Carter Racing Case Upload.doc - CARTER RACING CASE SUMMARY BJ and Chris Carter are siblings and business partners They have everything they own riding

Carter Racing Case Upload.doc - CARTER RACING CASE SUMMARY...

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Unformatted text preview: CARTER RACING CASE SUMMARY: BJ and Chris Carter are siblings and business partners. They have everything they own riding on the Carter Racing Team. This season must be a success. The first year was hard because the team was making a name for itself. They had to run a lot of small races to get this shot at “the big time”. The Pocono race is important because of the price money and TV exposure. A successful outing could mean more sponsors, a chance to make a profit, and the luxury of racing only the major events. The team’s car had filed 7 times in 24 outings this season, with various degrees of damage to the engine and car. 29% failure rate. The team finished 62.5% of its races and were in the top 80% of the time. The first season was a success with the team’s car finishing “in the money” in 12 of the last 15 races completed. If the team suffered another engine failure on national television, it could mean bankruptcy. The team’s engine mechanic, Pat Edwards, believes that cooler temperatures are related to engine failure and on the night before the race, it was below freezing. On race day the temperature is 40 degrees at 8.23am. Robin Burns, the chief mechanic, does not agree with Pat’s conclusion that temperature is the issue. Based on his 20 year experience in racing, he believes that luck plays a part in racing, and is an important element in success. RACE POSSIBLE OUTCOMES: Race Pros: - Top 5 finish and the team will gain a new sponsor (Goodstone Tires), worth $2,000,000 a year, plus incentives - They will be able to add another car next season - Prize money from Pocono race of an undisclosed amount Race Cons: If they race and blow engine: - They will lose Goodstone tire sponsorship, worth $40,000 for the Pocono race; plus a full season contract for next year worth $2,000,000 a year, plus incentives - They will need to replace the $20,000 engine - They will lose their existing oil contract of $800,000 - They will lose the $30,000 race entry fee - Possible bankruptcy If they withdraw without racing: - They will lose $15,000 of race entry fee - They will lose potential sponsorship with Goodstone Tire - They will have to return $25,000 received from the Goodstone Tire sponsorship for the Pocono race - They will end the season in a $50,000 hole - They will keep their existing oil contract of $800,000 RELATIONSHIP BETWEEN TEMPERATURE AND GASKET FAILURES: Things to add: - Risk profile chart - Decision tree - Race possible outcomes financial information (Gain-Loss=Profit). Possibly in chart form. ...
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  • Spring '14
  • SimSitkin
  • Carter Racing Team, lot of small races

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