Menu

Real Options Valuation When Multiple Sources Of Uncertainty Exist Online Case Study Analysis

Home >> Business >> Real Options Valuation When Multiple Sources Of Uncertainty Exist

Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution & Analysis


Introduction

Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis (National Association for Stock Automobile Automobile Racing) is a company conducting series of Stock Cars and truck racing in United States and serving as an approving body for driving the guidelines for Stock Cars and truck Racing. The company was established in 1947, by "Huge Costs" France. NASCAR set up Stock Car Racing occasions in United States with the presence of about 130000 audiences usually in 2005. It likewise transmitted its events in about 150 countries. Stock Car Racing by NASCAR is the second biggest spectator sport, with highest number of sponsors. It has about 500 sponsors contributing billions of dollars in its earnings. The other sources of revenue for Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis includes; 10% of the total revenue from television rights, sanctioning charges i.e. $1-2 million per race, and licencing NASCAR brand to companies.

NASCAR has a closed corporate culture with the non-interventionist approach. The structure of Vehicle of Tomorrow by NASCAR, with an intention of security for the motorists, brought various tensions amongst the stakeholders of the sport.
Executive Summary
The communication audit, conducted in 2010, exposed that regardless of the fact that the business extremely rely on the interactions between its stakeholders, there was no identifiable service interaction technique. The industry's target clients, instructions and objectives were all unidentified.

The audit pointed out various doing not have of NASCAR in terms of absence of internal combination, lack of fan management method and lack of digital and social media of marketing. The business has complicated community with independent tracks, teams and motorists. This structure with closed corporate culture bring different difficulties in speeding up a modification. Other partners in environment includes the media networks i.e. television and radio, and business online marketers.

Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis audiences was extremely faithful to the sport and the brands associated with the NASCAR, making it appealing for sponsors and corporate online marketers.

Problem Statement.

The business is currently dealing with the issue of decreasing rates of attendance at racing tracks and rates of television viewers. This can put a considerable impact on its incomes from sponsors, media rights, and from other sources of income.

Situational Analysis.

The business was quite successful till 2005 with its traditional marketing techniques, but soon after 2005 the business begins dealing with various problems consisting of decrease of its fan base. A number of external along with internal aspects are responsible for the decline. Internal elements consist of; insufficient financial investment in social media and other digital medias of.

Fan base of NASCAR comprised of married males with a typical age of 47, which passes their fandom to their youngsters and create generational commitment. The household system in America was altering resulting in decrease of impact of married male fan base over their children. Along with it understandings about car was also altering with viewing cars and truck a lorry to reach at point B from point A, instead of as a fun project. Other difficulties for Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution consists of the shift of its fans to other sports as they were enhancing their fan's experience permitting access to their broadcasts out of the homes through jumbo turns, Wi-Fi gain access to, etc. These all difficulties were tending the company to revise its marketing methods.

SWOT Analysis.

Strengths.


NASCAR core competencies includes it has rights of determining guidelines as sanctioning body. Guidelines and rules relating to professional stock vehicle racing are determined by NASCAR like if any group with required abilities and resources can get in into races by following guidelines and policies dictated by NASCAR. All the events of NASCAR are sponsored by corporates since of biggest brand commitment of fans toward brands advertised by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help.

Weaknesses.

Weak points of NASCAR includes its close culture which is non collective. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help establishes Car of Tomorrow without collaboration so result is that motorists did not like that concept. It was also discovered that NASCAR had no efficient method for company communication.
Porter's 5 Forces Analysis
Opportunities.

Opportunities in SWOT analysis are external factors which can be favourable to company or the external elements on which business is having competitive benefit. NASCAR generally utilized to count on conventional media sources like regional paper for promotion of its sports. Normally these conventional media sources try to cover their home team and specific kind of occasions. NASCAR also familiarized from these conventional media outlets that sport was tough to cover. Media landscape likewise altered from standard to digital landscape. Newspapers failed. NASCAR can deal with its abilities to get optimal possible take advantage of this new digital landscape. NASCAR have underinvestment in digital resources. It can capitalize in social and digital media to get its advantages. Digital rights of NASCAR were also offered to Turner Sports. NASCAR utilized to make money check of around $15 million yearly from Turner Sports. There are variety of cons behind this offer. NASCAR had to get approval from Turner Sport if it want to develop its Facebook page, twitter account or even mobile application. Turner Sport likewise had rights of every single video which is shoot throughout race at track. If media sources like papers, magazines and cable television channels wish to post videos of races on their particular pages then they are needed to pay licensing costs to Turner Sport. So NASCAR can deal with conditions and attempt to negotiate with Turner Sports to get maximum benefits of it. Star power plays very crucial function in creating profits from every sport. Nevertheless it was noted that Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis is lagging in this area i.e. star power. When sports fans were asked concerning popular celebrities and stars then NASCAR motorist was not discovered even in leading twenty reactions. NASCAR can put efforts in this location too for earnings generation. They must assist their chauffeurs that how they can become sport stars. Four tactical focuses which are generated by research study group can also be functioned as opportunity for NESCAR. These 4 tactical focuses compares and analysis Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis methods.

Dangers

Threats in SWOT analysis are specified as external factors that can threat to business's success. Since if there is financial down turn then individuals would be having less return on investment, Economic down turn was experienced in late 2000 which can be hazard for NASCAR. Earning of individuals would be effected and they would be more conscious in spending their loan. Economic down turn also leads to boost fuel prices which likewise impacted NASCAR. Since fans of NASCAR used to attend its event from long distances. NESCAR had a guideline of 65/25/10 for revenue circulation. 65 percent revenues from media rights would be dispersed to race tracks, 25 percent earnings would be distributed to completing group and staying 10 percent would be kept by NESCAR which is approving body. Contending group wished to increase their portion of revenue from 25 percent since of boost in operating expense of a race group and likewise there is decline in the variety of full-season sponsorship. NESCAR also faces threats from other sponsors because they are making enormous financial investments to enhance experience of fans. For instance that includes upgrading existing avenues, building new opportunities, providing Wi-Fi center and likewise offering other interactive mediums to connect sports on smartphones. Fan base of NASCAR consisted of married males with a typical age of 47, which passes their fandom to their youngsters and develop generational loyalty. So the obstacle is that the family system in America was altering resulting in reduction of influence of married male fan base over their youngsters. Along with it understandings about car was also changing with perceiving automobile a car to reach at point B from point A, rather than as an enjoyable project. If NASCAR make considerable financial investments in brand-new sections which are based on brand-new consumers then it might deal with unfavorable comments from its core fan base, now.

Porter's 5 Forces Analysis

It is essential to comprehend market in which company is working since NASCAR's bottom line i.e. net revenue is greatly depends on this. There are 5 forces that are used to identify profitability, strength and beauty of NASCAR organisation.

Competitive Rivalry

This force shows capability of competitors. Groups generally represents sponsors in NASCAR and the medium of advertising is chauffeurs. It can be said that motorists and race cars are competitors. If they got better opportunity in terms of rewards and television direct exposure, these drivers can go against Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution. If viewers delight in other race automobiles and drivers more than NASCAR then viewers can shift to those other fascinating cars and trucks and drivers. NASCAR might be having hazard from its two direct competitors that is Solution 1 and Moto GP. They require to create competitive benefits for chauffeurs so they don't move to other rivals.
Swot Analysis
Supplier Power

The provider power indicates the variety of suppliers are available in market and what is the expense associated with supplier if company shifts from one supplier to another. Because drivers with required skills and resources are limited, in this industry there is supply monopoly.

Buyer Power

This force is concerning to clients that is it easy for clients to move to other items. If there is more changing cost is associated then customers are less likely to switch. When it comes to NASCAR consumers are its audiences. Audiences can change to other rivals easily due to the fact that audiences will having low switching cost.

Threat of Replacement

Substitutes are referred as options. The substitutes in this case can be other home entertainment indicates like audiences can shift to other sports. There are broad range of alternatives are available in this situation which recommends that danger of alternative is high.

Threat of New Entry

In the case of NASCAR risk of brand-new entry is low. They need to construct vehicles and racing tracks and also requires to pay substantial amount to chauffeurs for switching.

PESTEL Analysis

Political


It can not be concluded from case research study that there would be change in resource allocations. NASCAR had actually got take advantage of lower tax policies which results in increasing in profits. So they made heavy investments in the research and advancement. As NASCAR is working in different markets so it requires to deal with various regulations. It is also noted that Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution has dealt with increased analysis concerning regulative. Every government has different priority so NASCAR needs to be gotten ready for it as priority can be moved to other sector.

Affordable

Economic elements includes tax rate, currency exchange rate, economic performance of that specific company, conditions of labour market, inflation rate etc. If there is federal government intervention in the marketing and sales sector, fortunes of the NASCAR and its competitors can be affected. NASCAR can utilize abilities of staff members to develop new opportunities and improve existing chances.

Social

Each has different social values and norms. It helps in comprehending concerning society and choice of customers.

Technical

In this case of NASCAR it can be kept in mind that companies are heavily investing for research study and advancement. NASCAR must likewise work on its media rights policy with Turner Broadcasting System.

Legal
Vrio Analysis
Due to the fact that every country has various legal terms and conditions, Legal plays an essential role in every country. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution requires to be make certain that they secure their legal rights in every county so any company does not hurt to its legal rights.

Environmental

Ecological elements are also crucial for every service. NASCAR requires to make sure that its cars and trucks are not producing pollution more than appropriate level.

7 P's of Marketing

Product

The items of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help in its product portfolio are; racing events tickets, racing tracks, sponsor's marketing, media rights, licencing NASCAR brand name, sanctioning guidelines for races and ad-space to business marketers during broadcast of NASCAR races. (Hanlon, 2018).

Price.

Prices method of NASCAR for its race events tickets is based upon the location and value of the racing occasions. In addition to race events tickets, NASCAR also charge different service charge to its stakeholders and earns profits. For instance it charged approving costs of $1-2 million per race usually in 2005.

Promo.

Advertising strategy of NASCAR is highly based upon its fan base. A strong fan base share its fandom with others and increase the number of viewers for NASCAR races.

Location.

NASCAR have its racing tracks in numerous cities in United States. The most important tracks of NASCAR includes Atlanta Motor Speedway in Georgia, Auto Club Speedway in California and Darlington Raceway in South Carolina. It tries to perform its races in the majority of the cities in United States to understand across the country popularity.

Individuals.

Nestle people strategy is comprised of providing much better experience to its viewers, its fan base and to all of its stakeholders. Individuals are a crucial aspect of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help A marketing technique as its events are the source of entertainment for crowd. Its individuals method includes efforts to offer much better experience to its Fans, Race Drivers, Team, Occasion Organizers etc., all of which come under individuals strategy of NASCAR.

Procedures.

A number of business procedures are required to carry out racing events in an efficient method. These processes include; proper schedule of time, arrangement for viewers, offering tickets, arrangement of area for sponsors, managing logistics and so on. These all processes contribute I constructing NASCAR image, improving spectators experience and increasing fan base.

Physical Evidence.

Most important physical evidences for the NASCAR includes the presence of its racing tracks, stock cars and racing occasions. Along with it, its retailing brand names consisting of t-shirts, caps, goodies and so on, likewise act as a physical proof for NASCAR.

Product Life Cycle Evaluation.

The racing occasions by NASCAR was introduced on June 19, 1949. At the first stage competitors for NASCAR was low, as the competitors drove the cars and trucks comparable to the cars driven by normal individuals.

Development.

The very first NASCAR based track, particularly the Darlington Raceway track, was started in 1950 in South Carolina. After the development of racing tracks the company moved towards relaying its races on tv in 1979.

In 1972, William France Jr., became the president of NASCAR and n about 3 decades, he transformed NASCAR from a regional Sport popular company into one with global fan base. He initiated a brand-new era of rewarding sponsorships and television agreements for NASCAR.

Maturity.

The maturity period for NASCAR began with the efforts of William France Jr., with the business having wide variety of profits sources. The company has about 500 sponsors with transmitting its occasions in about 150 nations. The business has large number of tracks in most of the cities of United States.

Decline.

The decline in the business's offerings began after 2005 with typical presence rate per race decreased by 22% from 2005 to 2010 and television viewership rate declined by 30% from 2005 to 2010. The major causes of decrease consist of the monetary crisis of 2008, which increased the expense of coming to tracks for viewers due to increasing fuel costs, and the shifting of its fan base towards other sports.

Market Segmentation.

The market segmentation of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis can be divided into four sectors; Geographic, Demographic, Psychographic and Behavioural. (Dutta, 2018).

Geographic.

The geographical division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Analysis is based upon the geographical existence of its tracks in different states and cities in United States, and the tv broadcasting of its occasions in various countries. The business has 23 tracks in about 20 states of America and has television broadcast through different Medias i.e. TNT, ESPN, ABC and Fox, in about 150 countries.This large geographical segmentation provides the business regional as well as worldwide fan base.

Group.

The demographic segmentation of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis is likewise highlydiverse based upon the gender, earnings and age of the consumer. To increase the group sector of its market NASCAR ought to modify its marketing techniques to attract more age groups and lower its prices to enter in the market sector with a low average earnings.

Psychographic.

The psychological characteristics of most of the fans are quite similar. NASCAR has a fan base with a commitment. When in a week, NASCAR fans view it compulsive to buy tickets and see the races. 71% of them choose to buy products with a NASCAR brand. They are rather extrovert and are willing to mingle with other fans while racing. They desire quality racing with low cost at practical location. Although Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis has attempted to increase the quality of its racing by introducing stage racing, they also have actually attempted to lower prices and make the event more convenient by introducing live racing.

Behavioural.

Behavioural division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help is based upon the behaviour of fans in terms of seeing the race survive on the television or by going in the events. Currently, the fans choice is towards seeing the race at home on television rather than going, as the client experience at NASCAR tracks is not favourable along with expensive. This preference makes the rates for participation lower than the rates for television audiences. NASCAR needs to change the behaviour of its fan base by introducing qualitative services at its tracks.

Target Market.

Hispanics.

One of the potential target market of NASCAR was Hispanics; the young and growing population of United States. The market sector has great potential for NASCAR as the population was growing at a greater rate and it was anticipated to become thrice after forty years and the section has increasing wealth rate with about $1 trillion of wealth in 2014.

Kids.

Kids are also one of the potential target audience section for NASCAR, as they are more linked socially than other groups. Creating fan base amongst kids can supply a potential boost in the number of fans for racing due to their connectivity. Kids spend the majority of their times in playing and using smartphones computer game. Car racing games developed by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help can be a potential source of gaining attention of kids towards NASCAR track racing. NASCAR's digital functions related to kids are not capable of getting the attention. NASCAR needs more attention towards customizing and improving its digital features to bring in the kids target audience.

This huge expense makes the segment potential for NASCAR marketing strategy of increasing its fan base. The market section thinks about NASCAR as an organization doing not have in producing a multiculturalism environment. NASCAR ought to take numerous actions to improve the experience of Generation Y consumers in its events.

5 C's of Marketing

5 C's of marketing assists in taking decisions regarding marketing.

Climate/Context.

It requires to make PESTLE analysis in order to understand environment or context in which NASCAR is working. PESTLE stands for political, financial, social, technical, environmental and legal and is specified above.

Company.

NASCAR is an automobile racing business with having USP of high quality automobile racing with a worldwide structure. Its sector is sports team and events. Its target audience is males in the age group of 15-60 years. Business has actually closed corporate culture and having non-interventionist technique.

Cooperations.

Collaborations consists of suppliers, suppliers and alliances of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help. It is worked together with various racing teams which are taking part in racing. It likewise worked together with Turners Sport for digital rights. NASCAR used to earn money check of around $15 million every year from Turner Sports. There are variety of cons behind this deal. For example NASCAR needed to get approval from Turner Sport if it want to develop its Facebook page, twitter account or perhaps mobile application. Turner Sport likewise had rights of every single video which is shoot throughout race at track.

Clients.

The customer of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help are its viewers. They target clients with having age of 15-60 years. Fan base of NASCAR comprised of married males with a typical age of 47, which passes their fandom to their children and develop generational commitment.

Competitors.

Teams generally represents sponsors in NASCAR and the medium of marketing is motorists. These drivers can go against NASCAR if they got better opportunity in terms of rewards and tv direct exposure.

Marketing Strategies.

1. Developing and Keeping Facebook Page.
One of the prospective target markets sectors for NASCAR is Hispanics which is the growing population sector of USA however regrettably NASCAR had actually been not able to attract the this targeted sector. It must develop a Facebook page containing the information concerning the races and the areas of tracks to make the consumer useful about the core operations of NASCAR.
2. Developing and Updating Accounts of Key Drivers.
NASCAR chauffeurs has a low star power as compare to gamers of other sports. Its ranks 7th in terms of star power (see Case Exhibition). The major factor behind it is that, the racers mostly play in groups and are unable to construct a key account and keep a close contact with fans. The bad contacts with fans result in less attraction of viewers towards the racers and a low star power. Star power is a crucial element for attracting audiences towards tracks and towards tv. The star power for the motorists at NASCARA might be enhanced by creating and upgrading accounts of essential chauffeurs by NASCARA itself. This would eliminate the requirement of forcing chauffeurs to preserve their accounts and would lead to increasing fans attention towards NASCARA drivers.
3. Establishing New Games and enhancing existing video games for kids.
In order to draw in these kids, NASCARA should enhance its present racing games by introducing customization in the cars and trucks i.e. changing colours, selection of speed, presenting group racing in the video game, using much better graphics related to the racing tracks and presenting different levels in the video game. All these adjustments in the current game would supply much better experience to kids.
In addition to it, NASCAR should likewise build new games connected to racing like kids racing with kids characters as chauffeurs, animation racing with racing between numerous animation characters with a choice of selecting the preferred animation character for the kids. These methods would make it possible for the company to draw in among its potential target segments.
4. Presenting multiculturalism at events.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution events are consisted of fans with very couple of multiculturalism, due to expense of arrival in events, making it unappealing for the customers viewing sport events as get-togethers i.e. Generation Y clients. As the Generation Y customers are a potential target audience for NASCAR, for that reason the company ought to take certain steps to attract this possible target audience. It needs to adopt strategies to attract the clients far from the tracks area with different culture. The strategy to do so could be offering unique discount rates on tickets or complimentary tickets to audiences coming from a particular distance or from another state. It would increase multiculturalism of the fans and would make Generation Y consumers more pleased.
5. Improving Customer Experience at Tracks.
NASCAR should work on facilities and amenities at tracks since on the race day audiences got dissatisfied. Audiences have numerous expectations from Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help because in very same market other business are providing better services than NASCAR. IF NASCAR do not work on this problem then its fans might shifted to its competitors.

Marketing Budget plan

Marketing budget made on the basis of the above strategies for the period of 5 years from 2011 to 2015, reveals the cost related data for the marketing techniques. It can be seen that technique 5 of enhancing customer experience at tracks would need greatest preliminary investment and cost and method 4 of presenting multiculturalism will require most affordable preliminary financial investment with least expensive even more per year expense.
NOTE: The values about cost are presumed on reasonable basis due the lack of truths and figures connected to cost in the case research study. Inflation rate of United States is presumed to be 10%.

Recommendations.
Recommendations
On the basis of deep analysis of the external and internal factors of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis triggering the decline of television viewership rate and participation rate at tracks, the above marketing techniques are recommended to NASCAR to increase its fan base in long term. These methods would deal with internal factors like poor customer experience at tracks, insufficient social media marketing, incapable digital medias like games, lack of culturalisms at tracks etc., in addition to with external factors like shifting of fans towards other sports, demographical changes in America and changing domesticity designs.