Real Options Approach to Evaluate Strategic Flexibility for Startup Projects

The "Real Options Approach to Evaluate Strategic Flexibility for Startup Projects" paper presents a thorough investigation and evaluation of a startup project's strategic flexibility, focusing on its array of development options through the lens of the real options approach. This innovative approach melds concepts from corporate finance, real options, and game theory, culminating in the application of the Risk-Neutral Probability measure and the valuation techniques derived from the Black-Scholes-Merton model.
The crux of this research lies in its ability to quantify the value of managerial decisions and the extent of a project's flexibility. By employing this methodology, the article sheds light on the often complex decision-making processes in the startup arena, providing entrepreneurs and investors with a more structured framework to assess and determine the optimal strategic path for a project's development.
The application of the real options approach in this context is particularly groundbreaking, as it goes beyond traditional evaluation models to consider the dynamic nature of startup projects. This perspective allows for a more nuanced understanding of the inherent uncertainties and opportunities that startups face, and the strategic options available to them.
The findings of this research offer valuable insights into the decision-making process for startup projects, equipping entrepreneurs and investors with a robust tool to evaluate and maximize the potential of their strategic choices. This contributes significantly to the broader discourse on startup development and strategic planning in an uncertain and ever-evolving business landscape.
Publisher: Cobanoglu, C., & Ongan, S. (Eds.). Proceedings of the International Interdisciplinary Business and Economics Conference, Vol. 3, University of South Florida Sarasota-Manatee, pp. 360–368. USF M3 Publishing. ISSN: 2372-5885.
The full manuscript of the "Real Options Approach to Evaluate Strategic Flexibility for Startup Projects" paper is available at: https://doi.org/10.5038/2372-5885-v3.
Dmytro Shestakov, 2015