Fuzzy real option analysis in patent related decision making and patent valuation

The shift towards a knowledge-based economy has inevitably prompted the evolution of patent exploitation. Nowadays, patent is more than just a prevention tool for a company to block its competitors from developing rival technologies, but lies at the very heart of its strategy for value creation and is therefore strategically exploited for economic pro t and competitive advantage. Along with the evolution of patent exploitation, the demand for reliable and systematic patent valuation has also reached an unprecedented level. However, most of the quantitative approaches in use to assess patent could arguably fall into four categories and they are based solely on the conventional discounted cash flow analysis, whose usability and reliability in the context of patent valuation are greatly limited by five practical issues: the market illiquidity, the poor data availability, discriminatory cash-flow estimations, and its incapability to account for changing risk and managerial flexibility. This dissertation attempts to overcome these impeding barriers by rationalizing the use of two techniques, namely fuzzy set theory (aiming at the first three issues) and real option analysis (aiming at the last two). It commences with an investigation into the nature of the uncertainties inherent in patent cash flow estimation and claims that two levels of uncertainties must be properly accounted for. Further investigation reveals that both levels of uncertainties fall under the categorization of subjective uncertainty, which differs from objective uncertainty originating from inherent randomness in that uncertainties labelled as subjective are highly related to the behavioural aspects of decision making and are usually witnessed whenever human judgement, evaluation or reasoning is crucial to the system under consideration and there exists a lack of complete knowledge on its variables. Having clarified their nature, the application of fuzzy set theory in modelling patent-related uncertain quantities is effortlessly justified. The application of real option analysis to patent valuation is prompted by the fact that both patent application process and the subsequent patent exploitation (or commercialization) are subject to a wide range of decisions at multiple successive stages. In other words, both patent applicants and patentees are faced with a large variety of courses of action as to how their patent applications and granted patents can be managed. Since they have the right to run their projects actively, this flexibility has value and thus must be properly accounted for. Accordingly, an explicit identification of the types of managerial flexibility inherent in patent-related decision making problems and in patent valuation, and a discussion on how they could be interpreted in terms of real options are provided in this dissertation. Additionally, the use of the proposed techniques in practical applications is demonstrated by three fuzzy real option analysis based models. In particular, the pay-of method and the extended fuzzy Black-Scholes model are employed to investigate the profitability of a patent application project for a new process for the preparation of a gypsum-fibre composite and to justify the subsequent patent commercialization decision, respectively; a fuzzy binomial model is designed to reveal the economic potential of a patent licensing opportunity.

Determination of potential value drivers by identifying customer expectations and perceived value

The purpose of this exploratory research is to identify the potential value drivers regarding a new service offering. More specifically, the aim is to build understanding of customer expectations and perceived value of energy efficiency solutions in the building’s sector. The knowledge is then used in defining potential value drivers. The research is conducted from the customer’s perspective in a business-to-business context. The theory part of the master’s thesis focuses on discussing the antecedents of customer expectations and customer value. The theory gives implications how to determine value drivers and develop value propositions as well as conduct value assessment. The empirical part is based on the qualitative research method. The research was conducted as a single-case study, and the primary data was collected through semi-structured interviews with potential customers. The results of the research revealed that the customer expectations are connected to being able to define value drivers. In addition, the research revealed generic themes relating to the offering and customer-supplier relationship, which help in the process of identifying potential value drivers. The results were discussed in terms of product-, service-, price- and relationship-related value drivers for the new service. Based on the data analysis the dominant value drivers are elaborated in terms of identified customer benefits and customer sacrifices (costs). Finally, some implications of value proposition and value assessment to support the value delivery were given.

The new era of customer experience in the omni-channel environment of a communication service provider

This study discusses the evolution of an omni-channel model in managing customer experience. The purpose of this thesis is to expand the current academic literature available on omni-channel and offer suggestions for omni-channel creation. This is done by studying the features of an omni-channel approach into engaging with customers and through the sub-objectives of describing the process behind its initiation as well as the special features communication service providers need to take in consideration. Theories used as a background for this study are related to customer experience, channel management, omni-channel and finally change management. The empirical study of this thesis consists of seven expert interviews conducted in a case company. The interviews were held between March and November 2014. One of the interviewees is the manager of an omni-channel development team, whilst the rest were in charge of the management of the various customer channels of the company. The organization and analysis of the interview data was conducted topically. The use of themes related to major theories on the subject was utilized to create linkages between theory and practice. The responses were also organized in two groups based on the viewpoint to map responses related to the company perspective as well as the customers´ perspective. The findings in this study are that omni-channel is among the best tools for companies to respond to the challenge induced by changing customer needs and preferences, as well as intensifying competitive environment. The omni-channel model was found to promote excellent customer experience and thus to be a source of competition advantage and increasing financial returns by creating an omni-experience for the customer. Through omniexperience customers see all of the transactions with a company presenting one brand and providing ease and effortlessness in every encounter. The processes behind omni-channel formulation were identified as customer experience proclaimed as the most important strategic goal, mapping and establishing a unified brand experience in all (service) channels and empowering the first line personnel as the gate keepers of omniexperience. Further the tools, measurement and supporting strategies were to be in accordance with the omni-channel strategy and the customer needs to become a partner in a two way transaction with the firm. Based on these findings a model for omni-channel creation is offered. Future research is needed to firstly, further test these findings and expand the theoretical framework on omni-channel, as it is quite scarce to date and secondly, to increase the generalizability of the model suggested.

Value creation in project business relationships: Supplier and customer's perspectives

The purpose of this study is to analyze supplier’s value creation ability in project business in order to enhance customer’s business. In addition, the aim is to identify the role of business relationships in value creation and analyze the applicability of key account management in project business. The study considers value from the customer’s point of view. The concepts of value and value creation are widely discussed in marketing literature. Theory emphasizes the importance of value creation and business relationships in business markets. The empirical part of the study is conducted as a case study research. The empirical evidence is collected by interviewing one supplier organization and their three customer organizations. These companies operate in Finnish and global industrial markets. Data is collected through semi-structured interviews and analyzed by using qualitative content analysis. The study identifies several customer value drivers influencing on the value creation, which can be divided into product, service and relationship elements. One of the recognized value drivers is customer-supplier relationship. The findings show that a closer relationship enhances value creation possibilities and the key account management program allows effective managing of business relationships. As managerial implications, suppliers should seek to create continuous and conversational relationships with the key account customers.

Power Electronic Converters in Low-Voltage Direct Current Distribution – Analysis and Implementation

Over the recent years, smart grids have received great public attention. Many proposed functionalities rely on power electronics, which play a key role in the smart grid, together with the communication network. However, “smartness” is not the driver that alone motivates the research towards distribution networks based on power electronics; the network vulnerability to natural hazards has resulted in tightening requirements for the supply security, set both by electricity end-users and authorities. Because of the favorable price development and advancements in the field, direct current (DC) distribution has become an attractive alternative for distribution networks. In this doctoral dissertation, power electronic converters for a low-voltage DC (LVDC) distribution system are investigated. These include the rectifier located at the beginning of the LVDC network and the customer-end inverter (CEI) on the customer premises. Rectifier topologies are introduced, and according to the LVDC system requirements, topologies are chosen for the analysis. Similarly, suitable CEI topologies are addressed and selected for study. Application of power electronics into electricity distribution poses some new challenges. Because the electricity end-user is supplied with the CEI, it is responsible for the end-user voltage quality, but it also has to be able to supply adequate current in all operating conditions, including a short-circuit, to ensure the electrical safety. Supplying short-circuit current with power electronics requires additional measures, and therefore, the short-circuit behavior is described and methods to overcome the high-current supply to the fault are proposed. Power electronic converters also produce common-mode (CM) and radio-frequency (RF) electromagnetic interferences (EMI), which are not present in AC distribution. Hence, their magnitudes are investigated. To enable comprehensive research on the LVDC distribution field, a research site was built into a public low-voltage distribution network. The implementation was a joint task by the LVDC research team of Lappeenranta University of Technology and a power company Suur-Savon S¨ahk¨o Oy. Now, the measurements could be conducted in an actual environment. This is important especially for the EMI studies. The main results of the work concern the short-circuit operation of the CEI and the EMI issues. The applicability of the power electronic converters to electricity distribution is demonstrated, and suggestions for future research are proposed.

Analysis and guidelines for implementation of EN 1090-2 Standard to assist execution class assignment of steel structures

Finnish design and consulting companies are delivering robust and cost-efficient steel structures solutions to a large number of manufacturing companies worldwide. Recently introduced EN 1090-2 standard obliges these companies to specify the execution class of steel structures for their customers. This however, requires clarifying, understanding and interpreting the sophisticated procedure of execution class assignment. The objective of this research is to provide a clear explanation and guidance through the process of execution class assignment for a given steel structure and to support the implementation of EN 1090-2 standard in Rejlers Oy, one of Finnish design and consulting companies. This objective is accomplished by creating a guideline for designers that elaborates on the four-step process of the execution class assignment for a steel structure or its part. Steps one to three define the consequence class (projected consequences of structure failure), the service category (hazards associated with the service use exploitation of steel structure) and the production category (manufacturing process peculiarities), based on the ductility class (capacity of structure to withstand deformations) and the behaviour factor (corresponds to structure seismic behaviour). The final step is the execution class assignment taking into account results of previous steps. Main research method is indepth literature review of European standards family for steel structures. Other research approach is a series of interviews of Rejlers Oy representatives and its clients, results of which have been used to evaluate the level of EN 1090-2 awareness. Rejlers Oy will use the developed novel coherent standard implementation guideline to improve its services and to obtain greater customer satisfaction.

Hinnoittelustrategian valinta terästeollisuudessa - Case Teräsyhtiö Oy

Kandidaatin tutkielma ”Hinnoittelustrategian valinta terästeollisuudessa – Case Teräsyhtiö Oy” käsittelee tuotantohyödykkeitä valmistavan hiiliteräsyhtiön hinnoittelustrategian valintaa, peilaamalla toteutuvaa hinnoittelua hinnoittelun teoreettisiin periaatteisiin. Tutkimuksen tavoitteeksi kohdentui selvittää, kuinka hyvin kohdeyrityksen hinnoittelu noudattaa hinnoittelun teoreettisia periaatteita. Tavoitteena oli myös selvittää, miten hinnoittelu toteutuu kohdeyrityksessä ja mitkä tekijät vaikuttavat tähän strategiseen päätökseen. Tutkielman teoriaosuuden muodostaa hinnan ja hinnoitteluprosessin teorian muodostama kokonaisuus yhdessä tutkielman varsinaisen viitekehyksen kanssa, jona toimivat kustannusperusteisen ja markkinalähtöisen hinnoittelun perinteiset mallit. Tutkielmassa markkinalähtöisillä malleilla viitataan kysyntä- ja kilpailulähtöisiin malleihin. Tutkimuksen aineisto kerättiin teema-haastattelun avulla, haastattelemalla kolmea Case-yrityksen hinnoittelussa toimivaa henkilöä. Tutkimus toteutui laadullisena tutkimuksena hyödyntäen analyysissä teorialähtöistä sisällönanalyysiä. Tutkimustulosten osalta tärkeään rooliin asettui kahtiajako kotimarkkinoihin ja kotimarkkinoiden ulkopuolisiin alueisiin. Nämä alueet määrittivät pitkälle sitä, jouduttiinko hinnoittelu toteuttamaan hintaa seuraten vai asettaen. Toimialan alueellisten hintatasojen osalta merkittävässä asemassa olivat teräsyhtiöiden avoimet hintalistat, jotka ohjaavat hinnoittelua vahvasti. Hinnoitteluprosessin osalta tärkeimmäksi tavoitteeksi asettui kannattavuuden takaaminen, sekä johdonmukaisen hinnoittelun harjoittaminen. Markkinalähtöistä hinnoittelua ohjaavista ulkoisista tekijöistä tärkeintä oli Kilpailulain (948/2011) huomioiminen. Asiakkaan rooli hinnoittelussa oli myös erittäin merkittävä. Tutkimus osoitti kohdeyrityksen hinnoittelun painottavan markkinalähtöisiä menetelmiä, huomioiden kuitenkin kustannusten vaikutus katteen kautta. Tutkimus osoitti myös, ettei asiakkaan kokemaa arvoa huomioida hinnoittelun pohjatyössä siinä määrin, kuin olisi mahdollisesti tarpeellista. Tutkimuksen johtopäätöksissä korostuu se, kuinka asiakasarvon huomioiminen voisi mahdollistaa yritykselle korkeamman tuloksellisuuden.

Production Quality Analysis of Special Elevator Cars Based on Six Sigma Approach

Project scope is to utilize Six Sigma DMAIC approach and lean principles to improve production quality of the case company. Six Sigma tools and techniques are explored through a literature review and later used in the quality control phase. The focus is set on the Pareto analysis to demonstrate the most evident development areas in the production. Materials that are not delivered to the customer or materials that damaged during transportation comprise the biggest share of all feedbacks. The goal is set to reduce these feedbacks by 50 %. Production observation pointed out that not only material shortages but also over-production is a daily situation. As a result, an initial picking list where the purchased and own production components can be seen, is created, reduction of over- and underproduction and material marking improvement are seen the most competitive options so that the goal can be reached. The picking list development should still continue to make sure that the list can be used not only in the case study but also in the industrial scale. The reduction of material missing category can be evaluated reliably not sooner than in few years because it takes time to gather the needed statistical information.

Customer Value Creation in Born Global Companies

The purpose of this master's thesis is to study customer value creation in born global companies. The main objective is to identify the types of value enabling customer value creation in born global companies, and to establish their relative importance. After an introduction to the born global academic literature and the customer value creation literature, the empirical part consists of a multiple case study, examining the state of customer value creation in the case companies, along with the subsequent analysis. The results of this research indicate that high-tech born global companies perceive customer value creation as a crucial function of their operations, but their value creation thinking is often one-dimensional. Technology based born globals often place high value on the product and the technology behind it, mainly striving to incorporate performance- and relationship value in their value offerings, but they're unable to utilize their opportunity creation to the fullest, and they lag behind their more established competitors that are able to diversify their value offerings.

Price movement in the Brazilian land market (1994-2010): an analysis in the light of post-Keynesian theory

ABSTRACT The present study aims to evaluate crop, pasture and forest land prices in Brazil, between 1994 and 2010, in the light of Post-Keynesian theory. The results provide evidence that land, more than just a simple factor of production, must be conceived of as an economic asset. In fact, the price of rural land is determined not only by the expected profitability deriving from agricultural activities but also by the agents' expectations about its future appreciation and liquidity in an economic environment permeated with uncertainty. In this context, as an object of speculation, land has been particularly important as a store of value.

Customer Discovery and Customer Validation in Lean Software Startups

The traditional business models and the traditionally successful development methods that have been distinctive to the industrial era, do not satisfy the needs of modern IT companies. Due to the rapid nature of IT markets, the uncertainty of new innovations‟ success and the overwhelming competition with established companies, startups need to make quick decisions and eliminate wasted resources more effectively than ever before. There is a need for an empirical basis on which to build business models, as well as evaluate the presumptions regarding value and profit. Less than ten years ago, the Lean software development principles and practices became widely well-known in the academic circles. Those practices help startup entrepreneurs to validate their learning, test their assumptions and be more and more dynamical and flexible. What is special about today‟s software startups is that they are increasingly individual. There are quantitative research studies available regarding the details of Lean startups. Broad research with hundreds of companies presented in a few charts is informative, but a detailed study of fewer examples gives an insight to the way software entrepreneurs see Lean startup philosophy and how they describe it in their own words. This thesis focuses on Lean software startups‟ early phases, namely Customer Discovery (discovering a valuable solution to a real problem) and Customer Validation (being in a good market with a product which satisfies that market). The thesis first offers a sufficiently compact insight into the Lean software startup concept to a reader who is not previously familiar with the term. The Lean startup philosophy is then put into a real-life test, based on interviews with four Finnish Lean software startup entrepreneurs. The interviews reveal 1) whether the Lean startup philosophy is actually valuable for them, 2) how can the theory be practically implemented in real life and 3) does theoretical Lean startup knowledge compensate a lack of entrepreneurship experience. A reader gets familiar with the key elements and tools of Lean startups, as well as their mutual connections. The thesis explains why Lean startups waste less time and money than many other startups. The thesis, especially its research sections, aims at providing data and analysis simultaneously.

Customer Discovery and Customer Validation in Lean Software Startups

The traditional business models and the traditionally successful development methods that have been distinctive to the industrial era, do not satisfy the needs of modern IT companies. Due to the rapid nature of IT markets, the uncertainty of new innovations‟ success and the overwhelming competition with established companies, startups need to make quick decisions and eliminate wasted resources more effectively than ever before. There is a need for an empirical basis on which to build business models, as well as evaluate the presumptions regarding value and profit. Less than ten years ago, the Lean software development principles and practices became widely well-known in the academic circles. Those practices help startup entrepreneurs to validate their learning, test their assumptions and be more and more dynamical and flexible. What is special about today‟s software startups is that they are increasingly individual. There are quantitative research studies available regarding the details of Lean startups. Broad research with hundreds of companies presented in a few charts is informative, but a detailed study of fewer examples gives an insight to the way software entrepreneurs see Lean startup philosophy and how they describe it in their own words. This thesis focuses on Lean software startups‟ early phases, namely Customer Discovery (discovering a valuable solution to a real problem) and Customer Validation (being in a good market with a product which satisfies that market). The thesis first offers a sufficiently compact insight into the Lean software startup concept to a reader who is not previously familiar with the term. The Lean startup philosophy is then put into a real-life test, based on interviews with four Finnish Lean software startup entrepreneurs. The interviews reveal 1) whether the Lean startup philosophy is actually valuable for them, 2) how can the theory be practically implemented in real life and 3) does theoretical Lean startup knowledge compensate a lack of entrepreneurship experience. A reader gets familiar with the key elements and tools of Lean startups, as well as their mutual connections. The thesis explains why Lean startups waste less time and money than many other startups. The thesis, especially its research sections, aims at providing data and analysis simultaneously.

Offshoring and outsourcing under demand uncertainty -a supply chain management analysis

Outsourcing and offshoring or any combinations of these have not just become a popular phenomenon, but are viewed as one of the most important management strategies due to the new possibilities from globalization. They have been seen as a possibility to save costs and improve customer service. Executing offshoring and offshore outsourcing successfully can be more complex than initially expected. Potential cost savings resulting from of offshoring and offshore outsourcing are often based on lower manufacturing costs. However, these benefits might be conflicted by a more complex supply chain with service level challenges that can respectively increase costs. Therefore analyzing the total cost effects of offshoring and outsourcing is necessary. The aim of this Master´s Thesis was to to construct a total cost model using academic literature to calculate the total costs and analyze the reasonability of offshoring and offshore outsourcing production of a case company compared to insourcing production. The research data was mainly quantitative and collected mainly from the case company past sales and production records. In addition management level interviews from the case company were conducted. The information from these interviews was used for the qualification of the necessary quantitative data and adding supportive information that could not be gathered from the quantitative data. Both data collection and analysis were guided by a theoretical frame of reference that was based on academic literature concerning offshoring and outsourcing, statistical calculation of demand and total costs. The results confirm the theories that offshoring and offshore outsourcing would reduce total costs as both offshoring and offshore outsourcing options result in lower total annual costs than insourcing mainly due to lower manufacturing costs. However, increased demand uncertainty would make the alternative of offshore outsourcing more risky and difficult to manage. Therefore when assessing the overall impact of the alternatives, offshoring is the most preferable option. As the main cost savings in offshore outsourcing came from lower manufacturing costs, more specifically labour costs, the logistics costs in this case company did not have an essential effect in total costs. The management should therefore pay attention initially to manufacturing costs and then logistics costs when choosing the best production sourcing option for the company.

Carbon pricing and its effect on company profitability

In order to reach the 2°C climate target, the carbon price should rise significantly in order for it to be financially rewarding for companies to reduce their emissions. This research aims to find how a significant increase in the carbon price would affect the profitability of companies. Prior research has not found consensus on how regulatory policies affect companies. This research looks at profitability factors of carbon pricing through a mix of related issues such as the carbon risk, carbon pricing mechanisms and cost pass-through of additional costs. The research is quantitative and examines financial data and emissions data regarding scope 1 and scope 2 emissions on 328 European companies. The data analysis method utilised is a sensitivity analysis conducted as a scenario analysis. Different price increases and cost pass-through rates are tested to see how company profitability is affected. As the companies are distributed between 9 sectors and 53 industries, the results vary. The industries that are found to be affected by an increase in carbon pricing show drastic negative changes in profitability. The results complement prior research identifying the most carbon-intensive industries, but also provide some new insights on industries that may be affected by carbon pricing. Industries related to manufacturing, electricity and energy are partly significantly impacted, but also industries related to tourism and food show potential signs of impact when an increased carbon price is introduced.

Performance Degradation Modelling and Techno-Economic Analysis of Lithium-Ion Battery Energy Storage Systems

Transmission system operators and distribution system operators are experiencing new challenges in terms of reliability, power quality, and cost efficiency. Although the potential of energy storages to face those challenges is recognized, the economic implications are still obscure, which introduce the risk into the business models. This thesis aims to investigate the technical and economic value indicators of lithium-ion battery energy storage systems (BESS) in grid-scale applications. In order to do that, a comprehensive performance lithium-ion BESS model with degradation effects estimation is developed. The model development process implies literature review on lifetime modelling, use, and modification of previous study progress, building the additional system parts and integrating it into a complete tool. The constructed model is capable of describing the dynamic behavior of the BESS voltage, state of charge, temperature and capacity loss. Five control strategies for BESS unit providing primary frequency regulation are implemented, in addition to the model. The questions related to BESS dimensioning and the end of life (EoL) criterion are addressed. Simulations are performed with one-month real frequency data acquired from Fingrid. The lifetime and cost-benefit analysis of the simulation results allow to compare and determine the preferable control strategy. Finally, the study performs the sensitivity analysis of economic profitability with variable size, EoL and system price. The research reports that BESS can be profitable in certain cases and presents the recommendations.