ABSTRACT
Business conditions are fraught with uncertainty and risks. These uncertainties hold with them valuable information. When uncertainty becomes resolved through the passage of time, managers can make the appropriate midcourse corrections through a change in business decisions and strategies. This chapter gives an overview on how real options incorporate this learning model, akin to having a strategic road map, whereas traditional analyses that neglect this managerial flexibility will grossly undervalue certain projects and strategies. It also introduces the concepts in implementing real options, as well as a balanced perspective on what is really needed to do so.
