http://repub.eur.nl/res/aut/14638/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/16283/ 2009-01-01T00:00:00Z To understand the recent trend toward privatization of infrastructure assets (e.g., airports), this article proposes a valuation methodology based on real options and game theory analysis that enables assessing when investors might overpay for infrastructure assets over standard discounted cash flow methods and when a premium is justified for their operating flexibility or strategic growth option value. While some infrastructure asset acquisitions may involve financial transactions whose value derives primarily from their expected cash flows, many of these infrastructure investments provide a platform and create the strategic context within which the firm can grow. http://repub.eur.nl/res/pub/12235/ 2007-02-01T00:00:00Z This article demonstrates how to use strategic options and games to quantify the option value of technology investments. Research and product development in electronics, capacity expansion in telecommunications or strategic acquisitions to enter new markets are examples of strategic investments that are difficult to analyse based on standard discounted cash flow approaches. Yet these decisions determine a firm's competitive success in a dynamic technological and competitive landscape. How much is such a strategic option worth? How does one analyse strategic options in a dynamic, competitive environment? We describe basic principles for analysing competitive strategies under uncertainty by incorporating game theory in real options analysis. We show how executives can analyse high-stakes multi-stage investment decisions under uncertainty, both under a proprietary setting and under different kinds of competitive structures. The analysis can apply in the last stage of commercialisation or in the innovation/R&D stage. Our proposed valuation of competitive investment strategies can help answer strategic questions such as: When should an innovator take a tough stance to pre-empt market share and force its rival to retreat, and when should it take an accommodating stance to avoid a retaliation and intensified competition? When should a firm co-operate (e.g. via joint R&D ventures) and when should it choose head-on competition (e.g. innovation races)? Step-by-step illustrative analyses provide guidelines that practitioners can adapt in realistic settings. http://repub.eur.nl/res/pub/12234/ 2004-01-01T00:00:00Z 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. http://repub.eur.nl/res/pub/12258/ 2003-01-01T00:00:00Z The paper illustrates the use of real options and game theory principles to value prototypical investment projects and capture important competitive/strategic dimensions in a step-by-step analysis of investment decisions (options) under uncertainty. It first illustrates the application of real options principles to a mining concession and to an R&D program. It then provides examples from innovation cases and uses basic game theory principles to discuss other strategic and competitive aspects, especially applicable to oligopolistic industries like consumer electronics. The issue of whether (and when) it is optimal to compete independently or coordinate/collaborate (e.g., via joint R&D ventures or strategic alliances) is given particular attention.