The Use of Real Options to Evaluate Business-To-Business Companies

Authors

Marco Aurelio Albernaz, Department of Industrial Engineering, Pontifícia Universidade Católica do Rio de Janeiro, BrazilFollow
José Paulo Teixeira, Department of Industrial Engineering, Pontifícia Universidade Católica do Rio de Janeiro, BrazilFollow

Document Type

Article

Abstract

The purpose of this work is to show that the use of real options can contribute to a better evaluation of companies devoted to Electronic Commerce – Business-to-Business. For such, usual company-evaluation techniques are presented and the advantages and disadvantages of each one are discussed, with emphasis to the real-option technique. Additionally, the similarity between asset investment and call options is shown, and internal and external real options existing in a Business-to-Business company are identified. Finally, this work describes how to evaluate a company acting in Business-to-Business by employing the concepts of real-option theory.

Recommended Citation

Albernaz, Marco Aurelio and Teixeira, José Paulo, "The Use of Real Options to Evaluate Business-To-Business Companies" (2003). ICEB 2003 Proceedings (Singapore). 41.
https://aisel.aisnet.org/iceb2003/41