Business Administration 3300K Study Guide - Quiz Guide: Real Options Valuation, Net Present Value

• School: Western University
• Department: Business Administration
• Course: Business Administration 3300K
• Professor: Alexander Miller

Document Summary

S7-im: beyond valuation: options thinking in it project management . Options thinking: investment management philosophy based on theory of real options, provides promising foundation for proactive stance of handling uncertainty: purpose of paper: describing how practitioners can incorporate options thinking into contemporary. In real options, quite valuable options can be created very inexpensively. Uncertainty: can arise from inherent risks in particular it projects (technical uncertainty) and from unknown future (market uncertainty: technical uncertainty resolve: requires managers to do something , market uncertainty resolve: often only by waiting & staying alert to market. Project elements firms must do: no flexibility; traditional tools (npc, roi) are appropriate. Project elements firms may do: value is created by actively structuring those elements as option. Effective options thinking requier managers to: recognise and enhance opportunities to create options with it, value these options (in some way, manage projects to fully extract this value.