Carter Racing Case Essay

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Pages: 5
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Carter Racing Case
Situation
Bj Carter and Chris Carter are siblings and business partners. They have to decide to run their race car in a high stakes race against tougher competition than they have seen all year. The problem being, their car has failed 7 times out of 24 this season and if it fails in this race, not only will they be out a $50,000 engine, but they will also be out a full season contract from Goodstone worth two million per year. If they decide not to race, they will be out $15,000 in entry fees and for sure lose Goodstone and end up $80,000 in debt on the season. Lastly, if they race and they do blow and engine, they will lose a sponsorship worth $80,000 from oil company because they don’t want their name on a car that …show more content…
Option 2
Secondly, they could run the race but not push the car to its limits and likely not place in the top 5. This would make them lose the Goodstone sponsorship but would likely help them keep the oil company sponsorship given the car does not end up stalled on the side of the road. Not only could they save on sponsors, but they would not blow the engine, thus saving them $50,000 on replacing the blow engine. The downside to this option is, it will result in a lose either way.
Option 3
The third option is, they could call their sponsors and work out a deal to remove the company name from the car for this race if they take a pay cut. This allows them a chance at placing in the top 5, resulting in a cash winning from the race. However, if they do end up doing well in the race, they will have lost out in the winnings their sponsors would have also paid them if they won. They also risk blowing the engine, and having to pay for those repairs out of pocket.
Option 4 Lastly, they can take the 29% chance the car blows and run the race as hard as possible. If they run the race, they risk losing in every aspect from engine repair to losing sponsors and credibility. However as risky as this option is, it also has the highest possible winnings. This is the only option with a good chance of being profitable on the season because they will get the two million
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