02: Types of business investment

Investment decision-making usually concerns sizable projects over the longer term. Some investments will be mandatory in order to meet regulatory requirements such as health and safety, while others will be necessary to facilitate growth and improve profitability – good examples being investment in assets like more efficient machinery, or in the development of new products or new technologies.

Broadly speaking there are two types of investment opportunity:

• Investing in the external capital market.
• Investing in internal productive opportunities.