Evaluation of nested and parallel real options : case study of Ford's investment in fuel cell technology
Name
43602854-MIT.pdf
Description
Full printable version
Size
8.86 MB
Format
Adobe PDF
Checksum (MD5)
632b531ee976bf421da1b97965db35fa
Author(s)
Oueslati, Skander K. (Skander Khalil), 1972-
Advisor(s)
Richard de Neufville.
Date Issued
1999
Publisher
Massachusetts Institute of Technology
Abstract
This thesis explores nested and parallel real options and applies the suggested methodology to the Case of Ford Motor Company's investment in Ballard/Daimler Chrysler's joint venture. After reviewing the different existing methods that could be applied to the evaluation of Ford's investment, an analysis of the previous major applications of the "Real Option Thinking" to real projects was included. A two dimensional approach in the evaluation of a project with uncertainty was introduced, followed by a suggested methodology. Two approaches were considered in the Ford Case: -- The first divides the investment into two parts one associated with Ford Holdings in Ballard Power Systems (Ford holds 15% of Ballard shares) and the other relative to the investment in the research and development of fuel cells for automotive applications. -- The second adopts a more global view and looks at the investment as buying a portfolio of options. Each option is relative to a specific application of the technology. The suggested methodology was applied to the Ford Case using the first approach only. In fact, with the right set of inputs, both methods should yield comparable results. In the last part of the Thesis, a policy analysis that explores other dimensions that could have influenced Ford's decision was included. This analysis went through isolating the problem, identifying all the available options, analyzing external and internal factors and designing a strategy that would have helped implement the best available option.
Description
Thesis (S.M.M.O.T.)--Massachusetts Institute of Technology, Sloan School of Management, Management of Technology Program, 1999.
Includes bibliographical references (leaves 114-116).
Subjects
Management of Technology Program.
MIT Department
Management of Technology Program.
Sloan School of Management
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