In today's competitive business environment, companies have to make various investment decisions to move forward or sometimes just to function in the marketplace. The return of an investment, the effect of external market factors on an investment decision and ways to encourage an investment, the impact of an investment's timing and magnitude on a firm's performance represent the core issues surrounding an investment decision. In this thesis, we address each of these investment questions with different settings.; In Chapter 2, we quantify the return of investment in a new technology. We demonstrate how inventory visibility helps reduce a manufacturer's inventory cost on the coordination of his reverse and forward channel. We consider a single manufacturer who meets the end customer demand with recently produced products (forward channel) as well as returned items. We quantify the value of information/visibility on the reverse channel for the manufacturer by making comparisons between three approaches: naive approach where the manufacturer has no visibility on his reverse channel and does not pay attention to the return flow characteristics; enlightened approach where the manufacturer has no visibility but takes the return flow into account while making his production planning; and full visibility where the manufacturer can monitor the arrival of returned items to the system and adjust his inventory level expectations for the following periods based on his observations. Under such a setting, we characterize how the supply chain characteristics of the manufacturer (visibility versus no visibility) and the type of management (naive versus enlightened) affect the value of visibility. We also evaluate the performance of practical approximations in inventory planning and find that the manufacturer may still invest for visibility and enjoy a majority of the savings with practical inventory planning rules. The value of visibility that we find here also translates into the visibility savings of an enabler technology and provides guidance on the investment decision for such a technology. A candidate enabler in this setting is RFID (Radio Frequency Identification) technology, adoption of which is recently being discussed in industry.; In Chapter 3, we focus on the effect of external market factors such as positive network externalities among firms and scale economies in the technology's supply on an investment decision, and discuss ways to foster investment. Faced with a new technology introduced in a market, a firm has to account for uncertainties regarding the future of the technology, network effects, and steep startup costs while making the adoption decision. Thus, each firm may be reluctant to be the first to invest due to the risk of being stranded with the investment. The vendor of the new technology, however, still experiencing economies of scale in the technology production, cannot provide assurance and lower prices unless some firms get on board with the technology. This individualistic behavior of firms produces a chicken-and-egg problem where the vendor and potential adopters both need encouragement from the other side but cannot completely commit. We study this adoption problem by finding the inefficiency, i.e., the adoption gap, due to lack of coordination. We propose several intervention methods such as subsidies, mandates, and quantity discounts to improve the adoption process. We evaluate each method's performance depending on the market characteristics, and discuss when each method is preferable. Finally, we compare our findings with our observations on the RFID market and its adoption.; In Chapter 4, we study the role of investment, specifically quality investment, in competition between two firms. We first consider a monopolist challenged by an entrant. We discuss how quality investment may keep the potential entrant out of the market. We characterize the market conditions motivating the monopolist to blockade, deter
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