Traditional Investment Appraisal Techniques Can Not Cope With The Fast Changing Environment

1997 Words Oct 23rd, 2014 8 Pages
TRADITIONAL INVESTMENT APPRAISAL TECHNIQUES CANNOT COPE WITH THE FAST CHANGING ENVIRONMENT IN MANUFACTURING INDUSTRY TODAY.
Manufacturing industry is brimming with rivalry due to the presentation of new and advanced technologies to help manufacturing processes. These new technologies are capital investment a manufacturing organization must acquire to compete with others in the business. The choice to put resources into these new and advanced technologies requires appropriate investment appraisal techniques that can adapt to the quick changing environment of the manufacturing industry. These choices are vital investment decision. As indicated by Adler R.W (2000), Strategic investment decision making includes the methodology of recognising, assessing and selecting among different projects that are subject to an enormous impact on an organization competitive advantage. Such investment choices have long haul effect on the organization.
Key investment decision relies on upon the sort of project the organization need to undertake. As indicated by Eugene F.B and Gapenski L.C (1988) p.257, firms arrange investment into the accompanying classifications
• REPLACEMENT; support of business: these are expenditure important to supplant exhausted or damaged equipment used to deliver productive item.
• REPLACEMENT; cost reduction: these are used to supplant serviceable or outdated machine.
• EXPANSION OF EXISTING PRODUCT OR BUSINESS SECTOR: these are used to build output of existing…
Open Document