Strategic implications of valuation methods

Author's OriginalStrategy is ultimately aimed at creating shareholder value, placing valuation in a central role linking finance and strategy. Focusing on growth options, this paper uses a unique "perfect information" model to examine, from a strategy point of view, the relationship between the market value of the firm and its intrinsic, or DCF, value. Although the research is at the level of the firm, the results have implications at the level of individual strategies and projects, since a firm can be conceptualized as a collection of projects. The findings highlight the relationship between the value of growth options and macroeconomic conditions, industry characteristics, and firm-specific factors. A revised version of this paper has since been published in the journal Advances in Strategic Management. Please use this version in your citations.Alessandri, T. M., Lander, D. M., & Bettis, R. A. (2007), Strategic Implications of Valuation: Evidence from Valuing Growth Options, in Professor Brian Silverman (ed.) Real Options Theory. Advances in Strategic Management, 24, 459-48

Multinational investment and the value of growth options: Alignment of incremental strategy to environmental uncertainty

Research Summary One of the motivations for multinational firms' investment in foreign affiliates in uncertain environments is the future growth opportunities the investment may bring. We argue that whether firms derive growth option value from their multinational investment is determined by the interaction between market uncertainty and firms' incremental investment strategy. We show evidence that multinational investment creates growth option value for firms operating affiliates in host countries with high market uncertainty. In such uncertain environments, however, incremental investment strategies—limiting the equity stake or the size of investment in affiliates, across all countries or within each country—prove critical to the value of growth options. Creating growth option value therefore requires an alignment of firms' incremental investment strategy to the uncertain country environments they confront. Managerial Summary Managers have long recognized the importance of taking an incremental approach to strategy making, but evidence on whether and when strategic incrementalism is valuable to firms remains scarce. This study focuses on two ways Japanese multinational firms invest incrementally in the context of foreign expansion—by limiting the equity stake or the size of investment in their foreign affiliates—and analyzes when such incremental strategies create valuable growth options that translate into market value. We find that these strategies, whether implemented across all host countries or within each country, do create significant growth option value, provided that market uncertainty is high. The findings highlight the importance of aligning firms' incremental strategy to the environmental uncertainties they confront, in line with the core notion of “fit” in strategic management

Umorismo and critical reading in Boccaccio's vernacular and Latin opere 'minori'

Umorismo as Luigi Pirandello defines it is distinct from the general body of literary material meant to invoke laughter. It consciously turns rhetorical convention on its head: it creates unexpected oppositions through conscious and careful use of certain types of language in contexts where it is not expected. The aim of my study is to offer readers new ways to approach Giovanni Boccaccio’s lesser-known works as fundamentally humorous texts, among other things, and to observe how they are crafted and what sets them apart from other works to which one might compare them. I argue that Boccaccio created the Amorosa visione, the Teseida delle nozze di Emilia, the Elegia di Madonna Fiammetta, and the De mulieribus claris with a sense of umorismo, that is to say, by playing with the conventions that each book’s respective genre invokes and then subverting expectations set up by those conventions. I examine each of these four works in its own chapter, with special attention to authorial voice, fictionality, narrative strategies, and intertextual practices. I rely chiefly on close readings of the texts themselves, in the original language first and foremost, and I attempt to draw out the humor that I see in the way they have been composed, often a result of play between their content and their structure and style. Ultimately, the umorismo in these works is, as Pirandello would agree it should be, not immediately evident: it takes patience and close reading to uncover. Boccaccio is staunchly in favor of critical and persistent reading as a necessary value that all poetry and fiction should require. His treatise in the Genealogia deorum gentilium on how readers should interact with books explicitly promotes the sort of reading required to perceive and parse the umorismo within his texts.Romance Languages and Literature

The Exchange Rate Exposure of a Global Competitor

This paper analyzes the exposure of operating cash flowing to an exogenous exchange rate change for a firm operating internationally as a multimarket oligopolist (i.e., a “global” competitor) and facing demand that depends in a general way on the exchange rate. It is shown that exposure is the sum of a base case exposure identified in other studies and two other components: terms associated with exchange rate-induced demand shifts and terms associated with competitors’s reoptimization following the exchange rate shock. In general, the magnitudes of these additional terms are significant, especially in the presence of asymmetries across markets and firms. Numerical examples are provided that incorporate asymmetries corresponding to stylized facts about some U.S. markets and U.S. manufacturers.© 1990 JIBS. Journal of International Business Studies (1990) 21, 225–242