Options management in F&E : eine Fallstudie

Benefits of incremental investments in R&D and new business initiatives are strongly future oriented and, therefore, coincide with large uncertainty. Market launch after the embryonic stages only takes place when conditions are favorable and is blown off when circumstances are poor. Such conditional invesments lead to the problem of a complex economic evaluation for which the conventional methods of evaluation are inadequate. In this article, the authors elaborate on the options approach as derived from an analogy with financial options on stocks which offers a possible solution to this problem. The article orginates in a current research project in the field of multimedia concerning the development of Optical Tape Recording at Philips Electronics. First, it is shown how a given set of numbers can be interpreted differently in an option-type analysis versus a conventional discounted cash flow analysis. All other thinf being equal, and option valuation adjustment to traditional capital budgeting leads to a fundamentally different conclusion. Second the link between option valuation and strategy analysis is discussed and elaborated on