A currently profitable bricks-and-mortar retail firm is under attack from several Internet start-up firms. The top management has decided to join the Web competition and open up an Internet store. Given the strong competition and price-cutting by the upstart Internet firms, the future profitability of the firm is uncertain. Given this doubt, the firm’s CFO is concerned about the firm being in the wrong investment and financing clientele. She has asked you to prepare a memo outlining possible actions, together with your recommendations, that the firm might take to reduce the expected costs of finding itself being in the wrong clientele. She has asked that any assumptions you make be made explicit.
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