Capacity expansion generally requires large capital expenditure on illiquid assets. Therefore, decisions to enlarge capacity must support the organisation's strategic objectives and provide valuable input for the budgeting process. This paper applies an expanded form of Real Options Analysis (ROA) to generate and evaluate capacity expansion strategies under uncertainty in the construction material industry. ROA is applied to different expansion strategies associated with different demand scenarios. Evaluating a wider variety of strategies can reduce risk and sponsor decisions that maximise the firm's value. The case study shows that the execution of a lead expansion strategy with 10-year intervals under a 50 per cent demand satisfaction scenario produces superior results. OPSOMMINGDie uitbreiding van kapasiteit vereis gewoonlik groot kapitaalbesteding op nie-likiede bates. Besluite om kapasiteit te vergroot moet dus die organisasie se strategiese doelstellings ondersteun en waardevolle insette tot die begrotingsproses lewer. Hierdie artikel pas ʼn uitgebreide vorm van ware keuse analise toe om die kapasiteit uitbreidingstrategieë te genereer en te evalueer. Hierdie strategieë is vermoeid met onsekerheid in die boumateriaal industrie. Ware opsies analise (Real Options Analysis) is toegepas op verskillende uitbreidingstrategieë wat met verskillende vraagscenario's verband hou. Deur ʼn groter verskeidenheid van strategieë te evalueer kan risiko verminder en besluite lewer wat ʼn firma se waarde maksimeer. Die gevallestudie toon dat die uitvoer van ʼn uitbreidingstrategie met tien jaar intervalle onderhewig aan ʼn 50 per sent vraagbevrediging scenario die beste resultate lewer.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.