Application of the Real Option Methods in BAIDU Company Valuation

Abstract

In an uncertain environment, the firm’s ability to manage projects over time is valuable. The real options framework recognizes this value, and so represents a new approach to both project evaluation and strategic management [Barnett, 2005]. In this diploma thesis, we adopted real options method to evaluate asset values of Baidu with different flexibilities in 2013. Baidu is a leading company in Chinese internet search engine market, with the strongest technology and the best development teams in the industry.