County Line Markets: Real Options and Store Expansions Harvard Case Solution & Analysis

CLM needed to consider growth of its present sixty-seven Indiana based stores to form a superstore. Ron Winston, CFO, was contemplating whether a real options approach should be utilized to help determine when and in the event the store should be converted to a superstore.

This case focuses on the assessment of its downtown metro area place of CLM. Even though the specific circumstances of each place were different, the analytical and judgmental issues facing the management for the update of CLM to a superstore were not atypical of the dilemmas present at every location. The CLM store under assessment can be found in a place where the demographics, people, and competitive landscape have changed radically since the shop was remodeled.

The chief financial officer (CFO) Ron Winston thinks that it's premature to invest substantial sums of cash in a few existing locations because they are still in a state of flux, and he believes it is better to wait until the market stabilizes before committing large amounts of funds to these marketplaces. Jerry Williams, vice president of operations, believes that CLM needs to invest in advance of marketplace changes. Williams also considers that competitive developments are not being considered by Winston in his analysis; that is, the impact on the downtown metro area shop if the contest moves to a superstore first.

This is just an excerpt. This case is about FINANCE & ACCOUNTING

PUBLICATION DATE: May 01, 2015 PRODUCT #: NA0351-PDF-ENG

 

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