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Strategic Investment In Taiwan Chain And Franchise Stores: A Real Options And Game-Theoretic Approach

Author

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  • Yin-Ching Jan

Abstract

The purpose of this study is to examine and demonstrate the strategic investment decisions faced by Taiwan’s chain and franchise store enterprise. We show that incorporating an abandonment option to strategic timing in a game-theoretic real option approach makes the approach more complete and accurate. The results show that the chain and franchise store industry favors large companies, a finding consistent with economies of scale. The demonstration also provides practitioners a step-by-step guideline for analyzing dynamic investment strategy in the chain and franchise store industry.

Suggested Citation

  • Yin-Ching Jan, 2011. "Strategic Investment In Taiwan Chain And Franchise Stores: A Real Options And Game-Theoretic Approach," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(4), pages 25-37.
    • Handle: RePEc:ibf:gjbres:v:5:y:2011:i:4:p:25-37
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    References listed on IDEAS

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    1. Paul D. Childs & Timothy J. Riddiough & Alexander J. Triantis, 1996. "Mixed Uses and the Redevelopment Option," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(3), pages 317-339, September.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Grenadier, Steven R, 1996. "The Strategic Exercise of Options: Development Cascades and Overbuilding in Real Estate Markets," Journal of Finance, American Finance Association, vol. 51(5), pages 1653-1679, December.
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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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