Capital investment decisions are among the most critical strategic moves of a corporation. Qualitative factors should be
Question:
Capital investment decisions are among the most critical strategic moves of a corporation. Qualitative factors should be included in Mara's analysis. Customer satisfaction, scrap reduction, reduced inventory needs, and reputation for quality can affect the decision to purchase capital resources (William et al, 1975). Decision makers must understand these types in order to make capital investment decisions. Reasons for inclusion in the analysis include:
- Reputation for Quality
In order for the company to increase the capacity of production, they need to use capital investment. It is very clear that the quality of capital resources had a huge effect on the quality of capital production. Its inclusion would, therefore, ensure that the robot-guided aluminium window machine would help improve the quality of the firm's products and services and itself is of high quality.
- Customersatisfaction
The purchased capital equipment should be able to aid in offering products/services in a way that ensures customers satisfaction. Therefore, the inclusion of this factor in the analysis will ensure that the capital investment in the robot-guided aluminium window machine would in one way or another help improve customer satisfaction. (Fried, & Hisrich, 1994).
- Scrap Reduction
Scrap reduction is the ability of the machine to reduce the amount of scrap resulting from production. The robot-guided aluminium window machine should be able to be effective in reducing the amount of scrap from processes. This would reduce the costs of operations.
- Reduced Inventory Needs
The new machine should be efficient and economical in the use of inventory. Therefore, factoring this requirement will enable Mara to find out whether the machine should be bought or not. The machine should be able to fulfil this requirement for it to be a good capital investment decision.
Q:Could these qualitative factors also be quantitativefactors?