Business Case Analysis BCA By Priyanka Darshana MBA

Business Case Analysis (BCA) By Priyanka Darshana MBA (AUS), ACMA (UK), CGMA, ACMA (SL), B. B Marketing sp

BCA 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…

Introduction to case study • 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.

Objective of Business Case study 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 5. Gaining in-depth exposure to different industries and companies, thereby acquiring something close to actual business experience.

Approach to case study analysis • • • Read the case study Situational analysis Problem/decision statement Strategic analysis Strategic alternative Recommendation

Step 01: Situational analysis • The situation phase of the problem solving process is basically a synopsis and evaluation of a firm current situation. • Situational analysis q Internal analysis q External analysis

Models of situational analysis § Internal analysis Ø SWOT Analysis Ø Financial Analysis § External Analysis Ø PESTEL Analysis Ø Industry analysis (5 Fs) Ø Competitor analysis

Situational analysis : Internal organizational assessment • SWOT analysis is the conventional management technique which is used to assess the company current position. • Evaluate the strength, weakness , opportunities and threat

Financial analysis for diagnosing the firm current strategy Strategy formulation Assess the current situation Identify the current strategy of the firm and assess how well that strategy is doing in terms of financial performance Identify the inadequacies of firm value drivers and reason for deviations. Internally driven or external driven Strategic or operational level actions

Financial Analysis • • • Profitability analysis Key expenses analysis Short term liquidity Business efficiency Financial gearing Investors

Situational analysis: External analysis § PESTEL Analysis Ø Political factors Ø Economic factors Ø Social and cultural factors Ø Technological factors Ø Ecological factors Ø Legal factors

Situational analysis: Five forces analysis • Industry or sector profitability is determined by FIVE competitive forces ü Barraging power of the customer ü Bargaining power of the supplier ü Threat of new entrants ü Threat of substitutes ü Revelry

Industry analysis variables

Situational analysis: Competitor analysis • Competitors are the companies who competing in a same market segment –Narrow definition • Identify the strategic group/Competitor profiling matrix • Broader definition of the competitor

Step 02: Problem/Decision statement • The identification and clear presentation of the problem(s) , opportunity 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.

Problem/Decision statement Example § How can XYZ Plc survive? § What factors drive the declining trends of company sales? § How to drive the XYZ Plc growth in 5 years

Strategic analysis • Strategic analysis will facilitate firm to identify the possible alternatives available to address the problem/issue or the decision. Models of strategic analysis § Ansoff matrix /Market growth share matrix § Expansion policy matrix § BCG product portfolio analysis

Market option matrix and Expansion method matrix Market penetration Product development Market development Diversification –Related Unrelated Corporate strategic options Inside International Outside Internal development § § Mergers & Acquisition Joint venture Alliances Franchises • § § § Mergers & Acquisition Joint venture Alliances Franchises Licensing Home country Geographical location Company • • Exporting Overseas office Overseas manufacture Multinational operation Global operation

The BCG “Portfolio” Matrix Market Share High Stars High Anticipated Growth Cash Cows Rate Low Question Marks ? Dogs ? ? ?

Strategic alternative • Strategic alternatives are the strategic options or actions that appear to be viable solution to the problem, issue or the decision situation that you have posed. • List all possible alternative available to the current strategic issue or to drive the decision.

Evaluation of strategic alternative • Evaluate the each alternative using Jhonson and Scholes 3 strategic test. § Financial feasible to the shareholders § Acceptable to the other stakeholders § Suitable to the organization current objective and the competitive position

Recommendation • This is the final stage of the business case analysis. If your analysis has been through the action recommendation that your propose should flow directly from it. • First part of your recommendation section address what specific actions should be taken and why with justifications • The second part of the recommendation should address the implementation. State clearly who should do what, when and where. Implementation plan shows that your recommendations are both possible and practical.

Workshop 02 - Conduct a business case analysis • ILO Addressed: • ILO 05 - Analyze, discuss and present some cases; ILO 06 - Comment on other’s analysis with a clear position • Key Activities: Exercise - Each team to present their analysis on the selected business case; Teams in the audience to present their critical comments and debates on the business case analysis presented • Mandatory Readings: • Selected Case Studies from: 1. Compaq in crisis 2. Gillette and the men’s wet-shaving market 3. Beefing up the beefless Mac: Mc. Donald’s expansion strategies in India 4. Southwest Airlines

Workshop 02: • Each team would be assigned a case study presentation for which they should listen to carefully when presented by another team, and when given the time should draw critical comments and debate for and/or against the points that were presented by the presentation team. Each team would be allowed a time of 10 minutes for their critical comments and debate.