Hi! In this post, we will look at how to present a case analysis and what frameworks can be used to crack a business case. A lot of this content can be used for group discussion, case discussion, and case analysis, especially if it’s related to solving a business problem. I have tried to make the jargon simpler using examples as most of these are core concepts that you will pick during your MBA. An initiation through this effort should definitely help!
1. Issue Tree [wiki article]
Think of a simple flowchart which tells you what to do once you reach a certain problem. Let’s say you want to invest money in the stock market and you want to buy a share at a certain price. So my flowchart could be: If the price is <100 then buy, if the price is >100 then wait
Now, let’s say you have purchased the share at 95, and you want to sell it for more than 130, so you have created another branch from the buy option that you had chosen which will be: If the price is < 130 then hold, if the price is > 130 then sell
but there could be one more option now, that if the price falls to 80, you don’t want to hold the stock any more and 15 Rs is the maximum loss that you can bear. The flowchart will then become: If the price is <= 80 then sell, if the price is > 80 but less than 130 then hold, if the price is >130 then sell
What we are building here is a logic tree. Similarly, a business problem can be solved by creating an Issue Tree. Let’s say there is a company which has hired you as a consultant to increase profitability. So, you will have to think in terms of Issue Tree, the beginning of which will start from the problem statement:
Under each of these, you can have more branches. For example, to increase the revenue from new clients, you can acquire new clients and/or increase the ticket size of your offering (ticket size is cost of 1 item of your product/service). The objective of decreasing variable cost may be achieved by reducing the price of the raw material cost by negotiating with vendors (a further branch to that could be looking for alternate vendors) or performing work study to check if there is optimal resource utilization.
An important thing here is to be MECE in your approach, which is the next concept that we are going to understand.
2. MECE [wiki article]
MECE stands for Mutually Exclusive and Collectively Exhaustive. To put it simply, you are considering all the sets and the elements of sets are not common or the sets aren’t intersecting. In the above example that we have seen, the first branch that we created which is increasing revenue and decreasing costs, I am considering these two as the exhaustive ways of improving profitability and there is no overlap between them (don’t confuse the outcome which you will create through the combination of these two with ‘overlap’).
An example of MECE is categorizing all the students of a college on the basis of the year in which they are born as a person can’t have two different birth years. A non-MECE example of categorizing the same set of students would be on the basis of their hobbies and interests as a person can have two or more hobbies.
So how do you use this in a case that you encounter? Start thinking of exhaustive solutions to the problem and arranging the information using the issue tree such that there is no overlap between the branches that you are pursuing. If the problem is to reduce the travel time to reach from point X to point Y, a MECE approach can begin with something like: Increasing the speed on the current path (which can further branch into using the same vehicle or a different vehicle) or finding an alternate path which has shorter distance (which can further branch into taking air, water, and alternate land route to reach the same place).
Please keep in mind that if you make any assumptions while solving a problem, you should put them up clearly so that the case evaluator knows the scope that you have defined for the problem. So in the above problem, it is important to clarify the definition of travel time possibly as = Time taken on average in the absence of heavy traffic and unforeseen situations such as construction work on the road.
A really good article on MECE can be found here for those of you who want to read more about it.
3. Root Cause Analysis [wiki article]
As the term indicates, RCA deals with identifying Root or the main cause of a problem. If your electricity bill has gone up and the usage has remained constant, cause will mostly be increase in tariff by the service provider (assuming no theft and rejecting other branches). To find the root cause, you will have to ask yourself a lot of questions and most of them will be Wh-questions which brings us to the next concept: Five Whys
An example of a problem is: The Computer isn’t switching on.
Why? – There is no electricity. (First why)
Why? – The entire area grid has been shut down. (Second why)
Why? – The grid is faulty and is under repair. (Third why)
Why? – There was a flood situation yesterday due to heavy rain and the water level reached main circuit causing a significant damage. (Fourth why)
Why? – The grid was constructed in a low lying area ignoring such eventualities. (Fifth why, a root cause)
An extension of this and of the issue tree approach that we saw previously is the Ishikawa Diagram or the Fishbone Diagram (named so because of its appearance) which can be used to put causes behind a problem in a pictorial format.
Think of a business problem. Let’s say the company is experiencing decline on all financial indicators in the last few years: Revenue down, Profits down, Costs are up, etc. So we know the effect. But we need to know the causes, which can be represented in this manner. From here, you can work out various causes and their reasons.
To summarize this post, understand that any case solution stars with understanding the problem statement, breaking it down into causes, and identifying solutions to solve the problem. Any business case will require you to think in multiple directions, put yourself in the shoes of the problem solver, think of stakeholders and impact of your decisions, and come up with a viable strategy or strategies. If there is one take away from this post, it is this: Ask more questions! Let’s end it on a fun note and visit this ad from my era.
Hope this helps! I am not sure how many parts will this series run into as I am going to rely a lot on the response by readers. Please give your feedback in the comments section and if you want me to cover any specific points. Tentatively, the next post will be up in 2/3 days. Do share with your friends and co-aspirants. Happy prepping! 🙂