Focusing on the core value levers companies can apply in the decision and design phase of capital investments, this book is the first to cover this topic in a holistic, practical and strategic manner, and is based on McKinseys extensive industry analysis and research. The book examines this topic by looking atthe challenges in making correct decisions on capital investment in the following ways: Risk exposure: outlining a framework for measuring the risk exposure of an asset relative to the return and giving examples of how market playerscan follow different strategies, depending on the protective circumstances and challenges they face. Technology: Product and process innovations often require investments in new assets. The book describes a quantitative model to identify the right technology and the best investment time for switching from a current to an innovative technology. Timing: Price cycles are a well-known and much-feared phenomenon in many capital-intensive industries. The book describe a model for assessing capital investments and the levers managers can use to tame the cycle, e.g., influencing industry conduct by investing counter-cyclically as the most important strategy for market leaders. Size: Building a new asset that is too small or too big can destroy a lot of value. Decision makers therefore need to find the lowest-possible unit costs. Often economies of scaleare taken into account, while diseconomies are disregarded both complexity costs as well as ‘risks of size.’ By integrating these views, we have found thatthe lowest-possible unit cost occurs in a wide capacity range, because economies and diseconomies of scale balance each other. This leads to smaller-than- usual assets. We describe a quantitative model that illustrates the impact of economies and diseconomies of scale on the cost curve of an investment. Location: Guidelines for choosing the right location in a globalized asset network. Financing: Asset-heavy companies can use their superior understanding of investment risks to optimize their financing structure and thereby create more value. The book also covers governmental incentives and how companies and governments can create a win-win situation in defining the optimal investment incentives. The book includes many industry-specific examples, focusing on seven asset-heavy industries: Utilities, Oil & Gas, Telecommunications, Transportation & Logistics, Chemicals, High Tech, and Automotive. These industries cover about 35% of all global annual investments.
- ISBN: 978-0-470-77967-5
- Editorial: John Wiley & Sons
- Encuadernacion: Cartoné
- Páginas: 232
- Fecha Publicación: 29/05/2009
- Nº Volúmenes: 1
- Idioma: Inglés