Study Of Strategic Investment Decision For Mobile Telecommunication Enterprise Based On Real Options

With the development of world economy globalization, the mobile telecommunication enterprises have to strengthen the validity of the strategic investment decision-making, enhance the competitive ability and its own value in order to survive and develop in long term in the intensely competitive, complex and changeable market environment, Therefore, for the mobile telecommunication enterprises, how to seek strategic investment decision-making ,enhance the competitive ability and its own value become the key issue.This paper attempts to introduce real option theory into strategy investment decision-making for mobile telecommunication enterprises. According to characters of their strategic investment such as unreversibility, flexibility, and uncertainty, it proves that the strategic investment has the characteristic of real option, and expounds the disadvantages of traditional DCF method and the advantage of real option theory in the strategic investment decision-making appraisal. Then, based on the analysis of characters of strategic investment in mobile telecommunication field, an analysis model of appraisal strategy investment decision-making has been constructed by applying the binomial options tree method to evaluate. Finally, this paper employs the investment for 3G project in china mobile company as an example to demonstrate the advantage of this model and make analysis on the results. The project value obtained by binomial options tree method is much larger than that obtained by DCF method, from which we know that the 3G would bring so huge benefit that mobile communication companies would like to develop 3G project.This paper only introduces the binomial tree pricing model in the quantitative analysis aspect, as the complexity of strategic investment decision-making under the indefinite environment and real option itself, the impossible to be a fixed pattern to solve the strategic in this article is investment decision-making, but it only can provide one kind of analysis mentality and method. Further endeavor is needed in order to consummate the research of real option pricing method and serve the strategic investment decision-making.