Question

1. How might organization mechanisms support implementation of a real options strategy?

Please answer in about a paragraph or less. Thanks!

Answer 1

Real options strategy is flexible way of diversifying the business model of an organization to overcome the risks. This offers organization multiple ways to handle risks on investment, handling competition in market and performance of the company. The performance of the organization is determined by the financial advantage and the advantages it has over the competition. Companies in recent times have been focusing more on acquisition in other countries mainly to expand its presence in global markets, enhance its technological strength, establishing minimizing competition in global markets, reduce financial transactions and focus on adding new customers. Companies have these real time options to run their business with less risks such as scout of opportunities in local and global markets to make investment, depending upon the economic company chose to wait and make fresh investment, acquiring competitor companies and getting on to technical and commercial collaborations.Organization going for real option strategy must be cooperative and ready to adapt based on the real time situation. Companies fill in gaps choosing collaborative approach rather than competitive way of thinking.

Some of organization mechanisms, which support real option strategy as given below,

- Organizations unite people and work towards the common strategy identified. As a part of real option strategy company can buy, sell, acquire, collaborate for research purpose or provide the facility on rental basis. For implementing these strategy employees should unite and work towards it to implement it successfully.

- Formation of group with right people with enable organization to make sudden switches over decisions. Companies invest on studying the market potential, investment opportunities and possible technical collaboration with the help of potential and performing employees.

-Data collection, process negotiation with internal and external associates, presenting those learnings to management of organization and set up necessary process to implement those actions. In order to kick off real time strategy, company should have clear idea about the long-term business plan, potential investments to be made, and resources to be recruited and develop necessary process to implement this new business process. Top management of the company develops specific team members to work on such real time strategic approach.

-Companies invest on resources, which can be of internal core team members or an external agency to evaluate the potential risks of investment and technical collaborations.