STRATEGIC INVESTMENT IN TAIWAN CHAIN AND FRANCHISE STORES: A REAL OPTIONS AND GAME-THEORETIC APPROACH

The purpose of this study is to examine and demonstrate the strategic investment decisions faced by Taiwan’s chain and franchise store enterprise. We show that incorporating an abandonment option to strategic timing in a game-theoretic real option approach makes the approach more complete and accurate. The results show that the chain and franchise store industry favors large companies, a finding consistent with economies of scale. The demonstration also provides practitioners a step-by-step guideline for analyzing dynamic investment strategy in the chain and franchise store industry.