The forecasted profits and investments are elementary forces of futuristic and advance business strategy, both at micro and macroeconomic levels. Business plans are always required to probe into the possible course of action in future so as to be able to out smart their competitors and achieve the objective of doing the business. These questions range from asking as what drives a decision to build a new capital intensive production plant? Or be inquisitive if there is any room for a common “rule of thumb” which would explain the recent past and predict the future developments? It also require to explore that whether using
such a rule of thumb, would not be quite a risky affair in forecasting, even in develop economies and even more so in highly volatile emerging markets? It has been observed that in the wake of globalization and exploration of newer and wider horizon, firms may fall into the comfort zone when they must look into environment around it instead of fooling around with some fallacies that are farfrom hard core realities. The aspiration of this paper is to evaluate and understand the fallacy of reinvestment trigger and to see why at times firms may look for easy and quicker ways to gain edge over the competitors, when they need to be careful in handling capital investment decision or else they may become easy prey to the harsh realities of the market. It also highlights the fact that in the ever changing environment, where survival is depending upon making plans that are flexible and at the same time concrete enough to give the firm cutting edge over its rivals.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Copyright (c) 2012 Syed Shabib ul Hasan, Syed Shahid Zaheer Zaidi