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Preparing a Winning Case. © George Leng Cisco Systems Posted with permission – March 2006. What Are We Looking for?. Creative. Analytics. Soft Skills. Apply a unique perspective to business situations See the big picture Draw conclusions from partial information

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preparing a winning case

Preparing a Winning Case

© George Leng

Cisco Systems

Posted with permission – March 2006.

what are we looking for
What Are We Looking for?

Creative

Analytics

Soft Skills

  • Apply a unique perspective to business situations
  • See the big picture
  • Draw conclusions from partial information
    • Make assumptions, see patterns, and generate hypotheses

Provide structure to unstructured problems

Break problems into components

Apply transparent, logical thinking to each component

Synthesize discussion into solution

Time management skills and awareness

Communication skills

Interpersonal skills and personality

Performance under and reaction to pressure

to be successful you must
To be successful, you must:
  • Play the role stated in the case.
  • Make a decision and support it.
  • Make reasonable assumptions
  • Support your recommendations with detailed qualitative and financial analysis
  • Financial Analysis it is not that hard.
    • Just ask “what numbers do I need to crunch to figure out what is going on with the firm?”
what is the right answer
What is the Right Answer?
  • There isn’t one in most cases.
  • There are, however, very bad answers.
  • Make sure your B.S. meter is functioning.
  • The solution must be realistic given:
    • the power of the company,
    • the resources she can control,
    • the time frame for solving the problem and
    • the expected competitive response.
understand the business
Understand The Business
  • What Business Are We In?
  • Who Are Our Customers?
  • What Are They Buying?
  • Who Are Our Competitors?
  • How Do We Make Money?
  • How Does $ Go Through Our Company?
approaching the case
Approaching the Case

Dissect

Structure

Analyze

Conclude

  • Develop approach to solve problem
  • Be hypothesis-driven
  • Communicate approach and assumptions (if necessary)
  • Prioritize hypothesis
  • Ask questions to test hypothesis
  • Perceive possible solutions in the decomposition
  • Perform “reality check:” Did you address the key problem?
  • Synthesize findings and their relation to the question
  • Make recommendations
  • Identify implications
  • Ensure complete understanding of question
  • Distinguish relevant issues from “red herrings”
  • Identify root causes of problem
the issue tree analysis
The Issue Tree Analysis

Issue Tree Methodology

Basic Issue Tree Structure

Characteristics of Good Issue Trees

Subissue

  • Elements at a given level are logically part of prior level
  • No overlap of elements (mutually exclusive) and thorough representation of contributing elements (collectively exhaustive)
  • Elements are useful, observable, measurable and can be delegated
  • Can be easily communicated

Issue/Cause

Subissue

Subissue

Problem

Subissue

Issue/Cause

Subissue

Subissue

leveraging common business frameworks
Leveraging Common Business Frameworks
  • Frameworks are used to help guide and present analysis in a logical fashion
  • There is no exhaustive list of frameworks or analytical tools
  • Frameworks can be expanded and changed
  • Not all frameworks can be applied to all situations
  • The key is to understand which framework works best with the situation in question
leveraging common business frameworks9
Leveraging Common Business Frameworks
  • Product Life Cycle
  • Porter\'s 5 Forces: Barriers to Entry, Bargaining Power of Buyers, Bargaining Power of Suppliers, Availability of Substitute Products, and Level of Competition Among Firms
  • 3 C\'s: Cost, Customers, Competitors (Capacity sometimes added as a 4th C)
  • Value Chain
  • 4 P\'s: Product, Price, Place, Promotion
sample case
Sample Case

Cisco Systems has experienced the third consecutive drop in home networking sales. What should Cisco do to overcome this declining trend?

process
Process

Hypothesis

Research

Solution

Implementation

Enter Adjacent Markets

Declining Market

Digital TV

Video/ Entertainment

Take Market Share

Increased Competition

Divest

Handheld Devices

Flattening Sales

Product Quality

Electronic Appliances

Sales Strategy

Distribution Channels

six elements of a winning case

ProblemDefinition

Implement-ation Plan

Financials

StrategyFormulation

Cohesive Storyline

Research

Six Elements of a Winning Case
top 7 things to do
Top 7 things to DO
  • Tell a story. Develop a logical flow.
  • Answer the questions stated in the Case.
  • Tie your strategy back to your problem statement.
  • Be realistic, given the constraints of money, customer readiness, and technology limitations.
  • Summarize your slides.
  • Manage your time
  • Leverage visuals to bring out your points.
do use visuals to communicate broad trends
Do Use Visuals to communicate broad trends

2X2 matrix

Cost

Millions

Revenue

Millions

50

80

Seg A

70

‘01

100

50

Revenue Potential

Seg B

70

‘00

70

20

70

‘99

50

% of Profit

% of accounts

Year

Service Rating

Risks

Impact

top 7 things not to do
Top 7 things NOT to do
  • Recommend something that the company has already done
  • Try to force-fit a framework to the problem
  • Label your frameworks
  • Hide from the details or numbers
  • Forget what question you’re trying to answer
  • Crowd your slides
  • Panic
the product industry life cycle
The Product (Industry) Life Cycle
  • Describes the stages that a new product goes through from the beginning to the end

Sales

Maturity

Growth

Decline

Introduction

Time

the product industry life cycle19
The Product (Industry) Life Cycle
  • Each phase within the product life cycle is defined by certain characteristics

Introduction

Growth

Maturity

Decline

  • Definition of users and uses
  • Low competition
  • High risk
  • High investment
  • Technical period
  • Growth of competition
  • High profits
  • Strategies are defined
  • Legends develop
  • Dynamic period
  • Profits level/decline
  • Marketing plays key role
  • Manufacturing economics are key
  • Mergers
  • Stable period
  • Sales decline
  • Eroding profits
  • Products perceived as commodities
  • Market exit
  • Mergers
swot analysis
SWOT Analysis
  • Used to understand how internal/external factors interact to create competitive advantage or competitive pressure
  • Strengths
  • Cost advantage
  • Financial resources
  • Customer loyalty
  • Modern production
  • facilities
  • Patents
  • Opportunities
  • Add to the product
  • line
  • Enter new market
  • Acquire firms with
  • needed technology

Leverage

Vulnerability

  • Weaknesses
  • Too narrow a product
  • line
  • Lack of management
  • depth
  • High-cost operation
  • Inadequate financing
  • Weak market image
  • Threats
  • Shifting buyer tastes
  • Likely entry of new
  • competitors
  • Potential for
  • technology to
  • radically change
  • industry

Constraints

Problems

porter s five forces
Porter’s Five Forces

New Entrants

Government Forces

Macroeconomic Forces

Suppliers

Industry Competitors

Buyers

Distribution Channel Dynamics

Substitutes

Technology

porter s five forces model
Porter’s Five Forces Model
  • Each of the five forces shapes various aspects of an industry and must be taken into account in strategy formulation
  • New entrants are companies from a different industry offering products within the same class as competitors
  • High threat if: low barriers to entry, high industry profitability and/or growth, and/or low buyer switching cost
  • Substitutes are products of a different class that offer a similar value proposition as the industry product class
  • High threat if: low substitute cost-to-benefit trade-off, rapidly-changing technology, and/or high buyer willingness to substitute
  • Suppliers provide the inputs (labor, material, equipment, infrastructure, etc.) to the competitors
  • High power if: few suppliers with no available substitute inputs, high supplier switching costs for industry competitors, and/or other markets for suppliers’ products
  • Buyers are the purchasers of industry product class
  • Power is high if there is/are: a relatively small number of informed buyers or buyer groups purchasing high volume, little or no perceived product differentiation, and/or low switching costs
  • Competitors are those companies offering products within the same product class
  • Competition is high if there is/are: numerous or equally balanced competitors, mature market growth, and/or high exit barriers
the marketing mix four p s
The Marketing Mix: Four P’s
  • Is used as an approach for crafting and implementing marketing strategies, usually for new products
  • Quality
  • Features
  • Warranties
  • Brand
  • Services
  • Options
  • Payment Period
  • Credit Terms
  • Discounts
  • Allowances
  • List Price

Price

Product

Marketing Mix

  • Channels
  • Coverage
  • Location
  • Inventory
  • Transport
  • Publicity
  • Partnering
  • Advertising

Place

Promotion

key financial statements
Key Financial Statements
  • The following three financial statements are available for any public entity and can be used to assess the financial health of the entity
balance sheet
Balance Sheet
  • Provides a snapshot of an entity’s assets and liabilities at a given point in time

Assets

= Liabilities & Shareholder Equity

Current Liabilities

Current Assets

Where the money is coming from

Where the money is going to

Long-term Liabilities

Liquidity

Fixed Assets

Shareholder’s Equity & Retained Earnings

Intangible Assets

Off-Balance Sheet Items

income statement
Income Statement
  • Reflects the financial results of a an entity over a period of time, typically one year

Revenues

COGS

SGA

Interest Expenses

Net Profit

net present value
Net Present Value
  • NPV is a quantitative way to evaluate strategic choices.
  • PV = FV

(1+r)n

PV = Present Value, FV = Future Value, r = discount rate, n = time in years

  • NPV = FV0 + FV1+ C2+…

(1+r)2 (1+r)3

  • Perpetuity: C

r

C = Cash Flow, r = discount rate

Note: First payment is one year from today, not today.

  • Payback Method: How long will to take to recover the initial investment?
npv and payback example
NPV and Payback Example

NPV Example:

Payback Example:

NPV = $285

ratio analysis
Ratio Analysis
  • The following are some common ratios used to analyze a company’s financial health
break even analysis
Break-Even Analysis
  • This is used to understand the relationship between costs and helps identify the point at which an investment will receive a positive return
solution scenario analysis
Solution Scenario Analysis
  • You expect a certain outcome based on the current market environment, trends and your current assumptions.
  • But Wait! Your solution may have several outcomes due to “uncontrollable” variables:
    • Competition, consumer preference, economy, energy costs, process complications, delays, new technologies, regulations, etc.
stakeholder analysis
Stakeholder Analysis

Consider the following questions:

  • Is the stakeholder part of the decision making? How influential is the stakeholder?
  • How does your strategy affect the stakeholder and how does the stakeholder affect your strategy?
  • Is the stakeholder a possible supporter or a possible hurdle?
  • What do you need to achieve with the stakeholder to make sure your strategy is a success?
implementation timeline
Implementation Timeline
  • Your strategy should be accompanied by a realistic timeline
  • Consider the following questions:
    • What kind of a time scale does it take to implement your strategy?
      • 6 months, 1 year, 2 years, 5 years, etc.
    • What happens at each milestone?
    • How realistic is your implementation milestones? What kind of research have you put in to your estimates?
    • How much money is required for each step?
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