This PPT slide, part of the 39-slide Creative Thinking in Strategy Development PowerPoint presentation, presents a qualitative assessment framework designed to evaluate options under a high uncertainty scenario, specifically focusing on two strategic choices: launching full production or opting for a five-year license on a block of land. The left side outlines evaluation criteria, providing concrete examples for each. It highlights key financial metrics, including the present value of future cash flows and sunk costs associated with both options. The full commitment cost is noted at $100 million, emphasizing the financial stakes involved.
On the right side, the qualitative assessment contrasts the two options across several dimensions. It details the level of uncertainty regarding expected cash flows, which is categorized as low for full commitment and high for the licensing option. This distinction is crucial for decision-makers who must weigh the risks associated with each choice. The duration of the option is also compared, revealing a short duration for full commitment versus a longer duration for the licensing option, suggesting different strategic timelines.
Direct and opportunity costs are assessed, indicating that maintaining the option incurs high costs compared to full commitment. Lastly, the discount rate is evaluated, showing a lower rate for the licensing option, which could influence the present value calculations. This slide effectively illustrates the complexities of decision-making in uncertain environments, providing a structured approach to evaluate potential paths forward. It serves as a valuable tool for executives navigating high-stakes investment decisions.
This slide is part of the Creative Thinking in Strategy Development PowerPoint presentation.
This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It teaches a practical consulting framework actively used by tier-1 consulting firms.
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