REAL OPTIONS THEORY ANALYSIS

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Professional Service Firms are facing challenges as the sector evolves. Globalisation, client demands and the effects upon business models require strategic change. Firms need to ... look carefully at how they prepare to meet their future needs. Real options is a strategic decision making paradigm that allows for making flexible or staged decisions under conditions of uncertainty. The theory captures the value of managerial flexibility to adapt and revise decisions at a future time under the right conditions with the benefit of better information. Using this paradigm, discuss the strengths and weaknesses of applying real options analysis in evaluating sustainable developments for a PSF. Discuss the issues and questions faced by management and carry an evaluation of the various options, including the mitigation of any identified weaknesses of the theory. To conduct the analysis, select a Professional Service Firm (PSF) operating in the built environment (e.g. engineer, architect, cost consultant for the built environment) that will serve as case study. For data collection, consider as primary data sources archival records, such as newsletters, industry reports, company webpages and financial statements. You can also use academic sources where the PSF in question was used as case study. [Show More]

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