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

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

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


NASCAR (National Association for Stock Car Car Racing) is an organization performing series of Stock Vehicle racing in United States and acting as an approving body for driving the rules for Stock Vehicle Racing. 2) Stock Cars And Truck Racing by NASCAR is the 2nd 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 Analysis consists of; 10% of the total revenue from television rights, approving costs i.e. $1-2 million per race, and licencing NASCAR brand name to business.

NASCAR has a closed corporate culture with the non-interventionist approach. The structure of Automobile of Tomorrow by NASCAR, with an intention of security for the motorists, brought different tensions among the stakeholders of the sport.

The communication audit, performed in 2010, revealed that in spite of the truth that the business extremely rely on the interactions between its stakeholders, there was no identifiable company interaction strategy. The industry's target customers, direction and objectives were all unidentified.

The audit mentioned numerous doing not have of NASCAR in regards to absence of internal integration, absence of fan management method and lack of social and digital media of marketing. The company has complex environment with independent tracks, teams and chauffeurs. This structure with closed business culture bring different obstacles in accelerating a change. Other partners in environment includes the media networks i.e. television and radio, and business marketers.

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

Problem Declaration.

The business is currently dealing with the issue of declining rates of presence at racing tracks and rates of television viewers. This can put a significant effect on its revenues from sponsors, media rights, and from other sources of income.

Situational Analysis.

The company was rather effective till 2005 with its traditional marketing techniques, however soon after 2005 the company starts facing different problems consisting of decline of its fan base. Numerous external along with internal factors are responsible for the decrease. Internal elements include; insufficient financial investment in social networks and other digital medias of.

Fan base of NASCAR made up of married males with a typical age of 47, which passes their fandom to their youngsters and produce generational commitment. Other challenges 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 access, and so on.

SWOT Analysis.


NASCAR core competencies includes it has rights of dictating guidelines as approving body. Rules and regulations concerning professional stock cars and truck racing are dictated by NASCAR like if any team with required abilities and resources can get in into races by following guidelines and guidelines dictated by NASCAR. All the events of NASCAR are sponsored by corporates because of biggest brand name commitment of fans towards brands promoted by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution.

Weak points.

Weak points of NASCAR includes its close culture which is non collective. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis develops Vehicle of Tomorrow without collaboration so result is that motorists did not like that concept. It was also discovered that NASCAR had no effective technique for company communication.


NASCAR normally utilized to rely on conventional media sources like regional paper for publicity of its sports. NASCAR likewise came to understand from these traditional media outlets that sport was hard to cover. When sports fans were asked relating to popular celebrities and stars then NASCAR chauffeur was not discovered even in leading twenty reactions.


Risks in SWOT analysis are defined as external aspects that can hazard to business's success. Economic down turn was experienced in late 2000 which can be risk for NASCAR due to the fact that if there is financial down turn then individuals would be having less return on investment. Earning of individuals would be effected and they would be more conscious in investing their money. Economic down turn also leads to increase fuel costs which likewise impacted NASCAR. Since fans of NASCAR utilized to attend its event from cross countries. NESCAR had a rule of 65/25/10 for earnings distribution. 65 percent incomes from media rights would be distributed to race course, 25 percent income would be distributed to contending group and staying 10 percent would be kept by NESCAR which is approving body. Contending team wanted to increase their portion of profits from 25 percent since of boost in operating expense of a race group and likewise there is decrease in the variety of full-season sponsorship. NESCAR likewise deals with risks from other sponsors due to the fact that they are making huge financial investments to enhance experience of fans. For example which includes updating existing avenues, building new opportunities, providing Wi-Fi facility and likewise supplying other interactive mediums to engage sports on smart devices. 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 difficulty is that the household system in America was changing leading to reduction of influence of married male fan base over their children. Together with it perceptions about car was likewise altering with viewing cars and truck a vehicle to reach at point B from point A, rather than as an enjoyable job. If NASCAR make substantial investments in brand-new sections which are based on new consumers then it might face unfavorable remarks from its core fan base, now.

Porter's Five Forces Analysis

It is essential to comprehend industry in which business is working because NASCAR's bottom line i.e. net earnings is heavily depends on this. There are 5 forces that are used to determine success, strength and attractiveness of NASCAR company.

Competitive Competition

These drivers can go versus NASCAR if they got much better chance in terms of prizes and television exposure. If audiences take pleasure in other race automobiles and drivers more than NASCAR then viewers can move to those other fascinating cars and trucks and motorists. NASCAR could be having danger from its two direct rivals that is Formula 1 and Moto GP.

Provider Power

If company shifts from one provider to another, the provider power shows the number of suppliers are offered in industry and what is the expense associated with provider. Since motorists with needed resources and abilities are restricted, in this market there is supply monopoly.

Buyer Power

This force is regarding to consumers that is it easy for clients to move to other products. Then clients are less likely to switch, if there is more changing cost is associated. When it comes to NASCAR consumers are its viewers. Because audiences will having low changing cost, audiences can change to other rivals quickly.

Hazard of Replacement

Alternatives are referred as options. The replacements in this case can be other home entertainment indicates like audiences can shift to other sports. There are wide variety of replacements are available in this scenario which suggests that hazard of substitute is high.

Risk of New Entry

In the case of NASCAR danger of brand-new entry is low. They need to develop automobiles and racing tracks and likewise requires to pay large quantity to motorists for changing.

PESTEL Analysis


As NASCAR is working in different markets so it needs to deal with different policies. It is also noted that NASCAR has faced increased scrutiny concerning regulative. Every government has various priority so NASCAR has actually to be prepared for it as concern can be shifted to other sector.


Financial factors includes taxation rate, currency exchange rate, economic efficiency of that specific company, conditions of labour market, inflation rate etc. If there is government intervention in the marketing and sales sector, fortunes of the NASCAR and its competitors can be affected. NASCAR can take advantage of capabilities of employees to produce new opportunities and improve existing opportunities.


Every society is various from each other. Each has different social values and standards. It assists in understanding concerning society and preference of consumers. Social elements consists of customs, culture, attitudes towards particular product and services, demographics, norms, interests etc. It can be concluded that advertising through other methods instead of traditional (i.e. newspaper) can be chosen in this society.


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


Legal plays an important function in every country because every nation has various legal terms and conditions. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis needs to be ensure that they secure their legal rights in every county so any business does not hurt to its legal rights.


Ecological factors are also essential for every service. NASCAR needs to make sure that its vehicles are not producing contamination more than acceptable level.

7 P's of Marketing


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


Pricing strategy of NASCAR for its race events tickets is based upon the location and importance of the racing events. In addition to race events tickets, NASCAR also charge various service charge to its stakeholders and makes income. It charged sanctioning fees of $1-2 million per race on average in 2005.


Promotional technique of NASCAR 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.


NASCAR have its racing tracks in various cities in United States. The most crucial tracks of NASCAR includes Atlanta Motor Speedway in Georgia, Automobile Club Speedway in California and Darlington Raceway in South Carolina. It tries to conduct its races in the majority of the cities in United States to grasp across the country appeal.


Nestle individuals technique is comprised of offering better experience to its audiences, its fan base and to all of its stakeholders. People are an essential element of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution A marketing strategy as its events are the source of entertainment for crowd. Its people technique includes efforts to offer better experience to its Fans, Race Drivers, Team, Occasion Organizers etc., all of which come under people strategy of NASCAR.


Several business processes are needed to carry out racing occasions in an effective method. These processes consist of; appropriate schedule of time, plan for viewers, offering tickets, arrangement of area for sponsors, handling 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 includes the existence of its racing tracks, stock automobiles and racing events. In addition to it, its retailing brands including tee shirts, caps, goodies etc., also function as a physical proof for NASCAR.

Product Life Cycle Evaluation.

The racing occasions by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help was introduced on June 19, 1949. The first race was held at Charlotte Speedway in North Carolina. There had to do with 13000 fans present in the race. At the very first stage competitors for NASCAR was low, as the rivals drove the cars and trucks comparable to the automobiles driven by common individuals.


After conducting its first race effectively the business moved towards constructing its own tracks. The first Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help based track, specifically the Darlington Raceway track, was started in 1950 in South Carolina. It was followed by establishment of more raceways consisting of Daytona International Speedway, which was opened in 1959. After the growth of racing tracks the company moved towards relaying its races on television in 1979. The very first event transmitted on television was flag-to-flag protection of Daytona.

In 1972, William France Jr., became the president of NASCAR and n about 3 decades, he transformed NASCAR from a local Sport popular company into one with international fan base. He initiated a new period of profitable sponsorships and tv contracts for NASCAR.


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


The decline in the company's offerings started after 2005 with typical attendance rate per race decreased by 22% from 2005 to 2010 and tv viewership rate decreased by 30% from 2005 to 2010. The significant reasons for decline consist of the financial crisis of 2008, which increased the cost of reaching tracks for audiences due to increasing fuel prices, 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 4 sectors; Geographic, Demographic, Psychographic and Behavioural. (Dutta, 2018).


The geographical segmentation of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Solution is based upon the geographical existence of its tracks in various states and cities in United States, and the television broadcasting of its occasions in different nations. The business has 23 tracks in about 20 states of America and has television broadcast through numerous Medias i.e. TNT, ESPN, ABC and Fox, in about 150 countries.This large geographical segmentation supplies the company regional in addition to international fan base.


The group division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help is also highlydiverse based upon the gender, earnings and age of the consumer. To increase the market section of its market NASCAR need to revise its marketing methods to bring in more age groups and lower its rates to go into in the market section with a low typical earnings.


The mental characteristics of the majority of the fans are quite comparable. NASCAR has a fan base with a commitment. NASCAR fans perceive it compulsive to purchase tickets and see the races once in a week. 71% of them prefer to acquire products with a NASCAR trademark name. They are quite extrovert and want to join other fans while racing. They desire quality racing with low rate at hassle-free area. NASCAR has tried to increase the quality of its racing by introducing phase racing, they also have tried to lower rates and make the event more practical by presenting live racing.


Behavioural segmentation of NASCAR is based upon the behaviour of fans in terms of seeing the race live on the tv or by going in the events. Presently, the fans preference is towards watching the race at house on tv rather than going, as the consumer experience at NASCAR tracks is not beneficial as well as pricey.

Target Market.


Among the potential target audience of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help was Hispanics; the young and growing population of United States. The marketplace section has fantastic possible for NASCAR as the population was growing at a greater rate and it was expected to end up being thrice after forty years and the section has increasing wealth rate with about $1 trillion of wealth in 2014. The segment shows affinity with vehicle culture, however require a more concentrated marketing towards inviting the sector towards racing.


Kids are likewise one of the prospective target market section for NASCAR, as they are more linked socially than other groups. Producing fan base amongst kids can offer a potential boost in the variety of fans for racing due to their connectivity. Kids invest the majority of their times in utilizing smart devices and playing video games. Car racing games established by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help can be a possible source of getting attention of kids towards NASCAR track racing. NASCAR's digital features related to kids are not capable of acquiring the attention. NASCAR requires more attention towards tailoring and enhancing its digital functions to bring in the kids target market.

Generation Y.
Generation Y target market consists of those who invested 5 times more resources on discretionary expenses i.e. purchasing tickets for racing occasions, than others. This substantial expenditure makes the sector capacity for NASCAR marketing technique of increasing its fan base. The market sector is likewise easy to method as 81% of the Y Generation consumer utilizes Facebook every day and the usage is twice of using television and radio. The market sector views sports as an affair, instead of adherence to sport. The marketplace sector thinks about NASCAR as a company lacking in producing a multiculturalism atmosphere. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help should take numerous steps to enhance the experience of Generation Y customers in its events.

5 C's of Marketing

5 C's of marketing helps in taking choices relating to marketing. These 5 C's requirements to be evaluated appropriately for taking any marketing choice. These 5 C's mean Climate, Company, Collaborators, Competitors and customers.


It requires to make PESTLE analysis in order to comprehend climate or context in which NASCAR is working. PESTLE means political, financial, social, technical, legal and ecological and is stated above.


Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution is a car racing company with having USP of high quality car racing with an international structure. Its sector is sports group and events.


Collaborations includes distributors, suppliers and alliances of NASCAR. NASCAR used to get pay check of around $15 million yearly from Turner Sports. NASCAR had to get approval from Turner Sport if it want to develop its Facebook page, twitter account or even mobile application.


The consumer of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution are its audiences. They target clients with having age of 15-60 years. Fan base of NASCAR consisted of married males with an average age of 47, which passes their fandom to their youngsters and produce generational commitment.


Teams usually represents sponsors in NASCAR and the medium of advertising is chauffeurs. These drivers can go against NASCAR if they got much better opportunity in terms of prizes and television exposure.

Marketing Methods.

1. Developing and Keeping Facebook Page.
One of the prospective target markets sectors for NASCAR is Hispanics which is the growing population section of U.S.A. but unfortunately NASCAR had actually been unable to bring in the this targeted sector. In order to draw in the young growing generation the NASCAR must market by utilizing social media like Facebook. It needs to develop a Facebook page consisting of the info regarding the races and the places of tracks to make the consumer helpful about the core operations of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution. It needs to also update its Facebook page on daily basis to offer info about its approaching events. This would make the target market section more useful about the business and would lead to drawing in large fans base.
2. Developing and Upgrading Accounts of Secret Drivers.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution chauffeurs has a low star power as compare to gamers of other sports. The bad contacts with fans result in less tourist attraction of audiences towards the racers and a low star power. Star power is an essential factor for bring in audiences towards tracks and towards television.
3. Establishing New Games and improving existing video games for kids.
Kids spent most of their time on playing games and using mobile phones. Unfortunately, kids playing NASCARA have a worst experience of playing its games. As a result, they are less brought in towards the sport. In order to draw in these kids, NASCARA ought to enhance its existing racing video games by presenting modification in the cars and trucks i.e. changing colours, selection of speed, presenting group racing in the video game, utilizing better graphics connected to the racing tracks and presenting numerous levels in the video game. All these adjustments in the present game would offer better experience to kids.
Along with it, NASCAR ought to also construct new video games related to racing like kids racing with kids characters as chauffeurs, cartoon racing with racing in between different animation characters with an option of choosing the favourite cartoon character for the kids. These methods would enable the business to draw in one of its possible target sectors.
4. Introducing multiculturalism at events.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis events are consisted of fans with extremely few multiculturalism, due to expense of arrival in events, making it unattractive for the clients perceiving sport occasions as affairs i.e. Generation Y consumers. As the Generation Y customers are a prospective target market for NASCAR, therefore the business needs to take particular measures to attract this potential target audience. It needs to embrace strategies to bring in the consumers far from the tracks area with different culture. The strategy to do so might be offering unique discounts on tickets or free tickets to audiences originating from a particular range or from another state. It would increase cultural diversity of the fans and would make Generation Y customers more pleased.
5. Improving Consumer Experience at Tracks.
NASCAR needs to work on infrastructure and features at tracks since on the race day audiences got disappointed. Audiences have many expectations from Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help since in exact same industry other companies are providing better services than NASCAR. IF NASCAR do not work on this issue then its fans may moved to its rivals.
Marketing Budget plan.
Marketing budget plan made on the basis of the above strategies for the duration of 5 years from 2011 to 2015, reveals the expense associated data for the marketing methods. (See Appendix B). It can be seen that strategy 5 of enhancing customer experience at tracks would require greatest preliminary financial investment and expense and technique 4 of presenting multiculturalism will need most affordable preliminary financial investment with most affordable even more per year cost. The business needs to prioritize the resource allowance on these strategies on the basis of its readily available resources and the potential benefits which the method would supply.
NOTE: The worths about cost are assumed on reasonable basis due the lack of figures and truths connected to cost in the case research study. Inflation rate of United States is presumed to be 10%.


On the basis of deep analysis of the internal and external elements of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis triggering the decrease of tv viewership rate and participation rate at tracks, the above marketing techniques are recommended to NASCAR to increase its fan base in long term. These strategies would deal with internal factors like poor consumer experience at tracks, inadequate social media marketing, incapable digital medias like video games, lack of culturalisms at tracks etc., in addition to with external aspects like shifting of fans towards other sports, demographical changes in America and altering family life designs.

Liz Claiborne China Verge Software B Xmarksthespot Note On Pre Money And Post Money Valuation Ab Risk Management At Apache
Selecting A Hosting Provider Zaplet Inc A Webmd B Avantgo
Strategic Planning At Sun Life Merloni Elettrodomestici Building For A New Century Brazil Embracing Globalization Efrenzy Inc B
Unext Business Education And E Learning Efrenzy Inc C Gucci Group Nv B Monsanto And Intellectual Property
Competition Policy In The European Union And The Power Of Microsoft Verge Software A Robert Shapiro And Monsanto Web And It Hosting Facilities Technology Note
The Global Water And Food Supply Problem Exchange Rate Terminology And Analytics Exchange Rate Exercise Technology Legend In China
Supply Chain Management At World Co Ltd Quest Foods Asia Pacific And The Crm Initiative Corruption In International Business B Hidden Costs Of It Outsourcing
Limits Of Mass Customization Power Of Strategic Integration Execution The Missing Link In Retail Operations Decision Making Its Not What You Think
Learning From Toys Lessons In Managing Supply Chain Risk From The Toy Industry The Good Commissioner Linking Actions To Profits In Strategic Decision Making Enabling Customization Using Standardized Operations
Organizational Support For Employees Encouraging Creative Ideas For Environmental Sustainability Framework For Analyzing Environmental Voluntary Agreements Corporations Communities And Conservation The Mountain Institute And Antamina Mining Co Francisco De Narvaez At Tia Selling The Family Business Video
Katharine Graham Color Kinetics Inc A Color Kinetics Inc B Amazoncom Update January 2001 July 2002
Amazoncom Evolution Of The E Tailer Charlene Barshefsky A Real Options Valuation When Multiple Sources Of Uncertainty Exist Charlene Barshefsky B
Extracting Information From The Futures And Forwards Markets The Relation Between Spot Prices Forward Prices And Expected Future Spot Prices Napster Montefiore Medical Center Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods
Arvin Exhaust Thailand Building An Asian Supply Base Sustainable Development And Socially Responsible Investing Abb In 2000 Corruption In International Business A E Commerce In Latin America
Progressive Insurance Firestoneford Tire Controversy B Syncra Systems Psinet Building An Internet Super Carrier A
First For Inspiration And Recognition Of Science And Technology Notel A Speak To Me Power And Influence Achieving Your Objectives In Organizations Kelon A Chinas Corporate Dragon
Technical Note On Managing Inventories Periodic Review System The Israel Cancer Association B Merrill Lynch Holdrs Dpsc Software Post Acquisition Evaluation
Circon B Circon C Veltvest Corp Breakup Of Att Project Grand Slam
Samhoud Service Management Yvette Hyater Adams And Terry Larsen At Corestates Financial Corp Time Warner Vs The Walt Disney Co A Pulling The Plug Chiquita Brands International B
Time Warner Vs The Walt Disney Co B Reaching Agreement Identifying And Realizing Investments In Eastern Europe B Identifying And Realizing Investments In Eastern Europe A Pricing Strategy And The Net
Security Factors Fdi In China Iturf Note On Valuation Of Venture Capital Deals
Venture Capital Vignettes The Israel Cancer Association A Range B Merck Latin America D Mexico
Merck Latin America B Argentina Sime Darby Berhad B The Asian Crisis Begins Two Big Banks Broken Back Office Merck Latin America A
Tampa General Hospital The Politics Of Privatization Sequel An Introduction To Business To Business Exchanges Hdfc B Merck Latin America C Brazil
Tampa General Hospital The Politics Of Privatization Sime Darby Berhad C Responding To The Asian Crisis Word Of Mouth Referral Module Note Service Recovery Module Note
Wingspanbankcom B Should This Bird Still Fly Note On Service Excellence Citigroup Asset Management Aes Corporation B Global Sourcing Initiative
Mack Henley D Macromedia Inc Weaving Dreams Of Global Markets And New Technologies Excel Model For Aggregate Production Planning Aggprods Sweet Concepts Inc Trade Show Marketing
Big Deal Or No Big Deal International Speedway Corporation Six Sigma Fx Cascade Bellaire Clinical Labs Inc B
King Roberts B Note On Acquiring A Specialty Retailer Competitive Cost Analysis Scale And Utilization Calculations Ginnys Restaurant
Mack Henley C Aggregate Production Management 2002 Competitive Cost Analysis Cost Modeling Techniques General Electric 2000 Quality Of Earnings Assessment
Mack Henley B Mack Henley A Note On The Development Of Management Communication In Graduate Business Schools Technology Strategy For A Diversified Corporation