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Title: Determining the going market value of a business in an emerging information technology industry : the case of the cellular communications industry
Authors: Kim, Namwoon
Mahajan, Vijay
Srivastava, Rajendra K.
Keywords: Telecommunications
Diffusion models
Market valuation
Cost of capital
Value growth duration
Issue Date: Jul-1993
Series/Report no.: Marketing Working Paper Series ; MKTG 94.005
Abstract: Given the phenomenal growth or the anticipation of growth in certain information technology industries, concerns for economy of scale, market access and expansion, and the need for ongoing research and development are resulting in mergers, acquisitions, and strategic alliances. A key question in such industries is what is, or should be the going market value of a business? This paper suggests an approach to imbed market penetration models in the popular value-based planning approach suggested by Rappaport (1986) to obtain the going market value of a business. The model developed in implementing the approach is tailored for the cellular communications industry. Limitations and adaptations of the approach to other industries are discussed.
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