13 Jun WHAT IS YOUR ESTIMATE OF THE MARKET VALUE OF STUDENTCITY?
Read case1 and answer the questions below:
1. Using examples from the case discuss how Jim created the opportunity of the solar-powered trash compactor?.
2. Would you describe Jim as an entrepreneur? Justify your answer.
How does the solar power trash compactor fit with him? Why did he not pursue some of his other venture ideas?
3. Describe Jim resources. What are they? Where did they come from? if your were in his position would you did mobilise resources in a different way?
See below for a sample of contributions from former students for case 1
Contribution by Leiv
I do believe that James Poss created the solar-powered trash compacter to offer businesses both a good and a service that may contribute to noticeable savings and reduce the amount of wasteful spending. One word that can be used to describe James Poss’s idea and product is Innovation. The trash compactor is definitely a innovative, new thinking and very useful product that attracts curious potential consumers and customers. The sola-powered trash compactor may offer businesses the opportunity to get rid of trash in an affordable way.
James Poss is the founder of Seahorse Power Company and an entrepreneur that has created an innovative product that has led to success for himself and his company. He has created a business with limited financial needs, and a business that definitely enters the markets with a competitive advantage due to the new thinking, innovative and patented product, as well as lack of competitors or similar products. James Poss and his company has introduced the world with the first solar-powered trash compactor ever made. James Poss background and earlier experience is from engineer industry where he worked with battery electric drive systems for cars, and he has at later times also worked for a sailboat manufacturing company. According to case 2, Poss does also have a BA degree in Environmental Science and Policy and Geology from Duke University as well as a Master in Business Administration from Babson College. But now, James Poss is paying all the attention and focus to renewable energy technology.
The solar power trash compactor fits perfectly with James Poss because it is a product manufactured based on his experience, knowledge, and vision. Poss has turned an idea into a well-functioning innovative product that are to be found at ski resorts, parties and parking lots around the United States. I do not believe that this product would have become that successful and well working without Poss’s genuine interest in the product and it’s potential.
I do believe that James Poss could have pursue other venture ideas he has, but his genuine interest lays on the renewable energy technology field, and I do believe that is the field where he has the strongest opportunity to success due to his strong vision and beliefs.
Seahorse Power Company’s core team exists of two MBA students from Babson and two engineering students from Olin School, together with great advisors the company is growing in the industry of solar energy equipment.
case 2 :
Q.1. Should Mario take his advisor’s advice and immediately begin looking to harvest the company? If not, how long should he wait? What factors would you consider in making your decision? If you were Mario, how would set about harvesting this business?
Q.2. What is your estimate of the market value of StudentCity? What are the critical factors that determine its value? Which valuation method(s) did you use and why? Does your value depend on how the market valuation is realized?
Q.3. What challenges will StudentCity likely face if it succeeds in growing from $20 million to over $57 million in sales? Consider internal and external factors.
Similar answers to case 2:
Sample contribution
1.In my opinion, Mario should definitely follow his advisors advice and begin looking to harvest the company. But in order to do this, Mario must carefully do it by following a well thought out and solid harvest strategy. By several trials and steps taken, Mario has not been able to stabilize the company, in terms of a steady growth etc. The company shows impressive growth in profit in the period between 2002 and 2007, but as the growth potential was not considered steady enough, other possibilities were considered, such as either selling the whole company or start a brand new one based on his entrepreneurial experience. The company would never worked or endured if it were not for Mario’s commitment and faith in the company.
2) With many ups and downs for the company on its way to success, I do believe its time to harvest the company. But, the harvest strategy that should be used must be able to achieve as much profit as possible as an outcome of the harvest, and carefully follow advisors tips and suggestions through the whole process in order to not fail with the decision.
I found it difficult to estimate the market value of StudentCity based on the article given. But one must carefully evaluate the company’s business history and earnings, and market share to estimate a value. But when looking at StudentCity’s balance sheets at the end of the article/report one can see that the total liabilities and shareholders equity in the company stands at $13,214,937 projected per June 2007, which is a important to take into account when trying to estimate StudentCity’s market value.
3) First of all, StudentCity must expand in several internal fields in order to successfully face such a growth. The company must increase their amount of staff, and start hiring new potential coworkers that may contribute to the capacity needed for the company in the process of facing their growth. StudentCity must also expand their inventory greatly in order to successfully control over $57 million in sales. As their sales expands, the company’s need for inventory increase. Externally they must implement a well thought out strategy in order to compete in a best possible way against other competitors they most likely may meet on their way. And in order to be a successfully competitor in the market they must have several factors and forces in place that may contribute to some potential competitive advantage for StudenCity in this market. With such a growth, strong competitors will most likely follow, and they must be well prepared to fight such companies on their way.
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