Chapter 8

Strategic Investment Decisions

Capital investment can range from relatively small operational projects consisting of expenditure on new or replacement equipment to substantial investments, which have a more “strategic” focus with a potentially significant impact on long-term corporate performance. Typical examples of the latter include the introduction of new technology, the introduction of major new product lines, and, perhaps most significantly, the acquisition of, or merger with, other companies. The distinguishing features of strategic, as opposed to operational, investments relate to the higher risks and expenditure involved with the increased complexity associated with identifying the potential outcomes. As a consequence of the ...

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