Strategic investment decision-making – scanning and screening investment opportunities: The expansion of Guinness in West Africa. Issue 4 (3rd October 2016)

• Record Type: Journal Article
• Authors: Alkaraan, Fadi
• Is Part Of: Meditari accountancy research. Volume 24:Issue 4(2016)
• Page Start: 505
• Page End: 526
• Publication Date: 2016-10-03
• Subjects: Strategic investment decision-making -- Heuristics -- Managerial judgements -- Strategic control; Accounting -- Periodicals; Finance -- Periodicals; 657.05
• DOI: 10.1108/MEDAR-01-2016-0007
• Languages: English
• ISSNs: 2049-372X

Abstract

Abstract : Purpose: This study brings together cognitive and organizational aspects of the strategic investment decision-making process. It focuses on the early stages of strategic investment decision-making. This paper aims to augment the limitations of previous survey-based research through an archival case study that describes pre-decision screening in detail. Design/methodology/approach: This paper draws on archival data covering an investment decision undertaken by a large brewing company. The data cover a period of about six years, focusing on the decision to invest in West Africa. A rational/intuitive orientation model of the process is used as a framework to help analyze the archival evidence. Findings: Strategic investment decisions are non-programmed, complex and uncertain. For some companies (e.g. those with a strategic focus on new expansions), certain non-programmed decisions may become semi-programmed in the course of time by applying knowledge learned from having successfully handled non-programmed decision situations in the past. However, other companies without such a focus may not be able to programme part of their strategic decisions. Pre-decision control mechanisms constitute a form of strategic control by detecting potential problem areas in the investment option before formal approval. Research limitations/implications: Given the narrow scope of this paper – a single case study – the findings are used for theorization rather than offering generalizable results. There is a need for unified models to enrich our understanding of the influence that contextual factors have on strategic investment decision-making. Effective strategic pre-decision control mechanisms that maintain a good balance between rational and intuitive approaches are matters that remain open for debate in future research. Practical implications: Research on organizational and cognitive aspects of the strategic investment decision-making process is inherently practical. To achieve successful strategic investment decisions, it is essential to devote more attention to the choice and design of strategic control mechanisms. Originality/value: The framework of this study can help practitioners to gauge the strengths and weaknesses of their decision-making practices. It focuses on three aspects that are relatively absent in the literature: the strategic problem, the strategic choice and the chronological relations between the five stages of the strategic investment decision-making process. The use of historical data is suited to providing illustrations of intuitive/heuristic-based practices that would otherwise be hard to capture.