Fundamentals of Evaluating the Economic Efficiency of Organizational Development Projects

This research aims to substantiate the concept of cost and its relationship with the notions of value and utility, as well as the market price of a good, by examining the theoretical foundations of cost, its contemporary interpretation, and the link between firm valuation and investments. According to research findings, cost is one manifestation of economic value. Simultaneously, cost is fundamentally based on economic value, understood as the aggregate of a good’s utility and the expenditures required for effective economic activity. However, scarce goods possess a considerably higher value. Thus, there is an inverse relationship between the quantity of goods, their utility, and their cost because increased production diminishes their scarcity and value. Every firm is viewed as an ongoing investment process that carries its own market valuation. If an economic agent agrees to exchange a certain sum of money for a specific object or good, this sum is considered its cost, ultimately expressed in its price. In other words, cost encompasses utility, value, and production expenses. In a market environment where the primary aim of strategic management is to maximize the owners’ wealth, achieved through an increase in the company’s market value, the significance of a firm’s “price” grows because it is influenced by long-term strategic capital investment decisions. These decisions must effectively maintain the owners’ interest and enhance their prosperity. An increase in value is attainable through the implementation of successful investment projects, making it essential to properly assess their effectiveness.