 Michigan State University, 2007 Analyzing Case Studies Learning to accept ambiguity and disappointment

 Michigan State University, Dr. Robert M. Wiseman Learning From Case Analysis “One cannot step in the same river twice” Heraclitus, 540BC-480BC “Those that fail to learn from history are doomed to repeat it.” W. Churchill, “All models are wrong, but some are useful” Box, 1979

 Michigan State University, Dr. Robert M. Wiseman Case Study Handbook

 Michigan State University, Dr. Robert M. Wiseman Types of Case Studies Rules Analysis –Requires you to apply certain rules to a situation (e.g., Net Present Value calculation). Decisions –The case calls for a decision. Evaluation –The case requires you to express a judgment about a process, action or outcome. Problems –The case focuses on a significant outcome, and asks you to determine why or how it occurred.

 Michigan State University, 2007 Step One: Read the Intro and Ending First Then read the entire case

 Michigan State University, Dr. Robert M. Wiseman Sorting Through the Red Herrings What do I need to know? –Who is the subject or key actor? –What are the key issues? –Who or what is responsible? What are the decision options? –What’s at stake? –What are the possible criteria?

 Michigan State University, Dr. Robert M. Wiseman Understanding the True Drivers of Action

 Michigan State University, 2007 Step Two: Re-Read the Case Have a purpose in mind as you read

 Michigan State University, Dr. Robert M. Wiseman Identify key data Use the frameworks presented in class to help guide your search. –Frameworks help identify key factors or issues –Frameworks organize data into information IndustryRivalsIndustryRivals SubstitutesSubstitutes BuyersBuyers Potential Entrants SuppliersSuppliers MARGIN Administration and Infrastructure Human Resource Management Information Management Purchasing Inbound Logistics Operations Outbound Logistics MarketingService

 Michigan State University, Dr. Robert M. Wiseman Step Two: Generate Hypotheses Take the perspective of the key protagonist –What is their position and view of the situation? What’s my hypothesis? –What is the key problem? –What decisions need to be made? –What are the terms of the evaluation?

 Michigan State University, 2007 Step Three: What’s the Problem or Problems? Identify the key issues requiring attention

 Michigan State University, Dr. Robert M. Wiseman Selecting the Problem Problems are gaps between an actual or anticipated state of affairs and the desired state of affairs. Two conditions for gaps to be closed –The gap can be closed, such that there are sufficient resources, knowledge and so forth to close the gap. –The gap will be closed, there is sufficient political will to close the gap. Are there people who will thwart attempts to close the gap.

 Michigan State University, Dr. Robert M. Wiseman Example Problem Analysis Problem definition –“The division’s performance is declining and their reputation for delivery and service is slipping. Employees have poor morale, don’t trust other departments, and are involved in unending conflict.” Diagnosis –“Many of these issues can be traced to the underlying culture of the division, the differing leadership styles of the division director and that of the CEO, poor decisions by the division director, and the lack of alignment among different groups in the division.”

 Michigan State University, 2007 Step Four: Finding the Causal Linkages What’s causing what?

 Michigan State University, Dr. Robert M. Wiseman Ask Yourself Questions Implications emerge from asking lots of questions. –What is causing the current situation? –What might happen if the company does ______? –What will others do, in response to this action? –Why would this work? –What must happen to make it work? Provide Proof of causes –What data do you have to support your assessment?

 Michigan State University, Dr. Robert M. Wiseman Dig deep into the financials!! Treat the financials as you would clues in a mystery. Be prepared to cite relevant data to support your view Interpret, don’t regurgitate financial information –What are the trends telling you? –What are the relations between the numbers telling you? –How is the firm really performing? What explains this?

 Michigan State University, Dr. Robert M. Wiseman We All Have a Theory Recognize that you have assumptions –We develop a view of the world from our experience, and that view filters our understanding. Your view may not match the data. –Ask yourself “what are you assuming?” Recognize that actors in the case are also making assumptions –Assumptions are often used to link events or actions to one another –Question the assumptions that are implicit in the case, are they viable? Do they rest on facts or conjecture?

 Michigan State University, 2007 Step Five: Generate Alternatives What is needed to close the gap or solve the core problem?

 Michigan State University, Dr. Robert M. Wiseman Generate Viable Alternatives What alternatives exist for resolving each issue? –What outcomes are likely from each alternative? –How will the alternative affect other stakeholders? –What is necessary for the alternative to work? Resources, knowledge, relationships, capabilities? Each answer must include the why! –“The CEO is right to acquire the firm because…” –Then provide your rationale and evidence.

 Michigan State University, Dr. Robert M. Wiseman Necessary and Sufficient Conditions Necessary conditions are critical to the success of a solution but don’t by themselves assure success –Think about what must happen for the (acquisition, price change, etc) to succeed? –Superior resources may be necessary to producing superior value for customers, but is not a guarantee Sufficient conditions assure success. –Ask what if anything would assure the outcome? –Customers perceive and value our superior offering

 Michigan State University, Dr. Robert M. Wiseman Step Five: Take a stand and defend it Don’t play both sides of the fence –Pick a position and defend it. –Everything has both advantages and disadvantages –You must decide which side outweighs the other

 Michigan State University, 2007 Step Six: The Action Plan How will the solutions be implemented?

 Michigan State University, Dr. Robert M. Wiseman How Do You Propose to Proceed? Short and long-term steps ordered by time and priority. Consider and address the risks and how to contain them

 Michigan State University, Dr. Robert M. Wiseman Case Analysis is not a formula. Case analysis is a skill that applies a knowledge of organizations and markets to situations containing a considerable amount of ambiguous and potentially relevant information. To be successful decision makers, you need to sift through this information to identify the key drivers of firm performance and then determine which drivers can and should be manipulated, as well as how to manipulate those drivers in a way that generates a desired outcome.

 Michigan State University, Dr. Robert M. Wiseman Solutions Change You are not here to learn specific solutions or how a particular company does business. This is because solutions and situations are constantly changing.

 Michigan State University, Dr. Robert M. Wiseman Asking Questions is Key! You are here to learn what questions to ask!

 Michigan State University, Dr. Robert M. Wiseman Ryanair Case 1.What is your assessment of Ryaniar’s launch strategy? Was it a good strategy? In your answer consider potential market demand, pricing and Ryanairs’ likely cost structure. 2.How do you expect Aer Lingus and British Airways to respond? Why? 3.How costly would it be for Aer Lingus and British Airways to retaliate against Ryanair’s launch? That is, how much in Irish pounds could they lose in a price war with Ryanair?

 Michigan State University, Dr. Robert M. Wiseman Ryanair Case Hint: Consider AL and BA’s strategy, goals, assumptions, capabilities when answering Q2. When answering Q3, consider whether Ryanair can make money at 98 Irish pounds (i.e., consider both fixed and variable costs).

 Michigan State University, 2007 Analyzing Case Studies Prof. Robert M. Wiseman, Ph.D. Eli Broad Legacy Fellow of Management Learning to accept ambiguity and disappointment