GMS 450 Midterm: 450 Midterm crib sheet

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 450
• Professor: Peter Monkhouse

Document Summary

Dcf does not take into account opportunities or uncertainties in the future. Real options analysis: capacity planning decision are dynamic (multi-stage), invest in the expansion of a firms factory after having more accurate demand forecast, the new market development in future after some market uncertainties resolved. Market uncertainties unfold in the future: operational/technical uncertainties unfold learning curve. Opportunities impact current decisions: firm can react to opportunities in future; whether or not to undertake expansion phase 1 at all/to undertake phase 2(or subsequent phases)/to push one new product or the other. Future flexibility: recognize flexibility in 2nd phase; dcf will be calculated at the same time decision made, will be undertaken if only it was positive. Scoring method: project may be selected for funding based on different criteria; not necessarily financial profitability (weights have to equal 1) Project: interrelated set of activities with a definite start and end point, which results in a unique outcome for a specific allocation of resources.