Factors influencing investment decisions

• Financial factors influencing 


  -investment criteria

  -total returns and sensitivity

  -alternative investments

  -financial position of business
• non-financial factors influencing 


  -corporate objectives

  -organisational culture and attitude to risk

  -management confidence in the investment appraisal data

  -business image and reputation
• Investment Criteria 


  criteria = the measures by which an investment will be judged
• Role of corporate objectives 


  -major investments need to be consistent with corporate aims and objectives
• Organisational culture

  -investments involve an element of risk-taking

  -culture of a business is likely to influence attitude to risk taking
• Uncertainty 


  -all involve uncertainty

  -changed in external environment can impact

  -contingency planning and sensitivity analysis can help businesses address the problems created by uncertainty