Leasing

The Problem statement:

“How to value Netscape Communications Corporation as a company, since the company had only existed for 16 months and had yet to be profitable.”

Threat of new entrants | -------------------------------------------------

Intensity of competitive rivalry * Though Netscape was the indisputable leader of its kind but the intensity of competitive rivaltry was presence in this industry. * As the internet community and its demand continued to increase result in entering the multitude of competitors. | Bargaining power of customers (buyers) |

* As there were potential competitors in this industry so the threat of new entrants was high. | | * The bargaining power of customers was low.Because by introducing ‘click and point’ browser and concept of web surfing,they had getting the first mover advantage. |

Bargaining power of suppliers * Bargaining power of suppliers were low.Because they did not buy the software from supplier rather they developed by thier engineered. | | Threat of substitute products or services * Threat of subsitute product or services were high.But as they were dominated the market and set standard and also gave the browser free that lead to capturing higher market share. |

Risk analysis:

Risk: Risk is defined as the variation from the expected return.

Types of risks:

* Business risk

* Financial risk

Business risk: It is the variation of return for the main operation of the firm.It is the riskiness of the fims stock if it uses no debt.

In our case, as netscape will issue IPO under firm commitment underwritting so there business risk will be low.Their return will not be affected if the share price will decline in future.

Financial risk: It is an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default.

In our case, netscape will not be affected by financial risk because they will have no...