WRITING A FINANCE CASE

WHAT IS A CASE STUDY?

A Case Study refers to the collection and presentation of detailed information about a
particular participant or small group, frequently including the accounts of subjects
themselves. A form of qualitative descriptive research, the case study looks intensely at an
individual or small participant pool, drawing conclusions only about that participant or group
and only in that specific context. Researchers do not focus on the discovery of a universal,
generalizable truth, nor do they typically look for cause-effect relationships; instead,
emphasis is placed on exploration and description.

Case studies typically examine the interplay of all variables in order to provide as complete
an understanding of an event or situation as possible. This type of comprehensive
understanding is arrived at through a process known as thick description, which involves an
in-depth description of the entity being evaluated, the circumstances under which it is used,
the characteristics of the people involved in it, and the nature of the community in which it
is located. Thick description also involves interpreting the meaning of demographic and
descriptive data such as cultural norms and mores, community values, ingrained attitudes,
and motives.

CASE STUDIES: TYPES AND DESIGN CONCERNS

There are multiple methods and approaches to conduct case studies. Under the more
generalized category of case study, there are several subdivisions, each of which is custom
selected for use depending upon the goals and/or objectives of the investigator. These types
of case study include the following:

Illustrative Case Studies

These cases are primarily descriptive studies. They typically utilize one or two instances of an
event to show what a situation is like. Illustrative case studies serve primarily to make the
unfamiliar familiar and to give readers a common language about the topic in question.

Exploratory (or pilot) Case Studies

These ones are condensed case studies performed before implementing a large scale
investigation. Their basic function is to help identify questions and select types of
measurement prior to the main investigation. The primary pitfall of this type of study is that
initial findings may seem convincing enough to be released prematurely as conclusions.

Cumulative Case Studies

These serve to aggregate information from several sites collected at different times. The idea

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behind these studies is the collection of past studies will allow for greater generalization
without additional cost or time being expended on new, possibly repetitive studies.

Critical Instance Case Studies

These examine one or more sites for either the purpose of examining a situation of unique
interest with little to no interest in generalize, or to call into question or challenge a highly
generalized or universal assertion. This method is useful for answering cause and effect
questions.

WHAT TO DO IN A FINANCE CASE?

After considering the different sub categories of case study and identifying a theoretical
perspective, researchers can begin to design their study. Research design is the string of
logic that ultimately links the data to be collected and the conclusions to be drawn to the
initial questions of the study. Typically, research designs deal with at least four problems:

 What questions to study

 What data are relevant
 What data to collect
 How to analyze that data

In other words, a research design is basically a blueprint for getting from the beginning to
the end of a study. The beginning is an initial set of questions to be answered, and the end is
some set of conclusions about those questions.

THE CASE STUDY SEQUENCE

Readers love a good story. Case studies are essentially success stories about products,
services, or situations … and all those people interested in using it.

To write a Case studies one should follow "The Case Study Sequence."

a) The customer. In the lead paragraph, focus on the kind of person interested in your
case, not on the company. Gain attention with an interesting lead.

b) The challenge. Next, introduce the problem. What condition has to be changed or
improved?

c) The journey. What steps were taken to solve the problem? What other products or
services were investigated? Why didn't these work out?

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 d) The solution. This is where you have unbridled freedom to pitch your product or
service without fear of sounding too promotional. The earlier sections have earned
you this right.

e) The implementation. How was your product or service implemented? Was there any
downtime or disruption involved? How long was it before it was up and running at
100%? Be honest about any problems that arose and how they were resolved.
Highlight instances where you went "the extra mile" to satisfy the customer.

f) The results. How well did your product or service solve your customer's problem? Be
as specific as you can here. If possible, use hard numbers such as savings, revenue
gains, sales growth and return on investment. This is another good spot to include a
customer quotation. And a great place to summarize and close your story.

THE STATEMENT OF THE CASE

A typical Statement of the Case would include:

a) Summary
The Summary has to be written last not to be inconsistent. It has to include:
 The proposal
 The key benefit
 Essential background only
 Essential financial information

b) Background
You must identify and explain the motivation of the Case and facilitate all subsequent
sections.
Background suggests something passive and historical. To keep it active, concentrate
on the project’s key motivation. There are three main motivating forces, requiring
specific approaches:

 Motivation 1: Reaction (the need to solve a problem)

 Things appear to be wrong
 Are they really wrong?
 If not, deal with appearances (no project!)
 If yes, describe and explain the problem situation

 Motivation 2: Maintenance (the need to pre-empt a problem)

 The status quo appears satisfactory
 You believe “there may be trouble ahead”

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  Can you justify these believes?
 If not, put it on hold (no project!)
 If yes, predict and explain the problem situation

 Motivation 3: Initiative (the desire to improve matters)

 The status quo appears satisfactory
 You believe you can make worthwhile improvements
 Can you justify these believes?
 If not, put it on hold (no project!)
 If yes, describe and explain the potential improvement

c) Objective and Proposal

The Objective and Proposal should be written as a pair, and must be entirely
consistent with each other or the bid will fail.
The Objective conventionally comes before the Proposal in the Statement of Case,
giving the appearance of the project being Objective-led. However, in practice, the
Objective really comes last as it is merely the description of the envisaged outcome
of the Proposal.

a. Objective:

 quantifies the realistically achievable outcome of the proposed

solution to the problem identified in the background

 is set in the future and assumes the project's successful

implementation

 is not concerned with details of implementation

b. Proposal:
 offers a solution to the problem in order to meet the objective
 does not restate the problem
 does not go into operational detail

d) Alternatives
The Statement of Case should have a section for alternatives to the proposal. It is
included to demonstrate that the scenario has been analyzed in depth and to avoid
not having considered an obvious alternative.
Alternatives are refuted by demonstrating, quantitatively if possible, that they are
inconsistent with the stated objective. As the objective is, by definition, the outcome
of the proposal, all alternatives should be easy to refute.

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 The do nothing option (null option) should project the problem described in the
background into the future and either quantify the cost or demonstrate other
unacceptable consequences.
Other options should be selected with care. Time-wasters should be avoided as they
discredit the work. Select only those options (one or two) that at first sight seem
reasonable. You include them and refute them to show that they have been correctly
analyzed.

e) Benefits
The Principal Benefit is often similar to the objective, except that it is described in
isolation, i.e. pure benefit with no mention of associated costs or other
disadvantages.
The same applies to additional benefits. The list should include only the substantial
benefits, nothing that appears contrived or trivial.

f) Disadvantages
These should be specific disadvantages resulting from the proposal's
implementation, e.g. the unavoidable removal of a useful facility.

g) Consequences
This refers to longer term knock-on effects. In particular, will this project necessitate
further, otherwise unforeseen, project work?

h) Finance
A standard summary of the financial details that normally form the first few
appendices (e.g. details of capital, operating and staff costs, allocation of funds, etc).

i) Method
Method refers to the project management and control systems that will be followed,
not to the physical implementation methods. It therefore deals with the process of
the project, not the content.

j) Details
This section is arguably misnamed. It should identify the natural subdivisions of the
work into "work packages" and briefly describe each package. (The same subdivisions
should be used in the timetable.) In particular, it should identify the essential order of
implementation.

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SOLVING THE CASE

MAKING DATA RELEVANT TO SOLVE THE CASE

Many case studies will contain data that needs analysis before it can be utilized in a report.
These are some tips for handling data the data that we routinely find in business case
studies:

 Data in case studies is not always presented in a clear and rational way. Make sure
that you arrange the data so that trends or other significant issues can easily be
identified.
 Don’t assume that all the information that you are given is relevant. Be prepared to
extract, sort or merge data that has been given to you in the case study in order to
identify and summarize the key information.
 Some basic calculations may be necessary, such as sensitivity analysis, to create new
and more useful data.
 When presented with financial data, such as balance sheets and income statements,
compare these between periods to identify trends. You should also consider whether
ratio analysis, cash flow analysis, and break-even analysis will inform your report.

STRUCTURING YOUR BUSINESS REPORT

 The standard structure for a business report based on a case study is as follows.
 Summary of recommendations: this should summarize your analysis and be
thorough enough to inform the reader who doesn’t have time to read your full report
 Body of report: the structure of this section is quite flexible but should cover the
background issues, statement of the problem, a logical case analysis, and solution
choice which notes the alternatives considered as well as the recommended solution.
 Appendices: key data that has been used to inform the report.

WRITING UP THE BUSINESS REPORT

These are some key tips that will help you write a good quality business report that is based
on a case study:

 Prepare an outline of the report before you start writing - this will serve as a roadmap
of where you plan to go.

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  Use descriptive headings that clearly describe the section’s contents to engage and
inform the reader.
 Tell a coherent story that unfolds in your report. Your recommendations should
emerge from the analysis that you have undertaken and not appear as stand alone
items at the end of your report.
 Do not let your analysis be simply a restatement of the facts that you have been
given.
 Be clear about what information you are using and where you obtained it from. Your
credibility will depend on the sources you use to support your arguments.
 Do not allow your own interests to skew your approach to the case and your
recommendations. Check the brief you have been given and focus on what is
important and relevant to the case.
 Use graphs and charts to convey difficult concepts or show alternatives in a visually
attractive and easy to understand way. Ensure that all graphs and charts that you use
are relevant, add value to your report, and are clearly labeled.
 Use the right graphics for the concepts you are explaining or illustrating. Bar charts or
Gantt charts are appropriate for showing a changing relationship over time, while pie
charts are the best way to illustrate proportional relationships. Line graphs should be
used to show trends to show trends over a period of time. Remember the key is
simplicity in illustrating key points - if you can’t explain what your graphics show then
don’t use them.
 Use a clear and consistent formatting style throughout the report - a messy writing
style will prejudice the reader against your recommendations while a professional
approach lends credibility to your research skills.

Remember that using these steps to prepare your business report based on a case study
will enable you to submit a high quality and targeted report. The skills involved in
generating these reports are highly sought after by employers in business, industry and
particularly consulting.

DO AND DON’TS FOR FINANCE CASE STUDIES

Your case study is part of your assessment for the Cases in … course and lead to the Final
Case. We ask you to adhere to the following guidelines.
We will evaluate your written case based on content and the quality of your presentation,
and we reserve the right to ignore those parts of your write-up that are not comprehensible.

We limit the write ups to a maximum of five DIN A4, 1.5 line spaced computer written pages
in 11 (preferably 12) font size with 2cm margins on all sides. Use a standard font, like "Times
New Roman" and "Arial" or one with a comparable letter size. Also, reducing word spacing
and character size in order to squeeze in more text is not acceptable.

DO…

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• Aim for a concise, analytical style.

• Analyze by example and by reference.

o By example: "...there are circumstances where the plan resulted in zero payouts
because of one significant event (a zero incentive payout in ’92 because of the loss of
a single customer)..."
o By reference: "The plan is quite complex and subject to change at any time (see the
final note on Case Exhibit 6)."

• Try to draw inferences from the numbers and exhibits given in the case. It is not enough
simply to understand how the case spreadsheets have been created; you need to use
them to illustrate and justify your analysis.
o Example: "Computing P/E-ratios for companies X and Z from exhibit 10 and
comparing them with industry averages (exhibit 11) allows us to conclude that..."

• Use your conceptual knowledge of finance, accounting, economics and other disciplines
of management and apply it to the case. The point of this case course is to let you
demonstrate your conceptual knowledge by applying it to a real life application.
o Example: "Here the conditions for applying the internal rate of return-criterion are
satisfied..."

• Use the lectures, lecture notes, teaching notes and the textbooks to enhance your
conceptual knowledge and build a framework for analyzing the case.
o Example: If you read the two pages in Grinblatt/Titman that show why the present
value of future EVAs is equal to the NPV of a project, you stand much better chances
to pick up what is right about EVA as a performance metric.

• Give a clear structure to your spreadsheets. Spreadsheet printouts must be readable

without access to the electronic version of the tables:
o Assumptions should be declared as such and grouped together in one area, for
example at the top or bottom of the sheet.
o For key mathematical operations it is sometimes advisable to number the lines in a
separate column and to use line-references (e. g., (3)=(1)*(2)).
o Key results should be grouped together in the same way. For example, if you do a
valuation, you should not have to search all over the spreadsheet to find the value of
the company.

• Provide a basis for your assumptions wherever possible. The statement "I use average
yield of CCC-rated debt (15.2%, from exhibit 10), as a discount rate" is far superior to "I
assume the cost of debt is 15%."

• Put all your numerical analysis (spreadsheets) into tables in an appendix and number
them. Then refer to them in your verbal exposition in the text.

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 o Example: "On the basis of these assumptions we perform a DCF-analysis (see table
2)."

• Put all discussions of assumptions in the text. Reading your verbal exposition should give
the reader a clear understanding of the logical steps of your analysis and how you built
your spreadsheets. The reader should be in a position to unambiguously recreate your
tables.
• Answer all the questions and structure your write-up along the questions.

• Write your text in English.

DON’T…
• Use the "chatty" approach to answering questions.

• Make value judgments (such as: "this is the wrong approach") without saying why and/or
suggesting a better one. For example: "Prime + 2% is not the right way to approximate cost
of capital." Why not? What might be more suitable?

• Make loose generalizations that may or may not be correct. For example, the statement "In
today’s business environment, managers frequently do not stay in the same position for a
long period of time." is too general and should be avoided.

• Simply repeat data or exhibits that are given in the case. Use them by reference to justify
your analysis or to emphasize a point that you are making. Assume the reader of your write-
up is familiar with the case; you do not need to summarize it or fill your write-up with
lengthy quotes.

• Repeat passages from textbooks, teaching notes or lecture notes. Assume the reader is
familiar with those, so you can just reference them.

• Surrender to the temptation of producing endless pages of spreadsheet output in order to

make your case write-up appear more analytical. All exhibits and tables you attach should
have a clear purpose for your argument and be referenced in the text.

• Write answers to questions that have not been asked. You do not need to restate the
questions themselves (we know them!), but it should be clear which part of your text refers
to which question.

• Exceed the space limit. Five pages of text, not including numerical exhibits are the
maximum. Please do not use a font-size less than 11pt, spacing less than 1.5, or margins less
than 2cm.

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• Extend the page-limit by including verbal discussions and expositions in your exhibits. If
your exhibits are mainly verbal, we will count them as text.

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