Thursday, December 4, 2008

Letter Q

Q
q-theory: A theory of investment behavior which suggests that firms tend to invest as long as the value of their shares exceeds the replacement cost of the physical assets of the firm. Developed by economist James Tobin, q-theory encompasses other theories of investment in a simple framework. q is the ratio of the value of a firm to the replacement cost of the assets of the firm like machines, buildings, etc. If q > 1 the firm should expand. If q < 1, it will make sense to sell the assets rather than try to use them.

Quinn, James Brian: A well known scholar in the area of strategic management, Quinn has suggested that strategic management is not primarily an analytical or rational activity. Strategic decisions typically evolve in a part random or erratic and part logical way. In 1980, Quinn coined the expression “logical incrementalism” to capture this idea. Quinn’s view is that managers tend to make strategic decisions according to perceptions of incremental opportunities which appear to add to what they already have.
(See Strategic Planning)

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