Evaluation of managerial flexibility: the method of real options
Evaluation of managerial flexibility: the method of real options

Summary/Abstract: The flexibility of decision-making is one of the most important prerequisites for effective management, especially in investment projects. The author characterized the types of real options, depending on their contribution to the value of the business. Different types of real options are presented (option to abandon, to expand, to scale, to delay) in conjunction with examples of real applications in different industries (oil, construction, transportation, pharmaceuticals, etc.) A short description of the methods for evaluating real options, including binomial model is presented. the positive and negative aspects are assessed, and recommendations for extracting the maximum value from the application of the method of real options are provided in terms of building learning organizations, promoting empowerment and delegation, involvement in strategic decision-making, and organizational agility.

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