6 Pages Posted: 30 May 2017
The founder of a U.S. provider of geographic information system services focused on sustainability must decide whether to open a Canadian facility. The facility would be in operation for five years and enough information is provided for a detailed cross-border capital budgeting analysis. In addition to introducing foreign currency issues, the case provides exposure to subscription-based revenue streams and discussion of relevant costs.
Rev. Sept. 21, 2016
Thomas Boyatt did not set out to be a player in the sustainable-development arena. When he founded Geosystems Technology Group (Geo Tech) in 2006 to develop and sell a geographic information system (GIS), his goal was for timberland owners to use the technology to monitor harvesting activities under sales contracts. But rising concerns about the sustainability of natural resources had greatly expanded the technology's possible applications, so the company had responded by developing a portfolio of products that enabled companies to access and explore data on their timber holdings, optimize development, and maximize long-term value.
By the end of 2014, after a few early setbacks, Geo Tech was growing, and Boyatt was very pleased with the systems he was selling—valuable tools at a reasonable price. He was acutely aware, however, that even though Geo Tech's offering was still the only system of its kind with appreciable traction in the United States, a number of competing products were selling well internationally. To preempt the establishment of a competitor in Canada, where systems of this type were not yet regularly employed, Boyatt was considering the establishment of a Geo Tech facility in Alberta, Canada.
Geo Tech Products
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Keywords: capital budgeting, foreign currency, exchange rate, revenue, costs
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