic” ▫Self-guided learning that employs analysis to help draw conclusions about a situation. ▫Analysis = Dissolving  To break something up into its constituent parts  To study relationships of the parts to the whole  To analyze a case = need of identifying and understanding important aspects of the situation and what they mean in relation to the overall situation.

Starting Point for Understanding Specialized methods are fruitful because they’re tailored to fit well-defined purposes. ▫Complex ▫Hard to apply  Example: Michael Porter’s Concepts – Competitive Advantage (not useful in deciding whether to launch a product at a particular price or choosing the best method to finance a business) –Industry Context

Cases Complements Business Concepts Cases provide a starting point for analysis that aids the use of theories and frameworks and quantitative formulas = CONCLUSIONS

Thinking, not Reading is Key For case analysis you need to know when to read fast and when to read slowly. Spend more time thinking about the case than reading it. Reading is simply an instrument directed by the thought process that makes meaning from the text. In an active approach to a case: ▫start thinking before you read the case; ▫as you start reading it, you ask questions about the content; ▫seek answers in the case itself; ▫as you find partial or full answers, you think about how they relate to each other and to the case as a whole.

Types of Case Situations Problems Decisions Evaluations Rules

Problems It is a situation in which: ▫There is a significant outcome or performance ▫There is no explicit explanation of the outcome or the performance. ▫It is a situation in which something important has happened, but we don’t know why it did.  See Page 21

Problems It is important to know the causes of these problems. ▫The knowledge can help improve the situation Success can also be a problem. ▫Example: A case which operates in three different market segments but the case doesn’t tell you which is the most profitable, much less why.

Outcomes are Important to Know: The knowledge can help improve the situation

Problems Problem Analysis begins with a definition of the problem. ▫Realize that a problem exists ▫Define it for yourself ▫Workout an explanation of the problem by linking the outcome or performance to its root causes

Decisions Many cases are organized around an explicit decision The existence of an explicit decision is an important distinction because all business cases involve decisions. ▫“What is the best case the company should pursue in the future?” (After current strategy and how well it works)

Decisions Requirements for Analysis: ▫Decision Option  Identifying decision options is easy because the case tells what they are. ▫Decision Criteria  This is the most important part. A decision cannot be made without a criteria. Criteria has to be derived through careful study of the specifics of the case +specialized methods; used to develop evidence ▫Relevant Evidence  The reader needs to find evidence indications which option delivers the greatest value to the customer

Evaluations It expresses a judgment about the worth, value or effectiveness of a performance, act or outcome. It can also involve the assessment of an act such as a decision that has already been taken. It requires appropriate criteria. ▫Without criteria, there are no standards for assessing worth, value or effectiveness

Evaluation An overall evaluation expresses the best fit between the evidence and the criteria. It includes both positive and negative sides.

Rules For rules analysis, one needs to know: ▫The type of information needed in a situation ▫The appropriate rule to furnish that information ▫The correct way to apply the rule ▫The data necessary to execute the rule

Rules Rules Analysis exists in every area of business ▫Examples:  Breakeven calculation = marketing  Quantitative methods for process analysis = manufacturing  Rules Analysis exists in every area of business

Rules A well-defined set of rules is needed to analyze a company’s liquidity Qualitative methods are different from rules ▫There are many alternative methods for obtaining the same or similar information ▫There is a correct way to execute a rule such as using formula, there is no objectively correct way to execute qualitative methods

Rules Rules Analysis lacks uncertainties and ambiguities The results of rules analysis provoke sharp differences of opinion (HBS Video Case) Numbers don’t explain what they mean, they don’t make decisions for you.

Case Analysis as a Process The way one analyzes the case differs from the way anyone else does The key to the process is active reading. Active reading is interrogative and purposeful (you ask questions about the case and seek answers) Questions – give purpose for reading, direct and focus study on important aspects. Active reading is also iterative, you make multiple passes through a case (with each iteration, the purpose of reading changes) Three concepts which contribute to active reading ▫A goal ▫A point of view ▫A hypothesis

Goal of Analysis “Understanding” – usual goal but its too vague How do you know when to conclude the study of the case? Concrete Goal: Familiarity with the case information, conclusion about the main issue, evidence showing why your conclusion is reasonable, thought of other possible conclusions. + TIME LIMIT

Point of View Adopt the Point of View of the Protagonist – main character ▫Consider the character’s strength, responsibilities and blind spots ▫Why is this person in this dilemma?

Hypothesis It is a tentative explanation that accounts for a set of facts and can be tested for further investigation. –multiple conclusions are possible It offers an advantage of a concrete statement you can test against case evidence. Cases don’t allow just any hypothesis There is a range of possible hypotheses about every case (Contrarian’s Position)

Example Scenario: Protagonist to evaluate an Individual she hired. –rising star + alienates people within the firm… ▫Hypothesis: The new hire should receive a high rating despite flaws in her performance. ▫How to test: Develop a strong argument based on relevant criteria, facts and inferences that backs a positive evaluation but also recognizes poor performance on other criteria

Description of Process Flexible and Adaptable Five Phases: ▫Situation (Problems, Decisions, Evaluations, Rules) ▫Questions ▫Hypothesis ▫Proof and Action ▫Alternatives

1. Situation (5 minutes) Most difficult part of case analysis Bridge the gap between no knowledge about the case and knowledge about sufficient to form a hypothesis. All parts no whole; wider gap Understand big picture first then fill it with details. What is the situation?

1. Situation (5 minutes) Usually the beginning and the end of the case is sufficient to identify the situation. Beginning ▫Decisions and Evaluations ▫Problems are more difficult to identify In the case of Apple’s Ipod,does the first section identify the decision and a conflict?

2. Questions (15 minutes) Once you know the situation you are ready to ask questions significant to the problem, decision or evaluation. What do I need to know about the Situation?

Questions on Problem Who or what is the subject of the problem? What is the problem? What’s the significance of the problem to the subject? Who is responsible for the problem? What does he need to do about it?

Questions on Decision What are the decision options? What’s at stake in the decision? What are the possible criteria? Most important criteria?

Questions on Evaluation Who or what is being evaluated? Who is responsible for the evaluation? What is at stake? What are the possible criteria? Most important criteria for evaluation? Content Inventory = to locate information that might be used to answer the questions about the situation. (Highlight texts)

3. Hypothesis (45 minutes) What is my Hypothesis? This is the most important phase If you have 3 hypotheses, test them starting with the one you think is the most promising.

Hypothesis - Problem Make sure you know the problem that needs to be diagnosed. Consider whether the characteristics of the problems suggests causes. Think about the frameworks most appropriate Pursue diagnosis by looking at case information Look for evidences In case with a protagonist, consider whether she is a potential cause. If you think she is a potential cause – wok out how she contributes to the problem.