Qualitative factors affecting investment decisions
- Created by: tanja soulsby
- Created on: 31-05-17 11:29
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- Non-numerical, Qualitative factors affect Investment Decisions
- Corporate Image can influence investment decisions
- Good corporate image brings customer goodwill and loyalty in the long term and the firm could consider this more important than short-term rate of return on investment
- Investment decisions creating bad publicity and damaging customer loyalty will damage profits long term
- A firm with green, eco-friendly image would avoid investments damaging the environment
- Some firms incorporate environmental costs into their investment appraisals
- Good corporate image brings customer goodwill and loyalty in the long term and the firm could consider this more important than short-term rate of return on investment
- Business Objectives and Strategy can influence investment decisions
- A business aiming to produce low cost products for mass market would be unlikely to invest much in research and development etc.
- An investment appraisal recommended purely on financial data might not fit in with the objectives of a firm
- Many businesses only make an investment if the project will help to achieve their objectives
- Industrial Relations can influence investment decisions
- Loss of jobs affects staff morale
- Cost of redundancy payments should be factored into the decision
- Trade unions may strike over job losses, which would affect productivity
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- Loss of jobs affects staff morale
- Corporate Image can influence investment decisions
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