Background: Previous studies regarding investments are based on surveys, which has had a low response rate and also in some ways are completely wrong. The companies, which responded to the surveys, actually don’t use the methods they said they did. In addition to the fact that the steel industry faces a constant increasing competition and a great effort is put on cost reducing measures makes this area interesting to study.

Purpose: The purpose with this study is to perform acase-study to investigate and describe a cost reducing investment process in the Swedish steel industry. Furthermore the purpose of this study is to reflect on the investment process in the practice on the basis of selected theories.

Method: A profound case-study has been carried out during two months at Company X, where the authors have followed a project group during an investment process. Furthermore has inside documentation been gathered through the company´s intranet and handed out by the executive in charge.

Conclusions:

• The cost reducing investment process in the Swedish steel industry is consistent with the chosen theories. This study confirms that the steps presented in the theories do not necessarily need to be in a certain order, but that all steps usually occur even though the depth can vary depending on the type of investment.
• The reason that the previous studies regarding capital budgeting are misleadning is
• because the researchers have treated investments as a group without making the necessary differentiations. The results obtained in the surveys have been the starting point when the researchers have studied the practical procedure of businesses without specifying the individual case. The only method actually used in cost reducing investments by companies in the Swedish steel industry isaccording to this study the Payback method.
• Regarding cost reducing investment processes, Company X do what it says it does. Some parameters are lacking in the application forms as they may be hard determine and measure and therefore contribute to more uncertainty than clarity in the decision-making. In some cases the purpose of the investment speaks for itself and by that reason no further presentation is necessary. Companies strive to rationalize their information gathering and operations.