CCER Peking University A Guide to Case Analysis A Guide

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					CCER, Peking University, 2004                                              A Guide to Case Analysis




                                  A Guide to Case Analysis
       This is a guide to case analysis for MBA students. Simply begin with this
guidance as your outline and fill in the blanks by answering the questions provided.

     A) Executive Summary – (1 page summary of the information below—do

          this section last after you have finished the rest of the case)

          1)   Description of the project
          2)   Market, Client & Competition
          3)   Financial Analysis
          4)   Sensitivity, Risks, and contingencies
          5)   Definitions of success and failure


     B) Description of the project

          1) Purpose of the investment. [This is a summary of what the company
             should expect to gain from its investment in this project.]

          2) Key reasons for pursuing the project. [What are the major reasons for
             pursuing this project and not other projects like it? What is the business
             model that drives this project – how will it contribute to a sustainable,
             repeatable, scaleable process for positive cash flow? Why does this one
             make the most business sense?]

          3) Strategic Alignment. [How will the project support the company’s strategy
             for sustaining competitive advantage? Is the POL (project outcome lifecycle)
             part of a portfolio of outcomes that represent the implementation of a strategy
             or is it an element toward developing a new strategy? If it is simply reacting to
             a development in the market, how will it support the strategy or at least not
             damage it?]

          4) The value proposition. [What are the core characteristics that make this
             venture uniquely valuable to its customers and that will allow continued
             success over time. Describe this using as few words as possible.]

          5) Project Requirements. [This is an executive overview of the requirements
             document for the project. It should connect the project requirements with
             how they will contribute to the business success of the venture through the
             POL.]

          6) Project Goal, Milestones, and Major Deliverables. [These should be
             listed and also related to the business success of the venture through the POL.]


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CCER, Peking University, 2004                                           A Guide to Case Analysis




     C) Market, Client & Competition


          1) Market Analysis
             (a) Critical Success Factors. [What critical success factors that the
                 company depends on to compete in the market place will be supported,
                 enhanced or created by this venture? How will this sustain, protect, or
                 advance competitive advantage?]
             (b) Weaknesses. [Are there any weaknesses along the value chain of this
                 venture that must be strengthened to ensure success?]
             (c) Opportunities. [What is the opportunity in the market that this venture
                 is going to capitalize on?]
             (d) Threats. [Are there problems or threats that this venture must be aware
                 of, or problems that it has to solve? Include marketing risk as well as
                 technical risk.]
             (e) Structure and size of the target markets.
             (f) Market trends. [What can we expect with regard to market growth over
                 the life of the POL?]

          2) Customer analysis
             (a) Who is the customer for this venture? [ Be specific on exactly who will
                 use the outcome of the venture. If it is an internal customer, position
                 them on your value chain out to the external customer who “pays the
                 bills.”]
             (b) How does the venture fulfill Customer needs? [Why will the targeted
                 customer want to use the outcome of the venture? What would they do it
                 did not exist?]
             (c) How does it provide needed Benefits to the customer? [Specifically
                 what will the venture do along the value chain of the company to delight
                 the customer?]

          3) Competitive Analysis
             (a) Who are our competitors? [If potential customers do not use the
                 outcome of the project, what are they likely to use (other products,
                 services, and substitutes) instead?    Who would provide that to them?
                 These are your competitors! (This should apply to the immediate end
                 user of an internal project as well as paying customers further down the
                 value chain.)]
             (b) What do they offer to our customers? [Why would your customers use
                 a competitor’s offering instead of yours?]
             (c) How are you going to beat the competition? [How will the investment
                 enable the company to provide a better product or other offering to our
                 customers than our competitors?]
             (d) Should we anticipate counter-moves by our competitors? [What are
                 they going to do to block the desired advantage that we intend to derive
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CCER, Peking University, 2004                                              A Guide to Case Analysis



                   from this venture?]
               (e) Are there possible new competitors lurking out there? [Are there any
                   potential competitors who are not active now, but could come out of
                   “nowhere” to blindside us?]
               (f) Do we have contingency plans? [What do we intend to do to meet the
                   counter-moves by our competitors and prepare for new competitors?]


     D) Financial Analysis

          1) Financial Model. [This should be done for all projects. Internal projects also
             influence the finances of the company. In these cases compare projected
             financial statements that would result if the project were not done with those
             resulting from doing the project. The net difference reveals the NPV or EVA
             of doing the project. For all calculations use the business calculator provided
             on this site.]
             (a) Cash flows in. Revenues and where they will come from.
             (b) Cash flows out. Expenses including Cost of Goods Sold, and SG&A.
             (c) Financial Analysis. Financial Statements projected out for five years
                 including:
                 • Income Statement
                 • Balance Sheet
                 • NPV
                 • Discounted EVA
             (d) List of Assumptions. [List all of the important assumptions that you
                 have made about the financial model, market, competition, technology,
                 and every other contingency that you can think of that will influence the
                 projected numbers of the financial analysis and consequently, the success
                 or failure of this venture.]
             (e) List of assumption tests. [List all of the milestones and other
                 opportunities that will allow testing of the assumptions in your models.]

          2) Other non-quantitative factors. [ This is especially relevant if this is a
             project taken on for strategic reasons and is difficult to justify financially.]
             (a) Costs. [What are opportunity costs for doing this project. What else
                 could we do if we did not do this project and what would we gain by doing
                 the other project?]
             (b) Benefits. [Are there other benefits that are difficult to quantify such as
                 supporting general capabilities of the company or benefits to other
                 ventures not directly connected to the project?]


     E) Sensitivity, Risks, and Contingencies




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CCER, Peking University, 2004                                              A Guide to Case Analysis




          1) Sensitivity Analysis
             (a) Critical Assumptions. [From the complete list of assumptions in the
                 previous section identify those that are the most critical to the results of
                 the venture by performing a sensitivity analysis on each one.]

               (b) What happens if they change? [List the most critical factors identified
                   and show how they influence the results of the venture.]

          2) Risk Analysis
             (a) Identification of risk. [Identify anything that may happen to influence
                 the critical factors.]
             (b) Quantification of risk. [Assign subjective probability on these events
                 occurring or simply use high, medium and low.]
             (c) Management of risk. [How will you prevent the high probability events
                 from happening?]
             (d) Contingency plan. [What will you do to minimize damage if the high
                 probability events occur? How will you monitor the medium events?
                 What triggers or signs will you look for to tell you that the contingency
                 plan is necessary?]

          3) Contingencies and Dependencies
             (a) Value Chain Analysis. [What must happen beyond the boundaries of
                 the project to make the investment successful?]
             (b) Responsibility Charting. [Who will be responsible for making this
                 happen?]




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