Strategic Growth Options

Strategic Growth Options

We provide a strategic rationale for growth options under uncertainty and imperfect competition. In a market with strategic competition, investment confers a greater capability to take advantage of future growth opportunities. This strategic advantage leads to the capture of a greater share of the market, either by dissuading entry or by inducing competitors to 'make room' for the stronger comp...

Return distributions of strategic growth options

In this study we develop implications for the return distribution of firms with embedded strategic growth options. In our model we integrate real option theory with a Cournot-Nash framework where two firms choose output levels endogenously and may have investment-timing differences. Simulations of the returns of the strategic growth option show that traditional option variables, such as the val...

Strategic Investment Options for Agricultural Growth and Poverty Reduction

Implementing the Comprehensive Africa Agriculture Development Programme (CAADP) as the centerpiece of a poverty-reduction strategy implies that agriculture and its individual subsectors must play a primary role as leading sources of pro-poor growth at national level. Uganda and other African countries pursuing the CAADP agenda are not just seeking to accelerate growth but also to maximize and b...

Strategic Real Options∗

I introduce a strategic seller to a standard model of real options. A privately informed seller, such as a startup, tries to court a forward-looking buyer, such as a venture capitalist. The buyer learns gradually about the seller’s quality, high or low, through exogenous news and can “adopt” the seller at any time. The seller pays a flow cost but can exit or privately upgrade its quality at any...

10 Generating strategic options