Capital Budgeting

According to an article posted on Nokia Press Release on April 23, 2012, Nokia started its business in Vietnam in 1996. Since then, Nokia has been successful in creating its own prestige in the prospective market like Vietnam. The company had two representative offices and one new company named Nokia (Vietnam) LLC in 2011. It began speeding up the long - term development by building its manufacturing facility to satisfy the world's increasing demand for mobile phones. This factory is located in Vietnam - Singapore Industrial Park (VSIP) in Bac Ninh Province, and expected to operate at the beginning of 2013.

The article is about Nokia, one of the most popular international mobile manufacters all over the world. With the history of 150 - year development, Nokia has accomplished its simple mission "Connecting People" since it helps over 1.3 billion people get in touch with each other by using a variey of its products like smart devices and mobile phones. Each product has appealing design, affordable price and many useful applications, which users can easily find them in the online Nokia store. The company's production facilities are located many places around the world including Brazil, India, China, etc. Throughout its operations, Nokia has received a number of awards and achievements such as one of the World's Most Sustainable Technology Companies on DJSI World for 2011, Forbes Top 10 World's Most Sustainable Companies in 2011, Bloomberg Business Week Top 25 Most Innovative Companies in 2010, etc.

Nokia's production program plays an important role with respect to reinforcing its firm commitment to Vietnam and fostering the company's strategy to take the lead in the information technology era. Nokia had been taken its position as the world's leading mobile manufacturer by Samsung by the end of the first quarter of 2012. However, the company had been leading in Vietnamese mobile phone market until the second quarter of 2012. Therefore, the new factory will produce attractive inexpensive new mobile devices, which are focused on gaining the market shares in the world in general and in Vietnam in particular. This program also brings a lot of benefits to Vietnam like foreign investment growth, employment opportunities, and people's awareness improvement about modern technology, etc.

Like any worldwide companies, Nokia has to face with a lot of decisions to keep the operations on the right way, especially those related to finance. The action of building manufacturing facility in Bac Ninh Province of Nokia is a typical illustration of capital budgeting, which is one of the three types of financial decisions including capital budgeting, capital structure, and working capital management. In this situation, the production plant is the company's long - term assets, and Nokia decided to invest money to construct the factory in Vietnam with the purpose of developing its mobile phone