In the previous chapters, we have described various outcomes derived from the basic research, such as a growth theory of companies, business networks and agent simulations. In this chapter, by changing our perspective, we will review what consequences are expected from the research outcomes, in other words the practical applications of econophysics. Real economic data is abundant in Japan compared with other countries, and for this reason alone the Japanese economy is of particular importance in our work. It is also convenient in other ways. The practical applications of our work are currently under development, and the concrete content of these applications is being improved through ongoing conversations with companies in Japan. Indeed, the contents of this chapter should be regarded as an interim statement, which might be greatly altered in the future. However, we think that it is of real interest even at this stage to describe some of our suggested applications. We will concentrate on three topics, namely, the methodology for developing a business strategy, the management of the propagation of credit risk and the encouragement of innovation in business models, and offer them as of potential value to central government civil servants, acquisition specialists, investment bankers, staff working in the management planning division of companies, financial departments, materials departments, credit divisions, and rating companies, as well as business administrators.

Development of business strategies

In this section we will begin by explaining the elements of corporate finance theory, and then move on to discuss issues relating to the practical applications of that theory.