Guidelines for Case Analysis Graduate Overall Guidelines 1. Organization Break the analysis into the following major headings: 1. Company Situation 3pages 2. Recommendations 2pages 3. Appendix Financial Ratios, Industry Analysis, Five Forces Analysis, SWOT, SGM, etc. In addition, use the subheadings described in this document to break up long sections. 2. Style Use APA style which means double space throughout—do not add any additional space between paragraphs. Be sure to indent the first word of each new paragraph. Do not have long paragraphs containing a variety of related but different topics—break into smaller paragraphs for organization and ease of reading. Use a topic sentence to clarify the purpose of each paragraph. Number the pages starting with the Introduction , e.g., do not include the title page. Proof! Check your work and correct the spelling and grammar errors. Write clearly with correctly structured complete sentences. The ability to present an effective case analysis depends on your critical thinking skills AND your ability to express your ideas in writing. Students who turn in a “first draft” may not earn a grade that is desired. When sections are returned to you, note all comments from the instructor and take notes in the class discussion to incorporate into your next case analysis. Start each of the major sections with an introduction that briefly characterizes and sets the stage for the section. Also at the end of each significant section, summarize with a paragraph capturing the key strategic findings of your analysis for that section. Do not make comments like “The case did not provide information on . . .” You do not need to site the textbook or case. Eliminate personal pronouns such as I, we, etc. Staple or clip the paper in the upper left hand corner—no binders, please. 3. Show Impact Your job is not to “spill back” the facts from the case. Assume that the person who reads your write up will have read the case carefully. Support your statements of analysis with brief examples from the case information. Your focus should be on the impact, effect, and strategic implications of your analysis. Do not overlook exhibits in the case with additional data. 4. Apply Tools and Vocabulary Demonstrate that you understand and can effectively apply the tools of strategic analysis: macro environment, driving forces, key success factors, industry analysis, financial analysis, SWOT, strategic group map and the nine cell industry attractiveness, competitive strength matrix. An effective case analysis effectively incorporates the language of strategic analysis throughout. 1 Company Situation 1. Financial Analysis: A. Determine Growth rate of the industry and the industry stage B. Determine Zara Market share and define whether Zara market share is increasing or decreasing C. Calculate the financial ratio for all 4 companies. Use the Below table. D. Write minimum of one paragraph about the above findings. A. Company Market Share: Company A market Share= {Company A total sales (Net operating revenue)/(total sales or revenues of all other companies in the industry + Company A) /100} B. Calculate the financial ratio for all 4 companies. Use the Below table. Calculate the below ratios for all 4 companies. Put the table in the appendix of your assignment Paper. Refer to Page 240-241 for ratios formula. Financial Ratios - 2011 Indetix Benetton GAP H&M Profitability ratios: Gross profit margin Operating profit margin Net profit margin Liquidity ratios: Current ratio Working capital or quick capital leverage ratios: Debit to asset ratio Debit to equity ratio Activities ratios Days of inventory Inventory turnover Average collection period Growth Ratios Changes in operating revenue Changes in Cost of Goods Sold Changes in net income Changes in total assets Changes in total equity 2. SWOT Analysis: • Develop a SWOT Analysis diagram and attach it as an appendix to your assignment papers. • Don’t use external resources. Refer ONLY to provided ZARA CASE Study • Refer to Page 2,3,4,5 to obtain information related to ZARA SWOT • Consider the above financial analysis as an input for ZARA SWOT Analysis. Financial is an important aspect to determine company performance. • Write a minimum of one paragraph about the SWOT findings. Provide an introduction that characterizes the essence of the company situation and sets the stage for the analysis that follows. Calculate the past sales growth rate for the company if there is historical data. If the case has data on historical industry sales, calculate the sales growth rate and determine whether the industry is in the introduction, growth, maturity or decline phase of their life cycle. If there is information such as the revenue of the top 3 competitors for the last few years, combine their sales and calculate the change in sales growth to infer where the industry is in their life cycle. Then discuss this analysis in any of the sections where it is appropriate. Based on the conclusions from the preceding section and the case analysis, determine the stage of the industry life cycle (introduction, growth, maturity or decline). Identify the key company-specific issues with which the company is dealing. Financial Analysis. Be sure to distinctly address each of the four areas of financial analysis—profitability, liquidity, leverage and activity—identify each in the topical sentence for that paragraph. The financial analysis must be thorough and accurate. Look at trends and compare the company’s performance to industry targets, if available. Evaluate the primary financial indicators, provide supporting data and interpret them to show how they affect the company regarding its present and future strategic performance. Put the calculations of the ratios in a table in the APPENDIX. Close this analysis by writing a paragraph that draws conclusion about the company’s overall financial situation, prospects and the impact of its financial condition on its potential strategic plans. The fundamental question you are trying to answer is, “What is the overall financial status of the company now, and what does its current financial status mean for its future strategic success or ability to grow sales?” Common Errors Incorrect computation of the ratio. Incomplete computations of the ratios (trends, etc.). Focusing on the definition rather than the strategic impact that the ratio implies. SWOT Analysis. Discuss each of the four legs of the SWOT fully—strengths, weaknesses, opportunities and threats in this section. Be clear that events are not the same as attributes. SWOT is about attributes, not events. An attribute describes the characteristics of the company. For example, you might say, “The company isn’t profitable.” True, but what is its weakness attribute? What characteristics of the company drives its lack of profitability? A better way to express it is, “The company has not managed costs in its value chain. This is supported by the sustained increase in cost of goods sold accompanied by flat sales reflecting a weakness that must be overcome to improve profitability.” Summarize the SWOT analysis in a one-page table and place in the APPENDIX. Discuss the table in the body of the paper. SWOT is the “integrator” of the analysis. SWOT draws from the findings resulting from the Macroenvironment, Industry Analysis, and Financial Analysis. No new information is provided. Use the terminology in the previous sections. For example, “An opportunity identified in the discussion of the competitive analysis . . .” Another example, “The dumping of foreign products into this industry, identified earlier as a driving force, is a significant threat to incumbents.” Common Errors Not linking the findings to the previous analysis through the use of common terminology. Omitting important findings discussed previously. Focusing on historical events rather than inherent strengths and weaknesses. Not recognizing obvious strengths and weaknesses in the business functions: financial analysis, marketing (product, price, place and promotion), human resource management, operations, etc. 1. Recommendations Strategic Issue. This is the same question that is presented at the end of Section 2. Strategy Recommendations. Identify the GENERIC and GRAND strategy recommendations. These will tie closely to the SWOT analysis. The recommendations should play into the company’s strengths and opportunities. They should minimize the company weaknesses and overcome its threats. Discuss each strategic initiative in detail including the actions required in the functional areas to support the strategic recommendations: marketing, operations, human resource management, finance, etc. Objectives. Specify the performance objectives that should be monitored and result from the strategic recommendations and earlier analysis. What key performance indicators should be reported and what are the appropriate targets? For example, what are the sales and profitability goals? What goals should be established for nonfinancial indicators? Strategic Justification. Justify why your recommendations are the best option and why other options are not. This is a comparative analysis. Develop this fully, tying it back to the various factors in your strategic analysis. Evaluate the pros and cons of the recommended direction. Demonstrate that you understand the implications of your recommendations. A justification analysis weights the strength of the pros and cons for a given alternative in comparison to the other alternatives. It presents a rationale for why the pros of the recommended alternatives are better than the pros of the other alternatives. It also addressed why the cons of the recommended alternatives are less significant the those of the rejected alternatives. Common Errors Not naming and discussing a generic and several supporting grand strategies Developing recommendations that don’t tie clearly to the previous analysis. Not describing distinguishing characteristics of the strategies. Not clearly describing each strategy. Not aligning strategy recommendations with objectives. Writing in generalities rather than company and situation specific. Not describing strategies for all the relevant functions, e.g., human resource management, finance, etc.