Subject category:
Strategy and General Management
Published by:
INSEAD
Length: 10 pages
Data source: Published sources
Abstract
This is the first of a two-case series (302-093-1 and 302-094-1). The (A) case involves a strategic alliance between an electric utility and a firm developing pollution control technology under considerable regulatory and technological uncertainty. The deal structure involves a licensing agreement and a minority equity purchase structured as an option. The (B) case concerns the implementation of the alliance. The cases enable students to map the investment and operational practices of a firm into a taxonomy of real options, evaluate the structure of a deal using option theory, compare and contrast real options and financial options, and understand the practical difficulties surrounding the implementation of real options in organisations.
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Abstract
This is the first of a two-case series (302-093-1 and 302-094-1). The (A) case involves a strategic alliance between an electric utility and a firm developing pollution control technology under considerable regulatory and technological uncertainty. The deal structure involves a licensing agreement and a minority equity purchase structured as an option. The (B) case concerns the implementation of the alliance. The cases enable students to map the investment and operational practices of a firm into a taxonomy of real options, evaluate the structure of a deal using option theory, compare and contrast real options and financial options, and understand the practical difficulties surrounding the implementation of real options in organisations.