Proceedings

IMPACT OF LONG-TERM INVESTMENT
DECISIONS ON PROFITABILITY AND COMPETITIVE
ADVANTAGE IN BUSINESS. CASE STUDY
IN THE MINING INDUSTRY IN ROMANIA
Claudia Elena SERBAN 1 ,
Oana-Adelina FLORICIOIU & Radu-Daniel LOGHIN
Bucharest Academy of Economic Studies, Romania
ABSTRACT
Computer applications’ era, contemporary to us, generates the organizations’ management
appetite for long-term investment decision, especially since these investments, made either for
maintenance or for renewal-extension, are shown to be the path to profitability and
competitive advantage. However, are there limits to such investments? What should be the
reasoning when a long-term investment decision is taken? How could the executive identify
any faults that long-term investment decision could generate? In order to get answers to these
questions, we propose a model to reach practitioners, validated by statistical observation in
the mining industry, as organizational success depends not only on the chosen strategy and its
implementation, but on the mastery and application of quick observation techniques failures
as well.
KEYWORDS: investment decision, fixed-asset investment, economic and financial
equilibrium, business profitability, competitive advantage
INTRODUCTION
In the last decade in the U.S. have been rapidly shaped, developed and expanded
worldwide, the germs of “knowledge-based economy” that changes the fundamental
way to address macro and micro processes. For this type of economy “knowledge
becomes a cornerstone of achieving high productivity and competitiveness for firms,
industries, national economies and world economy as a whole”, says O. and L.
Nicolescu in „Economia, firma şi managementul bazate pe cunoştinţe” (Economy,
firm and knowledge based management). The two authors submit a concept with a
content that was developed almost simultaneously with the knowledge-based
economy, namely the concept of competitiveness. Countless international bodies and
experts put in the spotlight, during this period, competitiveness and how to get
competitive advantage at the macro and micro level.
However, as stated by the Lisbon European Council report in March 2000, now it can
be said, “there were no general accepted definitions of the concept and yet has not
been developed a comprehensive model to formalize its content”. Policy Board of
U.S. Competitiveness defines competitiveness as “the ability to produce goods and
1
Correspondence address: Elena Claudia ŞERBAN, Bucharest Academy of Economic Studies;
email: claudiaserbanos@yahoo.com
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