Abstract
Although technology has created many opportunities of investment, it brought a certain degree of uncertainty for corporation to invest. If an organization expects to beat the white-heat technology industry with its products, it would be a smart action to develop technology platform. The main contribution of this study is to apply the pricing models of defer options and exchange options, with the real data when Apple chose to cooperate with IBM and change partner to Intel, to be the first to present a thorough set of empirical results. With the defer options model of McDonald and Siegel(1986), we used dynamic programming technique to analyze how the corporation should react when the potential competitor enters the market first. Furthermore, we took Exchange options model of Stulz(1982) to suggest how the firm should evaluate if it should exchange its current partner to another to find the best decision which could bring out the most benefit. The empirical results showed that Apple has implemented the project to cooperate with IBM too early. It should defer the time to execute the project. Moreover, with the relatively high value of exchange options priced by the model, we proved that Apple was correct to exchange IBM for Intel. Also, this study presented the empirical data of the probability and the loss arisen when potential competitor enters the market first in real practice of high-tech industry.