Question: strategy case https://www.sonicautomotive.com/ Sonic Automotive is considering opening a location near North Attleboro, RI (where CarMax already has a store).To avoid direct competition with CarMax,

strategy case

https://www.sonicautomotive.com/

Sonic Automotive is considering opening a location near North Attleboro, RI (where CarMax already has a store).To avoid direct competition with CarMax, they plan to sell only trucks.If CarMax retains its focus on cars, the new location will boost the present valueof Sonic by $10M.If CarMax adds trucks to its North Attleboro location, then entry will reduce the present value of Sonic by $2M.Without competition from Sonic, the expected present value of CarMax's RI location for is $20M (selling cars) or $12M if it sells both trucks and cars.With competition from Sonic, the PV of CarMax's RI location is $10M (if they sell cars only) or $2M (cars and trucks).CarMax has threatened that if Sonic enters, they will add trucks to that location.What should sonic do?Why?

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