South Park IV Harvard Case Solution & Analysis

Central Problem

The problem in the case was that George Laflin had been thinking of investing $450,000 on South Park IV industrial center located in Houston, Texas which is around 80,000 square feet. However, by analyzing the conditions on real estate market of Houston, the market was recovering from a long decline. Laflin was having difficulty to determine whether the South Park IV would have good returns after investing $450,000 in the property

Key players and Decision-making Process

The key players in the South Park IV were George Laflin who had around ten years’ experience on the real estate market, while other players who had been investing in the property were his eight friends who were investing $50,000 each. The other player who had the rights to the South Park IV property was Lonestar who had been forced into bankruptcy due to being failed on another project.

The decision-making process was based on analyzing the South Park IV property value and its returns. Since the Houston real estate market had been in a decline due to the collapse of the oil industry as the prices of oil were low around $14 per barrel. The decision would be based on the Rental income, cost valuation and rental rates on the South Park IV property.

Mission of the Company

The mission of the company is to become the world’s best distribution center. It was situated on the 100-acre south acre industrial center. The building had 185-foot bay depths and 22 foot clear ceilings. About % of the space was finished as office space

South Park IV Harvard Case Solution & Analysis

Core vs Ancillary problems

The core problem which had been identified in the case was that the collapse on the oil prices had been on a decline which had a negative impact on the real estate and other business as well. These changes in oil prices had hurt the economy causing a recession period at that time in which the real estates were affected badly.

The secondary problem which Laflin was facing that many of the real estate were vacant due to the economic downfall. The collapse of the Saving & Loan had also affected the real estate market as it would decrease the prices of rents due to the discounted properties. The Lonestar projected rents were not accurate which also caused aproblem for Laflin in understanding the real estate market.

Factors influenced the problems

Internal factors

  • Knowledge regarding the real estate market
  • Demotivation of team members
  • Cultural factors of the team
  • Vision of Co-Founder...............

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