Competitiveness and strategic flexibility through real options

• Author: Suciu T., German A.M.
• Pages: 361-368

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 9 (58) No. 2 - 2016

Competitiveness and strategic flexibility through

real options

Titus SUCIU1, Ana-Maria GERMAN2

Abstract: The paper analyses the issue of competitiveness in the industry sector, offering an

interesting theoretical framework about competitiveness and an application based on real

options analysis. It addresses the theme of real options decision-making in multinational

industrial companies and models an investment decision. The best strategy leads to

investments in a new project even if the business environment is dynamic. The results help

managers in the decision-making process, with a view to obtaining performance.

Key-words: competitiveness, real options, strategy, industry, innovation

1. Introduction

The concept of open innovation is based on the idea that companies have to valorise

external knowledge that can be bought. In strategic terms, the competitive advantage

of a product does not come from the infusion of technical knowledge from multiple

technologies, but from the modalities of connecting and coordinating the resources

and the partners companies within a project.

Deloitte Research has developed a framework called “strategic flexibility”,

which has four steps: anticipate, formulate, accumulate and operate. Strategic

flexibility permits a company to confidently with certain international initiatives that

will be sustainable under a broad range of future scenarios, including those in which

globalization unravels. In the specialised literature there are five basic approaches

dealing with uncertainty in strategy selection when a firm faces scenarios with

differing strategic implications: bet on the most probable senario, bet on the best

scenario means, hedge, preserve flexibility and influence. We give emphasis to the

theme of real options decision-making in multinational industrial companies. Our

application refers to an investment decision in the industry sector, an application that

is focused on the real option analysis.

1 Transilvania University of Braşov, titus.suciu@unitbv.ro

2 Transilvania University of Braşov, german_ana_maria@yahoo.com