Corporate Strategy and Project Quality

At the lofty level of corporate strategy, there may be seem to be little use for the mechanics of corporate finance. Consequently, corporate strategic decisions are often made with little or no corporate financial analysis to back them up. One way in which corporate strategy can be linked to corporate finance, however, is through investment policy. An objective of any corporate strategy should be to enable the firm to develop a long-term capacity to differentiate itself and earn higher returns than its competitors. Alternatively, the efficacy of a corporate strategic choice can be measured through its effect on the firm's capacity to earn excess returns on its projects. Many of the concepts that are popular in corporate strategy can be linked to the discussion in the previous section.

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