CARTER RACING CASE
SUMANTA BASU
PROFESSOR
INDIAN INSTITUTE OF MANAGEMENT CALCUTTA
INTRODUCTION
• Stakeholders:
• Owner (John carter)
• Partner (Chris Carter)
• Chief Mechanic (Robin Burns)
• Engine Mechanic (Pat Edwards)
• Sponsors like Goodstone Tyre / Oil Company etc.
DECISION PROBLEM AND TIMELINE
• To Race or not to race
• Engine blowout problem
• Timeline:
• One hour before the race
FACTORS TO CONSIDER
• Internal Factors:
• Team members
• Management
• Car Problems
• External Problems:
• Weather/Racing conditions
• Sponsors
POSSIBILITY / OPTIONS
• Do not race
• Race and blow the engine
• Race but do not finish it top 5
• Race and come in top 5
OPTION/POSSIBILITY 1: DO NOT RACE
Do Not Race Option: Do Not Race Value
50000
40000
Goodstone 40000
30000
20000 Race Return 15000
10000
0 Goodstone -25000
Goodstone Race Return Goodstone Entry Fee
-10000
-20000 Race Fee -30000
-30000
Net Change 0
-40000
OPTION/POSSIBILITY 2: RACE AND THE ENGINE BLOWS
Value Option: Race and Engine
Value
100000 Blows
0
Goodstone Oil Sponsor Engine Replacement Entry Fee
Goodstone 40000
-100000
Oil Sponsor -800000
-200000
-300000
Entry Fee -30000
-400000
Engine Replacement -50000
-500000
-600000
Profit = -8,40,000 (Loss)
OPTION/POSSIBILITY 3: COMPLETE RACE BUT NOT COME IN
TOP 5
Value
Option: Complete Race
900000 Value
but do not win
800000
700000
Goodstone 40000
600000
500000
400000 Oil Sponsor 800000
300000
200000
Entry Fee -30000
100000
0
Goodstone Oil Sponsor Entry Fee
-100000
Profit = 8,10,000 (gain)
OPTION/POSSIBILITY 4: COMPLETE RACE AND WIN
Value Option: Complete Race and
Value
2500000 Win
2000000
Goodstone 40000
1500000
New Goodstone Sponsorship 2000000
1000000
500000
Oil Sponsorship 800000
0
Goodstone New Goodstone Oil Sponsorship Entry Fee
Sponsorship Entry Fee -30000
-500000
Profit = 28,10,000 (gain)
COMPARISON OF OPTIONS/POSSIBILITIES
Value of Different Options
Complete Race and Win
Complete Race but not in top 5
Race and Engine Blows
Do Not Race
-1500000 -1000000 -500000 0 500000 1000000 1500000 2000000 2500000 3000000
WEATHER AND ENGINE FAILURE
RACE PERFORMANCE
Race Performance of Carter Racing
29% Race Incomplete (Engine Blown)
Race Incomplete (Engine OK)
50% Race Complete (Not Within top 5)
Race Complete (Within top 5)
8%
13%
ANALYSIS OF STAKEHOLDERS
• Note that the individuals who are providing information vary in their technical
sophistication, communication skill and personal biases.
• How managers depend on the information provided by others in making decisions?
• How important are technical people in a decision making process?
• Burns’ First Law of Racing: “Nobody ever won a race sitting in the pits.”
