The Keys Stages in the Capital Investment Decision-Making Process - Essay Example

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The Keys Stages in the Capital Investment Decision-Making Process

This research will begin with the identifying investment opportunities. Once the capital investment strategy and budgetary processes are developed, the remaining process hinges on the generation of good investment ideas.  Projects do not exist merely to be discerned, rather opportunities for investment need to be highlighted or created, and subsequently exploited.  Initial investigation of the proposal pursues highlighting the projects’ feasibility (both technically and commercially). The origination of the proposal can come either from laid mechanisms that the entity has established to scan the environment for investment opportunities; technological developments/changes; or from those working in technical positions. Investment opportunities or proposals could emanate from analysis of strategic choices, an investigation of the present business environment, research and development, or legal requirements. A two-stage decision approach can be an effective way of encouraging investment ideas whereby, first, organizational personnel are encouraged to advance any preliminary undeveloped ideas that they have. The advanced ideas are then reviewed in the first stage and those that fail feasibility test screened out using decision criteria. The most promising ideas continue to the next stage whereby thorough financial and strategic appraisals are undertaken.  The core requisite in this stage details that investment proposal should reinforce the attainment of organizational objectives. ...
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Summary

This report has been written in an attempt to identify and explain the keys stages in the capital investment decision-making process, and the role of investment appraisal in this process. Investment decisions should align with the strategic and tactical decisions of the organization.

Author : angielebsack

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