Strategy Library

Investment planning

Investment planning is closely linked to strategic corporate planning. It is not just about identifying and implementing individual investment projects, but rather about creating a coherent investment program to provide the resources needed to successfully implement the corporate strategy.

Description of investment planning

Investment planning is closely linked to strategic corporate planning. It is not just about identifying and implementing individual investment projects, but rather about creating a coherent investment program to provide the resources needed to successfully implement the corporate strategy. A distinction is made between the following investment types: initial or new investments, replacement investments, rationalization investments, expansion investments, divestments and investments based on regulatory requirements (mandatory investment).

The investment planning process typically takes place in several phases (Schulte, 1986):

  • Initiation of the investment and description of the investment problem
  • Preparation of decisions: This stage includes the formulation of alternative courses of action, the collection of decision-relevant data and information (quantitative and qualitative), the check on compatibility with the company objectives and legal regulations as well as technical and economic feasibility, the execution of a profitability calculation for the remaining action alternatives as well as the consideration of interdependencies, soft factors and uncertainties.
  • Investment decision
  • Investment execution
  • Investment control (ongoing and following)

The result of the investment planning is an investment plan that establishes the investments planned for the planning period of the company. The investment plan is included in the financial plan.

Source

Schulte, K.-W. (1986). Profitability calculation (4th edition). Heidelberg: Physica-Verlag

How can Solyp 4.0 support your strategic work?

Get a free product demo