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Getting Ready to Write the Case Exam

*Newville Tigers Case used within this slide deck for illustration purposes.

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Report Contents

Cover Page Executive summary

• Management issue, strategic problem, recommendation, major implementation issues

Introduction The report’s contents

Body of Report Analyses Recommendation Implementation Plan Conclusion Appendices or exhibits

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Steps to Solving a Business Problem

What must we doto succeed in ournew direction?

Scan Internal EnvironmentIdentify Internal Strategic FactorsStrengthsWeaknessesFinancial Assessment-Bal. Sheet/ Inc S/M

ID Current MissionIs there an implied mission? What is it? Goals? Targets?Needs/Preferences?Constraints?

Scan External EnvironmentIdentify External Strategic FactorsExt. OpportunitiesExt. ThreatsFinancial Assessment-Benchmarking

Identify KSFCompetitive AdvantageKey risks to be eliminated or mitigated

ID Major Strategic Issues Rank issuesID Alternatives

Analyze AlternativesProvide balanced analysis:Qualitative & QuantitativePros & cons Consider information from Internal and external scan

RecommendationsRank AlternativesState recommendationsProve feasibility & viabilityExplain how it achieves goals/targets, mitigates key risks, does not exceed constraints, capitalizes on KSFs and meets stakeholder preferences

Implementation Plan changes: •ID and analyze issues e.g. change mgmt, resources•Resolve cons•Resolve weaknesses in Leadership, Structure,Mgmt Info, Internal Control, Ethics, H/R, Marketing, Operations, IT, etc. Address minor issuesProvide action plan

Financial Forecast of all RecommendationsPro Formas (cash flow, F/S)Identify future financial benefits

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Managing Your Time Hint

Do as much financial analysis as you can beforehand. This provides you with insight about where the organization is making or losing money and will provide you with a good foundation when you start working on the case examination

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The Key for Success – Manage your Time

Work the backgrounder beforehand – more on this below

Set milestones for your work Do not over invest in any one area You will never have enough time to do everything

you would like to do Go for the major points – worry later about the

minor points

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Working the Backgrounder (BG)

Backgrounder conveys most of the information that you will be required to complete in boxes 1-4

The Additional Information document might include additional information relevant to these boxes.

You should do any financial analysis you can with the Backgrounder information so that you will get a feeling for this organization’s financial situation

Remember that the Backgrounder will contain many, but not all, of the constraints, risks, and stakeholder preferences

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The Steps with Time Allocations During the Exam*

Step 1 – Scan Additional Information (5 minutes)

Step 2 – Fill in Storyboard While Reading AI (55 minutes)

Step 3 – Situation Analysis (10 minutes)

Step 4 – Issue Identification & Analysis (60 minutes)

Step 5 – Rank Alternatives (15 minutes)

Step 6 – Recommendation(s) (5 minutes)

Step 7 – Provide Evidence of Viability/Feasibility of Recommendations (10 minutes)

Step 8 – Implementation Plan and Financial Summary (60 minutes)

Step 9 – Prepare Report (20 minutes)

*suggestions only – will differ with each case – some will be weighted differently on strategic vs business issues.

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Managing your Time on the CE

NEVER NEVER NEVER plan on transcribing. Organize your report layout so you only have to write something once.

Do not evaluate both sides of a strategic alternative. For example “introduce the new product” or “do not introduce the new product”. Rejecting the initiative automatically means accepting the alternative.

Do not evaluate status quo situation in the case as it is a repetition of the situation analysis.

Use incremental analysis when evaluating alternatives

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More Time Management Hints

“Storyboard” your response—Prepare sheets for all elements of the response so you do not forget anything (cover page, executive summary; introduction; situation analysis; analysis of issues; implementation plan; conclusion; appendices (quantitative analysis for each issue that requires one)

Rather than highlighting something in the exam, record it on your handwritten or typewritten response.

Bullets are okay (and recommended)! But be sure to communicate in full sentences and be clear about your point.

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Box 1 – Identify or Infer the Mission

The opening mission is usually given – if not, you need to infer what it is by studying the organization’s current strategy

Remember that you should revise the mission statement if you recommend a strategy the moves the organization in a new direction

The mission should reflect which of the three generic strategies (or combination of these) that the organization is using or trying to use

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Box 2 – Internal Data

This is where you gather the important facts about the organization’s internal characteristics

You will find these facts in both the Backgrounder and the Additional Information

The facts will include• The organization’s resources (tangible and intangible)• Stakeholder preferences• Organization culture

Internal acts that support the organization’s strategy are strengths – those that impair the strategy are weaknesses

Be on the lookout for constraints and circumstances that could turn into weaknesses (risks)

Evaluate the organization’s financial situation using suitable ratios. If there are benchmark ratios use them – compute ratio trends and interpret

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Backgrounder – Internal Scan (Provided)

Strengths Weaknesses

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Backgrounder – Internal Scan (Provided)

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Backgrounder – External Scan (Provided)

Strengths Weaknesses

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Backgrounder – External Scan (Provided)

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Other

Stakeholder Preferences1. 2. 3. 4. 5.

Constraints1. 2. 3.

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Other

Stakeholder Preferences1. Miller – Improve area safety2. Gagnon – Develop an optimistic budget3. Agani – Develop a conservative budget4. DeVue – Sell beer at games5. Nack – Don’t sell beer at games

Constraints1. Salary cap of $1.7 million2. Area capacity limited to 5,020 seats and 4

boxes3. Event capacity 3 event rooms, one arena

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Key Ratios Liquidity

Current ratio – a liquidity measure – always provides insights Quick ratio – identifies excessive inventory issues in a manufacturing firm –

not a big issue in this case Efficiency Ratio

Net income/sales – always provides insight Turnover Ratios

Sales/Assets – a good overall measure Sales/Average Accounts Receivable – not a big issue in this case since

receivables are not large Cost of goods sold/inventory – not a big issue in this case since this is not a

manufacturing or retail operation Leverage Ratios

Assets/Equity – always provides insights Profitability

Net income/equity – always provides insights Net income/assets – always provides insights

Financial Risk Earnings before interest and taxes/intererst

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Ratios

2008 2007 2006 2005 2004Dollar values in thousandsSales 8570 7902 7397 8474 9014Interest 20 35 50 65 80Earnings before interest and taxes 1029 604 283 1114 1542Net Income 666 376 154 692 965Current Assets 954 682 583 969 708Total Assets 2683 2698 2940 3590 3584Current Liabilities 890 870 787 890 875Total Equity 1697 1431 1455 1701 1409

RatiosCurrent Ratio 1.07 0.78 0.74 1.09 0.81Times Interest Earned 51.45 17.26 5.66 17.14 19.28Net Income/Sales 7.77% 4.76% 2.08% 8.17% 10.71%Sales/Total Assets 3.19 2.93 2.52 2.36 2.52Total Assets/Total Equity 1.58 1.89 2.02 2.11 2.54Return on Equity 39.25% 26.28% 10.58% 40.68% 68.49%Return on Assets 24.82% 13.94% 5.24% 19.28% 26.93%

Newville Tigers Inc.

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Insight From Ratio Analysis

The current ratio averages about 1 which is significantly below 2 – the usual rule of thumb value

Times interest earned suggests low financial risk except for 2006

Net income to revenue is small – this is a low margin business that relies on total asset turnover and a reasonable level of leverage to provide an adequate return on equity

Total asset turnover averages slightly less than 3 which may be reasonable in this type of business

Leverage is very low

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Boxes 3 and 4 – External Data These are the facts about the environment facing

the firm Useful facts include

PESTE Porter Industry Key Success Factors

External facts that the organization can exploit are opportunities – facts that have the potential to impair performance are threats

Remember to look for external constraints and facts (risks) that can turn into threats

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Summary to Date You have identified the organization’s current

strategy and its mission statement You have gathered the data about the organization’s

environment both internal and external You have labelled these facts as strengths,

weaknesses, opportunities, or threats You have identified the industry and firm key

success factors You have identified any risks and constraints You have identified the organization’s financial

situation You have a good understanding of the organization

and you are ready to address the issues that arise in the additional information

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Reviewing Your Work Study the marker’s comments Study the general feedback on the case provided on the

CPP site.

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Now you are ready for the Additional Information (AI)

Add additional SWOT points from the AI Delete any SWOT points that have changed from the BG Identify the issues (you cannot do this from the information provided in the BG)

Strategic and operational Evaluate alternatives for dealing with the issues (you cannot do this from the

info provided n the BG) Qualitative Quantitative

Identify the criteria you will use to recommend what to do (focus on constraints, financing availability, key SWOT—ROBUST RECOMMENDATIONS deck)

Make specific recommendations Identify and discuss the implementation issues

3 parts: 1. Address/try to solve cons to recommended alternatives (some may be

weaknesses2. Solve remaining relevant weaknesses3. Action Plan: WHO is going to do WHAT, WHEN and HOW MUCH (if

feasible)

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Recommendations Decisions Matrix Criteria—one possible approach

“What are you Basing your Recommendations

on”Alt One Alt Two

Alt Three

Alt Four

Strategic Fit Shareholder’s Preference Financials – Bank/Profitability

Branding – Store/Product Customer

Inventory

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Implementation Plan

Actions Q1 Q2 Q3 Q4 Who Cost

Action 1 HR$5k

Action 1 Step Three

Step Four

Step Five

Step Six