Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution & Analysis
Intro
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis (National Association for Stock Automobile Vehicle Racing) is an organization performing series of Stock Cars and truck racing in United States and serving as an approving body for driving the guidelines for Stock Automobile Racing. The company was established in 1947, by "Huge Costs" France. NASCAR set up Stock Vehicle Racing events in United States with the presence of about 130000 audiences typically in 2005. It likewise broadcast its occasions in about 150 countries. Stock Vehicle Racing by NASCAR is the 2nd largest spectator sport, with highest variety of sponsors. It has about 500 sponsors contributing billions of dollars in its revenue. The other sources of revenue for Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution includes; 10% of the total income from television rights, approving charges 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. This non collaborative method brings stress in the sport. The structure of Vehicle of Tomorrow by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution, with an objective of security for the drivers, brought different stress among the stakeholders of the sport.
The communication audit, conducted in 2010, revealed that despite the reality that business extremely count on the communications between its stakeholders, there was no identifiable organisation communication strategy. The industry's target consumers, direction and goals were all unidentified.
The audit explained various doing not have of NASCAR in terms of lack of internal combination, absence of fan management technique and lack of digital and social media of marketing. The business has complicated ecosystem with independent tracks, groups and motorists. This structure with closed corporate culture bring various difficulties in speeding up a modification. Other partners in environment includes the media networks i.e. television and radio, and corporate marketers.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help audiences was highly faithful to the sport and the brands connected with the NASCAR, making it appealing for sponsors and business online marketers.
Issue Statement.
The company is currently dealing with the issue of decreasing rates of presence at racing tracks and rates of television viewers. This can put a substantial impact on its revenues from sponsors, media rights, and from other sources of profits.
Situational Analysis.
Although the company was quite effective till 2005 with its conventional marketing methods, but not long after 2005 the business begins facing various problems including decrease of its fan base. A number of external in addition to internal elements are responsible for the decline. Internal factors include; insufficient financial investment in social media and other digital medias of.
Fan base of NASCAR consisted of married males with an average age of 47, which passes their fandom to their children and create generational loyalty. The family system in America was changing resulting in reduction of impact of married male fan base over their children. In addition to it perceptions about car was likewise altering with viewing cars and truck an automobile to reach at point B from point A, rather than as a fun task. Other obstacles for Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis 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 houses through jumbo turns, Wi-Fi access, and so on. These all challenges were tending the business to revise its marketing strategies.
SWOT Analysis.
Strengths.
In SWOT analysis, strengths defined as company's qualities which are different from its competitors. 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 Help core competencies includes it has rights of determining guidelines as sanctioning body. Guidelines and regulations relating to expert stock vehicle racing are determined by NASCAR like if any team with required abilities and resources can enter into races by following rules and policies determined by NASCAR. NASCAR has monopoly it this element. Its strengths also consists of that it has title of second largest viewer sport in the United States with having more fortune 500 sponsors based in US. Its races were used to broadcast in more than 150 countries worldwide with more than $56 million incomes. The primary sources of their revenues come from television rights, sanctioning charges, 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 occasions of NASCAR are sponsored by corporates because of greatest brand name loyalty of fans toward brand names advertised by Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution. (See Appendix A).
Weak points.
Weak Points in SWOT Analysis are considered as external elements. Weak points includes the elements that stops business to carry out at needed level of effectiveness. Weaknesses of NASCAR includes its close culture which is non collective. They have non-interventionist method. They typically utilized to form rules and other needed procedures without intervention of others which results in bad collaboration. NASCAR establishes Car of Tomorrow without cooperation so result is that drivers did not like that idea. As this is racing sport so covering of sports by media is also hard. It was also found that NASCAR had no reliable technique for business communication. They don't know how to deal with problem if it took place off track. Inefficient company interaction leads to that they don't have clear instructions for their long term objectives. They don't understand that where they want to see this sport in future.
Opportunities.
Opportunities in SWOT analysis are external elements which can be favourable to business or the external aspects on which business is having competitive benefit. NASCAR generally used to rely on conventional media sources like regional newspaper for promotion of its sports. Typically these conventional media sources attempt to cover their house team and certain kind of occasions. NASCAR also familiarized from these conventional media outlets that sport was difficult to cover. Media landscape also altered from standard to digital landscape. Newspapers went out of business. NASCAR can deal with its capabilities to get maximum possible benefits from this brand-new digital landscape. NASCAR have underinvestment in digital resources. So it can capitalize in social and digital media to get its benefits. Digital rights of NASCAR were likewise offered to Turner Sports. NASCAR used to make money check of around $15 million yearly from Turner Sports. There are number of cons behind this deal. NASCAR had to get approval from Turner Sport if it desire to produce its Facebook page, twitter account or even mobile application. Turner Sport likewise had rights of every video which is shoot during race at track. Then they are required to pay licensing costs to Turner Sport, if media sources like newspapers, publications and cable channels desire to post videos of races on their particular pages. NASCAR can work on conditions and terms and attempt to work out with Turner Sports to get optimal advantages of it. Star power plays extremely essential function in generating profits from every sport. It was kept in mind that NASCAR is lagging in this area i.e. star power. For example when sports fans were asked concerning popular celebrities and stars then NASCAR chauffeur was not found even in leading twenty responses. So NASCAR can put efforts in this location too for revenue generation. They should guide their chauffeurs that how they can become sport stars. 4 strategic focuses which are created by research study group can likewise be worked as chance for NESCAR. These 4 tactical focuses compares and analysis Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis methods.
Threats
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 financial investment. Economic down turn also results in increase fuel rates which likewise affected NASCAR. Now if NASCAR make considerable investments in brand-new segments which are based on brand-new customers then it may deal with unfavorable remarks from its core fan base.
Porter's 5 Forces Analysis
Porter's 5 forces is a model that is used to analyse industry in which business is working. It helps in identifying what are strengths and weak point of any specific industry. It suggest that every market is various from one another. It is important to comprehend industry in which business is working since NASCAR's bottom line i.e. net earnings is heavily depends on this. There are 5 forces that are used to recognize profitability, strength and attractiveness of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution company.
Competitive Competition
This force shows capability of rivals. Groups normally represents sponsors in NASCAR and the medium of advertising is chauffeurs. Therefore it can be stated that motorists and race vehicles are competitors. These drivers can break NASCAR if they got better opportunity in regards to rewards and television exposure. Then audiences can move to those other intriguing cars and trucks and chauffeurs, if viewers enjoy other race cars and trucks and motorists more than NASCAR. NASCAR might be having risk from its 2 direct rivals that is Formula 1 and Moto GP. They require to develop competitive benefits for motorists so they do not move to other rivals.
Supplier Power
The provider power shows the number of suppliers are offered in industry and what is the cost associated with supplier if business shifts from one supplier to another. Due to the fact that chauffeurs with needed resources and skills are limited, in this industry there is supply monopoly.
Purchaser Power
This force is concerning to customers that is it simple for consumers to shift to other items. If there is more switching cost is associated then clients are less likely to switch. When it comes to NASCAR clients are its viewers. Since viewers will having low switching expense, viewers can change to other rivals easily.
Threat of Alternative
Replacements are referred as options. The substitutes in this case can be other home entertainment indicates like viewers can shift to other sports. There are wide variety of substitutes are available in this situation which recommends that threat of substitute is high.
Danger of New Entry
In the case of NASCAR hazard of new entry is low. They need to develop cars and trucks and racing tracks and likewise needs to pay large amount to motorists for switching.
PESTEL Analysis
Political
As NASCAR is working in numerous markets so it requires to deal with various policies. It is likewise noted that NASCAR has actually faced increased analysis concerning regulative. Every government has different top priority so NASCAR has actually to be prepared for it as top priority can be moved to other sector.
Economical
Financial elements consists of taxation rate, exchange rate, economic efficiency of that specific business, conditions of labour market, inflation rate etc. Fortunes of the NASCAR and its rivals can be affected if there is government intervention in the marketing and sales sector. NASCAR can leverage capabilities of employees to develop brand-new opportunities and improve existing chances.
Social
Every society is various from each other. Each has various social values and norms. It helps in comprehending regarding society and choice of clients. Social aspects consists of traditions, culture, mindsets towards particular product and services, demographics, norms, interests etc. It can be concluded that advertising through other ways instead of conventional (i.e. newspaper) can be chosen in this society.
Technical
In this case of NASCAR it can be noted that companies are heavily spending for research and development. NASCAR ought to also work on its media rights policy with Turner Broadcasting System.
Legal
Due to the fact that every nation has different legal terms and conditions, Legal plays a crucial function in every nation. Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution requires to be ensure that they protect their legal rights in every county so any company does not damage to its legal rights.
Environmental
Environmental factors are likewise crucial for every company. NASCAR needs to make sure that its vehicles are not creating contamination more than appropriate level.
7 P's of Marketing
Item
The products of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help in its product portfolio are; racing occasions tickets, racing tracks, sponsor's marketing, media rights, licencing NASCAR brand, sanctioning rules for races and ad-space to corporate online marketers during broadcast of NASCAR races. (Hanlon, 2018).
Price.
Pricing technique of NASCAR for its race events tickets is based upon the place and significance of the racing occasions. In addition to race occasions tickets, NASCAR likewise charge numerous service fees to its stakeholders and makes income. It charged sanctioning fees of $1-2 million per race on average in 2005.
Promo.
Advertising method 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.
Location.
NASCAR have its racing tracks in various cities in United States. The most important tracks of NASCAR includes Atlanta Motor Speedway in Georgia, Automobile Club Speedway in California and Darlington Raceway in South Carolina. It attempts to perform its races in the majority of the cities in United States to understand across the country popularity.
People.
Nestle individuals technique is consisted of supplying better experience to its viewers, its fan base and to all of its stakeholders. People are a crucial aspect of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help A marketing strategy as its occasions are the source of home entertainment for crowd. Its people technique consists of efforts to offer better experience to its Fans, Race Drivers, Crew, Occasion Organizers etc., all of which come under individuals technique of NASCAR.
Processes.
Several organisation processes are needed to perform racing events in an efficient method. These processes consist of; proper schedule of time, plan for spectators, selling tickets, arrangement of space for sponsors, handling logistics etc. These all procedures contribute I building NASCAR image, improving viewers experience and increasing fan base.
Physical Evidence.
Essential physical evidences for the NASCAR includes the presence of its racing tracks, stock vehicles and racing events. In addition to it, its retailing brand names including t-shirts, caps, goodies and so on, likewise serve as a physical proof for NASCAR.
Item Life Process Evaluation.
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 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 similar to the cars and trucks driven by common individuals.
Development.
After conducting its very first race effectively the company moved towards constructing its own tracks. The very first Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis based track, namely the Darlington Raceway track, was initiated in 1950 in South Carolina. It was followed by facility of more raceways consisting of Daytona International Speedway, which was opened in 1959. After the growth of racing tracks the company moved towards broadcasting its races on television in 1979. The very first occasion transmitted on television was flag-to-flag coverage 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 organization into one with global fan base. He initiated a brand-new era of financially rewarding sponsorships and tv agreements for NASCAR.
Maturity.
The maturity duration for NASCAR began with the efforts of William France Jr., with the business having wide range of income sources. The company has about 500 sponsors with transmitting its events in about 150 countries. The company has large number of tracks in the majority of the cities of United States.
Decline.
The significant causes of decline consist of the financial crisis of 2008, which increased the expense of getting here at tracks for audiences due to increasing fuel prices, and the moving of its fan base towards other sports.
Market Segmentation.
The marketplace segmentation of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis can be divided into four segments; Geographic, Demographic, Psychographic and Behavioural. (Dutta, 2018).
Geographic.
The geographical division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Help is based upon the geographical presence of its tracks in numerous states and cities in United States, and the television broadcasting of its occasions in numerous countries. The company 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 business local in addition to international fan base.
Market.
The market 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 demographic segment of its market NASCAR must modify its marketing strategies to attract more age groups and lower its rates to enter in the market sector with a low average earnings.
Psychographic.
NASCAR has a fan base with a loyalty. NASCAR fans perceive it compulsive to buy tickets and see the races when in a week. NASCAR has actually tried to increase the quality of its racing by presenting stage racing, they also have attempted to lower prices and make the occasion more hassle-free by presenting live racing.
Behavioural.
Behavioural division of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution is based upon the behaviour of fans in terms of seeing the race reside on the television or by entering the events. Currently, the fans choice is towards seeing the race at home on television rather than going, as the consumer experience at NASCAR tracks is not beneficial along with costly. This preference makes the rates for participation lower than the rates for tv audiences. NASCAR needs to alter the behaviour of its fan base by introducing qualitative services at its tracks.
Target Market.
Hispanics.
One of 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 segment has fantastic possible 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 segment has increasing wealth rate with about $1 trillion of wealth in 2014. The sector reveals affinity with cars and truck culture, but require a more concentrated marketing towards inviting the segment towards racing.
Kids.
Kids are likewise one of the potential target audience segment for NASCAR, as they are more connected socially than other groups. Producing fan base among kids can offer a possible increase in the variety of fans for racing due to their connection. Kids spend most of their times in playing and utilizing mobile phones video games. Automobile 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 functions related to kids are not capable of acquiring the attention. NASCAR needs more attention towards tailoring and enhancing its digital functions to draw in the kids target market.
This big expense makes the segment capacity for NASCAR marketing strategy of increasing its fan base. The market section considers 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 assists in taking choices concerning marketing. These 5 C's needs to be evaluated appropriately for taking any marketing choice. These 5 C's stands for Environment, Business, Collaborators, Clients and Rivals.
Climate/Context.
It needs to make PESTLE analysis in order to understand environment or context in which NASCAR is working. PESTLE stands for political, economic, social, technical, ecological and legal and is mentioned above.
Company.
NASCAR is a car racing business with having USP of high quality auto racing with a worldwide structure. Its sector is sports team and events. Its target market is males in the age of 15-60 years. Company has actually closed business culture and having non-interventionist method.
Cooperations.
Collaborations includes distributors, providers and alliances of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis. It is collaborated with different racing groups which are taking part in racing. It also collaborated with Turners Sport for digital rights. NASCAR used to make money check of around $15 million annually from Turner Sports. There are number 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 also 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 Analysis are its audiences. 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 develop generational commitment.
Rivals.
Teams generally represents sponsors in NASCAR and the medium of marketing is motorists. These motorists can go against NASCAR if they got much better chance in terms of rewards and television exposure.
Marketing Methods.
1. Preserving and establishing Facebook Page.
One of the possible target markets segments for NASCAR is Hispanics which is the growing population section of USA however regrettably NASCAR had been unable to bring in the this targeted sector. In order to draw in the young growing generation the NASCAR need to market by utilizing social media like Facebook. It needs to establish a Facebook page consisting of the details regarding the races and the areas of tracks to make the customer useful about the core operations of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution. It ought to also upgrade its Facebook page on daily basis to provide information about its upcoming occasions. This would make the target market sector more helpful about business and would result in drawing in large fans base.
2. Establishing 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 Display). The significant factor behind it is that, the racers mostly play in teams and are not able to develop a key account and maintain a close contact with fans. The bad contacts with fans result in less tourist attraction of audiences towards the racers and a low star power. Star power is a crucial aspect for bring in viewers towards tracks and towards tv. The star power for the chauffeurs at NASCARA might be enhanced by developing and upgrading accounts of key motorists by NASCARA itself. This would get rid of the requirement of forcing drivers to preserve their accounts and would lead to increasing fans attention towards NASCARA drivers.
3. Establishing New Games and improving current games for kids.
In order to bring in these kids, NASCARA ought to enhance its existing racing games by introducing modification in the automobiles i.e. altering colours, selection of speed, presenting group racing in the video game, utilizing better graphics related to the racing tracks and presenting various levels in the game. All these adjustments in the existing game would offer better experience to kids.
Together with it, NASCAR needs to also build brand-new video games associated with racing like kids racing with kids characters as chauffeurs, animation racing with racing between various cartoon characters with a choice of choosing the preferred animation character for the kids. These methods would allow the business to attract among its potential target segments.
4. Introducing multiculturalism at occasions.
Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Help occasions are comprised of fans with extremely couple of cultural diversity, due to cost of arrival in events, making it unattractive for the consumers viewing sport occasions as social occasions i.e. Generation Y consumers. As the Generation Y customers are a possible target market for NASCAR, for that reason the business ought to take certain measures to attract this potential target market. It needs to embrace methods to bring in the customers far from the tracks place with different culture. The technique to do so might be offering unique discount rates on tickets or complimentary tickets to audiences originating from a specific distance or from another state. It would increase multiculturalism of the fans and would make Generation Y clients more satisfied.
5. Improving Consumer Experience at Tracks.
NASCAR must work on infrastructure and amenities at tracks since on the race day viewers got disappointed. Viewers have numerous expectations from Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Analysis because in very same market other business are offering much better services than NASCAR. IF NASCAR do not work on this problem then its fans may moved to its rivals.
Marketing Spending plan
Marketing budget plan made on the basis of the above methods for the period of 5 years from 2011 to 2015, shows the expense associated data for the marketing methods. It can be seen that strategy 5 of improving consumer experience at tracks would require highest preliminary investment and expense and method 4 of presenting multiculturalism will require least expensive preliminary financial investment with most affordable even more per year cost.
KEEP IN MIND: The values about cost are assumed on rational 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.
On the basis of deep analysis of the internal and external aspects of Real Options Valuation When Multiple Sources Of Uncertainty Exist Case Study Solution triggering the decrease of tv viewership rate and participation rate at tracks, the above marketing methods are advised to NASCAR to increase its fan base in long run. These techniques would cope with internal factors like poor customer experience at tracks, insufficient social media marketing, incapable digital medias like video games, lack of culturalisms at tracks etc., as well as with external aspects like shifting of fans towards other sports, demographical modifications in America and changing domesticity designs.
