Noosa chocolate factory lawsuit outcome

Case studies Introduction A summary of the case

analysis process C-2

Preparing an effective case analysis – the full story C-5

Case 1 Hearing with the aid of implanted technology: The case of Cochlear™, an Australian high-technology leader C-19

Case 2 The Australian retail wars: Coles Myer and Woolworths battle for brand value C-26

Case 3 eBay.com: Profitably managing growth from start-up to 2000 C-32

Case 4 Gillette and the men’s wet-shaving market C-50

Case 5 Gunns and the greens: Governance issues in Tasmania C-70

Case 6 Growth at Hubbard’s Foods? C-79

Case 7 Incat Tasmania’s race for international success: Blue-riband strategies C-89

Case 8 The Golden Arches in India: A case of strategic adaptation C-95

Case 9 Monsanto: Better living through genetic engineering? C-106

Case 10 Nucor Corporation and the US steel industry C-121

Case 11 Philip Condit and the Boeing 777: From design and development to production and sales C-152

Case 12 Resene Paints C-168

Case 13 Sony Corporation: The vision of tomorrow C-184

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Introduction

A summary of the case analysis process Dallas Hanson University of Tasmania

Case analysis is an essential part of a strategic man- agement course and is also perhaps the most enter- taining part of such a course. The ‘full story’ that follows this summary gives you considerable detail about how to go about a case analysis, but for now here is a brief account.

Before we start, a word about attitude: make it a real exercise; you have a set of historical facts and use a rigorous system to work out what strategies should be followed. All the cases are about real companies, and one of the entertaining bits of the analysis pro- cess is to compare what you have said they should do with what they really have done. So, it is best not to check the Net to see current strategies until you have completed your analysis.

What follows is one analytical system, a fairly tight one that you may want to adapt according to how much time you have and the style of the case.

External analysis

Step 1 What industry is it? You must decide on this early. This is an important step, because it changes the analysis – for example, your industry analysis will yield different conclusions depending on what industry you determine.

Step 2 General environment analysis Analyse the six generic elements – economic, socio- cultural, global, technological, political/legal and demographic – and work out what the important facts are. There may be many issues and facts in each element, but you put down only the important ones. It is also important to avoid the common error of over- emphasis on the firm in question. So, assuming the firm operates in the Australian ice-cream industry, the demographic analysis may have this comment: ‘A large baby boomer generation is now becoming more health-conscious. This presents opportunities in health foods and healthy alternatives for conventional foods. It also presents opportunities for low-fat ice creams.’ Or, in analysing the demographics of the Cochlear™ firm, you may conclude that there is a global market of 1.8 million profoundly deaf people and that this pro- vides a huge undeveloped market for the implantable hearing devices industry.

Step 3 The industry environment Analyse the five forces (that is, supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each. For example, what are the issues involved in new entrants into the industry? For

Introduction • A summary of the case analysis process C-3

the implantable hearing devices industry, these may include the need for understanding of intricate new technology, possession of a reputation in the global deaf community for safe and effective product devel- opment, and links to research institutions. This makes the industry hard to enter. Each force needs a brief dis- cussion followed by a short conclusion.

One extra consideration before you pull the anal- ysis together and work out if this is an attractive industry (the main conclusion) is: Is there a key force or forces in your industry? Porter argues that there is a key force in any industry, one that exerts more influ- ence than the other forces.

Now, is it an attractive industry? You need to explain, briefly, why or why not. Bear in mind that it is often not a clear decision because the forces are mixed – for example, there may be little concern about new entrants, suppliers or substitutes, but buyers may be fickle and rivalry high. In such cases, the key force analysis is very important

Remember: it is the industry you analyse, not the firm.

Step 4 Competitive environment Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capa- bilities do the relevant firms have? What strategies do they follow? What threats do they represent?

Step 5 You now have material about opportunities and threats

It is easy to pull this together from the four steps you have now completed.

Internal analysis

Step 6 The firm’s resources, tangible and intangible

List all relevant resources. It is useful to distinguish between tangible and intangible resources. Remem- ber: firms have many resources.

At this point, if you have the skills and time, you can analyse the financial information that almost all cases provide. This provides material for a financial resources paragraph.

Step 7 Capabilities identification Here you make a list of capabilities. Capabilities tell you what the firm can do.

Remember: each firm may have a dozen or more capabilities, so include some that are very unlikely to be core competencies. This is a difficult step, because you must explain the capabilities carefully to indicate what the firm really does. For example, Cochlear has a capability for research in cochlear-related technol- ogy. It does not have a generic research capability.

Step 8 Core competency analysis For each capability, indicate which of the four tests for a core competency it meets. An easy way to do this is through use of a table. For example:

Rare? Valuable? Costly to imitate?

Non- substitutable

Logistics management in cochlear technologies Yes Yes No No

Research knowledge and skill in cochlear- related areas Yes Yes Yes Yes

Etc.

This is an important step, because the core compe- tencies are fundamental in the strategies you suggest – firms use their core competencies.

Step 9 Weaknesses What major weaknesses does the firm have – for example, old technology, very limited finance and poor cash flow, no succession planning?

Step 10 Pulling it together You now have all the material for an excellent SWOT (strengths/weaknesses, opportunities/threats) analysis. Pull together the earlier identification of opportunities and threats (step 5) with the internal analysis you have done. This resources-based, theory- oriented system gives you a powerful vocabulary to describe what simpler systems call ‘strengths’, and the other elements of the system allow you to systematically identify other significant factors in the mix.

C-4 Introduction • A summary of the case analysis process

Step 11 Current strategies Work out the firm’s current strategies.

Step 12 Strategies Here you take advantage of opportunities and handle threats. You should be able to make use of core com- petencies to do this.

You may need strategies at the business level, cor- porate level and international level (but it depends on the industry and on whether all are required). Also, bear in mind that you may need to specify functional- level strategies to fit the generic strategies at the business level. For example, if your ice-cream compa- ny adopts a differentiation strategy, you must specify how it is differentiated (on what grounds – low fat?) and there must be associated innovation and market- ing strategies (or, in the corporate-level strategy, a supporting acquisition strategy may be used to handle the innovation issue).

Make a list of alternative possibilities and use the external and internal analyses that you have con- ducted to assess them. Choose one set of alternatives. How do these differ from current strategies?

Make sure the strategies chosen fit in with your earlier analysis. Use all the conclusions in the earlier analysis. For example (and bear in mind that this is simplified to make the idea clearer), if you are in a rivalrous industry which has good growth prospects because of useful demographic change and you have good financial resources, you may argue for expan- sion into the new segment using available resources. If the finances were not there, this strategy would be difficult to support.

Using the Cochlear™ case as a training case This case analysis process is easy to use once you have learned it, and the best way to learn is to try it out. The Cochlear™ case in this book is designed as a training case to help you do this. Don’t be concerned if you get a slightly different analysis to other people: one of the glories of case analysis is that they are never ‘right’; some are, however, more plausible than others.

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Preparing an effective case analysis – the full story

In most strategic management courses, cases are used extensively as a teaching tool.1 A key reason is that cases provide active learners with opportunities to use the strategic management process to identify and solve organisational problems. Thus, by analysing situations that are described in cases and presenting the results, active learners (that is, students) become skilled at effectively using the tools, techniques and concepts that combine to form the strategic manage- ment process.

The cases that follow are concerned with actual companies. Presented within the cases are problems and situations that managers and those with whom they work must analyse and resolve. As you will see, a strategic management case can focus on an entire industry, a single organisation, or a business unit of a large, diversified firm. The strategic management issues facing not-for-profit organisations also can be examined using the case analysis method.

Basically, the case analysis method calls for a care- ful diagnosis of an organisation’s current conditions (as manifested by its external and internal environ- ments) so that appropriate strategic actions can be recommended in light of the firm’s strategic intent and strategic mission. Strategic actions are taken to devel- op and then use a firm’s core competencies to select and implement different strategies, including business- level, corporate-level, acquisition and restructuring, international and cooperative strategies. Thus, appro- priate strategic actions help the firm to survive in the long run as it creates and uses competitive advantages as the foundation for achieving strategic competitive- ness and earning above-average returns. The case

method that we are recommending to you has a rich heritage as a pedagogical approach to the study and understanding of managerial effectiveness.2

As an active learner, your preparation is critical to successful use of the case analysis method. With- out careful study and analysis, active learners lack the insights required to participate fully in the discussion of a firm’s situation and the strategic actions that are appropriate.

Instructors adopt different approaches in their application of the case analysis method. Some require active learners/students to use a specific analytical procedure to examine an organisation; others pro- vide less structure, expecting students to learn by developing their own unique analytical method. Still other instructors believe that a moderately structured framework should be used to analyse a firm’s situa- tion and make appropriate recommendations. Your lecturer or tutor will determine the specific approach you take. The approach we are presenting to you is a moderately structured framework.

We divide our discussion of a moderately struc- tured case analysis method framework into four sections. First, we describe the importance of under- standing the skills active learners can acquire through effective use of the case analysis method. In the sec- ond section, we provide you with a process-oriented framework. This framework can be of value in your efforts to analyse cases and then present the results of your work. Using this framework in a classroom set- ting yields valuable experiences that can, in turn, help you to successfully complete assignments that you will receive from your employer. The third section

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is where we describe briefly what you can expect to occur during in-class case discussions. As this descrip- tion shows, the relationship and interactions between instructors and active learners/students during case discussions are different than they are during lectures. In the final section, we present a moderately struc- tured framework that we believe can help you to pre- pare effective oral and written presentations. Written and oral communication skills also are valued highly in many organisational settings; hence, their develop- ment today can serve you well in the future.

Skills gained through use of the case analysis method The case analysis method is based on a philosophy that combines knowledge acquisition with significant involvement from students as active learners. In the words of Alfred North Whitehead, this philosophy ‘rejects the doctrine that students had first learned passively, and then, having learned should apply knowledge’.3 In contrast to this philosophy, the case analysis method is based on principles that were elab- orated upon by John Dewey:

Only by wrestling with the conditions of this

problem at hand, seeking and finding his own way

out, does [the student] think ... If he cannot devise

his own solution (not, of course, in isolation, but

in correspondence with the teacher and other

pupils) and find his own way out he will not learn,

not even if he can recite some correct answer with

a hundred percent accuracy.4

The case analysis method brings reality into the classroom. When developed and presented effectively, with rich and interesting detail, cases keep conceptu- al discussions grounded in reality. Experience shows that simple fictional accounts of situations and collec- tions of actual organisational data and articles from public sources are not as effective for learning as fully developed cases. A comprehensive case presents you with a partial clinical study of a real-life situation that faced managers as well as other stakeholders, includ- ing employees. A case presented in narrative form provides motivation for involvement with and analy- sis of a specific situation. By framing alternative stra- tegic actions and by confronting the complexity and ambiguity of the practical world, case analysis pro- vides extraordinary power for your involvement with a personal learning experience. Some of the poten- tial consequences of using the case method are sum- marised in Exhibit 1.

As Exhibit 1 suggests, the case analysis meth- od can assist active learners in the development of their analytical and judgement skills. Case analy- sis also helps students to learn how to ask the right questions. By this we mean questions that focus on the core strategic issues that are included in a case. Active learners/students with managerial aspirations can improve their ability to identify underlying prob- lems rather than focusing on superficial symptoms as they develop skills at asking probing, yet appropriate, questions.

The collection of cases your instructor chooses to assign can expose you to a wide variety of organisa- tions and decision situations. This approach vicari- ously broadens your experience base and provides insights into many types of managerial situations,

Exhibit 1

1 Case analysis requires students to practise important managerial skills – diagnosing, making decisions, observing, listening and persuading – while preparing for a case discussion.

2 Cases require students to relate analysis and action, to develop realistic and concrete actions despite the complexity and partial knowledge characterising the situation being studied.

3 Students must confront the intractability of reality – complete with absence of needed information, an imbalance between needs and available resources, and conflicts among competing objectives.

4 Students develop a general managerial point of view – where responsibility is sensitive to action in a diverse environmental context.

Source: C.C. Lundberg and C. Enz, 1993, ‘A framework for student case preparation’, Case Research Journal, 13 (summer), p. 134.

Introduction • Preparing an effective case analysis

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tasks and responsibilities. Such indirect experience can help you to make a more informed career deci- sion about the industry and managerial situation you believe will prove to be challenging and satisfy- ing. Finally, experience in analysing cases definitely enhances your problem-solving skills, and research indicates that the case method for this subject is better than the lecture method.5

Furthermore, when your instructor requires oral and written presentations, your communication skills will be honed through use of the case method. Of course, these added skills depend on your prepara- tion as well as your instructor’s facilitation of learn- ing. However, the primary responsibility for learning is yours. The quality of case discussion is generally acknowledged to require, at a minimum, a thorough mastery of case facts and some independent analysis of them. The case method therefore first requires that you read and think carefully about each case. Addi- tional comments about the preparation you should complete to successfully discuss a case appear in the next section.

Student preparation for case discussion If you are inexperienced with the case method, you may need to alter your study habits. A lecture- oriented course may not require you to do intensive preparation for each class period. In such a course, you have the latitude to work through assigned read- ings and review lecture notes according to your own schedule. However, an assigned case requires signifi- cant and conscientious preparation before class. With- out it, you will be unable to contribute meaningfully to in-class discussion. Therefore, careful reading and thinking about case facts, as well as reasoned anal- yses and the development of alternative solutions to case problems, are essential. Recommended alterna- tives should flow logically from core problems iden- tified through study of the case. Exhibit 2 shows a set of steps that can help you to familiarise yourself with a case, identify problems and propose strategic actions that increase the probability that a firm will achieve strategic competitiveness and earn above- average returns.

Exhibit 2

Step 1: Gaining familiarity

a In general – determine who, what, how, where and when (the critical facts of the case). b In detail – identify the places, persons, activities and contexts of the situation. c Recognise the degree of certainty/uncertainty of acquired information.

Step 2: Recognising symptoms

a List all indicators (including stated ‘problems’) that something is not as expected or as desired. b Ensure that symptoms are not assumed to be the problem. (Symptoms should lead to

identification of the problem.)

Step 3: Identifying goals

a Identify critical statements by major parties (e.g. people, groups, the work unit, etc.). b List all goals of the major parties that exist or can be reasonably inferred.

Step 4: Conducting the analysis

a Decide which ideas, models and theories seem useful. b Apply these conceptual tools to the situation. c As new information is revealed, cycle back to sub-steps (a) and (b).

Step 5: Making the diagnosis

a Identify predicaments (goal inconsistencies). b Identify problems (discrepancies between goals and performance). c Prioritise predicaments/problems regarding timing, importance, etc.

Step 6: Doing the action planning

a Specify and prioritise the criteria used to choose action alternatives. b Discover or invent feasible action alternatives. c Examine the probable consequences of action alternatives. d Select a course of action. e Design an implementation plan/schedule. f Create a plan for assessing the action to be implemented.

Source: C. C. Lundberg and C. Enz, 1993, ‘A framework for student case preparation’, Case Research Journal, 13 (summer), p. 144.

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Gaining familiarity The first step of an effective case analysis process calls for you to become familiar with the facts featured in the case and the focal firm’s situation. Initially, you should become familiar with the focal firm’s general situation (for example, who, what, how, where and when). Thorough familiarisation demands apprecia- tion of the nuances, as well as the major issues, in the case.

Gaining familiarity with a situation requires you to study several situational levels, including interactions between and among individuals within groups, busi- ness units, the corporate office, the local communi- ty and the society at large. Recognising relationships within and among levels facilitates a more thorough understanding of the specific case situation.

It is also important that you evaluate information on a continuum of certainty. Information that is verifiable by several sources and judged along similar dimensions can be classified as a fact. Information representing someone’s perceptual judgement of a par- ticular situation is referred to as an inference. Infor- mation gleaned from a situation that is not verifiable is classified as speculation. Finally, information that is independent of verifiable sources and arises through individual or group discussion is an assumption. Obviously, case analysts and organisational decision makers prefer having access to facts over inferences, speculations and assumptions.

Personal feelings, judgements and opinions evolve when you are analysing a case. It is important to be aware of your own feelings about the case and to evaluate the accuracy of perceived ‘facts’ to ensure that the objectivity of your work is maximised.

Recognising symptoms Recognition of symptoms is the second step of an effective case analysis process. A symptom is an indi- cation that something is not as you or someone else thinks it should be. You may be tempted to correct the symptoms instead of searching for true problems. True problems are the conditions or situations requiring solution before the performance of an organisation, business unit or individual can improve. Identifying and listing symptoms early in the case analysis process tends to reduce the temptation to label symptoms as

problems. The focus of your analysis should be on the actual causes of a problem, rather than on its symptoms. Thus, it is important to remember that symptoms are indicators of problems; subsequent work facilitates discovery of critical causes of problems that your case recommendations must address.

Identifying goals The third step of effective case analysis calls for you to identify the goals of the major organisations, business units and/or individuals in a case. As appro- priate, you should also identify each firm’s strategic intent and strategic mission. Typically, these direc- tion-setting statements (goals, strategic intents and strategic missions) are derived from comments made by central characters in the organisation, business unit or top management team as described in the case and/or from public documents (for example, an annual report).

Completing this step successfully can sometimes be difficult. Nonetheless, the outcomes you attain from this step are essential to an effective case analysis because identifying goals, intent and mission helps you to clarify the main problems featured in a case and to evaluate alternative solutions to those problems. Direction-setting statements are not always stated publicly or prepared in written format. When this occurs, you must infer goals from other available fac- tual data and information.

Conducting the analysis The fourth step of effective case analysis is concerned with acquiring a systematic understanding of a situ- ation. Occasionally, cases are analysed in a less-than- thorough manner. Such analyses may be a product of a busy schedule or of the difficulty and complexity of the issues described in a particular case. Sometimes you will face pressures on your limited amounts of time and may believe that you can understand the sit- uation described in a case without systematic analy- sis of all the facts. However, experience shows that familiarity with a case’s facts is a necessary, but insuf- ficient, step in the development of effective solutions – solutions that can enhance a firm’s strategic com- petitiveness. In fact, a less-than-thorough analysis typically results in an emphasis on symptoms, rather than on problems and their causes. To analyse a case

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effectively, you should be sceptical of quick or easy approaches and answers.

A systematic analysis helps you to understand a situation and determine what can work and prob- ably what will not work. Key linkages and under- lying causal networks based on the history of the firm become apparent. In this way, you can separate causal networks from symptoms.

Also, because the quality of a case analysis depends on applying appropriate tools, it is important that you use the ideas, models and theories that seem to be use- ful for evaluating and solving individual and unique situations. As you consider facts and symptoms, a useful theory may become apparent. Of course, hav- ing familiarity with conceptual models may be impor- tant in the effective analysis of a situation. Successful students and successful organisational strategists add to their intellectual tool kits on a continual basis.

Making the diagnosis The fifth step of effective case analysis – diagnosis – is the process of identifying and clarifying the roots of the problems by comparing goals with facts. In this step, it is useful to search for predicaments. Predica- ments are situations in which goals do not fit with known facts. When you evaluate the actual perfor- mance of an organisation, business unit or individual, you may identify over- or under-achievement (relative to established goals). Of course, single-problem situa- tions are rare. Accordingly, you should recognise that the case situations you study probably will be com- plex in nature.

Effective diagnosis requires you to determine the problems affecting longer-term performance and those requiring immediate handling. Understanding these issues will aid your efforts to prioritise prob- lems and predicaments, given available resources and existing constraints.

Doing the action planning The final step of an effective case analysis process is called action planning. Action planning is the process of identifying appropriate alternative actions. In the action planning step, you select the criteria you will use to evaluate the identified alternatives. You may derive these criteria from the analyses; typically, they are related to key strategic situations facing the focal

organisation. Furthermore, it is important that you prioritise these criteria to ensure a rational and effec- tive evaluation of alternative courses of action.

Typically, managers ‘satisfice’ when selecting courses of action; that is, they find acceptable courses of action that meet most of the chosen evaluation criteria. A rule of thumb that has proved valuable to strategic decision makers is to select an alternative that leaves other plausible alternatives available if the one selected fails.

Once you have selected the best alternative, you must specify an implementation plan. Developing an implementation plan serves as a reality check on the feasibility of your alternatives. Thus, it is important that you give thoughtful consideration to all issues associated with the implementation of the selected alternatives.

What to expect from in-class case discussions Classroom discussions of cases differ significantly from lectures. The case method calls for instructors to guide the discussion, encourage student participation and solicit alternative views. When alternative views are not forthcoming, instructors typically adopt one view so that students can be challenged to respond to it thoughtfully. Often students’ work is evaluated in terms of both the quantity and the quality of their contributions to in-class case discussions. Students benefit by having their views judged against those of their peers and by responding to challenges by other class members and/or the instructor.

During case discussions, instructors listen, ques- tion and probe to extend the analysis of case issues. In the course of these actions, peers or the instructor may challenge an individual’s views and the validity of alternative perspectives that have been expressed. These challenges are offered in a constructive man- ner; their intent is to help students develop their ana- lytical and communication skills. Instructors should encourage students to be innovative and original in the development and presentation of their ideas. Over the course of an individual discussion, students can develop a more complex view of the case, benefiting from the diverse inputs of their peers and instructor.

Introduction • Preparing an effective case analysis