Annals of the „Constantin Brâncuş i” University of Târgu Jiu, Economy Series, Issue 4/2016 „ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007 THE CHOICE OF INVESTMENT LOCATION – THE DETERMININING FACTOR OF ITS YIELD GUŢĂ ANCA JARMILA LECTURER Ph.D, UNIVERSITY OF PETROŞANI, FACULTY OF SCIENCES, SCIENCES ECONOMICS DEPARTMENT gancajarmila@yahoo.com Rezume The main objective of a financial manager is to use the funds of the company within its managerial authority, so that at long-term the firm obtains the investments yield at least as high as that which could be achieved through alternative investments, with similar risks. The second important objective is to maximize the present value of investment resources to achieve the higher yield as possible, without existing the undue risk. For maximization of the earning capacity of the firm, the resources are allocated in such a way that the earning are allocated in such a way that the earning capacity is transformed into a high efficiency as possible for the company. For achieving these objectives the measurement methods are needed to evaluate the company performance. A basic measurement method is the return on investment (ROI), which describes the relationship between profit and investment. The planning of a business regardless of the investment area must take into account the location of the investment project because of its importance to the future success of the company. In this context, the paper analyzes the main aspects concerning the natural environment and related geophysical conditions, the environmental impact of the project, socio-economic and governmental policies as well as the industrial infrastructure conditions, key issues in determining the efficiency of investment for a company with industrial production activity. Key words: investment, natural environment, environmental impact, socio-economical policies, governmental policies, industrial infrastructure. JEL Classification: M21, G11, L52 1. Introduction The business planning must take into account ever since the incipient stages the location and emplacement of the investment project because of its importance for the future success of the company. Without a suitable location any business is condemned to failure even before of beginning of its effective activity. The analysis of business or investment location is a dynamical process and not at all one static, because it is possible to say that it continues all the period of company life. Thus, the selected management strategy (both in the moment of starting a business and afterwards) will must correspond to the requirements of the location of the investment project. In other words, the initial choice of location can influence perpetually the business activity. Choosing a location, the entrepreneur mustn’t guide himself only according to cost or comfortableness, because this false initial economy can by transformed afterwards into the costs much bigger. For example an investment location can be chosen thanks to the existence of an available place or unoccupied building near the own residence, or a small rent. The fact that a location for investment is convenient or the rent is small wouldn’t be the reasons for choosing of location. On the contrary, other factors must be considered in pursuance of a complete analysis of all potential locations. 2. The investments yield – importance, usage For the most of businesses, perhaps no other aspect of decision - making isn’t so important to its success than the use and evaluation of resources. The management is constantly faced with the variety of alternatives concerning the institutional resources and is responsible for the funds which were given to its care. The selection of the most profitable alternative, the recognition of availability of funds and necessary resources to finance the investment can be considered as major functions of the management during the budget allocation process. The main objective of a financial manager is to use the funds of the company within its managerial authority, so that at long-term the firm obtains the investments yield at least as high as that which could be achieved through alternative investments, with similar risks. The second important objective is to maximize the present value of investment resources to achieve the higher yield as possible, without existing the undue risk. For maximization of the 171