Mac Development Corporation - Hbs Case Study Essay

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MAC Development Corporation The McCaffreys are in a sticky situation as they have tied up land for a development project and everything seems to be falling apart. They have deadlines to meet and so many moving pieces that I had to read the Case Study several times to wrap my head around it all. At the start of the Phoenix project, there were basically three main puzzle pieces the McCaffreys had to juggle. The first one was the Village of Woodland, where the land was located, had verbally agreed to give $4.1 Million in subsidies to the property for improving a community eyesore. This was a huge upside for the project initially, but the project and this $4.1 Million still had to be approved by the board to be official. It was not …show more content…

The September 11, 2001 terrorist attacks shook the country and would undoubtedly start a recession. The company had invested two years of their time and energy as well as $311,500 of theirs and investors’ money they risk losing should they choose to scrap the project. Their risks were interrelated and with a recession coming, there wasn’t room for error.
Dick has been overly optimistic about the project in my opinion, giving most of these factors the benefit of the doubt. The $4.1 Million subsidy package was verbal which in business is good for nothing. He and his team saw dollar signs when they found cheap land with free government TIF money on the table and started putting in more time and money until they found themselves here. He has different risks contingent upon other risks such as the Bank One loan requiring a purchase and sale agreement but the Village of Woodland having power to deny the purchase and sale agreement of any potential buyers. With that said he has done a decent job managing what he could, and no one can see when market crashes come. Sometimes developers are left sitting with a project like this and in a tough spot. Perhaps they should have had other deals in the pipeline they could choose instead of having all the team’s time and his investors’ money in one deal. Though he has past experience dealing with such issues, he should not have let his team become so invested. He needs to decide if he should jump

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