Investments and Corporate Strategy: Aligning investment decisions with overall strategy

Correct usage of a firm’s resources are crucial for the firm’s survival. Companies usually have formalized procedures for calculations of the profitability of investment projects. On the other hand is the corporate strategy, directing the company activities, determining how company resources should be used. The financial calculations and the corporate strategy should work together to ensure the best possible allocation of company resources. Unfortunately, this is not always the case.

The purpose of this study is to investigate if contradictions between strategy and individual investment decisions exists in companies today, if these are acknowledged, and what is done about it…


1. Chapter one: Introduction and problem statement
2. Chapter two: Method, methodology and theoretical framework
2.1. Methodology and theoretical framework
2.2. Method
3. Chapter three: Literature review
3.1. Strategy
3.1.1. History of strategy
3.1.2. Strategy formulation and implementation
3.2. Capital investments
3.2.1. The investment process
3.2.2. History of the investment process
3.3. Strategy aspects in the investment process
3.3.1. The capital budget must reflect strategy
3.3.2. Informal communication and pre-determined evaluation processes
3.3.3. Categorization
3.3.4. The investment process from the strategy textbook point of view
3.4. A potential problem and its reasons
3.5. Is the problem inherent?
3.6. Aligning suggestions from contemporary articles
3.6.1. Communicating strategy
3.6.2. Cultural aspects
3.6.3. Using the right base case
3.6.4. Taking a corporate perspective
3.6.5. Seeing the whole picture
3.6.6. Unbundling of subprojects
3.6.7. Controllers as strategic partners
3.6.8. The time aspect
4. Chapter four: Empirical study
4.1. About SKF
4.2. About the interviews
4.3. About the interviewees
4.3.1. Göran Wannerskog and Karin Carstens
4.3.2. Erik Nelander
4.3.3. Veronika Rundkvist Nihlén
4.4. The SKF formal capital investment proces
4.4.1. Definition of investments
4.4.2. The investment budget
4.4.3. Investment manual
4.4.4. The investment request (IRE)
4.4.5. Local and formal approval cycle
4.4.6. The IRE process
4.4.7. Evaluation parameters
4.4.8. Categorization
4.4.9. In line with strategies
4.4.10. Prioritization
4.4.11. Seeing the whole picture
4.5. The strategic process
4.5.1. Vision, mission, drivers and values
4.5.2. Strategy from a “business development” point of view
4.5.3. Divisional level and top-down investments
4.5.4. Strategy in the investment process
4.6. “In the middle”, interview with Erik Nelander
5. Chapter five: Secondary data
5.1. Sandvik Steel AB
5.1.1. About the data
5.1.2. About Sandvik Steel AB
5.1.3. The investment process
5.1.4. Strategy and strategic issues in the investment process
5.2. Cardo Pump
5.2.1. About the data
5.2.2. About Cardo Pump AB
5.2.3. The investment process
5.2.4. Strategy and strategic issues in the investment process
6. Chapter six: Analysis of SKF
6.1. Summary of the SKF investment process and comparison to literature
6.2. Strategy aspects in the SKF investment process (summary)
6.3. Informal strategy aspects
7. Chapter seven: Discussion
7.1. Introduction
7.2. The strategic importance of the investment manual
7.3. Specification of strategic fit
7.4. Anchoring of investments
7.5. Financial calculations as an instrument of choice
7.6. Other aspects
8. Chapter eight: Conclusions and recommendations
8.1. The research question reviewed
8.2. Conclusions from SKF and the other exemplars
8.3. Recommendations
9. Acknowledgement
10. References
11. Appendix: Interview guide

Author: Mia Åberg

Source: Blekinge Institute of Technology

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