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Investment policy

Investment policy

— organization and determination of the structure of the company's investments, establishing their volumes and determining the directions of their movement, as well as identifying sources for their formation

The main objective of the investment policy is to ensure the stable growth and development of the enterprise.

It is also worth noting that the investment policy, in most cases, is part of the financial strategy of the enterprise and helps in achieving the financial objectives set for the organization.

Many economists and researchers give their own definition of this concept. Thus, according to I.T. Balabanov, investment policy is an integral part of the financial strategy of the enterprise, which consists of choosing and implementing the most rational ways to expand and update the production potential.

P.L. Vilensky defines "investment policy" as a system of economic decisions that determine the volume, structure, and direction of investments both within an economic entity (enterprise, firm, company, etc.), region, country, and beyond, with the aim of developing production, entrepreneurship, profit, or other end results.

The investment policy of an enterprise is classified depending on its orientation and desired goals.

From this point of view, there is an investment policy aimed at:

  • enhancing efficiency;
  • the modernization of technological equipment and processes;
  • establishment of new businesses;
  • introduction of fundamentally new equipment and access to new markets.

The role of investments in the activities of any enterprise is to enable the possibility of expanding and updating production as well as the material basis of activity.

Intensive expansion of production has a number of features. Firstly, this is a more progressive type of economic growth, since a new factor is beginning to play a central role in the growth of the efficiency of the material conditions of production—the factor of the development of science and technology. Secondly, thanks to this, the production of scientific and technical information is developing on the scale of society, which is embodied in increasingly efficient means of production. Along with this, the system of education, training, and retraining of personnel provides an increase in the cultural and technical level of employees.

The choice of an enterprise's investment policy at the industry level is largely related to which group of industries the enterprise belongs to or in which industry it intends to work.

Let's turn to the example of Apple, which has always assigned a significant role to investment activities as part of the company's strategy.

As of 2018, the company has conducted a number of transactions worth less than $1 billion in the acquisition of technology, production assets, and talent, which it can use to strengthen its current work in the field of research and development.

Two deals from this list are buying a subscription to the digital magazine Texture and purchasing the music search app Shazam. They indicate that Apple cares about the further development of its business in the field of content services. The other two-the acquisition of the manufacturer of lenses for smart glasses, Akonia Holography, and most recently, the purchase of assets from the long-known supplier of chips for power management, Dialog Semiconductor, suggest that Apple considers chip manufacturing and component engineering as the main competitive force.

Despite the fact that the company's activity in the field of mergers and acquisitions in 2018 is not a guarantee that Apple will not succumb to temptation and will not conclude a major deal, it suggests that the company's approach to assessing the need for acquisitions in certain areas really remains unchanged.

At each level of the company's development, the investment policy performs an important function. Thanks to investments, it is possible to increase the quality of manufactured products, modernize and update manufacturing processes, and increase the competitiveness of the enterprise. Due to investments, environmental and environmental measures can be carried out so that companies can not only develop, but also function effectively, make a profit, and at the same time develop the environment.

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