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Introduction to London Olympics Case Analysis (4 pages)
The London Olympics 2012 case contains a number of issues and considerations. One of the most important for this course is the issue of revenue maximization. Your group should focus primarily on how to maximize revenue and how that would be achieved, and what that would amount to in total revenue. Knowing this, you would be better able to determine your position on the other goals and how much revenue you would be giving up to increase achievement on something else. However, for your case analysis, you do not need to fully examine the other goals. Focus on revenue maximization.
While in this course, for this case, we consider other objectives as secondary, we still need to propose a practical solution. For example, it must be technically possible to auction each ticket off on eBay to maximize revenue, but the transaction cost, delivery cost, and other frictions probably would make this impractical, as well as being in high conflict with the other goals.
Before doing the case, be sure you have thoroughly studied your microeconomic material, including the additional web-based items discussing price discrimination. In your analysis, be sure to cover the economic principles you used.
The basic outline for a case analysis is contained below and should be followed for your analysis of this case. That is, provide the major facts focus on the major problem—here, for us, that’s related to revenue maximization—possible solutions to revenue maximization, your choice and rationale, and then discuss implementation of that choice. There must be a practical way to actually achieve your choice.
Introduction to London Olympics Case Analysis
Outline for the Case Analyses
1. Major Facts Briefly state the key major facts as you see them. Make statements clear and concise for your own understanding as well as for the understanding of the other students and the instructor.
2. Major Problem State the major problem as you see it. Emphasize the present major problem. You may wish to phrase your statement in the form of a question. In a few cases, there may be more than one major problem. A good problem statement will be concise, usually only one sentence.
3. Possible Solutions
1. List the possible solutions to the major problem. Let your imagination come up with alternative ways to solve the problem.
2. Do not limit yourself to only one or two possible solutions. These solutions should be distinct from each other.
3. However, you may wish to include portions of one solution in another solution, as long as each solution stands alone. Only in this manner will your subsequent choice be definitive.
4. Briefly note advantages and disadvantages of each possible solution.
4. Choice and Rationale State your choice, A or B or ___ and the detailed reasons for your choice. You may also briefly state your reasons for not choosing the alternative solutions.
5. Implementation This should be a key focus of your analyses. Describe what actions should be taken immediately—the next day—by the manager. Then describe what future actions over the next few days or weeks must be taken to implement the solution you recommend. The solution should be practical to implement, given the facts of the case. Do not assume that unlimited budget or other resources will be available.
The entire case write-up should be comprehensive, but not lengthy. Normally a case analysis should not require outside research, however if you do use any sources, they must be cited.
Each assignment is to be your own group’s work—do not share your solution before the case deadline.
Forecasting Project (4 pages summary)
Forecast Introduction: It is a common business function to prepare a forecast of the economy for the following year. Most often those forecasts are compiled by estimating the changes that will occur during the forecast period.
The most naive forecast may be to say that nothing will change and that next year will be exactly like last year. A similarly naive forecast may be to say that the same changes of last year will continue, so that if GDP grew 2% last year it will also grow 2% next year. From your experiences you know that such forecasts would be frequently useless.
Generally forecasts will look at the four major components of GDP that we have studied and reflect upon the change expected in each area. For example, the changes in consumption which, as you know, is the largest component of GDP, may be quite different than the change expected in government spending on goods and services. The final GDP forecast will be a summation of each of the four sectors of GDP.
Typically the rate of inflation would be forecast as well so that GDP can be a stated in both nominal and real terms, although almost all business decisions are going to be based on the real (without inflation) forecast. Nevertheless, it is frequently desired to consider inflation and have GDP in nominal terms as well. While price changes could differ by sector, it is frequently forecast in general overall, which will be a sufficient approach for this project. Each of you probably came to a conclusion on the rate of inflation earlier in the course.
Forecast Project Instructions: This is a group forecasting project for instructor-selected groups of usually 4 or 5 students.
You have been asked by your boss to forecast GDP for the following 12 months. The forecast will be used at an executive retreat to aid in the discussion of company plant expansion plans. Your boss is a very intelligent, successful engineer, one of the founders of the company, but does not have business education or experience, so will be looking to you for that expertise. The boss is very exacting in looking for logical inconsistencies in all work.
The primary approach is to be by developing an expenditure model to estimate personal consumption expenditure, gross private domestic investment, government purchases of goods and services, and net exports of goods and services. This approach should be checked with other approaches for consistency.
The project report should consist of a 4 page executive summary that presents the forecast and key items of interest. The executive summary is to be a group effort, but is expected to reflect the individual sectors (discussed below), rather than be new material.
In addition, the report should have several 4 page sections to discuss the major sectors that make up the final forecast (C, Ig, G, Xn). Each of these sections will be the work of one individual of the group and will have that person’s name at the top of each page. While the other members of the group are expected to read the individual sections and should make suggestions for improvement, it is understood that the final product is the individual work of the student forecasting that GDP category.
When a 5th student is assigned to the group, a separate section will forecast the price level (inflation) over the next year. This may be a compilation and summary of work done individually earlier, but must clearly come to a single conclusion. The 5th member would be responsible for reconciling the 5 inflation forecasts and providing the justification for the rate forecast. [Note: generally there will be no 5th student assigned to the group, and in that case you may use an arbitrary increase of the price level of 2% to convert your real GDP forecast to nominal terms. That is not given as the correct percent, but is given as one that is unlikely to be so grossly erroneous that it would drive poor conclusions.]
Throughout, the report should exhibit an understanding of the nature of business fluctuations, practical forecasting issues, macroeconomic theory, and be written in proper business style.
The report will receive an overall grade. This grade will constitute 50 percent of each student’s grade. The other 50 percent will be based on the student’s individual section of the report.