Diciplined Decisions : Aligning Strategy With The Financial Markets  

Oleh:

Kulatilaka, Nalin ; Amram, Martha

Jenis: Article from Bulletin/Magazine - ilmiah internasional
Dalam koleksi: Harvard Business Review bisa di lihat di link (http://web.b.ebscohost.com/ehost/command/detail?sid=f227f0b4-7315-44a4-a7f7-a7cd8cbad80b%40sessionmgr114&vid=12&hid=105&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&jid=HBR) vol. 77 no. 1 (1999), page 95-109.
Topik: financial market; capital investments; financial analysis; financial planning; financial strategy; real options; risk management; securities analysis; strategy formulation; uncertainty

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: HH10.14 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

The goal of strategy is clear - to increase shareholder value. But in volatile markets, it's difficult to predict how a particular investment will affect a company's value. In this article, Martha Amram, a partner with the consultancy Onward Inc., and Nalin Kulatilaka, a professor at Boston University's School of Management, explain how managers can draw on the frameworks and information of the financial markets to make better, more sure - footed strategic investments. The financial markets are adept at calculating the value of an investment under uncertain conditions - exactly the challenge faced by business strategists. By applying the discipline of the markets, executives can avoid basing important decisions on subjective judgments about the future. The application of market discipline to strategy involves three components. First, the decision is framed in terms of the real options it creates. Second, in evaluating an investment, all the relevant information on value and risk available in the financial markets is taken into account. Third, actual financial transactions are used, when appropriate, to acquire options or otherwise mitigate risk. In a series of cases, the authors show how applying market discipline can help illuminate a range of common business decisions - whether to add production capacity, or to invest in a new venture, or to upgrade an information system, for example. By providing disciplined insight into the uncertainty present in all markets, the real - options approach lets executives think more clearly and realistically about complex and risky strategic decisions.

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