THE ALASKAN GOLD MINE
PART I
You have taken a three-month option on a possible gold mine in Alaska. It
took you two months of dangerous journey to get there. In two weeks of
exploration (and recuperation) you have regained your health, except for your
injured left hand, which sometimes can become suddenly quite weak. In the last 24
hours, you have finally discovered gold in what appears to be good quantity. You
have exactly two weeks to get to the claims office. If you arrive late, and attempt to
secure the property (with the owners knowing you have visited it), there will
probably be an auction at which you could be easily out-bid, given your limited
resources. Here are your alternatives:
1. Wait 3-4 weeks until the weather warms up and enjoy a safe trip home.
2. Go over the mountains. This is dangerous. It is sometimes impassable. It
is quick, if you can make it without harm: 7-10 days. If you encounter
storms or injury, you will probably have to turn back or perish, as the
longest part of the journey is on the way over the top.
3. Go through the valley passes. This is less dangerous and is usually
passable. It is slow and tiring. You can probably make it in 2 to 3 weeks.
The weather is only moderately favorable, with what may be a mountain
storm brewing. You will know if it is a storm within 48 hours, and whether the
mountain is passable (if the storm comes) about one day later.
4. Wait 2-3 days, take #2 weather permitting; if not, take #3. (There is no
advantage to waiting if you prefer #3 anyway, and waiting to take #1 = #1.)
What do you do? (Circle your answer)
#1
#2
#3
#4
Authored and copyrighted by Jeffrey Barach, Graduate School of Business, Tulane, University, New Orleans, LA. 1977.
THE ALASKAN GOLD MINE
PART II
Assume you chose the valley passes (#3). Five days later you are halfway
there. You have pushed too hard and sprained your ankle. Pat, an old friend on a
trapping expedition comes along and takes you to a cabin. Pat could get to the
claims office town, and offers to take you. Travelling together, it might take 10 to
14 more days to get there.
If you tell Pat and make a deal, Pat alone could get there in about 8 to 9
days. If you were well, you could do it easily in 7 days, but you presently cannot
make it without a few days rest and then 10 days to 2 weeks of travel.
You are not sure whether Pat can exercise the option and file the claim
correctly, because Pat is not too bright, tends to drink to excess, and is not the
single-minded hustler that you are. Pat is a simple, decent old friend who likes
trapping, but would, you suspect, both need and desire financial independence.
You think you can trust Pat if you offer to split 50:50, since your expertise and
help would be needed to capitalize on the discovery.
What is your decision?
Go with Pat _______
Go it alone
_______
Send Pat
_______
Explain and detail your best strategy for success and how you plan to do it?
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Authored and copyrighted by Jeffrey Barach, Graduate School of Business, Tulane, University, New Orleans, LA. 1977.
1. What was your choice? Explain the rationale of your choice. (5 points)
I chose the third alternative. This choice involves taking the moderately safer
route back to the claims office through the valley passes.
In light of my health and the ailing left arm, taking the second alternative and
going over the hills is extremely dangerous. I might not even make it to the top
of the mountain storm catches up with me. It would not be in my company’s
best interests to risk my life in pursuit of the newly found treasure. An
individual is regarded as the representation of his company to the outside
world and therefore, I would not take the first alternative of deliberately turning
my back on all the efforts done to get to the mines and going straight home.
The fourth alternative involves speculation, waiting for a day or two so as to
choose whether the mountains are the best route in the event a storm does
not occur or taking the valley route which is said to be long and slow. Waiting
would not help due to the apparent risk of wasting two days only to discover
the storm and therefore having to take the valley route. The third route is the
most warranted despite the fact that it might take me longer to get there; I can
be fast and make it on time, void of risks like the occurrence of a mountain
storm.
2. According to the model of strategic planning, strategy formulation involves the steps
of selecting company goals, analyzing the external and internal environments, and
choosing a strategy. How did your choice reflect these steps? (5 points)
Strategic planning involves developing and maintaining consistency between the
company’s objective and its resources. This sets the general direction for the achievement
of its vision. In this case, the company’s goal is to secure the gold mine and immediately
embark on the mining process, this leads to the achievement of the company’s primary
objective, profitability from the sale of gold and ultimately value addition. Planning involves
a process which entails making strategic choices as evidenced by the handout, strategic
analysis and implementation. In this case, strategic analysis involves the attempts to
understand the strategic position of a company by considering the effects of the
environment on the company’s strengths and weaknesses. Environmental analysis is a
core component of this process and it is reflected in my choice above – choosing the less
dangerous alternative to minimize the risks associated with the exploration. Another
important component of strategic analysis is the expectations, objectives and power. The
objective of the company is to mine gold in the new territory. A secondary objective is to
acquire the necessary authorization from the claims office in time, which largely depends
on the feasibility of my choice and how fast I can get to the claims office. Resource
availability is another factor in this process. It is evident that the company lacks the
necessary resources to carry out the pre-mining activities as evidenced in the need for my
sacrifice to try and get to the claims office in time despite my health.
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