Capital Expenditures
Capital expenditures include any investments a company makes to replace, improve, or acquire assets to help improve efficiency and profitability. Typically these are physical expenses such as machinery or buildings. The same analysis capital budget analysis can be applied to HRM and marketing. In your HR metrics class you'll spend more time conducting in-depth analysis of HR functions using these valuation tools. For now, we'll be focusing on investments which might involve purchasing new or better equipment, developing a new product, or increasing production. Since capital expenditures are oftentimes very expensive, it is important that they are prioritized and budgeted appropriately. Often departments within organizations compete for limited resources. As an HR manager, you will be better prepared by utilizing these valuation techniques as you aim to secure limited resources towards for HR initiatives.
· Present this concept in your own words in such a way that someone without a financial background could understand your explanation.
· Describe how this concept would be used in analyzing capital expenditures. Provide at least two examples of its use to you as an HR Manager.
· How would this concept be used in a long-term strategy? What would be the concerns of failing to use this concept when considering capital expenditures? What are some of the concerns you see in applying these techniques to analyzing investments within the HR function?