Applying real options thinking to industry analysis implies that industry attractiveness is less about an industry's profit potential and is more concerned with the range of strategic opportunities that an industry offers.

Question

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Real options thinking emphasizes the importance of flexibility and the ability to adapt to changing circumstances. Therefore, when applying real options thinking to industry analysis, the focus is on the range of strategic options that an industry offers, rather than solely on its profit potential. This approach recognizes that industries may have different types of strategic options, such as expansion, contraction, switching between products or customers, or investing in new technologies, which can create value and increase competitiveness. By considering the value of these options, decision-makers can make more informed and dynamic decisions about investing in or exiting from an industry.

Applying Real Options Thinking to Industry Analysis Implies That Industry