Real Option Valuation Of Product Innovation

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Real Option Valuation of Product Innovation

Yuanyun Kang
Real Option Valuation of Product Innovation Book PDF

Author : Yuanyun Kang
Publisher : Diplomica Verlag
Page : 91 pages
File Size : 55,5 Mb
Release : 2009-07
Category : Business & Economics
ISBN : 9783836677417

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Real Option Valuation of Product Innovation by Yuanyun Kang Pdf

How can you evaluate a potential investment if there are several possibilities to change the course of action in the future depending on different emerging situations? And even more challenging: How can you do so if you cannot come up with point estimates - but you have to use several ranges of input values? Both - managerial flexibility as well as so called continuous uncertainty - are highly relevant as they reflect most of the investment decisions realistically. But if you apply standard valuation techniques like a simple Discounted Cash Flow model, the computed value will be significantly distorted, potentially prompting you to make a wrong decision. Given the practical urgent need for a suitable valuation technique, the real option valuation approach was developed as an advanced valuation approach. It follows a non-trivial but doable four-step process, quantifying the value of investments in situations of managerial flexibility and continuous uncertainty. While real option valuation is considered to be an opaque technique, Ms. Kang proves that it can be explained in an understandable way, even for someone approaching the matter with limited or no prior exposure to the topic. The author outlines the major issues of current product innovation valuation with traditional valuation techniques. On the basis of this analysis she explains the basic concepts of valuing product innovation through the use of real option valuation. Supported by a few practical examples the author clarifies how to value different types of real options. So based on the actual Financial Statement 2006 of Research In Motion (RIM), the author develops a sample 5-year business plan for the product innovation of BlackBerry 9900. This is done through the highly advanced model of Binomial Trees. Overall with this thesis, you'll get a head-start into one of the more advanced management tools - the real option valuation.

Real Option Valuation of Product Innovation

Yuanyun Kang
Real Option Valuation of Product Innovation Book PDF

Author : Yuanyun Kang
Publisher : diplom.de
Page : 86 pages
File Size : 42,8 Mb
Release : 2009-01-12
Category : Business & Economics
ISBN : 9783836624718

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Real Option Valuation of Product Innovation by Yuanyun Kang Pdf

Inhaltsangabe:Abstract: Global competition, emerging technologies, and an ever increasing need for superior products in shorter time frames all contribute to drive companies to adopt new and innovative approaches to product innovation. Effective product innovation is imperative for the survival, growth and profitability of most design and manufacturing enterprises. In the current dynamic manufacturing environment, companies must innovate successfully if they wish to remain competitive. Product innovation is a complex, cross-functional and contingent, dynamic process, which is difficult to manage. Anticipating change and expeditiously responding to the dynamics of the business environment via product innovation are important precursors for achieving sustainable competitive positions and exceptional performance. The heart of a product innovation is its value. Traditional discounted cash flow approaches, such as net present value (NPV), have traditionally been the preferred methods for evaluating investments in product innovation. The traditional NPV method, which was initially developed to value bonds or stocks by passive investors, implicitly assumes that corporations hold a collection of real assets passively. Managerial choices (as delay, expand, switching etc.) are thus presumed to be limited to the initial decision. Therefore, traditional valuation methods undervalue the product innovation because they are unable to capture the value of management flexibility. Recently, real options emerged as an alternative to simplistic discounted cash flow methods. Real option valuation (ROV) values the managerial flexibility to make ongoing decisions regarding implementation of investment projects and deployment of real assets. ROV extends valuation models used to price financial options and applies them to investments in real assets. Black and Scholes developed the Black-Scholes model to value financial options that focus on factors affecting the value of the underlying financial asset over time. Proof by Cox, Ross, Rubinstein (1979), binomial tree model is simpler to understand for the practitioner and less elegant than Black-Scholes model. It uses the discrete mathematics to achieve the isomorphic results to the calculation used by Black-Scholes model. From an intuition point of view, the managerial flexibility is easy to understand. But, how much it is worth is most difficult or even impossible to think about and measure with the traditional [...]

Strategy, Value and Risk - The Real Options Approach

J. Rogers
Strategy Value and Risk The Real Options Approach Book PDF

Author : J. Rogers
Publisher : Springer
Page : 141 pages
File Size : 43,8 Mb
Release : 2002-06-25
Category : Business & Economics
ISBN : 9780230513051

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Strategy, Value and Risk - The Real Options Approach by J. Rogers Pdf

In the 1990s shareholder value was applied to all aspects of corporate strategy and management decisions as a result of intense competition, globalization, advances in technology, deregulation and the financial markets. As we enter the twentyfirst century the business environment is one of increasing creative destruction, where competitive advantage is much harder to sustain. Real Options , a type of advanced financial analysis, applies financial option theory to real assets and offers a strategic framework that recognizes the need for management flexibility and to leverage risk in this corporate environment.

Real R & D Options

Dean Paxson
Real R D Options Book PDF

Author : Dean Paxson
Publisher : Butterworth-Heinemann
Page : 356 pages
File Size : 53,5 Mb
Release : 2003-01-17
Category : Business & Economics
ISBN : 0750653329

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Real R & D Options by Dean Paxson Pdf

This text addresses a wide range of issues in valuation using the Real Options technique. It covers the whole area of Real Options and looks closely at developments, especially in valuing technology companies. Authors in Europe, North and South America, Asia and Africa provide seven Real Options models and applications.

Project Valuation Using Real Options

Prasad Kodukula,Chandra Papudesu
Project Valuation Using Real Options Book PDF

Author : Prasad Kodukula,Chandra Papudesu
Publisher : J. Ross Publishing
Page : 256 pages
File Size : 41,7 Mb
Release : 2006-07-15
Category : Business & Economics
ISBN : 1932159436

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Project Valuation Using Real Options by Prasad Kodukula,Chandra Papudesu Pdf

Business leaders are frequently faced with investment decisions on new and ongoing projects. The challenge lies in deciding what projects to choose, expand, contract, defer, or abandon, and which method of valuation to use is the key tool in the process. This title presents a step-by-step, practical approach to real options valuation to make it easily understandable by practitioners as well as senior management. This systematic approach to project valuation helps you minimize upfront investment risks, exercise flexibility in decision making, and maximize the returns. Whereas the traditional decision tools such as discounted cash flow/net present value (DCF/NPV) analysis assume a “fixed” path ahead, real options analysis offers more flexible strategies. Considered one of the greatest innovations of modern finance, the real options approach is based on Nobel-prize winning work by three MIT economists, Fischer Black, Robert Merton, and Myron Scholes.

Real Options in Practice

Marion A. Brach
Real Options in Practice Book PDF

Author : Marion A. Brach
Publisher : John Wiley & Sons
Page : 384 pages
File Size : 47,6 Mb
Release : 2003-04-07
Category : Business & Economics
ISBN : 9780471445562

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Real Options in Practice by Marion A. Brach Pdf

Explores real option theory applied in practice Real options are quickly becoming the valuation and decision-making method of choice for many companies, including oil and gas companies, utilities and natural resource companies, pharmaceutical and biotech companies, Internet companies, and many others. Real Options in Practice allows readers to view the world of real options from the vantage point of a corporate practitioner applying real option valuation techniques on a regular basis. Expert Marion Brach describes the challenges of implementing a real option framework in practice within a corporate setting. Touching on the real options most firms care about, Real Options in Practice identifies the classic types of real options-deferral, abandonment, switching, expansion, and compound-and explores the main concepts critical to understanding real option theory. Through Brach's own three-step real option valuation method readers will learn how the theory of real options is now being applied to drive better, more profitable corporate decision-making. Marion A. Brach, MD, MBA (Hagen, Germany), has undertaken financial valuation of business opportunities and acquisitions using scenario and real option valuation in the biotech industry. A recognized expert on real option theory and practice, Brach received her MBA from the Manchester Business School and frequently speaks at real option seminars.

The Real Options Solution

F. Peter Boer
The Real Options Solution Book PDF

Author : F. Peter Boer
Publisher : John Wiley & Sons
Page : 434 pages
File Size : 52,6 Mb
Release : 2002-11-08
Category : Business & Economics
ISBN : 9780471421276

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The Real Options Solution by F. Peter Boer Pdf

Harness the power of real options Real options theory is based on the Nobel Prize--winning work on financial options, and has captured the interest of executives, managers, and investors who need to understand the future profitability of an asset. Originally developed to value technology initiatives and companies, the method is now being applied broadly across various businesses and industries. The Real Options Solution offers comprehensive coverage of the real options approach with a five-step framework and examples for applying the author's unique total value model based on real options analysis. This approach will help executives and investors minimize the risk of committing to new ventures and delivers a framework flexible enough to apply to business initiatives in all types of companies.

Valuing Corporate Innovation

Gunther Friedl,Horst J. Kayser
Valuing Corporate Innovation Book PDF

Author : Gunther Friedl,Horst J. Kayser
Publisher : Springer
Page : 114 pages
File Size : 44,9 Mb
Release : 2017-11-06
Category : Business & Economics
ISBN : 9783319648644

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Valuing Corporate Innovation by Gunther Friedl,Horst J. Kayser Pdf

This book presents tools for valuing and controlling corporate innovation. It combines a well-established theoretical framework with case studies at Siemens that illustrate the practice of valuing and controlling innovation and underline the strong link between theoretical concepts and practical application. Innovation is a key factor determining the success of companies and since corporate innovation consumes large quantities of resources, the issue of how best to distribute these resources among different projects is crucial. For an optimal resource allocation, companies need valuation tools to assess the benefits, costs and risks of competing projects. The energy sector is an example of a market that is strongly driven by innovation, and as such the book describes the processes and the potential of digitalizing product development and outlines the valuation process for a long-term innovation project in this sector – the development of the latest Siemens gas turbine.

FINANCIAL DERIVATIVES

S.L. GUPTA
FINANCIAL DERIVATIVES Book PDF

Author : S.L. GUPTA
Publisher : PHI Learning Pvt. Ltd.
Page : 892 pages
File Size : 55,7 Mb
Release : 2017-07-01
Category : Business & Economics
ISBN : 9788120353480

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FINANCIAL DERIVATIVES by S.L. GUPTA Pdf

This highly acclaimed text, designed for postgraduate students of management, commerce, and financial studies, has been enlarged and updated in its second edition by introducing new chapters and topics with its focus on conceptual understanding based on practical examples. Each derivative product is illustrated with the help of diagrams, charts, tables and solved problems. Sufficient exercises and review questions help students to practice and test their knowledge. Since this comprehensive text includes latest developments in the field, the students pursuing CA, ICWA and CFA will also find this book of immense value, besides management and commerce students. THE NEW EDITION INCLUDES • Four new chapters on ‘Forward Rate Agreements’, ‘Pricing and Hedging of Swaps’, ‘Real Options’, and ‘Commodity Derivatives Market’ • Substantially revised chapters—‘Risk Management in Derivatives’, ‘Foreign Currency Forwards’, and ‘Credit Derivatives’ • Trading mechanism of Short-term interest rate futures and Long-term interest rate futures • Trading of foreign currency futures in India with RBI Guidelines • Currency Option Contracts in India • More solved examples and practice problems • Separate sections on ‘Swaps’ and ‘Other Financial Instruments’ • Extended Glossary

Adoption of Innovation

Alexander Brem,Éric Viardot
Adoption of Innovation Book PDF

Author : Alexander Brem,Éric Viardot
Publisher : Springer
Page : 230 pages
File Size : 45,9 Mb
Release : 2015-04-10
Category : Business & Economics
ISBN : 9783319145235

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Adoption of Innovation by Alexander Brem,Éric Viardot Pdf

This edited volume brings together academics from both innovation and marketing fields to explore the additional value for companies that can be generated with the innovations in marketing and the marketing of innovations. If ideas need to reach the marketplace, then marketing strategies, concepts and tools - such as the continuous development of new product and services - become vital for their success. On the other hand, marketing management is influenced by innovation as illustrated by the way social media and Internet have revolutionized the traditional marketing-mix. Such linkages between innovation and marketing research need to be much stronger as companies have to convince internal and external stakeholders to achieve successful innovation strategies. State-of-the-art research output from different perspectives would suit the needs of a researcher as well as the company CEO alike.

Economic and Financial Analysis for Criminal Justice Organizations

Daniel Adrian Doss,William H. Sumrall III,David H. McElreath,Don W. Jones
Economic and Financial Analysis for Criminal Justice Organizations Book PDF

Author : Daniel Adrian Doss,William H. Sumrall III,David H. McElreath,Don W. Jones
Publisher : CRC Press
Page : 732 pages
File Size : 50,5 Mb
Release : 2013-10-28
Category : Business & Economics
ISBN : 9781466592070

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Economic and Financial Analysis for Criminal Justice Organizations by Daniel Adrian Doss,William H. Sumrall III,David H. McElreath,Don W. Jones Pdf

From small law offices to federal agencies, all entities within the justice system are governed by complicated economic factors and face daily financial decision-making. A complement to Strategic Finance for Criminal Justice Organizations, this volume considers the justice system from a variety of economic and financial perspectives and introduces

Strategic Investment

Han T. J. Smit,Lenos Trigeorgis
Strategic Investment Book PDF

Author : Han T. J. Smit,Lenos Trigeorgis
Publisher : Princeton University Press
Page : 504 pages
File Size : 42,7 Mb
Release : 2012-01-12
Category : Business & Economics
ISBN : 9781400829392

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Strategic Investment by Han T. J. Smit,Lenos Trigeorgis Pdf

Corporate finance and corporate strategy have long been seen as different sides of the same coin. Though both focus on the same broad problem, investment decision-making, the gap between the two sides--and between theory and practice--remains embarrassingly large. This book synthesizes cutting-edge developments in corporate finance and related fields--in particular, real options and game theory--to help bridge this gap. In clear, straightforward exposition and through numerous examples and applications from various industries, Han Smit and Lenos Trigeorgis set forth an extended valuation framework for competitive strategies. The book follows a problem-solving approach that synthesizes ideas from game theory, real options, and strategy. Thinking in terms of options-games can help managers address questions such as: When is it best to invest early to preempt competitive entry, and when to wait? Should a firm compete in R&D or adopt an accommodating stance? How does one value growth options or infrastructure investments? The authors provide a wide range of valuation examples, such as acquisition strategies, R&D investment in high-tech sectors, joint research ventures, product introductions in consumer electronics, infrastructure, and oil exploration investment. Representing a major step beyond standard real options or strategy analysis, and extending the power of real options and strategic thinking in a rigorous fashion, Strategic Investment will be an indispensable guide and resource for corporate managers, MBA students, and academics alike.

Real Options Theory

Jeffrey J. Reuer,Tony W. Tong
Real Options Theory Book PDF

Author : Jeffrey J. Reuer,Tony W. Tong
Publisher : Emerald Group Publishing
Page : 520 pages
File Size : 41,6 Mb
Release : 2007-07-05
Category : Business & Economics
ISBN : 9781849504942

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Real Options Theory by Jeffrey J. Reuer,Tony W. Tong Pdf

Examines the ways in which real options theory can contribute to strategic management. This volume offers conceptual pieces that trace out pathways for the theory to move forward and presents research on the implications of real options for strategic investment, organization, and firm performance.

The Value of Information Updating in New Product Development

Christian Artmann
The Value of Information Updating in New Product Development Book PDF

Author : Christian Artmann
Publisher : Springer Science & Business Media
Page : 216 pages
File Size : 53,8 Mb
Release : 2009-04-21
Category : Mathematics
ISBN : 9783540938330

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The Value of Information Updating in New Product Development by Christian Artmann Pdf

Managing uncertainty in new product development projects for improved valuation and decision making is one of the most complex and challenging problems in operations management. It is important for any corporation depending on the success of new products and innovations. This work shows how uncertainty can be handled and partly resolved by conducting an information update during the development process. It is one of the first comprehensive models that combine statistical decision theory in form of Bayesian analysis with a real options framework for projects exposed to different sources of uncertainty. The proposed framework makes an important theoretical contribution in addressing this problem, while at the same time being of significant value to managers who face the difficult task of evaluating and managing complex product development projects.

Strategy, Value and Risk

J. Rogers
Strategy Value and Risk Book PDF

Author : J. Rogers
Publisher : Springer
Page : 219 pages
File Size : 54,5 Mb
Release : 2009-09-18
Category : Business & Economics
ISBN : 9780230353930

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Strategy, Value and Risk by J. Rogers Pdf

Updated and revised, this second edition applies advanced financial analytics within a strategic framework that recognizes an environment where sustainable competitive advantage is a progressively more difficult task. Real Options offer the link to value and the strategic opportunities that lie in an increasingly dynamic landscape