Subject category:
Strategy and General Management
Published by:
INSEAD
Length: 2 pages
Data source: Published sources
Abstract
This is the second 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.
About
Abstract
This is the second 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.