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This paper examines the extent to which the Real Options Approach (ROA) and Managerial Judgement (MJ) factors are deployed in the Investment Appraisal Process (IAP).It draws on a 73-firm survey aimed at finance directors of British Automotive Components Manufacturers (BACMs) to set out the relative importance of the strategic approach (ROA informed by MJ) and formal investment appraisal techniques: Pay back (PB), Return on Capital Employed (ROCE), Internal Rate of Return (IRR) and Net Present Value (NPV) when making Strategic Investment Decisions (SIDs) with growth options. The findings from the survey show the absence of the formal adoption of the ROA in the IAP. However, the impacts of the growth options regarding the deployment of MJ in the IAP are clearly evident. The analysis shows that MJ is considered when assessing both investments with growth options and risky projects.
This book presents a range of investment appraisal methods and models to help readers make good investment decisions. Each approach is thoroughly described, evaluated, and illustrated using examples, with its assumptions and limitations analyzed in terms of their implications for investment decision-making practice. Getting investment decisions right is crucial but due to a complex and dynamic business environment this remains a challenging management task.
How to make sound investment decisions: Based on a continuing case study this comprehensive analysis paces a sure way through the variety of investment appraisal methods. The companion text 'Grundlagen der Investitionsrechnung: Eine Darstellung anhand einer Fallstudie' is available in German.
Many approaches to investment and investment appraisal focus upon economic modelling or accounting techniques for investment decision making. This text focuses upon the managerial or directional aspects of investment decision making and the opportunities, benefits and consequences for organizations who ensure that investment appraisal is consistent with organizational business strategy. In a nutshell, it is a text about the managerial context of effective and successful investment appraisal.
Driven by such tools as big data, cognitive computing, new business models, and the internet of things, the overall demand for innovation is becoming more critical for competitiveness and emerging technologies. These technologies have become real alternatives for the market and offer new perspectives for modern project management applications. The Handbook of Research on Emerging Technologies for Effective Project Management is an essential research publication that proposes innovations for firms and markets through the exploration of project management principles and methods and the effective integration of knowledge and innovation. It encompasses academic and scientific propositions, reviews for conceptual bases, applications of theories in new market solutions, and cases of successful insertion of disruptive technologies and business models in new competitive market offers. Featuring a range of topics such as innovation management, business administration, and marketing, this book is ideal for project managers, IT specialists, software developers, executives, practitioners, managers, marketers, researchers, and industry professionals.
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.
This Handbook was the first APM Body of Knowledge Approved title for the Association for Project Management. Over the course of five editions, Gower Handbook of Project Management has become the definitive desk reference for project management practitioners. The Handbook gives an introduction to, and overview of, the essential knowledge required for managing projects. The team of expert contributors, selected to introduce the reader to the knowledge and skills required to manage projects, includes many of the most experienced and highly regarded international writers and practitioners. The Fifth Edition has been substantially restructured. All but two of the authors are new, reflecting the fast-changing and emerging perspectives on projects and their management. The four sections in the book describe: ¢ Projects, their context, value and how they are connected to organizational strategy; ¢ Performance: describing how to manage the delivery of the project, covering scope, quality, cost, time, resources, risk and sustainability ¢ Process: from start up to close down ¢ Portfolio: the project and its relationship to the organization The discrete nature of each chapter makes this Handbook a wonderful source of advice and background theory that is easy to consult. Gower Handbook of Project Management is an encyclopaedia for the discipline and profession of project management; a bible for project clients, contractors and students.
This handbook is intended primarily for practitioners such as accountants, auditors, financial analysts, business managers, and chief executives. The primary focus of this book is on techniques and concepts of cost and management accounting for strategic business decisions. In order to survive in the changing business environment, organizations should rethink their strategic philosophy and the role of management accounting. Management accounting systems exist to help managers make economic decisions. In preparing and assessing their strategic plans, organizations need information on many areas of their business environment. Management accounting is also in a process of change. While some businesses continue to use conventional methods of costing, performance measurement and cost analysis, increasing numbers are adopting activity based cost allocation system, strategic oriented investment decisions models, and multiple performance measures such as the Balanced Scorecard. This handbook focuses on both conventional and contemporary issues in cost and management accounting. It presents an intriguing combination of 20 chapters, separated for presentation purpose into seven themes, dealing respectively with: organizational planning and controls; costing for business decisions; pricing decisions; capital budgeting decisions; performance measurement and benchmarking; contemporary management accounting tools; and management accounting for the public sector. All chapters in this handbook provide both retrospective and modern views and commentaries by knowledgeable scholars in the field, who are able to offer unique insights on the changing role of cost and management accounting in today's businesses.
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.
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.