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Company investment decision refers to the judgment and decision made by the company's decision-making authority on the company's investment in major economic activities such as investment direction, investment scale, investment structure, investment cost and income, etc. Programme of Action.

Company investment decision

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Corporate investment decisions refer to the types of economic decisions made by the company's decision-making authority in relation to major investment activities such as investment direction, investment scale,

The investment decisions of modern companies have three characteristics: advancement, comprehensiveness and relativity. Among them, the relativity of the company's investment decisions, that is, the variability is mainly reflected in: ^[1]

The company's investment decision can correctly deal with the limited contradiction of the funds and resources required by the company's investment. The company's investment often requires a large expenditure, which will continuously affect the company for a long time, but in a certain period Inside, any company has very limited funds and resources, so in order to make overall arrangements for the limited funds and resources so that they can be used reasonably and effectively, it is necessary to make scientific investment decisions before project implementation. ^[2]

All environmental factors affecting the company's investment activities constitute the basis for the company's investment decisions, including internal factors such as the company's investment objectives, as well as the composition

Some studies have suggested that the decision-maker of a company's investment as an economic person, under certain personal abilities, legal and ethical standards, always pursues the theory of maximizing profit is being replaced by many modern business analysis points of view.

The decision-making method aims to determine who is the real decision-maker? Is the enterprise investment decision "settle" or "arbitrary". How to divide the decision-making authority of an enterprise's investment? Is it centralized or decentralized? What are the limits of decentralization? According to the principle of democratic centralism and the requirements of the operating rules of the market part of the framework of a mixed economic system, the decision-making method of an enterprise's investment should be set first, ie Decision-making by investment decision-makers based on brainstorming. At the same time decentralization is imperative. This is mainly because the board of directors or general manager of a joint-stock company cannot comprehensively and quickly understand all the factors affecting the investment of an enterprise, and the managers of various departments can respond quickly to the changing outside world due to the nature of their work. Of course, the decentralization of corporate investment decision-making power must be based on the premise that it does not harm the corporate investment goals and corporate growth. The limited nature of decentralization and corporate culture are different from each other. ^[2]

Corporate investment decision analysis methods include non-discount

I. Investment decisions are the highest-level strategic decisions of modern companies ^[3]

The shell of goods and assets is peeled off, and the economic activities of any company are all manifested as value movement processes such as capital investment, operation, and recovery. Enterprise management not only pays attention to the production and marketing of commodities, but also focuses on the flow and turnover of capital, the harmonious allocation and effective use of assets, and the qualitative content of capitalization movements is even more important. The capital movement shows its uninterrupted characteristics, and it exists in all links and time periods of the company's business activities, with its different economic content. However, the company's capital stock at any time and space stage (represented as asset stock from the material carrier) always has a reasonable degree and maintains the optimal ratio between each other. This ratio must be adapted to market demand in order to revitalize funds. (Assets) reach value preservation and appreciation, which is the theoretical basis for financial investment decisions. The investment decision is the highest strategic decision related to the achievement of the company's goals, and its operating points should be placed in the following areas:

The first requirement is to manage the company's investment business as a portfolio, and to choose a portfolio based on the company's strategic goals, so that it can decide which business needs to be established, maintained, and contracted (harvested, skimmed or terminated). Each business has a different profit potential, and whether it is consistent with the company's strategic positioning, and the company's resources should be allocated according to the balance between the two.

The second requirement is scientific justification for investment projects. Fully estimate the total cost of the investment project, the operating recovery period, the target income, etc. to determine the amount of funding and financing channels, and propose a preliminary implementation plan.

The third requires a risk analysis of capital investments. The market changes are driving the company s operations, and the individual companies capital operations show a certain degree of sociality. These are all objective factors that restrict whether the company s investment goals can be finally achieved. This requires that the financial management department of the enterprise must step out of the soil of closed-door accounting, face market research and research, and use various scientific decision-making methods to make reasonable estimates of investment opportunities. The fourth item emphasizes the formulation of investment plans. Investment planning is the guiding program of the company's investment behavior, including the company's investment objectives, total investment, investment costs, investment benefits, and supporting measures. The role of the company's investment planning is to guide the regulation of investment behavior to operate on the correct track to ensure that investment objectives are achieved.

To achieve its long-term goals, the company must develop a strategic plan for each business. Each company needs to identify which factors in its market position, goals, opportunities and resources are important. Japan's Canon has broken away from the traditional camera market and diversified its investment into the office supplies market such as photocopiers. At the same time, Nikon still adheres to a centralized strategy, staying in the camera equipment market and expanding the scale of its main business investment. Each of these investment strategies has been successful under the right circumstances. In short, according to the requirements of the modern enterprise system, the company will act as a completely independent economic entity to independently raise funds, invest independently, operate independently, and manage independently. The investment behavior of MNA is no longer a passive behavior of arranging funds according to the intention of the superior under the planned economic system. The company's investment decision has also become a major issue in determining the company's future market share. In a sense, the larger the company's market share, the larger the company's profit from the average social profit, and the more dynamic the company is. Therefore, the company's investment decisions have long-term strategic significance. It can be said that investment behavior guides the company's destiny, and all activities of modern companies are fighting for investment goals. Attaching great importance to the inherent energy of scientific investment behavior, and abandoning the mentality of taking advantage of opportunism and even drilling into national industrial policy to seek temporary benefits, are the essential characteristics of a mature modern company's financial management.

Second, the basic types of corporate strategy

Goals show where the company wants to go, and strategies show how to achieve them. Every investment decision must obey the company's strategic goals, which Michael Porter summarizes into three basic types.

1. Comprehensive cost leadership. The main point is that the company strives to keep manufacturing and distribution costs to a minimum so that it can be cheaper than its competitors. Companies adopting this strategy must have advantages in processes, purchasing, manufacturing, and logistics. Galanz is a leader in implementing this strategy. It has reduced production costs by investing in large-scale investments in plant and machinery to create huge production capacity.

2. Differentiate. Companies pursuing this strategy have identified certain important areas of customer interest by evaluating the entire market, and concentrated their efforts on improving operations in these areas. It can strive to excel in service and product quality, style and technology, but it is difficult to lead in all aspects. For example, TCL Communications has found a market segment for itself by setting gems on mobile phones.

3. Focus strategy. Companies pursuing this strategy focus on one or a few narrow market segments, rather than full bloom in the market. These companies pursue cost leadership in the market segment or pursue certain differentiation strategies in the target market.

Choice of company growth strategy

According to the three basic corporate competition strategies divided by Michael Porter, in the company's growth process, it faces the following strategic choices:

Product-market growth strategy

The strategy is a company development strategy that focuses on corporate products and aims at market share. This strategy has a very important position in the early stage of company growth. It can be said that most multinational companies have followed the product-to-market strategy development path in the early stage of their growth. The product-market growth strategy is based on Ansoff's "Product-Market (Demand) Matrix" and is divided into four categories according to the combination of products and markets: First, market penetration (current product-current market) It is the company's current production of products to further penetrate the existing market and expand sales. Second, market opening (existing products-new markets), which is to use existing products to open up new markets to increase sales. Third, product development (new product-current market), which means developing new products or providing new services to expand its presence in the existing market. Fourth, diversified operations (new products-new markets). This is a competitive strategy to increase the number of new products and occupy new markets. When the company adopts market penetration and market development strategies, the focus of investment decisions is marketing technology. In product development and multiple business strategies, manufacturers' resource allocation is more inclined to product design and innovation.

2. Vertical integration growth strategy

Vertical integration means that the company applies its existing advantages, especially in terms of technical and marketing skills, to new products and markets. If an enterprise develops in the direction of its upstream products, it is called backward integration; conversely, if an enterprise expands in the direction of its downstream products, it is called forward integration. For example, the development of a chemical company in the direction of refining is backward integration, while the development of plastic manufacturing is forward integration. To achieve the dual goals of effectiveness and growth, this strategic decision needs to consider the following points:

(1) Strategic cost. It mainly includes the costs of entry costs, flexibility, balance, ability to integrate operations, and the use of stimulus measures within the organization to deal with market stimulus measures.

(2) Growth path. The choice of growth path is critical to the company's successful implementation of a vertically integrated growth strategy. It mainly involves two aspects: one is to achieve integration through internal investment or external mergers; the second is to fully integrate or gradually integrate. Like other investment methods, internal growth and external growth have their own advantages and disadvantages, but we mainly examine the special advantages and disadvantages involved in vertical integration: the scale of integration projects. A suitable integrated project scale has three basic characteristics: one is that the project itself has an economic scale, the other is that the project matches the company's original operating scale, and the third is that the enterprise should have an overall economic scale or efficiency after integration. The organic unification of the three is not easy and needs to be determined after repeated weighing and weighing.

3. Horizontal integration growth strategy

In order to achieve the dual goals of benefit and growth, the company's main consideration in the implementation of the strategy of horizontal dualization is strategic cost. Horizontal integration is the company's expansion in the basic production area or adjacent areas. The technical difficulty of this expansion is relatively small. The main difficulty is to overcome liquidity obstacles such as economic and capital needs, and a feasibility analysis of investment benefits is required. Compare the benefits and costs of integration.

Considerations for investment decisions

Every investment decision made by the company is closely related to the company's development strategy. Why invest, what, and how to invest, the company must choose according to the strategy. In a market economy, inward and outward investment is an important part of the company's open strategy, and it is directly related to the company's long-term development and future interests. Therefore, investment decisions must be made with caution. At present, many companies regard project investment as a major way to expand their scale, and advocate investment for the establishment of large enterprise groups across regions, industries, and borders. Cross-industry and diversified operations are an important process for the company to diversify its operating risks while expanding its investment scale. But in this process, has the company's development strategy and business positioning come first? Does it adhere to the main business, supplemented by other business? Does it make the investment between cross-industry strongly correlated? Don't consider the company's development strategy as one of the internal conditions for investment decisions. Investing in areas different from the company's strategic goals has a high risk and a low success rate. China's Giant Group, originally a leading domestic software development company, invested in real estate that it was not good at. As a result, not only failed investment projects, but also affected the company's bankruptcy. In recent years, the international company's development trend is to expand the scale of its main business, or to invest in the same industry in foreign mergers and acquisitions, and to carry out internal unrelated business divestitures. It can be seen that the company no longer simply pursues diversified operations and expansion of business scale, but instead positions itself according to its own strategic position, focusing on business specialization as well as expanding scale and diversifying business risks.

In addition, the company's internal management level is also the basis of internal conditions that every decision maker must consider when making investment decisions. If there is no basis in this regard, or if the investment decision is not sufficient, the business becomes bigger, and the front is very "hot", but the backyard is "on fire". If the company can't grow through investment, it will suddenly die. Many companies expand through investment, from "children" to "adults", from "profit-making" to "growth", which is a performance that takes full account of internal conditions and evolves based on investment. If the investment company has a good management mechanism, innovative management methods and an excellent corporate culture, it will ensure the scientific and systematic investment projects from the internal governance mechanism, and undergo a rigorous demonstration process before the project implementation, and supervise and improve it during implementation. After the project is completed, it will be effectively integrated, so that it can ensure that the investment project meets the expected goals, bring scale benefits to the scale operation of the investment company, and form a good and dangerous trend for the company's long-term development, thereby building the company's core competitiveness. Make its foundation evergreen.