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

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


NASCAR (National Association for Stock Vehicle Auto Racing) is an organization conducting series of Stock Cars and truck racing in United States and acting as an approving body for driving the guidelines for Stock Cars and truck Racing. 2) Stock Car Racing by NASCAR is the second largest spectator sport, with highest number of sponsors. 1) The other sources of earnings for Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help 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 method. The building of Automobile of Tomorrow by NASCAR, with an intent of security for the chauffeurs, brought numerous tensions among the stakeholders of the sport.
Executive Summary
The interaction audit, carried out in 2010, exposed that in spite of the fact that business highly count on the communications between its stakeholders, there was no identifiable business communication technique. The market's target consumers, instructions and objectives were all unknown.

The audit pointed out different lacking of NASCAR in regards to lack of internal combination, lack of fan management method and lack of digital and social media of marketing. The business has complex environment with independent tracks, chauffeurs and teams. This structure with closed business culture bring different difficulties in accelerating a modification. Other partners in ecosystem consists of the media networks i.e. tv and radio, and business marketers.

Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help viewers was extremely loyal to the sport and the brand names related to the NASCAR, making it appealing for sponsors and corporate marketers.

Issue Statement.

The business is presently facing the issue of decreasing rates of attendance at racing tracks and rates of tv viewers. This can put a significant influence on its profits from sponsors, media rights, and from other sources of revenue.

Situational Analysis.

Although the company was rather successful till 2005 with its standard marketing methods, but not long after 2005 the business starts dealing with different issues including decline of its fan base. Several external along with internal aspects are accountable for the decrease. Internal factors consist of; insufficient 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 children and produce generational commitment. Other difficulties for NASCAR includes the shift of its fans to other sports as they were improving their fan's experience allowing access to their broadcasts out of the houses through jumbo turns, Wi-Fi gain access to, and so on.

SWOT Analysis.


In SWOT analysis, strengths specified as company's qualities which are different from its rivals. These are company's core proficiencies on which business performance or company success based upon. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis core competencies includes it has rights of dictating rules as sanctioning body. Rules and policies relating to expert stock vehicle racing are determined by NASCAR like if any team with needed skills and resources can participate in races by following guidelines and policies dictated by NASCAR. NASCAR has monopoly it this element. Its strengths likewise includes that it has title of second largest viewer sport in the United States with having more fortune 500 sponsors based in United States. Its races were utilized to broadcast in more than 150 countries worldwide with more than $56 million profits. The primary sources of their profits come from television rights, approving fees, sponsorship and licensing. It has longest season of 10 months and having ownership of 3 national series i.e. Outdoor camping World Truck Series, the Sprint Cup Series and the Nationwide Series. It has likewise large resource of fans and corporate sponsors. All the events of NASCAR are sponsored by corporates because of greatest brand name loyalty of fans towards brands promoted by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help. (See Appendix A).


Weaknesses in SWOT Analysis are thought about as external factors. Weaknesses consists of the aspects that stops company to perform at needed level of performance. Weak points of NASCAR includes its close culture which is non collaborative. They have non-interventionist method. They typically utilized to form guidelines and other needed procedures without intervention of others which results in bad partnership. NASCAR establishes Automobile of Tomorrow without collaboration so result is that motorists did not like that principle. As this is racing sport so covering of sports by media is likewise tough. It was likewise found that NASCAR had no effective method for business communication. They don't understand how to handle issue if it happened off track. Inadequate company interaction leads to that they do not have clear instructions for their long term goals. They don't know that where they want to see this sport in future.
Porter's 5 Forces Analysis

NASCAR generally utilized to rely on conventional media sources like regional newspaper for promotion of its sports. NASCAR also came to understand from these conventional media outlets that sport was difficult to cover. When sports fans were asked regarding popular celebrities and stars then NASCAR chauffeur was not discovered even in leading twenty actions.


Dangers in SWOT analysis are defined as external aspects that can danger to business's success. Because if there is financial down turn then people would be having less return on financial investment, Economic down turn was experienced in late 2000 which can be danger for NASCAR. Earning of individuals would be effected and they would be more mindful in spending their cash. Economic down turn also results in increase fuel rates which likewise impacted NASCAR. Since fans of NASCAR used to attend its event from long distances. NESCAR had a rule of 65/25/10 for revenue distribution. 65 percent profits from media rights would be distributed to race tracks, 25 percent earnings would be dispersed to contending group and remaining 10 percent would be retained by NESCAR which is sanctioning body. Completing team wished to increase their portion of revenue from 25 percent due to the fact that of boost in operating expense of a race team and likewise there is decrease in the number of full-season sponsorship. NESCAR also faces risks from other sponsors due to the fact that they are making massive investments to enhance experience of fans. Which consists of upgrading existing avenues, building new opportunities, providing Wi-Fi center and also providing other interactive mediums to engage sports on mobile phones. Fan base of NASCAR comprised of married males with a typical age of 47, which passes their fandom to their children and develop generational loyalty. So the challenge is that the family system in America was changing leading to reduction of impact of married male fan base over their children. Together with it perceptions about car was also altering with viewing car an automobile to reach at point B from point A, instead of as a fun task. If NASCAR make considerable financial investments in new sectors which are based on brand-new consumers then it might face negative remarks from its core fan base, now.

Porter's 5 Forces Analysis

Porter's 5 forces is a model that is utilized to analyse market in which company is working. It assists in determining what are strengths and weakness of any specific market. It recommend that every industry is various from one another. Due to the fact that NASCAR's bottom line i.e. net revenue is heavily depends on this, it is crucial to comprehend market in which company is working. There are 5 forces that are utilized to determine success, strength and beauty of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis company.

Competitive Competition

This force suggests ability of rivals. Groups generally represents sponsors in NASCAR and the medium of marketing is chauffeurs. It can be said that chauffeurs and race vehicles are competitors. If they got better opportunity in terms of rewards and tv exposure, these motorists can go versus Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help. Then audiences can move to those other interesting automobiles and chauffeurs, if audiences enjoy other race cars and drivers more than NASCAR. NASCAR might be having hazard from its two direct competitors that is Formula 1 and Moto GP. They require to create competitive benefits for chauffeurs so they do not move to other rivals.
Swot Analysis
Supplier Power

The provider power suggests the number of suppliers are readily available in industry and what is the cost connected with provider if business shifts from one supplier to another. In this industry there is supply monopoly because chauffeurs with required skills and resources are restricted.

Purchaser Power

This force is concerning to customers that is it simple for clients to move to other items. Then clients are less most likely to switch, if there is more changing cost is associated. When it comes to NASCAR clients are its audiences. Viewers can change to other rivals easily because audiences will having low changing expense.

Risk of Substitution

Alternatives are referred as alternatives. The replacements in this case can be other entertainment indicates like viewers can move to other sports. There are wide range of replacements are offered in this scenario which suggests that danger of replacement is high.

Hazard of New Entry

In the case of NASCAR risk of brand-new entry is low. They require to develop cars and trucks and racing tracks and likewise needs to pay hefty amount to drivers for changing.

PESTEL Analysis


As NASCAR is working in different markets so it needs to deal with various policies. It is also kept in mind that NASCAR has actually dealt with increased scrutiny relating to regulative. Every federal government has different top priority so NASCAR has actually to be prepared for it as concern can be moved to other sector.


Economic factors consists of taxation rate, exchange rate, economic performance of that particular company, conditions of labour market, inflation rate etc. Fortunes of the NASCAR and its competitors can be impacted if there is federal government intervention in the marketing and sales sector. NASCAR can leverage capabilities of employees to develop new chances and improve existing opportunities.


Each has different social worths and norms. It assists in understanding concerning society and choice of customers.


Technology has effect on practically every business. It consists of innovation in service technique. In this case of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution it can be kept in mind that companies are heavily investing for research and development. NASCAR ought to also work on its media rights policy with Turner Broadcasting System.

Vrio Analysis
Since every country has different legal terms and conditions, Legal plays an essential role in every nation. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help requires to be ensure that they secure their legal rights in every county so any company does not hurt to its legal rights.


Ecological aspects are likewise important for every organisation. NASCAR needs to make sure that its automobiles are not creating pollution more than acceptable level.

7 P's of Marketing


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


Rates technique of NASCAR for its race occasions 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 makes profits. For instance it charged sanctioning charges of $1-2 million per race usually in 2005.


Advertising method of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis is highly based upon its fan base. A strong fan base share its fandom with others and increase the number of audiences for NASCAR races. The company is not entirely relied upon its fan base for its promo and promote through regional radio stations too. The business has likewise adopted the retailing media of promotion, in which the company sells products with its logo design.


NASCAR have its racing tracks in various 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 conduct its races in most of the cities in United States to comprehend nationwide popularity.


Nestle individuals strategy is comprised of providing much better experience to its audiences, its fan base and to all of its stakeholders. People are an important aspect of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution A marketing technique as its events are the source of entertainment for crowd. Its individuals technique consists of efforts to supply better experience to its Fans, Race Drivers, Crew, Occasion Organizers and so on, all of which come under people method of NASCAR.


Several service procedures are needed to carry out racing events in an effective method. These processes consist of; proper schedule of time, plan for spectators, offering tickets, arrangement of space for sponsors, managing logistics and so on. These all processes contribute I developing NASCAR image, enhancing viewers experience and increasing fan base.

Physical Proof.

Essential physical evidences for the NASCAR consists of the presence of its racing tracks, stock automobiles and racing occasions. Together with it, its retailing brands consisting of t-shirts, caps, goodies and so on, likewise function as a physical evidence for NASCAR.

Product Life Process Assessment.

The racing events by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution was introduced on June 19, 1949. The very first race was held at Charlotte Speedway in North Carolina. There were about 13000 fans present in the race. At the first stage competition for NASCAR was low, as the rivals drove the cars similar to the automobiles driven by ordinary individuals.


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

In 1972, William France Jr., ended up being the president of NASCAR and n about 3 years, he changed NASCAR from a local Sport popular company into one with international fan base. He initiated a new age of profitable sponsorships and television agreements for NASCAR.


The maturity duration for NASCAR started with the efforts of William France Jr., with the business having wide range of income sources. The business has about 500 sponsors with broadcasting its events in about 150 nations. The company has a great deal of tracks in the majority of the cities of United States.


The major causes of decline consist of the monetary crisis of 2008, which increased the expense of arriving at tracks for viewers due to increasing fuel rates, and the shifting of its fan base towards other sports.

Market Division.

The marketplace 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).


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 numerous states and cities in United States, and the television broadcasting of its occasions in numerous nations. The company 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 vast geographical segmentation provides the company local as well as global fan base.


The group division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis is likewise highlydiverse based upon the gender, income and age of the customer. To increase the group segment of its market NASCAR must modify its marketing methods to draw in more age groups and lower its rates to go into in the market segment with a low typical earnings.


NASCAR has a fan base with a commitment. NASCAR fans view it compulsive to purchase tickets and see the races as soon as in a week. NASCAR has actually tried to increase the quality of its racing by presenting phase racing, they likewise have attempted to lower prices and make the occasion more convenient by presenting live racing.


Behavioural division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis is based upon the behaviour of fans in terms of seeing the race survive on the tv or by entering the events. Presently, the fans preference is towards viewing the race at home on television instead of going, as the client experience at NASCAR tracks is not beneficial along with costly. This choice makes the rates for participation lower than the rates for television viewers. NASCAR needs to alter the behaviour of its fan base by introducing qualitative services at its tracks.

Target Market.


One of the prospective target market of NASCAR was Hispanics; the young and growing population of United States. The market segment has fantastic prospective for NASCAR as the population was growing at a higher rate and it was expected to end up being thrice after forty years and the sector has increasing wealth rate with about $1 trillion of wealth in 2014.


Kids are likewise one of the prospective target market sector for NASCAR, as they are more linked socially than other groups. Developing fan base amongst kids can offer a possible boost in the number of fans for racing due to their connectivity. Kids spend the majority of their times in playing and utilizing mobile phones computer game. Car racing video games developed by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution can be a potential source of getting attention of kids towards NASCAR track racing. However, NASCAR's digital functions related to kids are not efficient in acquiring the attention. NASCAR requires more attention towards personalizing and enhancing its digital functions to attract the kids target audience.

This substantial expenditure makes the section capacity for NASCAR marketing strategy of increasing its fan base. The market sector thinks about NASCAR as an organization lacking in producing a multiculturalism atmosphere. NASCAR should take various actions to improve the experience of Generation Y customers in its events.

5 C's of Marketing

5 C's of marketing helps in taking decisions regarding marketing. These 5 C's requirements to be analysed correctly for taking any marketing choice. These 5 C's represent Climate, Business, Collaborators, Customers and Rivals.


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, legal and ecological and is specified above.


NASCAR is an automobile racing business with having USP of high quality auto racing with an international structure. Its sector is sports team and occasions. Its target audience is males in the age group of 15-60 years. Company has closed corporate culture and having non-interventionist approach.


Collaborations consists of distributors, providers and alliances of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help. It is teamed up with different racing groups which are participating in racing. It likewise teamed up with Turners Sport for digital rights. NASCAR used to earn money check of around $15 million annually from Turner Sports. There are number of cons behind this offer. For example NASCAR had 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 each and every single video which is shoot during race at track.


The consumer of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help are its viewers. They target customers 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 create generational loyalty.


The direct rivals of NASCAR are Formula 1 and Moto GP. Groups typically represents sponsors in NASCAR and the medium of marketing is motorists. It can be said that motorists and race vehicles are competitors. These motorists can go against Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis if they improved opportunity in regards to prizes and television exposure.

Marketing Methods.

1. Establishing and Keeping Facebook Page.
Among the possible target audience sections for NASCAR is Hispanics which is the growing population sector of USA but sadly NASCAR had been not able to draw in the this targeted sector. In order to attract the young growing generation the NASCAR need to market by utilizing social media like Facebook. It should develop a Facebook page consisting of the info concerning the races and the places of tracks to make the consumer useful about the core operations of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution. It should likewise update its Facebook page on day-to-day basis to supply information about its upcoming occasions. This would make the target audience sector more informative about the business and would lead to bring in large fans base.
2. Establishing and Updating Accounts of Key Drivers.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help drivers has a low star power as compare to players of other sports. The poor contacts with fans result in less destination of audiences towards the racers and a low star power. Star power is a crucial element for drawing in viewers towards tracks and towards tv.
3. Establishing New Games and enhancing present video games for kids.
In order to bring in these kids, NASCARA should improve its present racing games by presenting customization in the vehicles i.e. changing colours, choice of speed, introducing group racing in the video game, utilizing better graphics related to the racing tracks and introducing various levels in the game. All these adjustments in the current game would offer much better experience to kids.
Along with it, NASCAR needs to likewise build brand-new games connected to racing like kids racing with kids characters as motorists, animation racing with racing between various animation characters with a choice of selecting the preferred cartoon character for the kids. These techniques would allow the business to attract among its prospective target sectors.
4. Presenting multiculturalism at occasions.
NASCAR occasions are made up of fans with extremely few cultural variety, due to expense of arrival in occasions, making it unattractive for the consumers viewing sport occasions as social events i.e. Generation Y customers. As the Generation Y customers are a prospective target market for NASCAR, therefore the business must take specific measures to attract this prospective target market.
5. Improving Client Experience at Tracks.
NASCAR should work on facilities and amenities at tracks since on the race day audiences got dissatisfied. Viewers have many expectations from Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help due to the fact that in very same market other companies are supplying much better services than NASCAR. IF NASCAR do not work on this issue then its fans might shifted to its rivals.

Marketing Spending plan

Marketing budget made on the basis of the above methods for the duration of 5 years from 2011 to 2015, shows the cost related information for the marketing techniques. (See Appendix B). It can be seen that strategy 5 of enhancing customer experience at tracks would need greatest initial investment and cost and technique 4 of introducing multiculturalism will need lowest preliminary financial investment with least expensive further each year expense. The company should focus on the resource allocation on these techniques on the basis of its readily available resources and the possible benefits which the strategy would offer.
NOTE: The worths about cost are presumed on reasonable basis due the absence of truths and figures related to cost in the case study. Inflation rate of United States is assumed to be 10%.

On the basis of deep analysis of the external and internal aspects of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help causing the decline of television viewership rate and presence rate at tracks, the above marketing strategies are recommended to NASCAR to increase its fan base in long term. These techniques would cope with internal factors like bad consumer experience at tracks, insufficient social media marketing, incapable digital medias like video games, absence of culturalisms at tracks etc., along with with external elements like moving of fans towards other sports, demographical changes in America and altering domesticity designs.