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GPS, Inc.: A Case of Investment under Uncertainty
Author(s) -
Hudson Darren,
House Lisa,
Barnett Barry,
Isik Murat
Publication year - 2004
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/j.1467-9353.2004.00178.x
Subject(s) - global positioning system , investment (military) , business , geodesy , economics , finance , computer science , geography , telecommunications , political science , politics , law
Johnny Williams, president of Global Positioning Solutions, Inc., is considering entering the market for providing remotely sensed imagery and associated prescriptions to farmers. A large initial investment is required and additional investments will be needed if the business expands. Johnny is faced with trying to predict demand for a product that is not currently available in his market area. The case prompts students to discuss the trade‐off between losing “first‐mover” advantage versus the potential value of waiting for additional information in a highly uncertain market demand.