How Does Taking a Real-Options Perspective by Entering Strategic Alliances

question 34

Multiple Choice

How does taking a real-options perspective by entering strategic alliances help incumbent firms?

• A) It helps the incumbent firms gain the confidence of the partnering company by making credible commitments.
• B) It helps the incumbent firms reduce the value gap they create through their product and service offerings.
• C) It allows the incumbent firms to buy time and wait for the uncertainty surrounding the market and technology to fade.
• D) It reduces the incumbent firms' cost of acquisition by enabling them to make the entire investment decision in the beginning itself.

---

Definitions:

Noncurrent Monetary Liabilities

Long-term financial obligations that are not due within the next 12 months, such as bonds payable or long-term loans.

Present Value

The current value of future money or cash flows, determined by applying a specific rate of return.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Stated Rate

The interest rate expressed in the terms of a loan or bond agreement, not necessarily reflecting the effective interest rate after considering fees or compounding.