Published by:
Harvard Business Publishing
Length: 6 pages
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Abstract
When conflict arises between the tenets of competitive analysis and those of financial analysis, it''s not the theory at fault but the practice. Good project evaluation considers all relevant factors, including hard-to-quantify costs and benefits. It takes into account the consequences of not investing and also recognizes the value of opening up options. Finally, it doesn''t undervalue projects by arbitrarily restructuring the time horizon or setting discount rates too high, and it considers separately investments that may be proposed together.
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Abstract
When conflict arises between the tenets of competitive analysis and those of financial analysis, it''s not the theory at fault but the practice. Good project evaluation considers all relevant factors, including hard-to-quantify costs and benefits. It takes into account the consequences of not investing and also recognizes the value of opening up options. Finally, it doesn''t undervalue projects by arbitrarily restructuring the time horizon or setting discount rates too high, and it considers separately investments that may be proposed together.