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Real Options at Polaris Energy Corporation (A)

Published 12 Jun 2002
Reference 5043
Topic Strategy
Region North America
Summary

The (A) case involves a strategic alliance between an electric utility and a firm developing pollution control technology under considerable regulatory and technological uncertainty. The deal structure involves a licensing agreement and a minority equity purchase structured as an option.

Teaching objectives

The cases enable students to map the investment and operational practices of a firm into a taxonomy of real options, evaluate the structure of a deal using option theory, compare and contrast real options and financial options, and understand the practical difficulties surrounding the implementation of real options in organizations.

Keywords
  • Real Options
  • Strategic Alliances
  • RD0502
  • AR2002
  • Natural Environment
  • Pollution
  • Green
  • Minority Investment
  • Licensing
  • Electric Utilities