Corporate decision-making and methods of investment projects

Summary: Investment decision-making is going in one of the most important decision-making behavior. For corporate Investment activities of the main issues, focusing on project decision-making in compliance of corporate strategy, project feasibility and Economic viability of the market approach to argument the study.

Keywords: business Investment; project decision-making; Investment Analysis

1 Investment decision-making and meaning of the concept of

This Investment is direct Investment within the meaning is the main form of fixed assets, Investment in the formation of the "product" is not the social needs of the end product, only the intermediate products, intermediate products, final products ultimately serve. Investment projects is for the specific purpose for Investment and construction, and equipment containing certain equipment, building or construction and installation, and construction of fixed assets projects investment decision-making phase of the project before construction of all the activities that idea, proposal, argument analysis and decision-making process , but does not include funding. investment decision-making task is to demonstrate through the analysis to determine the project do not do and what to do while here, and generally the purchase of investment are different, the investment objective is to obtain the expected income, expected income and this may be uncertain, although one can experience with what happens in the future of scientific prediction, but this prediction is not accurate, that investment is uncertain.


2 business investment decision-making situation and the main problems

Since reform and opening, China's investment on the role of Economic growth is very obvious, while the investment decisions of Economic cyclical fluctuations is the main reason our business is the main problem at this stage investments: a serious overlapping of excessive growth of investment, the investment may be changing too intense investment in the productive capacity of the formation of some or most of the industry in excess etc. This situation is mainly composed of the following reasons.

2.1 The main business of business owners and auxiliary times, regardless of 
For some of the old state-owned Chinese enterprises, due to historical reasons, main business revenue and other operating income comparable to or even less than other operating income, a variety of manufacturing and a variety of services revenue in the range of business operations. Business no link between the business is not conducive to production and management decision-making and leadership, and investment diversification, the core competitiveness of enterprises do not have them, only to bankruptcy, although such enterprises gradually exit the market, but the inspiration is left to the enterprise of great significance .

2.2 Investment project management and decision-making lower level 
In some enterprises to invest in the whole process, the enterprise is the main time and energy on the implementation of the project, but not strong operational implementation of the project plan, project schedule more than a delay, not able to realize the whole process of project control; encounter mainly rely on temporary emergency decision to change the investment program content, most likely a waste of resources, while, due to inadequate pre-project Research, product and market analysis is not sufficient, the lack of data to support project decision-making, rely mainly on empirical judgments.

2.3 lack of professional analysts project 
In the production of manufacturing enterprises, the analysis of the personnel engaged in the project are mainly technical staff, or from the technical staff in transition, most of them lack of professional financial management and investment theory of knowledge, leading to difficult to carry out analytical work, or difficult to analyze The results for the actual decision-making on the project.

2.4 Investment Decision Methods enough 
Economic development needs and investment theory with practice, in order to demonstrate the correctness of the theory and guide practice, but because of corporate investment often has a certain urgency, or the enterprise can not follow the scientific method of analysis and steps to conduct a feasibility analysis, so the investment practice decision-making is more extensive, it can not master the effective analysis tools and methods. Links to free download http://www.hi138.com 3 Research investment decisions and

This paper argues that corporate investment decisions need to consider the overall business strategy, market feasibility, project technical feasibility, Economic viability of the project, project feasibility and other aspects of the implementation of the program, but the key point is that corporate strategy compliance, market feasibility of the project financial analysis and feasibility, while the technical feasibility and feasibility analysis of the implementation of the program is relatively easy to grasp, enough to become the key decision-making.

3.1 Investment projects in line with overall business strategy of the project's success 
Company's overall strategic direction of clear business development, positioning and profitability levels, making the tone of the provisions of the project. Investment projects must be carried out under the overall strategic direction and investment to meet the business development and investment to reflect the company's position in the industry, After investment required to achieve business revenue and profit targets and if the same investment and corporate strategy (provided that the enterprise have a consistent strategic approach), the original investment in the enterprise on the basis of long-term additional investment, or investment-related business the sharing of resources, in order to save the overall investment cost. if the investment is not consistent with the corporate strategy and business development investment is not based on corporate strategy, the investments can be profitable even if temporary, may also be due to lack of resources to support the ultimate long-term failure.

3.2 pairs of investment projects for effective market analysis is key to project success 
Market analysis is key to project success, to achieve effective market analysis, one needs the right market Research findings, the query through the network, industry newspapers and magazines, field surveys, etc., demand for commodities, distribution channels, business conditions, competition, etc. aspects of the project market Research, as much as possible to obtain complete, accurate and timely market information. Second, the need to use a scientific approach to market analysis, according to market Research reports, market demand, market supply, market competition, product and market integrated, etc. analysis, and for the realization of production, sales and project investment program to carry out the analysis.

3.3 pairs of investment projects, financial analysis is correct success of the project to protect 
Business investment goal is to enable enterprises to maximize the value of the investment decision-making must take into account the corresponding costs and benefits. With the continuous development of economic theory, in practice, mainly the net present value method and real options theory of investment decisions and risk analysis.

(1) the present value method in addition to investment profit margin, profit tax rate, return on investment, capital profit, sales profit rate, payback period and other static indicators, to correctly determine whether the project is economically viable, it must the financial net present value, net present value rate, the financial internal rate of return, return on investment and other dynamic indicators of the dynamic calculation and analysis.

(2) the uncertainty of the project investment analysis applications net present value method of investment decisions, is the assumption that business investment environment under uncertainty derived, means that business investment in future earnings is to ascertain, no affect the project's uncertainty analysis so that corporate investment decision-making process is a simple calculation of future investment returns and investment cost comparison process, according to the same discount rate to decide whether to invest in investment income or investment or never invest. In fact, due to objective conditions and changes in relevant factors, forecasting technology limitations and other reasons, the results of project implementation may lead to conclusions inconsistent with the forecasts, the project is uncertain, the project risk.

3.4 Other investment decision-making factors 
(1) technical feasibility and implementation feasibility analysis project technical feasibility analysis can be divided into: First, market products (ie the final product) the technical feasibility, the success of product research and development projects must pass a small batch trial, to carry out process verification, the need for achieving a certain production capacity after the technical bottleneck analysis, generally do not have too much technical problems. Second, the investment products (ie intermediate goods) the technical feasibility of the investment in fixed assets, are generally used mature product, even if not mature enough, can also be used for domestic and international resources to solve, there is very significant technical problems.

Project implementation is the main argument in the specified time, the use of limited resources to achieve project objectives, mainly on the project implementation schedule, funding plan and project team working to develop distribution plan is reasonable for analysis, because the project is responsible for project planning people vary, companies can complete projects or other business data to determine the relevant experience, generally do not have much of a problem.

(2) Investment projects with business and operational plans based analysis that is their overall marketing plans, product development plans, quality assurance program to analyze the internal control plans to study new investment projects and their end-product of operating system adaptability for business to adjust.

(3) post-project evaluation of the impact of investment decisions. Post-project evaluation is the investor of the investment activities of an important means of regulating the same time, the relevant evaluation and analysis information is also available to serve investment decisions, to improve the business management help.

In short, in the final analysis, the need for the project's project selection and decision-making by the project's overall analysis, the building program of the investment market, technical and economic feasibility analysis concluded, according to the business of risk preferences, choose their own investment projects for investment.


References
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[3] Huang Zhongwei. On business investment and efficient ways and forms [J]. Business economy, 2000, (10) Links to free download http://www.hi138.com