This chapter is about the multinational company’s decision on whether to enter new foreign markets using direct investment, exporting, or developing a local partner for distribution, with the possibility of scaling the investment under different demand levels. The perception of the host market demand does not remain the same during the investment period due to additional information and economic or political reasons. Therefore, the influence of uncertainty can be addressed by recombining a trinomial lattice model with changing uncertainty, to value investments with several interacting options. Overall, in this chapter we enhance the knowledge associated with exploring foreign markets subject to different demand uncertainties, valuing the flexibility of sequential options.
Part of the book: Sustainable Supply Chain Management