Internet of Things and Their Coming Perspectives: A Real Options Approach

Internet of things is developing at a dizzying rate, and companies are forced to implement it in order to maintain their operational efficiency. The high flexibility inherent to these technologies makes it necessary to apply an appropriate measure, which properly assesses risks and rewards. Real options methodology is available as a tool which fits the conditions, both economic and strategic, under which investment in internet of things technologies is developed. The contribution of this paper is twofold. On the one hand, it offers an adequate tool to assess the strategic value of investment in internet of things technologies. On the other hand, it tries to raise awareness among managers of internet of things technologies because of their potential to contribute to economic and social progress. The results of the research described in this paper highlight the importance of taking action as quickly as possible if companies want to obtain the best possible performance. In order to enhance the understanding of internet of things technologies investment, this paper provides a methodology to assess the implementation of internet of things technologies by using the real options approach; in particular, the option to expand has been proposed for use in the decision-making process

The Choice between Greenfield Investment and Cross-border Acquisition: A Real Option Approach

The purpose of this study is to formalize the choice of market entry strategy for an individual multinational enterprise (MNE) from a dynamic perspective. It is argued that incorporating a suitable treatment of irreversibility, uncertainty and flexibility related to a MNEs investment decision gives further insights to the choice of cross-border acquisitions to greenfield investment as the preferred entry mode. In most cases, the initial entry strategy serves as a platform allowing the firm to make subsequent investments to exploit host-country advantages and capabilities.We allowfor this by taking a two-step expansion strategy explicitly into account. The evolutionary process of the value of the foreign direct investment includes two stochastic elements as well as the timing that triggers the transition from export to foreign direct investment. The results suggest that uncertainty and future investment opportunities play an important role when it comes to transit from export to the first phase of the foreign direct investment commitment as well as have an impact on the choice of entry strategy.Foreign direct investment; Multinational enterprise; Sequential investments; Entry mode; Greenfield investment; Cross-border acquisition

A marketingeszközök és –tevékenységek részvényesi értékre gyakorolt hatása (The effect of marketing assets and activities on shareholder value)

A vállalati marketing pénzügyi teljesítményre, különösen részvényesi értékre gyakorolt hatásának kimutatása mind fontosabbá válik a marketingráfordítások nagyságának növekedésével, valamint annak felismerésével, hogy a részvényesek számára vevői érték nélkül nem lehet hosszú távon értéket biztosítani, azonban kedvező piaci eredményekkel sem feltétlenül valósul meg a pénzügyi teljesítmény növekedése. A szerzők tanulmányukban a marketingeszközök és -tevékenységek részvényesi értékre gyakorolt hatását vizsgálják, rámutatnak arra, hogy milyen módon befolyásolhatják a részvényeseket megillető szabad pénzáramot, a tulajdonosi megtérülést, a stratégiai tervezési időhorizontot és a végértéket. A marketing néhány lehetséges negatív hatását is kiemelik. Ezt követően felvázolják a marketingjellegű beruházások reálopciós karakterisztikáit, valamint játékelméleti összefüggéseit dinamikusan változó környezetben. ________ Proving the effect of corporate marketing on financial performance, especially on shareholder value, becomes more and more important as marketing expenditures increase. Furthermore by the recognition that for shareholders without customer value it is not possible to provide value in the long run, however, neither good market results can assure the growth of financial performance. In this paper the authors examine the effect of marketing assets and activities on shareholder value, they point out how these can influence free cash flow to equity, shareholder return, strategic planning time period and terminal value. They emphasize also some possible negative effects of marketing. The authors outline the real optional characteristics of marketing investments and their game theoretical relations in dynamic environment

The Choice between Greenfield Investment and Cross-border Acquisition: A Real Option Approach

The purpose of this study is to formalize the choice of market entry strategy for an individual multinational enterprise (MNE) from a dynamic perspective. It is argued that incorporating a suitable treatment of irreversibility, uncertainty and flexibility related to a MNEs investment decision gives further insights to the choice of cross-border acquisitions to greenfield investment as the preferred entry mode. In most cases, the initial entry strategy serves as a platform allowing the firm to make subsequent investments to exploit host-country advantages and capabilities.We allowfor this by taking a two-step expansion strategy explicitly into account. The evolutionary process of the value of the foreign direct investment includes two stochastic elements as well as the timing that triggers the transition from export to foreign direct investment. The results suggest that uncertainty and future investment opportunities play an important role when it comes to transit from export to the first phase of the foreign direct investment commitment as well as have an impact on the choice of entry strategy

Market entry, phased rollout or abandonment? A real option approach

This paper proposes a model to value a phased rollout, and to determine the optimal time of a phased rollout as well as the optimal rollout area. Since a phased rollout of new products can be considered as an option on a worldwide launch, real option theory is applied to enhance decision making about entry strategy. We derive the analytical properties and illustrate the model with a case on phasing the rollout of CD-I at Philips Electronics. Under the assumptions made, we found that the value of a phased rollout strategy mainly depends on market and technology uncertainty and the expected net present value of the investment. The maximum value of phasing the rollout of CD-I was nearly 23% of the investment cost

Entry modes of Austrian insurance groups in SEE

In den letzten Jahren der wirtschaftlichen Entwicklung der Länder in CEE und SEE waren österreichische Versicherungsgruppen unter den ersten, diese Märkte zu erschließen und haben die Vorteile ihrer geographischen Lage und Know-how genutzt, um sich zu erweitern und erfolgreich in dieser Region zu positionieren. In die letzten Jahren hat die Frage, wie Unternehmen die ausländische Märkte erschließen, viel Aufmerksamkeit von Wissenschaftler der Gebiet des Internationales Betriebswirtschaft erhalten. Es gibt viele wissenschaftliche Studien, die sich primär mit den produzierenden Unternehmen beschäftigen, und nur wenige, die sich auf Dienstleistungs-Unternehmen beziehen. Diese Studie wird über die Markteintrittsstrategien der österreichischen Versicherungsgruppen, als Finanzdienstleistungs-Unternehmen, bei der Expansion in Südosteuropa diskutieren, mit einem Schwerpunkt auf zwei wesentliche Equity-Modes: Greenfield und Acquisition. Dieses Arbeit besteht aus einem Theorieteil und einem Fallstudienteil. Nach der Analyse der Theorie werden die Ergebnissen mit den praktischen Fällen aus der Fallstudie verglichen, um zu sehen, wie die theoretischen Ergebnisse in die Praxis unterstützt werden. Darüber hinaus werden die theoretischen Probleme von Greenfield and Acquisition analysiert, um zu sehen, ob sie in der Praxis auch präsent sind und welche Aktionen unternommen wurden, um sie zu vermeiden. Für diese Forschung wurde eine umfangreiche Literaturrecherche zum Thema durchgeführt. Weiters wurden Interviews mit dem Top-Management der drei wichtigsten österreichischen Versicherungsgruppen, die in Südosteuropa tätig sind, durchgeführt.In recent years of economic development of the countries in CEE and SEE, Austrian Insurance Groups were among the first to enter these markets and take advantage of their geographical location and know-how to expand and successfully position themselves in this region. The question of how to enter foreign markets, has received a great deal of attention from scholars in the field of international business during the last years. There are many academic studies, of which the majority is related to manufacturing companies and few on service-oriented companies. This study will discuss the entry mode decision of the Austrian Insurance Groups, as financial service-oriented companies, when expanding in South East Europe, with a focus on two major equity entry modes: Greenfield and Acquisition. The paper is split into a theory and a case study part. After analyzing the theory and coming up with some results, they will be compared with the practical cases from the case study in order to see how the theoretical results are supported in practice. Further, the common theoretical problems of Greenfield and Acquisition will be analyzed to see if they were present in practice and what actions were undertaken in-order to avoid them. For this research an extensive literature review on the topic was performed, as well as a research and interview with the top management of the three most important Austrian Insurance Groups that have presence in the SEE region

Giga-Investments: Modelling the Valuation of Very Large Industrial Real Investments

In this doctoral dissertation characteristics of very large industrial real investments (VLIRI) are investigated and a special group of VLIRI is defined as giga-investments. The investment decision-making regarding to giga-investments is discussed from the points of view of discounted cash-flow based methods and real option valuation. Based on the bacground of establishing giga-investments, state-of-the-art in capital budgeting (including real options) and by applying fuzzy numbers a novel method for the evaluation and profitability analysis of giga-investments is presented. Application of the method is illustrated and issues regarding investment decision-making of large industrial real investments are discussed.Real Options; Fuzzy Real Option Valuation; Giga-Investments; Very Large Industrial Real Investments; Dissertation