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The business environment is rapidly changing all over the world. Especially, in the
last two decades, there have been drastic and fundamental changes across the nations due
to the process of globalization. Today, the term globalization has become a
catchy-phrase though not a new phenomenon. What is new is its speed and reflexivity, given its
complex nature and the gravity of impact on the Indian business environment (Bhardwaj
and Hossain, 2001). The rate of technological and competitive change being witnessed by
the manufacturing industry is extreme. For instance, automotive industry faces
stiff competition, which is evident from the copious flow of models emerging in
the automotive industry. Companies have introduced new models regularly, and their
market shares have been fluctuating consistently. Companies must be able to diagnose
these changes quickly and, most importantly, be able to respond to them in order to
maintain or improve their competitive position in the market (Veronika, 2000).
This requires the most efficient and effective utilization of its resources,
which involves the evaluation of the company's strengths and weaknesses in the light of
the environmental threats and opportunities. Anecdotal evidence suggests that in
business worldwide, efficient allocation of capital is an important and challenging task
for contemporary Decision Makers (DMs). Such decision making can be regarded as a
complex managerial activity (Jose, 2005), as a key to managerial success, and is considered by
many to have inspired multiple research studies over the last four decades (Cyert and
March, 1963; Mintzberg et al., 1976; Kumar and Shesh, 1994; Dean and Sharfman,
1996; Papadakis, 1998; Burke and Miller, 1999; Nutt, 1999; Ekenberg, 2000; Ford and
Gioia, 2000; Gunn, 2000; and Jose, 2005). While these studies have provided useful
broad insights into the field of decision making, it is surprising that only few have
studied investment decision-making in complex business environments, or focused on
the subfield of Strategic Investment Decisions (SIDs). According to Northcott (1995),
such work would be vital at two levels: for the future operation of individual firms
making investment, and the functioning of the economy of the nation as a whole. At the
firm level, SIDs have implications for many aspects of operations, and often exert a
crucial impact on survival, profitability and growth, since it involves the allocation of
substantial financial, human and organizational resources
(Jacques-Bernard and Sauner-Leroy, 2004). Therefore, SIDs have a long-term and wide range impact on the firm's performance,
and they could be critical to the firm's success or failure (Brown and Solomon, 1993). |
