Impact of Corporate Strategy on Investment Decision in Nigeria
The research work investigates the impact of corporate strategy on investment decision in Nigeria. Effective corporate strategy plays a critical role in defining the businesses in which a company will compete, preferably in a way that focuses resources on how to convert distinctive competence into competitive advantages. The broad objective of the study is to investigate whether Cadbury Nigeria plc strategic pattern affects the company’s expansion investment decision and also to investigate how strategic pattern shows the growth and profitability of a firm that is increase in sales and market value. The primary source of data collection was used where stratified questionnaires were distributed to respondents. The simple random sampling technique was used to select a sample size of 50 personnel. The chi-square statistical tool was used to test the stated hypotheses and the findings revealed that the Net profit margin, measures the overall firm’s ability to turn each naira sales into profit. The study concludes that corporate strategy affects expansion investment decisions of organizations, i.e. strategic pattern affects the company’s expansion investment decision. The study recommends among others that management should reinforce the need for a strategic framework for problem solving under complexities and the relevance of strategic considerations in investment planning.
1.1 Background to the Study
It is glaring that investment decisions without a sound corporate strategy is like a ship without a rudder and a waste of time no wonder said that allowing resources to investment without a sound concepts to divisional aid corporate strategy is a lot like throwing darts in a darkroom. Investment decision which involves a firm’s decision to invest its current fund most efficiently in the long-term assets in anticipation of an expected flow of benefit over a series of years include: expansion acquisition, modernization and replacement of the long term assets, sales of a division or business (divestment), change in the method of sales distribution advertisement campaign, research and development programme etc needs a well formulated strategy.
A well formulated strategy help to marshal and allocate an organization resources into a unique and viable posture based on its relative interval competences and short comings anticipated changes in the environment and the contingent moves by intelligent opponent. Therefore, this study is aimed at focusing on the impact of overall corporate strategy on investment decisions in Nigeria with a particular emphasis on Cadbury Nigeria Plc to highlight the effective and efficient attainment of investment decisions of an organization particularly on expansion in achieving a sustainable competitive advantage capital efficiency and profitable long term growth and wealth maximization of shareholders.
Corporate strategy is the pattern of decision in a company that determines and reveals it objectives, purposes or goals, produces the principal policies and plans for achieving this goals and defines the ranges of business the company is to pursue, the kind or economic and human organization it is or intend to be and the nature of the economic and non economic contribution it intends to make to its shareholders, employees, customers and communities.
Effective corporate strategy plays a critical role in defining the businesses in which a company will compete, preferably in a way that focuses resources on how to convert distinctive competence into competitive advantages. It also means an ineffective corporate strategy will affect the overall performance of the organization particularly the firm’s investment decision since it the primary driven force (Verrechia, 2005), organization must therefore formulate a strategic decision that will determine the overall direction of the firm major goals, policies and action sequences into a cohesive whole.
Impact of Corporate Strategy on Investment Decision in Nigeria
It becomes a matter of great concern to management because any wrong step taken with a view of addressing any of the above taken will adversely affect the smooth running of the organization for instance, the huge amount of capital tied up in long term assets in anticipation of the expected cash flow over a series of years that is irreversible and even if reversible at substantial loss could be committed to other profitable venture within a short period that will yield quick return. The internal and external environment trends that gives the firms its identity. Its power to mobilize the strength and likelihood if success in the market place may crystallize to formless reality of loss of sustainable competitive advantage, superior skills, superior position and resources. As Charles Dawin said that it is not the strongest of the series that survive or the most intelligent, but the one most responsive to change. In the same way, if manager do not evaluate their resources in relative to competitor’s strategy there will be no superior return over long term on investment (expand) and shareholders values, growth and competitive advantage will dissipate.
Recently, a lot of emphasis has been placed on the view that a business firm facing a complex aid changing environment will benefit immensely in terms of improve quality of decision making if capital budgeting decisions are taken in the complex of its overall corporate strategy. This approach provides the decision making if capital budgeting decisions are taken in the complex of its overall corporate strategy. This approach provides the decisions maker with a central theme or a big picture to keep in mind at all times as a guideline for effectively allocating corporate fimucia1 resources.
1.2 Statement of Problem
The practice of corporate strategy in relation to investment decision by business organization in Nigeria is a new phenomenon; however, it is self evident that no individual firm is problem free. The problem to be addressed is; the effect of strategy on the firm’s investment decision particularly on the area of expansion. How strategic pattern shows the growth and profitability of a firm. From various business reviews, management and accounting literatures read and discover more problems like: What should we expand on or acquire within our core competences and resources at hand? And what are the approach to allocating investment capital and resources within the context of the interval and external environment trends.