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Guidelines for Case

Analysis

LEARNING OBJECTIVES
After studying the appendix, you should be able to do the following:

1. Describe the case method for learning strategic-management concepts.

2. Identify the steps in preparing a comprehensive written case analysis.
3. Describe how to give an effective oral case analysis presentation.
4. Discuss special tips for doing a case analysis.

385

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386 STRATEGIC MANAGEMENT

T
he purpose of this section is to help you analyze strategic-management cases. Numerous
guidelines and suggestions are presented as well as steps to follow. Be sure to use the
author website (www.strategyclub.com), which provides sample case analyses, sample
presentations, author videos, case and chapter updates, and especially the free Excel student
template.

What Is a Strategic-Management Case?

A strategic-management case describes an organization’s external and internal conditions and
raises issues concerning the firm’s vision, mission, strategies, objectives, and policies. Most of
the information in a strategic-management case is established fact, but some information may
be opinions, judgments, and beliefs. Strategic-management cases are more comprehensive than
those you may have studied in other courses. They generally include a description of impor-
tant internal (management, marketing, finance/accounting, production/operations, research
and development (R&D), management information systems) and external issues. A case puts
you at the scene of the action by describing a firm’s situation at some point in time. Strategic-
management cases are written to give you practice applying strategic-management concepts. The
case method for studying strategic management is often called learning by doing.

Guidelines for Preparing Case Analyses

The Need for Practicality
There is no such thing as a complete case, and no case ever gives you all the information you
need for conducting analyses and making recommendations. Likewise, in the business world,
strategists never have all the information they need to make decisions: Information may be
unavailable or too costly to obtain, or it may take too much time to obtain. So, in analyzing
cases, do what strategists do every day—make reasonable assumptions about unknowns, per-
form appropriate analyses, and make decisions. Be practical. For example, in performing a pro-
jected financial analysis, make reasonable assumptions and proceed to show what impact your
recommendations are expected to have on the organization’s financial position. Avoid saying,
“I don’t have enough information.” Always supplement the information provided in a case with
Internet and library research.

The Need for Justification

There is no single best solution or one right answer to a case, so it is important to give ample
justification for your recommendations. In the business world, strategists oftentimes do not know
if their decisions are right until resources have been allocated and consumed. Then it is often too
late to reverse a decision. Therefore, in your project, amply justify your recommendations, from
the beginning to the end of your written or oral presentation.

The Need for Realism

Avoid recommending a course of action beyond an organization’s means. Be realistic. No orga-
nization can possibly pursue all the strategies that could potentially benefit the firm. Estimate
how much capital will be required to implement your recommendation. Determine whether debt,
stock, or a combination of debt and stock could be used to obtain the capital. Make sure your
suggestions are feasible. Do not prepare a case analysis that omits all arguments and information
not supportive of your recommendations. Rather, present the major advantages and disadvan-
tages of several feasible alternatives. Try not to exaggerate, stereotype, prejudge, or overdrama-
tize. Strive to demonstrate that your interpretation of the evidence is reasonable and objective.

The Need for Specificity

Do not make broad generalizations such as, “The company should pursue a market penetration
strategy.” Be specific by telling what, why, when, how, where, and who. Failure to use specifics is
the single major shortcoming of most oral and written case analyses. For example, in an internal
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audit, say, “The firm’s current ratio fell from 2.2 in 2015 to 1.3 in 2016, and this is considered
to be a major weakness,” instead of “The firm’s financial condition is bad.” But recall from what
you have read that selected external and internal factors need to be “actionable” to the extent pos-
sible, and financial ratios in general are not actionable. Rather than concluding from a Strategic
Position and Action Evaluation (SPACE) Matrix that a firm should be defensive be more specific,
saying, “The firm should consider closing three plants, laying off 280 employees, and divesting
itself of its chemical division, for a net savings of $20.2 million in 2017.” Use ratios, percentages,
numbers, and dollar estimates. Businesspeople dislike generalities and vagueness.

The Need for Originality

Do not necessarily recommend the course of action that the firm plans to take or actually under-
took, even if those actions resulted in improved revenues and earnings. The aim of case analysis is
for you to consider all the facts and information relevant to the organization at the time, to gener-
ate feasible alternative strategies, to choose among those alternatives, and to defend your recom-
mendations. Support your position with charts, graphs, ratios, analyses, and the like. Be original.
Compare and contrast what you recommend versus what the company plans to do or is doing.

The Need to Contribute

Strategy formulation, implementation, and evaluation decisions are commonly made by a group
of individuals rather than by a single person. (See the individual versus group decision-making
exercise at the end of this Appendix.) Your professor will likely divide the class into three- or
four-person teams and ask you to prepare written or oral case analyses. Members of a team, in
class or in the business world, differ on their aversion to risk, their concern for short-run versus
long-run benefits, their attitudes toward social responsibility, and their views concerning global-
ization. There are no perfect people, so there are no perfect strategies. Be open-minded to others’
views. Be a good listener and a good contributor.
Your professor may ask the whole class to prepare a case for class discussion. Preparing a
case for class discussion means that you need to read the case before class, make notes regard-
ing the organization’s external opportunities and threats as well as internal strengths and weak-
nesses, perform appropriate analyses, and come to class prepared to offer and defend some spe-
cific recommendations. Be excited about strategic management. Be a class leader.

The Case Method Versus Lecture Approach

The case method of teaching involves a classroom situation in which students do most of the
talking; your professor facilitates discussion by asking questions and encouraging student inter-
action regarding ideas, analyses, and recommendations. Be prepared for a discussion along the
lines of “What would you do, why would you do it, when would you do it, and how would you
do it?” Prepare answers to the following types of questions:
• What are the firm’s most important external opportunities and threats?
• What are the organization’s major strengths and weaknesses?
• How would you describe the organization’s financial condition?
• What are the firm’s existing strategies and objectives?
• Who are the firm’s competitors, and what are their strategies?
• What objectives and strategies do you recommend for this organization? Explain your
reasoning. How does what you recommend compare to what the company plans?
• How could the organization best implement what you recommend? What implementation
problems do you envision? How could the firm avoid or solve those problems?

The Cross-Examination
Take a stand on the issues and support your position with objective analyses and outside
research. Strive to apply strategic-management concepts and tools in preparing your case for
class discussion. Seek defensible arguments and positions. Support opinions and judgments
with facts, reasons, and evidence. Crunch the numbers before class! Be willing to describe your

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388 STRATEGIC MANAGEMENT

recommendations to the class without fear of disapproval. Respect the ideas of others, but be
willing to go against the majority opinion when you can justify a better position.
Case analysis gives you the opportunity to learn more about yourself, your colleagues,
strategic management, and the decision-making process in organizations. The rewards of this
experience will depend on the effort you put forth. Discussing cases in class is exciting and
challenging. Expect views counter to those you present. Different students will place empha-
sis on different aspects of an organization’s situation and submit different recommendations for
scrutiny and rebuttal. Cross-examination discussions commonly arise, just as they occur in a real
business organization. Avoid being a silent observer.

Preparing a Written Case Analysis

In addition to asking you to prepare a case for class discussion, your professor could ask you
to prepare a written case analysis. Written reports are generally more structured and more
detailed than an oral presentation. Always avoid using jargon, vague or redundant words, acro-
nyms, abbreviations, sexist language, and ethnic or racial slurs. And watch your spelling! Use
short sentences and paragraphs and simple words and phrases. Use quite a few subheadings.
Arrange issues and ideas from the most important to the least important. Use the active voice
rather than the passive voice for all verbs; for example, say “Our team recommends that the
company diversify” rather than “It is recommended by our team to diversify.” Use many exam-
ples to add specificity and clarity. Tables, figures, pie charts, bar charts, timelines, and other
kinds of exhibits help communicate important points and ideas. Sometimes a picture is worth
a thousand words.

The Executive Summary

Your professor could ask you to focus the written case analysis on a particular aspect of the stra-
tegic-management process, such as (1) to identify and evaluate the organization’s existing vision,
mission, objectives, and strategies; or (2) to propose and defend specific recommendations for
the company; or (3) to develop an industry analysis by describing the competitors, products,
selling techniques, and market conditions in a given industry. These types of written reports are
sometimes called executive summaries. An executive summary usually ranges from three to five
pages of text in length, plus exhibits.

The Comprehensive Written Analysis

If asked to develop a comprehensive written analysis, picture yourself as a consultant who has
been asked by a company to conduct a study of its external and internal environment and to
make specific recommendations for its future. Prepare exhibits to support your recommenda-
tions. Highlight exhibits with discussion in the paper. Comprehensive written analyses are usu-
ally about 20 pages in length, plus 20 exhibits. Throughout your written analysis, emphasize how
your proposed strategies will enable the firm to gain and sustain competitive advantage. Visit
www.strategyclub.com for examples.

Steps in Preparing a Comprehensive Written Analysis

In preparing a written case analysis, you should follow the steps outlined here, which correlate
to the stages in the strategic-management process and the chapters in this text. (Note—More
detailed steps, including a minute-by-minute breakdown, are given later in this Appendix.)
Step 1 Identify the firm’s existing vision, mission, objectives, and strategies.
Step 2 Develop vision and mission statements for the organization.
Step 3 Identify the organization’s external opportunities and threats.
Step 4 Construct a Competitive Profile Matrix (CPM).
Step 5 Construct an External Factor Evaluation (EFE) Matrix.
Step 6 Identify the organization’s internal strengths and weaknesses.
Step 7 Construct an Internal Factor Evaluation (IFE) Matrix.
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Step 8 Prepare a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix,

Strategic Position and Action Evaluation (SPACE) Matrix, Boston Consulting
Group (BCG) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix, and
Quantitative Strategic Planning Matrix (QSPM) as appropriate. Give advantages
and disadvantages of alternative strategies.
Step 9 Recommend specific strategies and long-term objectives. Show how much your
recommendations will cost. Clearly itemize these costs for each projected year.
Compare your recommendations to actual strategies planned by the company.
Step 10 Specify how your recommendations can be implemented and what results you
can expect. Prepare forecasted ratios and projected financial statements. Present a
timetable or agenda for action.
Step 11 Recommend specific annual objectives and policies.
Step 12 Recommend procedures for strategy review and evaluation.

Making an Oral Presentation

Your professor may ask you to prepare a case analysis, individually or as a group, and pres-
ent your analysis to the class. Oral presentations are usually graded on two parts: content and
delivery. Content refers to the quality, quantity, correctness, and appropriateness of analyses
presented, including such dimensions as logical flow through the presentation, coverage of
major issues, use of specifics, avoidance of generalities, absence of mistakes, and feasibility
of recommendations. Delivery includes such dimensions as audience attentiveness, clarity of
visual aids, appropriate dress, persuasiveness of arguments, tone of voice, eye contact, and
posture. Great ideas are of no value unless others can be convinced of their merit through
clear communication. The guidelines presented here can help you make an effective oral
presentation. Present a united front when presenting as a team. Always say “we did such and
such” and “we recommend such and such,” rather than, “I did the financial ratios” or “I rec-
ommend such and such.” A light or humorous introduction can be effective at the beginning
of a presentation.

Controlling Your Voice

An effective rate of speaking ranges from 100 to 125 words per minute. Practice your presenta-
tion aloud to determine if you are talking too fast. Individuals commonly speak too fast when
they are nervous. Breathe deeply before and during the presentation to help yourself slow down.
Have a cup of water available; pausing to take a drink will wet your throat, give you time to
collect your thoughts, control your nervousness, slow you down, and signal to the audience a
change in topic.
Avoid a monotone voice by placing emphasis on different words or sentences. Speak loudly
and clearly, but do not shout. Silence can be used effectively to break a monotone voice. Stop at
the end of each sentence, rather than running sentences together with and or uh.

Managing Body Language

Be sure not to fold your arms, lean on the podium, put your hands in your pockets, or put your
hands behind you. Maintain a straight posture, with one foot slightly in front of the other. Do
not turn your back to the audience; doing so is not only rude but it also prevents your voice from
projecting well. Avoid using too many hand gestures, too. On occasion, leave the podium or table
and walk toward your audience, but do not walk around too much. Never block the audience’s
view of your visual aids.
Maintain good eye contact throughout the presentation. This is the best way to persuade
your audience. There is nothing more reassuring to a speaker than to see members of the audi-
ence nod in agreement or smile. Try to look everyone in the eye at least once during your presen-
tation, but focus more on individuals who look interested than on those who seem bored. To stay
in touch with your audience, use humor and smiles as appropriate throughout your presentation.
No presentation should ever be dull!

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390 STRATEGIC MANAGEMENT

Speaking from Notes

Be sure not to read to your audience; doing so puts people to sleep. Perhaps worse than reading
is merely reciting what you have memorized. Do not try to memorize anything. Rather, practice
unobtrusively using notes. Make sure your notes are written clearly so you will not flounder
when trying to read your own writing. Include only main ideas on your note cards. Keep note
cards on a podium or table if possible so that you will not drop them or get them out of order;
walking with note cards tends to be distracting.

Constructing Visual Aids

Make sure your visual aids are legible to individuals in the back of the room. Using color to
highlight special items is a good idea. Avoid putting complete sentences on visual aids; rather,
use short phrases and then orally elaborate on issues as you make your presentation. Generally,
there should be no more than four to six lines of text on each visual aid. Use clear headings and
subheadings. Do not use many handouts or your audience may concentrate on them instead of
you during the presentation.

Answering Questions
It is best to field questions at the end of your presentation, rather than during the presentation
itself. Encourage questions, and take your time to respond to each one. Answering questions can
be persuasive because it involves you with the audience. If a team is giving the presentation, the
audience should direct questions to a specific person. During the question-and-answer period, be
polite, confident, and courteous. Avoid verbose responses. Do not get defensive with your answers,
even if a hostile or confrontational question is asked. Staying calm during potentially disruptive
situations, such as a cross-examination, reflects self-confidence, maturity, poise, and command
of the particular company and its industry. Stand up throughout the question-and-answer period.

Tips for Success in Case Analysis

Strategic-management students who have used this text over 15 editions offer you the following
tips for success in doing case analysis.
1. Use the www.strategyclub.com website resources. The free Excel student template is espe-
cially useful as are the sample PowerPoint case analyses.
2. In preparing your external assessment, use the online databases subscribed to by your
college library.
3. Go to http://finance.yahoo.com and enter your company’s stock symbol. Also, enter your
firm’s major rival’s stock symbol. Become knowledgeable about key trends and issues in
your industry.
4. View your case analysis and presentation as a product that must have some competitive
factor to favorably differentiate it from the case analyses of other students.
5. Develop a mind-set of why, continually questioning your own and others’ assumptions and
assertions.
6. Seek the help of professors in other specialty areas when necessary, and mention them by
name in your presentation.
7. A goal of case analysis is to improve your ability to think clearly in ambiguous and confus-
ing situations; do not get frustrated that there is no single best answer.
8. Work hard to develop the ability to formulate reasonable, consistent, and creative plans; put
yourself in the strategist’s position.
9. Develop confidence in using quantitative tools for analysis.
10. Strive for excellence in writing and in the technical preparation of your case. Prepare infor-
mative and neat charts, tables, diagrams, and graphs.
11. Pay attention to detail.
12. Think through alternative implications fully and realistically. The consequences of
decisions are not always apparent. They often impact many different aspects of a firm’s
operations.
13. Provide answers to such fundamental questions as what, when, where, why, who, and how.
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14. Do not merely recite ratios or present figures. Rather, develop ideas and conclusions con-
cerning the possible trends. Use figures to support what your team is recommending.
15. Your analysis should be as detailed and specific as possible.
16. Emphasize the Recommendations and Strategy Implementation sections. A common mis-
take is to spend too much time on the external or internal analysis parts of your paper or
presentation. The recommendations and implementation sections are the most important
part.
17. Throughout your case analysis, emphasize how your proposed strategic plan will enable
the firm to gain and sustain competitive advantage.
18. When working as a team, do most of the work individually. Use team meetings mostly to
assimilate work. This approach is most efficient.
19. During the presentation, keep good posture, eye contact, and voice tone, and project confi-
dence. Do not get defensive under any conditions or with any questions.
20. Prepare your case analysis in advance of the due date to allow time for reflection and prac-
tice. Do not procrastinate.
21. Other students will have strengths in functional areas that will complement your weak-
nesses, so develop a cooperative spirit that moderates competitiveness in group work.
22. When preparing a case analysis as a group, divide into separate teams to work on the exter-
nal analysis and internal analysis.
23. Maintain a good sense of humor.
24. Capitalize on the strengths of each member of the group; volunteer your services in your
areas of strength.
25. Set goals for yourself and your team; budget your time to attain them.
26. Foster attitudes that encourage group participation and interaction. Do not be hasty to
judge group members.
27. Be prepared to work. There will be times when you will have to do more than your share.
Accept it, and do what you have to do to move the team forward.
28. Think of your case analysis as if it were really doing this for a company.
29. To uncover flaws in your analysis let one person in the group actively play the devil’s
advocate.
30. Do not schedule excessively long group meetings; two-hour sessions are about right.
31. Push your ideas hard enough to get them listened to, but then let up; listen to others and
try to follow their lines of thinking; follow the flow of group discussion, recognizing when
you need to get back on track.
32. Develop a case-presentation style that is direct, assertive, and convincing; be concise, pre-
cise, fluent, and correct.
33. Have fun when at all possible. Preparing a case is frustrating at times, but enjoy it while
you can; it may be several years before you are playing CEO again.
34. Get things written down (drafts) as soon as possible.
35. Neatness is a real plus; your case analysis should look professional.
36. Let someone else read and critique your presentation several days before you present it.
37. Make special efforts to get to know your group members. This leads to more openness in
the group and allows for more interchange of ideas.
38. Be constructively critical of your group members’ work. Do not dominate group discus-
sions. Be a good listener and contributor.
39. Include this project on your resume as class work is accomplished.
40. Apply for a full-time job at the case company for which you prepared this strategic plan.
41. For every slide you show in an oral presentation, point out how the information supports
your recommendations for the firm.
42. Make certain that your key external and internal factors are quantitative, divisional, and
actionable to the extent possible.

Sample Case Analysis Outline

There are musicians who play wonderfully without notes and there are chefs who cook wonder-
fully without recipes, but most of us prefer a more orderly cookbook approach, at least in the first
attempt at doing something new. Therefore, the eight minute-by-minute steps shown in Table 1

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392 STRATEGIC MANAGEMENT

TABLE 1 Recommended Outline for Delivering a 27-Minute Oral Case Presentation

I. +0641&7%6+10 /+076'
a. Introduce yourselves by name and major. Establish the time setting of your case and analysis. Prepare your strategic plan for the three
years forthcoming.
b. Introduce your company and its products or services; capture interest.
c. Show the outline of your presentation and tell who is doing what parts.

II. 8+5+10#0&/+55+10 /+076'5

a. Show existing vision and mission statements if available from the firm’s website, annual report, or elsewhere.
b. Show your “improved” vision and mission and tell how and why it is different.
c. Compare your vision and mission to a leading competitor’s statements.

III. +06'40#.#55'55/'06 /+076'5

a. Give your financial ratio analysis. Highlight especially good and bad ratios. Do not give definitions of the ratios and do not highlight all
the ratios.
b. Show the firm’s organizational chart found or “created based on executive titles.” Identify the type of chart as well as good and bad
aspects. Unless all white males comprise the chart, peoples’ names are generally not important because positions reveal structure.
c. Present your improved organizational chart. Tell how and why it is different.
d. Show a market positioning map with firm and competitors. Discuss the map in light of strategies you envision for firm versus competi-
tors’ strategies.
e. Identify the marketing strategy of the firm in terms of good and bad points versus competitors and in light of strategies you envision for
the firm.
f. Show a map locating the firm’s operations. Discuss in terms of strategies you envision. Perhaps show a value chain analysis chart.
g. Discuss (and perhaps show) the firm’s website and Facebook page in terms of good and bad points compared to rival firms.
h. Show your “value of the firm” analysis.
i. List the firm’s 20 most important strengths and weaknesses. Go over highly rated factors without “reading” any verbatim. Make sure you
key internal factors are quantitative, divisional, and actionable to the extent possible.
j. Show and highlight your Internal Factor Evaluation (IFE) Matrix.

IV. ':6'40#.#55'55/'06 /+076'5

a. Identify and discuss major competitors. Use pie charts, maps, tables, or figures to show the intensity of competition in the industry. Pave
the way for your recommendations.
b. Show your Competitive Profile Matrix. Include 15 factors and two competitors.
c. Summarize key industry trends citing Standard & Poor’s Industry Survey and IBIS World information. Highlight key external (economic,
social, cultural, demographic, geographic, technological, political, legal, governmental, and natural environment) trends as they impact
the firm.
d. List the firm’s 20 most important opportunities and threats. Make sure your opportunities are not stated as strategies. Go over highly
weighted factors without “reading” any verbatim. Make sure your key external factors are quantitative, divisional, and actionable to the
extent possible.
e. Show and highlight your External Factor Evaluation (EFE) Matrix.

V. 564#6');(14/7.#6+10 /+076'5
a. Show and highlight your SWOT Matrix, focusing on the strategies you ultimately will recommend.
b. Show and explain your SPACE Matrix. Focus more on the implications than the numbers. Strategies must be specific; avoid vague terms
such as market penetration.
c. Show your Boston Consulting Group (BCG) Matrix. Focus more on the implications than the numbers. Do multiple BCG Matrices if
possible, including domestic versus global, or another geographic breakdown. Develop a product BCG if at all possible. Comment on
each matrix as per strategies you recommend. Develop this matrix even if you do not know the profits per division and even if you have
to estimate the axes information. However, make no wild guesses on axes or revenue/profit information.
d. Show and highlight your Internal-External (IE) Matrix.
e. Show and highlight your Grand Strategy Matrix.
f. Show your Quantitative Strategic Planning Matrix (QSPM). Be sure to explain your strategies. Do not go back over the internal and
external factors.
g. Present your recommendations page. This is the most important page in your presentation. Be specific in terms of both strategies and
estimated costs of those strategies. Total your estimated costs. You should have 10 or more strategies. Divide your strategies into two
groups: (1) Existing Strategies to Be Continued and (2) New Strategies to Be Started.
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VI. 564#6');+/2.'/'06#6+10 /+076'5

a. Show and highlight your earnings per share/earnings before interest and taxes (EPS/EBIT) analysis to reveal whether stock, debt, or a
combination is best to finance your recommendations. Graph the analysis.
b. Show your projected income statement and balance sheet. Relate changes in the items to your recommendations rather than blindly
going with historical percentage changes. Be sure to show the retained earnings calculation and the results of your EPS/EBIT decision.
c. Show your projected financial ratios and highlight several key ratios to show the benefits of your strategic plan.

VII. 564#6');'8#.7#6+10 /+076'

a. Prepare a Balanced Scorecard to show your expected financial and nonfinancial objectives recommended for the firm.

VIII. %10%.75+10 /+076'5

a. Compare and contrast your strategic plan versus the company’s own plans for the future.
b. Thank audience members for their attention. Genuinely seek and gladly answer questions.

may serve as a basic outline for you in presenting a strategic plan for your firm’s future. This
outline is not the only approach used in business and industry for communicating a strategic
plan, but this approach is time-tested, it does work, and it does cover all of the basics. You may
amend the content, tools, and concepts given to suit your own company, audience, assignment,
and circumstances, but it helps to know and understand the rules before you start breaking them.

Recommended Time Allocation for Presenting a Case Analysis

Your professor may allow between 15 and 40 minutes for your case presentation; the outline in
Table 1 is provided for a 27-minute presentation. Be sure in an oral presentation to manage time,
knowing that your recommendations and associated costs are the most important part. If you are
only allowed 15 minutes of presentation time, prepare (1) a condensed slide show and (2) a full
slide show of your case analysis, using the condensed for presentation purposes and the full to
submit to your professor. Good luck.

ASSURANCE OF LEARNING EXERCISE

Strategic Planning for Gruma SAB
Purpose
Strategic-management classes are usually composed of a team of students who perform case analysis
as described in the text. The purpose of this exercise is to examine whether individual decision mak-
ing is better than group decision making. Academic research suggests that groups make better deci-
sions than individuals about 80 percent of the time. No company has sufficient resources to implement
all strategies that would benefit the firm. Thus, tough choices have to be made. Ranking strategies as
to their relative attractiveness (1 = most attractive, 2 = next most attractive, etc.) is a commonly used
procedure to help determine which actions to fund. Oftentimes, a group of managers will jointly rank
strategies and compare their ranking to other groups. This ranking process may be used to determine
the relative attractiveness of feasible alternative strategies.
Completing this exercise will reveal whether you as an individual make better strategic decisions
than your group or team. This is a fun exercise that also gives you experience selecting among feasible
alternative strategies for a company.
The Situation
Headquartered in Monterrey, Gruma is the largest tortilla producer in the world. Gruma uses corn
and wheat flour and other ingredients to produce grits, cereals, tortilla chips, taco shells, sauces,
snacks, pasta, potato chips, and more. Top Gruma food brand names are Mission, Guerrero, Calidad,

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394 STRATEGIC MANAGEMENT

Maseca, and Tortimasa. The company also produces Tortec and Batitech machines that produce
tortilla and tortilla chips that are sold to restaurants, supermarkets, and other food service provid-
ers. One special feature of Gruma’s machines and products is the use of a dry production method
rather than using wet dough. Gruma’s method yields lower costs and superior product uniformity.
Over the last 10 years, Gruma has acquired several competing firms, including Albuquerque Tortilla
Company, Casa de Oro Foods, and Archer Daniels Midlands stake in Azteca Milling. Gruma oper-
ates 101 production facilities serving over 113 countries and employs 18,000. On July 22, 2015,
the company announced excellent results for its second quarter of 2015 (2Q15). During the course
of 2Q15, Gruma made capital investments worth 33 million U.S. dollars, most of which was spent
on technology improvements, expanding the installed capacity of the firm’s tortilla and corn flour
production plants in Mexicali, building a new plant to produce tostadasin in Tijuana, Mexico, and
building a tortilla plant in Russia. Despite doing really well, Gruma wants to do better. It is trying
to decide what strategies would be best for the company going forward. Following are 12 strategies
that are being considered.

The Strategies
1. Backward integration. Purchase a 10,000-acre corn and wheat farm to gain better control
over supplies needed for production operations.
2. Forward integration (a). Acquire Chipotle Mexican Grill (CMG). Chipotle is a chain
of about 1,700 restaurants in the United States, United Kingdom, Canada, and Europe,
specializing in burritos, tacos, and salads. Chipotle is Spanish for “smoked or fried jalapeno
chili pepper.”
3. Forward integration (b). Acquire Chuy’s (CHUY). Chuy’s is a chain of 59 small Mexican
restaurants in the United States. Chuy’s is not “fast casual” like Chipotle, but rather is a sit-
down table-service restaurant that is uniquely festive. Chuy’s revenue soared 20 percent to
$64.1 million in its latest quarter. Chuy’s opened 11 more locations in the last year.
4. Horizontal integration. Acquire Grupo Bimbo, S.A.B. de C.V. Founded in 1945 in Mexico
City, Grupo Bimbo employs over 129,000 and does business worldwide with167 plants, but
the company’s principal operations are in Mexico and the United States. Top brands in Mexico
include Bimbo, Marinela, Barcel, and Ricolino.
5. Market development (a). Build a manufacturing plant in China to begin servicing that country.
6. Market development (b). Build a manufacturing plant in South Africa to begin servicing all of
Africa.
7. Market penetration (a). Launch an advertising, promotion, and publicity campaign in Mexico
to increase market share in Mexico.
8. Market penetration (b). Launch an advertising, promotion, and publicity campaign in the
United States to increase market share in the country.
9. Product development (a). Develop, produce, and launch a full line of organic tortillas, chips,
and taco shells.
10. Product development (b). Develop, produce, and launch new products, including spaghetti,
linguine, and bread.
11. Related diversification. Acquire the Prego trademark brand name pasta sauce from Campbell
Soup Company. Prego pasta sauce is available in 19 different flavors, including marinara, tradi-
tional, mini meatball, zesty mushroom, and roasted garlic parmesan. Several Prego flavors are
made with all organic ingredients.
12. Unrelated diversification. Acquire a construction company in Mexico, such as one of the fol-
lowing companies: Cemex, Grupo Villacero, Tubacero, Lamosa, or ICA.

The Task
Your task is to rank the 12 preceding strategies in terms of their relative attractiveness for Gruma,
where 1 = the most attractive strategy to pursue, 2 = the next most attractive strategy, and so on to
12 = the least attractive strategy to pursue. Rank the strategies first as an individual, and then as part
a group. Then, listen to the EXPERT ranking and rationale. In this manner, this exercise enables you
to determine what individual(s) and what group(s) in class make the best strategic decisions (i.e., that
come closest to the expert ranking).
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TABLE 2 Strategic Planning for Gruma: Individual versus Group Decision Making
Column Number

 
   Absolute Absolute
Strategy My Rank Group Rank EXPERT Rank 8CNWGs 8CNWGs

1. Backward integration

2. Forward integration (a)

3. Forward integration (b)

4. Horizontal integration

5. Market development (a)

6. Market development (b)

7. Market penetration (a)

8. Market penetration (b)

9. Product development (a)

10. Product development (b)

11. Related diversification

12. Unrelated diversification

Sum of Columns 1, 2, 4, & 5

Note: The expert ranking and rationale are given in the Chapter Instructor’s Manual.

The Steps
1. Fill in Column 1 in Table 2 to reveal your individual ranking of the relative attractiveness of the
proposed strategies. For example, if you feel backward integration is the seventh-best option,
then enter 7 into Column 1 beside backward integration.
2. Fill in Column 2 in the table to reveal your group’s ranking of the relative attractiveness of the
proposed strategies. For example, if your group believes backward integration is the third-best
option, then enter 3 into Column 2 beside backward integration.
3. Fill in Column 3 in the table to reveal the expert’s ranking of the relative attractiveness of the
proposed strategies.
4. Fill in Column 4 in the table to reveal the absolute difference between Column 1 and Column 3
to reveal how well you performed as an individual in this exercise. (Note: Absolute difference
disregards negative numbers.)
5. Fill in Column 5 in the Table to reveal the absolute difference between Column 2 and Column 3
to reveal how well your group performed in this exercise.
6. Sum Column 4. Sum Column 5.
7. Compare the Column 4 sum with the Column 5 sum. If your Column 4 sum is less than your
Column 5 sum, then you performed better as an individual than as a group. If you did better
than your group, your performance was especially good.
8. The Individual Winner(s): The individual(s) with the lowest Column 4 sum is the WINNER.
9. The Group Winners(s): The group(s) with the lowest Column 5 score is the WINNER.

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