AnalyzingandWritingCaseStudy-DubaiSupplementalSlides.pptx

Analyzing and Writing a Case StudySupplemental Reading – Chabros / Dubai

Professor Kelly Ashihara

Strategy Management

Seattle University

What is Case Study?

Case Study is an integral part of strategic management

Purpose: to provide students with experience in actual situations and industry and ask them to address issues real managers had to respond to given a situation over a number of years.

Cases provide student with real situations and improve analytical skills

Cases illustrate theory and content in strategic management and allow you to apply what you’ve learned and make decisions. As we learned, top managers enjoy the thrill of learning and problem-solving in an uncertain environment

Case studies allow you to improve team work skills and participate in class in a substantive way and present your ideas to the class.

Analyzing a Case Study

Case Studies allow you to apply your theory that you’ve learned in this class and through past coursework.

Generally, cases include:

1. General background, history and development of the case

2. Identification of the company’s internal strengths and weaknesses (SWOT)

3. Analysis of strategies considering internal core competencies and external factors (PEST and competition)

4. Analysis of how to reach target goals and what strategies to set such as product development, market expansion, pricing, vertical integration, external partners.

5. Core Recommendations

SWOT Checklist

Strengths

Product types and product lines

Manufacturing competence

Marketing

R&D

Materials

Human resources

Brand name reputation

Cost differentiation

Management style

Financial management

Weaknesses

Rising manufacturing costs

Decline in R&D

Customer goodwill

Information systems

Growth without direction

Conflict or politics

External competitive situations

External market factors

Poor financial management

Change in margins

How can strengths and weaknesses be balanced against opportunities and threats?

Can you reach your goals by continuing to pursue the current path or do you need to change directions?

Are there functional or corporate strategies to pursue – what are your conclusions?

SWOT continued

Environmental Opportunities

Expand product types and product lines

Expand manufacturing Marketing

Diversify business

Expand to new markets

Source new materials

Gain scale through new products and use of existing infrastructure

Vertically integrate

Reduce rivalry

Leverage differences found in competition

Environmental Threats

Attacks on core businesses

Increases in competition

Change in consumer taste

Rise in substitute products

Potential for takeover

Changes in demographics

Rising labor costs

Slower market growth

Change in product tastes / market

Analyze Structure and Control Systems

The aim of analysis is to identify key issues in the structure and control that open up opportunities and finding which opportunities produce the most value.

Making recommendations: The quality of your recommendations will be a product of the thoroughness of your analysis. Wherever possible, try to combine and think of different factors (multiple exhibits / numbers that support your case)

Your team should be specific whenever possible in terms of diversification of products, level of integration, changes in functional products or direction and reasons what certain strategies – you believe, will improve the profitability or situation of the company.

Case Study Supplemental Reading

Dubai

Palm shaped islands built and developed by state owned Dubai World

Dubai in 2008

Historically, oil based economy

Oil is sold in Petrol dollars linked to the dollar

Estimated 20% of world cranes in Dubai.

Sept 2008, $1.5billion dollar Atlantis resort on palm-shaped island opened. $25,000 / night

Banks reigned in loans, oil prices dropped

Dubai home prices dropped 50% from 2008 peak

Emirates Central Bank made $3.6 billion available as of Sept. 22nd 2008, speculation that that may not be enough.

Many building projects without secure financing may be dropped

2007 – 2008 Financial Crisis

Like all previous cycles, the seeds of subprime meltdown were rooted in unusual circumstances.

In 2001 – the US economy had a mild recession – to keep the recession away, the Federal Reserve eased capital by lowering interest rates 11 times from 6.5% in May 2000 to 1.75% in Dec. 2001. This created liquidity. Borrowing money was cheap which increased home sales (dramatically).

Question is not just IF you have a home, it is how MUCH home should one live in / can one afford.

In June 2003, the Fed lowered interest rates to 1%, the lowest rate in 45 years.

Bankers repackaged loans collateral debt obligations (CDO) and passed on debt.

2007 – 2008 Financial Crisis

Decline begins:

By 2004, homeownership peaked at 70%, home prices started to fall which led to a declining by 40% in new construction.

During Feb – March of 2007, more than 25% of subprime lenders filed bankruptcy.

According to 2007 news reports, financial firms and hedge funds owned more than $1 trillion in securities backed by these now failing subprime mortgages.

Central banks coordinated to prevent worldwide crises. The Fed started to reduce rates.

The US Gov’t came out with the National Economic Stabilization Act in 2008 to create $700 billion,

Central banks in England, China, Canada, Sweden, Switzerland, European Central Bank cut rates.

Dollar slides to 2009 low versus Euro

As of May 22, 2009, the dollar fell to the lowest level versus the Euro as traders looked for alternatives to the U.S. dollar amid waning fears about the global economy's prospects.

The euro rose to $1.3996 on Friday, after passing the key $1.40 mark to touch $1.4049 earlier. That was up from $1.3904 in late North American trading Thursday.

"In the near-term, the stars are aligned against the U.S. dollar." "If the news stream is good, we are told investors are less risk averse and do not need the dollar's security. If the news stream is poor, we are told the U.S. is in horrific shape and the budget deficit and Fed's balance sheet will swell even more" to the detriment of the dollar.

The British pound also rose to its highest level since November versus the U.S. currency, shaking off a Standard & Poor's report Thursday saying the ratings agency might downgrade the U.K.'s AAA credit rating. The pound traded at $1.5925 from $1.5848 late Thursday.

Several analysts' notes earlier also acknowledged reports about concern that the U.S. will maintain its AAA credit rating, after the U.K.'s top-tier rating was given a negative outlook by Standard & Poor's on Thursday.

"We would have to see a continuing onslaught of real deterioration in the U.S. financial situation for its rating to come under threat," he said. "The dollar's issues are mostly related to quantitative easing and how inflationary that might be. Also, risk aversion has lessened considerably" in recent months.

Minutes of Fed policy makers' last meeting released Wednesday indicated a possibility that the Fed would buy more Treasury or mortgage-related debt. Those kinds of programs to keep borrowing costs low for consumers, companies and home buyers are considered quantitative easing and negative for the currency

Dollar slides to 2009 low versus Euro

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