Corporate Strategy
Stochastic Balance Simulation
We know that forecasts based on average values are on average wrong. In addition deterministic models will miss the important dimension of uncertainty – that gives both the different risks facing the company and the opportunities they produce.
2010 © | S@R | 0 comments | ContinuedA short presentation of S@R
Most companies have some sort of model describing the company’s operations – but…
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Selecting Strategy
When there is no uncertainty the maximum return criterion can be used to rank strategies. With uncertainty we have to look for the strategy that maximizes the firms expected utility.
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When in doubt, develop the situation
Planning for an uncertain future is a hard task, but preparing for it by adapting to the uncertainties and risk uncovered is well within our abilities.
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Valuation as a strategic tool
Valuation is something usually done only when selling or buying a company. However it is a versatile tool in assessing issues as risk and strategies both in operations and finance.
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Fish farming
When we in 2002 were asked to look into the risk of Cod fish farming, we had to start with the basics; how do cod feed and grow at different locations and what is the mortality at the same locations.
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What is the correct company value?
Value is not the same as price. Price is what the market is willing to pay. Even if the value is high, most want to pay as little as possible.
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Investment analysis
An important part of the investment analysis is cost. Especially in complex and demanding projects, there is significant risk related to investing.
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The Probability of Gain and Loss
Every item written into a firm’s profit and loss account and its balance sheet is a stochastic variable with a probability distribution derived from probability distributions for each factor of production.
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The Value of Quality Management
Warret Buffett is recognized being one of the worlds most successful investor. What are the key issues when deciding to invest? Some of the most relevant factors are written here.
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The Challenge
Whenever you take a decision where you can loose or gain something, value is at risk. Most decision makers want a situation where they maximize the value, and if everything goes wrong have a minimum of regret.
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Uncertainty – lack of information
Every item in a budget or a profit and loss account represents in principal a probability distribution. In this framework all items whether from the profit and loss account or from the balance sheet will have individual probability distributions.
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