Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Online Case Study Help

Home >> Business >> Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods

Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution and Analysis


Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution (National Association for Stock Car Automobile Racing) is a company performing series of Stock Automobile racing in United States and acting as an approving body for driving the guidelines for Stock Car Racing. The organization was established in 1947, by "Huge Bill" France. NASCAR organize Stock Cars and truck Racing occasions in United States with the presence of about 130000 viewers typically in 2005. It also transmitted its occasions in about 150 countries. Stock Automobile Racing by NASCAR is the 2nd largest spectator sport, with greatest number of sponsors. It has about 500 sponsors contributing billions of dollars in its revenue. The other sources of income for Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis includes; 10% of the total income from television rights, sanctioning fees i.e. $1-2 million per race, and licencing NASCAR brand to companies.

NASCAR has a closed business culture with the non-interventionist technique. However this non collective method brings stress in the sport. The structure of Automobile of Tomorrow by Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help, with an objective of safety for the motorists, brought various tensions amongst the stakeholders of the sport.
Executive Summary
The interaction audit, conducted in 2010, exposed that regardless of the truth that the organisation highly rely on the communications between its stakeholders, there was no recognizable business communication technique. (

The audit pointed out different doing not have of NASCAR in terms of absence of internal combination, lack of fan management strategy and lack of digital and social media of marketing. The company has complicated environment with independent tracks, drivers and groups. This structure with closed business culture bring various obstacles in speeding up a change. Other partners in environment includes the media networks i.e. tv and radio, and business online marketers.

Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help audiences was extremely devoted to the sport and the brand names associated with the NASCAR, making it appealing for sponsors and corporate marketers.

Problem Statement.

The company is presently facing the problem of declining rates of presence at racing tracks and rates of television audiences. This can put a considerable effect on its earnings from sponsors, media rights, and from other sources of income.

Situational Analysis.

The company was quite successful till 2005 with its traditional marketing techniques, but quickly after 2005 the business starts facing different problems including decline of its fan base. Numerous external along with internal elements are responsible for the decrease. Internal aspects consist of; inadequate financial investment in social networks 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 youngsters and create generational loyalty. However the family system in America was changing resulting in decrease of influence of married male fan base over their youngsters. In addition to it understandings about cars and truck was likewise altering with viewing vehicle a lorry to reach at point B from point A, rather than as a fun task. Other obstacles for Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution consists of the shift of its fans to other sports as they were improving their fan's experience permitting access to their broadcasts out of the homes through jumbo turns, Wi-Fi gain access to, and so on. These all challenges were tending the business to revise its marketing methods.

SWOT Analysis.


In SWOT analysis, strengths defined as business's qualities which are different from its rivals. These are company's core proficiencies on which company efficiency or business success based on. Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis core proficiencies includes it has rights of determining rules as sanctioning body. Guidelines and guidelines relating to expert stock car racing are determined by NASCAR like if any group with needed abilities and resources can enter into races by following rules and guidelines determined by NASCAR. So NASCAR has monopoly it this element. Its strengths likewise consists of that it has title of second largest spectator sport in the United States with having more fortune 500 sponsors based in United States. Its races were utilized to relay in more than 150 nations around the globe with more than $56 million incomes. The main sources of their profits originate from television rights, sanctioning fees, sponsorship and licensing. It has longest season of 10 months and having ownership of 3 nationwide series i.e. Camping World Truck Series, the Sprint Cup Series and the Nationwide Series. It has likewise big resource of fans and business sponsors. All the events of NASCAR are sponsored by corporates since of greatest brand loyalty of fans toward brands marketed by Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis. (See Appendix A).


Weaknesses in SWOT Analysis are thought about as external factors. Weaknesses consists of the factors that stops company to carry out at required level of effectiveness. Weak points of NASCAR includes its close culture which is non collaborative. They have non-interventionist technique. They generally used to form guidelines and other required processes without intervention of others which results in bad partnership. NASCAR develops Car of Tomorrow without cooperation so result is that drivers did not like that concept. As this is racing sport so covering of sports by media is likewise challenging. It was likewise discovered that NASCAR had no efficient strategy for organisation interaction. If it occurred off track, they don't know how to manage problem. Inefficient business interaction results in that they do not have clear instructions for their long term objectives. They do not understand that where they want to see this sport in future.
Porter's 5 Forces Analysis

NASCAR typically utilized to rely on conventional media sources like local newspaper for promotion of its sports. NASCAR also came to know from these conventional media outlets that sport was tough to cover. When sports fans were asked relating to popular celebrities and stars then NASCAR motorist was not discovered even in leading twenty responses.


Economic down turn was experienced in late 2000 which can be hazard for NASCAR due to the fact that if there is economic down turn then individuals would be having less return on investment. Economic down turn likewise results in boost fuel rates which likewise impacted NASCAR. Now if NASCAR make considerable investments in brand-new sections which are based on brand-new consumers then it may face unfavorable remarks from its core fan base.

Porter's 5 Forces Analysis

It is important to comprehend market in which business is working because NASCAR's bottom line i.e. net profit is greatly depends on this. There are 5 forces that are utilized to recognize success, intensity and attractiveness of NASCAR business.

Competitive Rivalry

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

The supplier power shows the number of suppliers are readily available in industry and what is the cost associated with provider if business shifts from one supplier to another. Due to the fact that motorists with required resources and abilities are restricted, in this market there is supply monopoly.

Buyer Power

This force is regarding to consumers that is it simple for clients to move to other products. If there is more changing expense is associated then customers are less most likely to switch. When it comes to NASCAR consumers are its viewers. Viewers can change to other rivals easily because audiences will having low changing cost.

Hazard of Replacement

Replacements are referred as alternatives. The substitutes in this case can be other entertainment indicates like audiences can move to other sports. So there are large range of substitutes are readily available in this circumstance which recommends that threat of substitute is high.

Hazard of New Entry

It is specified as how it is simple for any business to enter in that specific industry. In the case of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution danger of new entry is low. If any business needs to go into in this service than they have to make heavy financial investments, due to the fact that. They require to develop vehicles and racing tracks and also requires to pay significant amount to chauffeurs for changing.

PESTEL Analysis


As NASCAR is working in various markets so it needs to deal with various regulations. It is likewise noted that NASCAR has actually dealt with increased examination relating to regulatory. Every federal government has various top priority so NASCAR has to be prepared for it as top priority can be moved to other sector.


Financial aspects includes taxation rate, exchange rate, financial efficiency of that specific company, conditions of labour market, inflation rate etc. Fortunes of the NASCAR and its competitors can be affected if there is federal government intervention in the marketing and sales sector. NASCAR can leverage abilities of staff members to create brand-new opportunities and improve existing chances.


Every society is different from each other. Each has various social worths and standards. It assists in comprehending relating to society and preference of consumers. Social aspects includes customs, culture, attitudes towards specific product and services, demographics, standards, interests and so on. It can be concluded that marketing through other ways instead of conventional (i.e. paper) can be chosen in this society.


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

Vrio Analysis
Since every nation has various legal terms and conditions, Legal plays an important function in every nation. Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis needs to be make sure that they protect their legal rights in every county so any company does not harm to its legal rights.


Ecological factors are likewise crucial for every business. NASCAR needs to make sure that its automobiles are not producing pollution more than appropriate level.

7 P's of Marketing


The products of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help in its product portfolio are; racing events tickets, racing tracks, sponsor's marketing, media rights, licencing NASCAR brand name, approving guidelines for races and ad-space to business marketers throughout broadcast of NASCAR races. (Hanlon, 2018).


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


Marketing strategy of NASCAR is extremely 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 numerous cities in United States. The most crucial tracks of NASCAR consists of Atlanta Motor Speedway in Georgia, Vehicle Club Speedway in California and Darlington Raceway in South Carolina. It attempts to conduct its races in the majority of the cities in United States to comprehend across the country popularity.


Nestle individuals method is comprised of supplying much better experience to its audiences, its fan base and to all of its stakeholders. Individuals are a crucial aspect of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis A marketing technique as its events are the source of entertainment for crowd. Its individuals method includes efforts to provide better experience to its Fans, Race Drivers, Crew, Occasion Organizers and so on, all of which come under individuals method of NASCAR.


Several organisation procedures are needed to carry out racing occasions in an effective way. These procedures include; proper schedule of time, plan for spectators, selling tickets, arrangement of space for sponsors, managing logistics etc. These all processes contribute I constructing NASCAR image, improving viewers experience and increasing fan base.

Physical Proof.

Most important physical evidences for the NASCAR includes the existence of its racing tracks, stock cars and racing events. In addition to it, its retailing brand names consisting of t-shirts, caps, goodies and so on, likewise serve as a physical evidence for NASCAR.

Product Life Cycle Evaluation.

The racing occasions by Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution 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 first phase competitors for NASCAR was low, as the rivals drove the cars similar to the cars and trucks driven by regular people.


The very first NASCAR based track, namely the Darlington Raceway track, was started in 1950 in South Carolina. After the development of racing tracks the company moved towards broadcasting 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 regional Sport popular company into one with worldwide fan base. He started a new era of lucrative sponsorships and television agreements for NASCAR.


The maturity period for NASCAR started with the efforts of William France Jr., with the company having vast array of revenue sources. The company has about 500 sponsors with broadcasting its events in about 150 countries. The business has a great deal of tracks in most of the cities of United States.


The decrease in the business's offerings began after 2005 with typical attendance rate per race decreased by 22% from 2005 to 2010 and television viewership rate decreased by 30% from 2005 to 2010. The significant reasons for decrease consist of the monetary crisis of 2008, which increased the expense of arriving at tracks for viewers due to increasing fuel prices, and the shifting of its fan base towards other sports.

Market Segmentation.

The market division of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help can be divided into four sectors; Geographic, Demographic, Psychographic and Behavioural. (Dutta, 2018).


The geographical segmentation of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Solution is based upon the geographical existence of its tracks in different states and cities in United States, and the tv broadcasting of its events in different countries. The company has 23 tracks in about 20 states of America and has tv broadcast through numerous Medias i.e. TNT, ESPN, ABC and Fox, in about 150 countries.This vast geographical division supplies the business local as well as worldwide fan base.


The demographic division of NASCAR is also highlydiverse based upon the gender, earnings and age of the consumer. Its present fan base is majorly comprised of male married fans with an average age of 47 years and an earnings around $30-50 thousands. However presently NASCAR is trying to increase its target market to the young growing population and kinds too. To increase the group section of its market NASCAR need to revise its marketing methods to bring in more age and lower its costs to enter in the market sector with a low typical income.( htt1).


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


Behavioural division of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution is based upon the behaviour of fans in terms of enjoying the race live on the tv or by going in the events. Currently, the fans preference is towards seeing the race in the house on television rather than going, as the client experience at NASCAR tracks is not favourable as well as 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 presenting qualitative services at its tracks.

Target Market.


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


Kids are also one of the prospective target market segment for NASCAR, as they are more linked socially than other groups. Cars and truck racing games established by Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Analysis can be a possible source of gaining attention of kids towards NASCAR track racing. NASCAR needs more attention towards personalizing and improving its digital features to attract the kids target market.

This big expenditure makes the segment capacity for NASCAR marketing technique of increasing its fan base. The market sector considers NASCAR as a company lacking in creating a multiculturalism atmosphere. NASCAR must take various steps to enhance the experience of Generation Y customers in its occasions.

5 C's of Marketing

5 C's of marketing helps in taking decisions relating to marketing.


It needs to make PESTLE analysis in order to comprehend climate or context in which NASCAR is working. PESTLE represents political, financial, social, technical, legal and environmental and is mentioned above.


Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution is a car racing business with having USP of high quality auto racing with an international structure. Its sector is sports team and occasions.


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


The consumer of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help are its viewers. They target clients with having age of 15-60 years. Fan base of NASCAR consisted of married males with a typical age of 47, which passes their fandom to their children and create generational commitment.


The direct competitors of NASCAR are Solution 1 and Moto GP. Groups generally represents sponsors in NASCAR and the medium of marketing is chauffeurs. It can be stated that drivers and race vehicles are rivals. If they got much better chance in terms of prizes and television direct exposure, these drivers can go against NASCAR.

Marketing Strategies.

1. Maintaining and establishing Facebook Page.
One of the possible target markets segments for NASCAR is Hispanics which is the growing population sector of U.S.A. however regrettably NASCAR had been unable to bring in the this targeted segment. It must establish a Facebook page consisting of the info concerning the races and the locations of tracks to make the customer informative about the core operations of NASCAR.
2. Developing and Upgrading Accounts of Secret Drivers.
NASCAR motorists has a low star power as compare to players of other sports. Its ranks 7th in terms of star power (see Case Exhibit). The significant factor behind it is that, the racers mainly play in teams and are not able to develop an essential account and maintain a close contact with fans. The poor contacts with fans lead to less destination of audiences towards the racers and a low star power. Star power is a crucial factor for attracting viewers towards tracks and towards television. The star power for the chauffeurs at NASCARA could be enhanced by producing and upgrading accounts of key motorists by NASCARA itself. This would remove the requirement of requiring drivers to keep their accounts and would result in increasing fans attention towards NASCARA chauffeurs.
3. Establishing New Games and improving current games for kids.
Kids invested the majority of their time on playing games and using mobile phones. Unfortunately, kids playing NASCARA have a worst experience of playing its games. As an outcome, they are less attracted towards the sport. In order to bring in these kids, NASCARA ought to improve its existing racing video games by presenting personalization in the automobiles i.e. altering colours, choice of speed, presenting group racing in the video game, utilizing much better graphics associated with the racing tracks and introducing numerous levels in the game. All these modifications in the existing game would supply much better experience to kids.
In addition to it, NASCAR ought to also construct brand-new games associated with racing like kids racing with kids characters as drivers, cartoon racing with racing between different cartoon characters with a choice of picking the favourite animation character for the kids. These methods would allow the company to attract among its prospective target segments.
4. Presenting multiculturalism at events.
NASCAR events are made up of fans with really couple of cultural variety, due to cost of arrival in occasions, making it unappealing for the consumers perceiving sport occasions as social celebrations i.e. Generation Y clients. As the Generation Y customers are a potential target market for NASCAR, therefore the business must take particular procedures to attract this prospective target market.
5. Improving Consumer Experience at Tracks.
NASCAR ought to work on infrastructure and facilities at tracks since on the race day viewers got disappointed. Viewers have numerous expectations from Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Solution since in very same industry other business are providing better services than NASCAR. IF NASCAR don't work on this problem then its fans might moved to its rivals.

Marketing Budget plan

Marketing spending plan made on the basis of the above methods for the duration of 5 years from 2011 to 2015, shows the expense related data for the marketing techniques. It can be seen that strategy 5 of enhancing client experience at tracks would need greatest preliminary investment and expense and technique 4 of introducing multiculturalism will require lowest preliminary financial investment with most affordable further per year cost.
KEEP IN MIND: The worths about cost are presumed on rational basis due the absence of truths and figures associated with cost in the case study. Inflation rate of United States is assumed to be 10%.

On the basis of deep analysis of the internal and external aspects of Valuing The Option Component Of Debt And Its Relevance To Dcf Based Valuation Methods Case Study Help triggering the decrease of tv viewership rate and participation rate at tracks, the above marketing strategies are recommended to NASCAR to increase its fan base in long run. These strategies 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 shifting of fans towards other sports, demographical changes in America and altering family life styles.