In the middle 1970s, the National Bank of Georgia (NBG) seized an opportunity to establish a branch in a major office complex that was being built in downtown Atlanta. The facility represented a new concept in urban office space for the city. It was to contain its own shops, restaurants, and branch banks. Workers in the office space could work, shop, eat, and bank without ever leaving the complex. Some were touting this approach as the wave of the future. The complex attracted a great deal of attention, and branch banks located in it were expected to be high-profile signals of the banks' presence in the downtown Atlanta market. At the time, NBG was the fifth largest bank in the city. NBG's management was trying to make a major push to become larger and more visible. Although the lease expenses and costs of improvements would be very high, the new office complex seemed to afford the type of opportunity the bank wanted.

At about the same time NBG was considering its branching decision, Home Federal Savings of Rome, Georgia, was considering a strategic branching decision of its own. Rome was a small city of approximately 40,000 people. Home Federal was a small, independent S\&L that was totally oriented toward making home loans and accepting savings deposits from individuals. It had long had a conservative banking philosophy. Despite its retail orientation, it operated from only one downtown location, unlike most of its competitors, which long ago had embraced branch banking. Home Federal's management, however, had come to the conclusion that the city's growth was headed in a westerly direction and that it had to establish a branch on that side of town or lose customers who considered the drive into town too inconvenient. Home Federal had the opportunity to acquire and remodel a vacant facility that had been used as a fast-food restaurant at a cost that, although significant, was considerably lower than the cost of building a new branch. The facility was in a highly visible location. Home Federal's logo would be seen by thousands of motorists driving by each week.

Both banks elected to make the capital investments in branching. NBG's investment failed. The branch was closed within two years because the new office concept failed to generate enough customers. Leasing of office space in the complex was slower than expected, and far fewer customers than expected used the shops and restaurants. Conversely, Home Federal's branch was a great success. The branch was profitable within months after opening and continued to show good growth and profitability thereafter.

Required What factors could account for the difference between these two strategic investment decisions? Why are marketing assumptions often critical to the success or failure of strategic capital investment decisions?