Real options and multinational investments : an empirical study of risk, performance and organisational awareness

DUE TO COPYRIGHT RESTRICTIONS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY AND INFORMATION SERVICES WITH PRIOR ARRANGEMENT This thesis is a cross-disciplinary study of the empirical impact of real options theory in the fields of decision sciences and performance management. Borrowing from the economics, strategy and operations research literature, the research examines the risk and performance implications of real options in firms’ strategic investments and multinational operations. An emphasis is placed on the flexibility potential and competitive advantage of multinational corporations to explore the extent to which real options analysis can be classified as best practice in management research. Using a combination of qualitative and quantitative techniques the evidence suggests that, if real options are explored and exploited appropriately, real options management can result in superior performance for multinational companies. The qualitative findings give an overview of the practical advantages and disadvantages of real options and the statistical results reveal that firms which have developed a high awareness of their real options are, as predicted by the theory, able to reduce their downside risk and increase profits through flexibility, organisational slack and multinationality. Although real options awareness does not systematically guarantee higher returns from operations, supplementary findings indicate that firms with evidence of significant investments in the acquisition of real options knowledge tend to outperform competitors which are unaware of their real options. There are three contributions of this research. First, it extends the real options and capacity planning literature to path-dependent contingent-claims analysis to underline the benefits of average type options in capacity allocation. Second, it is thought to be the first to explicitly examine the performance effects of real options on a sample of firms which have developed partial capabilities in real options analysis suggesting that real options diffusion can be key to value creation. Third, it builds a new decision-aiding framework to facilitate the use of real options in projects appraisal and strategic planning.

Investement appraisal in a deregulated electricity market

This thesis analyses the impact of deregulation on the theory and practice of investment decision making in the electricity sector and appraises the likely effects on its long term future inefficiency. Part I describes the market and its shortcomings in promoting an optimal generation margin and plant mix and in reducing prices through competition. A full size operational model is developed to simulate hour by hour operation of the market and analyse its features. A relationship is established between the SMP and plant mix and between the LOLP and plant margin and it is shown bow a theoretical optimum can be derived when the combined LOLP payments and the capital costs of additional generation reach a minimum. A comparison of prices against an idealised bulk supply tariff is used to show how energy prices have risen some 12% in excess of what might have occurred under the CEGB regime. This part concludes with proposals to improve the marlcapacity planning using lagrangian techniques to indicate needs without loss of data confidentiality. Part 2 demonstrates that the classical approach to generation investment appraisal is no longer valid and develops a new approach. It is shown how an individual generator can predict his utilisation and income to establish the worth of investment and demonstrates the validity of the operational model proposed. An empirical relationship is developed between profit and capacity and this is used to develop the theory to illustrate how companies interact. 1bree different economic models are developed to represent different market conditions and these are tested against the actual investment decisions since deregulation to demonstrate their appropriateness. It is shown that the current market mechanisms could lead to suboptimal investment. Part 3 discusses the essential role of transmission in enabling competition and reviews worldwide practices illustrating little consensus on charging for its use. Basic costing principles are described and a new model is developed to demonstrate bow a generator may strike supply agreements either side of an interconnector to influence prices so as to maximise his income. The optimal pricing strategy for the transmitter is also derived and consumer response is simulated .The concept of transmission uplift is developed and the operational model is extended to include transmission constraints and then used to establish monthly incremental transmission constraint cost functions. It is shown how these can be used to appraise investment options and optimally plan outages. Part 4 concludes by discussing the regulatory framework and its limitations in improving efficiency or encouraging the optimum levels of investment. The principal findings of the thesis are reviewed and potential market improvement are described. This part concludes with a discussion of alternative market structures and likely future developments.

Improving supply chain performance through improved visibility

Purpose – This paper seeks to investigate the links between different types of visibility, joint initiatives and business performance using the concepts of transparency as a measure of visibility in supply chains. The prognosis that increased supply chain visibility can be achieved through suppliers and customers working on joint initiative(s), the deployment of which leads to collaborative successes, is tested. Design/methodology/approach – Lamming et al.'s transparency concept was used as a basis for the development of a framework for assessing the visibility gaps between the focal company – Rolls-Royce (RR) – and their suppliers. The framework was applied to a particular supplier to identify visibility gaps; subsequently a joint initiative was launched across the supply chain and the benefits measured and assessed. A case study approach was followed due to the contemporary nature of the work undertaken. Findings – The supply chain's performance vis-à-vis schedule adherence was significantly improved as a result of the initiative launched. Additionally, there were improvements in visibility across capacity planning, material ordering and inventory management. Practical implications – The study demonstrated the value of using the developed transparency framework in a structured manner to generate improvements in the supply chain. RR will look to extend its use across other supply chains; the approach could also be extended out to other sectors. Originality/value – The development and application of the transparency frameworks in the aerospace sector are unique and have shown the value of the approach. The work has demonstrated tangibly that the exchange of high-quality information as part of an improvement initiative does lead to significant improvements in the overall performance of the supply chain.

Creating Responsive Information Systems with the Help of SSADM

In this paper, a program for a research is outlined. Firstly, the concept of responsive information systems is defined and then the notion of the capacity planning and software performance engineering is clarified. Secondly, the purpose of the proposed methodology of capacity planning, the interface to information systems analysis and development methodologies (SSADM), the advantage of knowledge-based approach is discussed. The interfaces to CASE tools more precisely to data dictionaries or repositories (IRDS) are examined in the context of a certain systems analysis and design methodology (e.g. SSADM).

Analytical approximations to predict performance measures of manufacturing systems with job failures and parallel processing

Parallel processing is prevalent in many manufacturing and service systems. Many manufactured products are built and assembled from several components fabricated in parallel lines. An example of this manufacturing system configuration is observed at a manufacturing facility equipped to assemble and test web servers. Characteristics of a typical web server assembly line are: multiple products, job circulation, and paralleling processing. The primary objective of this research was to develop analytical approximations to predict performance measures of manufacturing systems with job failures and parallel processing. The analytical formulations extend previous queueing models used in assembly manufacturing systems in that they can handle serial and different configurations of paralleling processing with multiple product classes, and job circulation due to random part failures. In addition, appropriate correction terms via regression analysis were added to the approximations in order to minimize the gap in the error between the analytical approximation and the simulation models. Markovian and general type manufacturing systems, with multiple product classes, job circulation due to failures, and fork and join systems to model parallel processing were studied. In the Markovian and general case, the approximations without correction terms performed quite well for one and two product problem instances. However, it was observed that the flow time error increased as the number of products and net traffic intensity increased. Therefore, correction terms for single and fork-join stations were developed via regression analysis to deal with more than two products. The numerical comparisons showed that the approximations perform remarkably well when the corrections factors were used in the approximations. In general, the average flow time error was reduced from 38.19% to 5.59% in the Markovian case, and from 26.39% to 7.23% in the general case. All the equations stated in the analytical formulations were implemented as a set of Matlab scripts. By using this set, operations managers of web server assembly lines, manufacturing or other service systems with similar characteristics can estimate different system performance measures, and make judicious decisions - especially setting delivery due dates, capacity planning, and bottleneck mitigation, among others.

Analytical Approximations to Predict Performance Measures of Manufacturing Systems with Job Failures and Parallel Processing

Parallel processing is prevalent in many manufacturing and service systems. Many manufactured products are built and assembled from several components fabricated in parallel lines. An example of this manufacturing system configuration is observed at a manufacturing facility equipped to assemble and test web servers. Characteristics of a typical web server assembly line are: multiple products, job circulation, and paralleling processing. The primary objective of this research was to develop analytical approximations to predict performance measures of manufacturing systems with job failures and parallel processing. The analytical formulations extend previous queueing models used in assembly manufacturing systems in that they can handle serial and different configurations of paralleling processing with multiple product classes, and job circulation due to random part failures. In addition, appropriate correction terms via regression analysis were added to the approximations in order to minimize the gap in the error between the analytical approximation and the simulation models. Markovian and general type manufacturing systems, with multiple product classes, job circulation due to failures, and fork and join systems to model parallel processing were studied. In the Markovian and general case, the approximations without correction terms performed quite well for one and two product problem instances. However, it was observed that the flow time error increased as the number of products and net traffic intensity increased. Therefore, correction terms for single and fork-join stations were developed via regression analysis to deal with more than two products. The numerical comparisons showed that the approximations perform remarkably well when the corrections factors were used in the approximations. In general, the average flow time error was reduced from 38.19% to 5.59% in the Markovian case, and from 26.39% to 7.23% in the general case. All the equations stated in the analytical formulations were implemented as a set of Matlab scripts. By using this set, operations managers of web server assembly lines, manufacturing or other service systems with similar characteristics can estimate different system performance measures, and make judicious decisions - especially setting delivery due dates, capacity planning, and bottleneck mitigation, among others.

Efeitos de um programa de treino cognitivo e das técnicas de higiene do sono para as funções executivas e para a qualidade de sono em idosos saudáveis

The aging process causes changes in the elderly’s sleep/awake standard impairing their cognitive abilities, particularly executive functioning, which already suffers loss by aging. The literature suggests that executive function and preserved sleep quality are key to maintaining good quality of life and independence of older people, requiring interventions to minimize the impact of losses incurred by the aging process. This study evaluated the effect of a cognitive training program and sleep hygiene techniques for executive functions and sleep quality in healthy older people. The participants were 41 healthy older adults, of both sexes, who were randomly divided into four groups: control group [GC], cognitive training group [GTC], sleep hygiene group [GHS] and training group + hygiene [GTH]. The research was developed in three stages: 1st - initial assessment of cognition and sleep; 2nd - specific intervention to each group; 3rd - post-intervention revaluation. The results showed that GTC had significant improvements in cognitive tasks flexibility, planning, verbal fluency and some aspects of episodic memory, besides gains in sleep quality and decrease on daytime hypersomnolence. The GHS improved sleep quality and daytime sleepiness as well and had significant improvements in insights capacity, planning, attention and in all evaluated aspects of episodic memory. The GTH had significant gains in cognitive flexibility, problem solving, verbal fluency, attention and episodic memory. The CG showed significant worsening in excessive daytime sleepiness in capacity planning. Thus, we conclude that cognitive training interventions and sleep hygiene strategies are useful in improving cognitive performance and quality of healthy elderly sleep.

Managing Rentals with Usage-Based Loss

Motivated by new and innovative rental business models, this paper develops a novel discrete-time model of a rental operation with random loss of inventory due to customer use. The inventory level is chosen before the start of a finite rental season, and customers not immediately served are lost. Our analysis framework uses stochastic comparisons of sample paths to derive structural results that hold under good generality for demands, rental durations, and rental unit lifetimes. Considering different \recirculation" rules | i.e., which rental unit to choose to meet each demand | we prove the concavity of the expected profit function and identify the optimal recirculation rule. A numerical study clarifies when considering rental unit loss and recirculation rules matters most for the inventory decision: Accounting for rental unit loss can increase the expected profit by 7% for a single season and becomes even more important as the time horizon lengthens. We also observe that the optimal inventory level in response to increasing loss probability is non-monotonic. Finally, we show that choosing the optimal recirculation rule over another simple policy allows more rental units to be profitably added, and the profit-maximizing service level increases by up to 6 percentage points.

Fatores de longevidade do programa Central do Cidadão no Rio Grande do Norte

The public management reform in Brazil, since 1995, provoked new experiences in public administration. Among the new models of public service the one-stop shopping has distinguished and was adopted at Rio Grande do Norte with the Citizens Center Program. The one-stop shopping assembles in the same place many public services with appropriate structure, enabled human resources and citizens focus processes. The goal of this research was understand how citizens focus processes help to explain Citizens Center Program s longevity. It was made a case study and the research tools were applied with Citizen Center Programs workers and citizen-users at South Unit of Citizen Center Program placed at Via Direta Mall, Natal. The major contributions for Citizen Center Program s longevity were imputed to Basic Operation Processes. The most spoken features in Citizen Center Program mentioned were quality, efficiency, celerity e personal appearance, what demonstrate concern and care with citizen-users. Worker s personal appearance, accommodation, celerity, politeness and attending capacity planning were high evaluated by citizen-users revealing the wisely choice of use a large quality concept and citizenship concept in public administration. Citizen-users also pointed the necessity of refine and enlarge the communication ways that form an essential mechanism to public citizen focus administration. Not ignoring the policy aspect citizen focus processes were noticed like especial management actions that make easier citizen s activities and public service access, what generate satisfaction to citizen-users. It s possible to conclude that the high level approving evaluation of Citizen Center Program consolidates it an especial public policy that serves citizen s necessities e create appropriate legitimacy conditions of the public policy making harder the choice of ending the policy even in more fragile moments strongly contributing for its longevity

Fatores de longevidade do programa Central do Cidadão no Rio Grande do Norte

The public management reform in Brazil, since 1995, provoked new experiences in public administration. Among the new models of public service the one-stop shopping has distinguished and was adopted at Rio Grande do Norte with the Citizens Center Program. The one-stop shopping assembles in the same place many public services with appropriate structure, enabled human resources and citizens focus processes. The goal of this research was understand how citizens focus processes help to explain Citizens Center Program s longevity. It was made a case study and the research tools were applied with Citizen Center Programs workers and citizen-users at South Unit of Citizen Center Program placed at Via Direta Mall, Natal. The major contributions for Citizen Center Program s longevity were imputed to Basic Operation Processes. The most spoken features in Citizen Center Program mentioned were quality, efficiency, celerity e personal appearance, what demonstrate concern and care with citizen-users. Worker s personal appearance, accommodation, celerity, politeness and attending capacity planning were high evaluated by citizen-users revealing the wisely choice of use a large quality concept and citizenship concept in public administration. Citizen-users also pointed the necessity of refine and enlarge the communication ways that form an essential mechanism to public citizen focus administration. Not ignoring the policy aspect citizen focus processes were noticed like especial management actions that make easier citizen s activities and public service access, what generate satisfaction to citizen-users. It s possible to conclude that the high level approving evaluation of Citizen Center Program consolidates it an especial public policy that serves citizen s necessities e create appropriate legitimacy conditions of the public policy making harder the choice of ending the policy even in more fragile moments strongly contributing for its longevity

Development Resource Planning: Complexity of Product Development and the Capacity to Launch New Products

Overcommitment of development capacity or development resource deficiencies are important problems in new product development (NPD). Existing approaches to development resource planning have largely neglected the issue of resource magnitude required for NPD. This research aims to fill the void by developing a simple higher-level aggregate model based on an intuitive idea: The number of new product families that a firm can effectively undertake is bound by the complexity of its products or systems and the total amount of resources allocated to NPD. This study examines three manufacturing companies to verify the proposed model. The empirical results confirm the study`s initial hypothesis: The more complex the product family, the smaller the number of product families that are launched per unit of revenue. Several suggestions and implications for managing NPD resources are discussed, such as how this study`s model can establish an upper limit for the capacity to develop and launch new product families.

Planning for institutional capacity building in war-torn areas: the case of Jaffna, Sri Lanka

This paper examines an attempt to build capacity and empower local institutions in war-torn Jaffna,, on the northern tip of Sri Lanka. A participatory approach that is aimed at social empowerment is seen to be possible even under the most restrictive of political environments. However, whether or not the development intervention provides a foundation for longer-term improvement depends on the extent to which institutional capacity is built. Through an examination of the Jaffna Reconstruction Project, it is argued that if any of the ingredients of this institutional capacity are missing, not only will the 'islands of participation and empowerment' that are built by the development initiative be short-lived, but there may also be a negligible contribution to building a foundation for longer-term improvement in quality of life. (C) 2001 Elsevier Science Ltd. All rights reserved.