The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis

Objectives. We identify and investigate circumstances that limit an application of the Five Focusing Steps of the Theory of Constraints in the strategic analysis of investment projects effectiveness.Methods. The methods of factor analysis and financial mathematics including methods for evaluation re...

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Autor principal:	I. A. Nechitaylo
Formato:	article
Lenguaje:	EN RU
Publicado:	North-West institute of management of the Russian Presidential Academy of National Economy and Public Administration 2020
Materias:	theory of constraints system constraints strategy invest project real option Political institutions and public administration (General) JF20-2112
Acceso en línea:	https://doaj.org/article/897eb0af918b4add837bddc802a0c86c
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spelling	oai:doaj.org-article:897eb0af918b4add837bddc802a0c86c2021-11-12T10:46:12ZThe Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis1726-11391816-859010.22394/1726-1139-2020-6-97-109https://doaj.org/article/897eb0af918b4add837bddc802a0c86c2020-08-01T00:00:00Zhttps://www.acjournal.ru/jour/article/view/1447https://doaj.org/toc/1726-1139https://doaj.org/toc/1816-8590Objectives. We identify and investigate circumstances that limit an application of the Five Focusing Steps of the Theory of Constraints in the strategic analysis of investment projects effectiveness.Methods. The methods of factor analysis and financial mathematics including methods for evaluation real options are used.Results. It is shown that in some cases, an increase in business value can be created only by a combination of a number of investment projects, leading to consistent removal of constraints and arising of useful synergistic effects. It is also shown that a value of a project can be determined by changes in the strategy that the company will have the opportunity to make if project is implemented. In such cases, their evaluation without taking into account subsequent decisions may distort their true value.Conclusions and Relevance. We concluded that the main object of evaluation in strategic analysis should be a strategy as a series of future transformations, taking into account the real options generated by them. Therefore, the evaluation of single projects on the base of the Theory of Constraints can lead the rejection of valuable projects due to distortion of their true value. At the same time an application of the Five Focusing Steps in strategic analysis protect against investment in projects with negative net present value.I. A. NechitayloNorth-West institute of management of the Russian Presidential Academy of National Economy and Public Administration articletheory of constraintssystem constraintsstrategyinvest projectreal optionPolitical institutions and public administration (General)JF20-2112ENRUУправленческое консультирование, Vol 0, Iss 6, Pp 97-109 (2020)
institution	DOAJ
collection	DOAJ
language	EN RU
topic	theory of constraints system constraints strategy invest project real option Political institutions and public administration (General) JF20-2112
spellingShingle	theory of constraints system constraints strategy invest project real option Political institutions and public administration (General) JF20-2112 I. A. Nechitaylo The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
description	Objectives. We identify and investigate circumstances that limit an application of the Five Focusing Steps of the Theory of Constraints in the strategic analysis of investment projects effectiveness.Methods. The methods of factor analysis and financial mathematics including methods for evaluation real options are used.Results. It is shown that in some cases, an increase in business value can be created only by a combination of a number of investment projects, leading to consistent removal of constraints and arising of useful synergistic effects. It is also shown that a value of a project can be determined by changes in the strategy that the company will have the opportunity to make if project is implemented. In such cases, their evaluation without taking into account subsequent decisions may distort their true value.Conclusions and Relevance. We concluded that the main object of evaluation in strategic analysis should be a strategy as a series of future transformations, taking into account the real options generated by them. Therefore, the evaluation of single projects on the base of the Theory of Constraints can lead the rejection of valuable projects due to distortion of their true value. At the same time an application of the Five Focusing Steps in strategic analysis protect against investment in projects with negative net present value.
format	article
author	I. A. Nechitaylo
author_facet	I. A. Nechitaylo
author_sort	I. A. Nechitaylo
title	The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
title_short	The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
title_full	The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
title_fullStr	The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
title_full_unstemmed	The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis
title_sort	five focusing steps of the theory of constraints: problems of application in strategic analysis
publisher	North-West institute of management of the Russian Presidential Academy of National Economy and Public Administration
publishDate	2020
url	https://doaj.org/article/897eb0af918b4add837bddc802a0c86c
work_keys_str_mv	AT ianechitaylo thefivefocusingstepsofthetheoryofconstraintsproblemsofapplicationinstrategicanalysis AT ianechitaylo fivefocusingstepsofthetheoryofconstraintsproblemsofapplicationinstrategicanalysis
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The Five Focusing Steps of the Theory of Constraints: Problems of Application in Strategic Analysis

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