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Describes the challenges confronting a recent HBS graduate who has started a direct-mail toy company. The entrepreneur must evaluate industry conditions in both toys and direct mail, and determine whether he has developed a viable business concept. Presents detailed financial projections associated with each of three major repositioning options.

Illustrates the various ways in which Choice Hotels, the franchiser for seven mid-market hotel chains, can realize economies of scope across its multiple products. Also provides an opportunity to discuss the benefits and limitations of various organizational forms (particularly, the franchise form) as a means of realizing these economies of scope. In adapting to a maturing U.S. hotel market, Choice has to confront the realization that the competitive environment and its choice of organizational form impose restrictions on the ways in which it can realize these economies of scope.