PERFORMANCE MEASUREMENT
Decentralization
Delegating decision making authority to lowerlevel managers
Advantages
Betterlocaldecisions
Faster response to customers
Trainsfuturemanagers
Highermotivation
Disadvantages
Goalincongruence
Lackofcoordination
Suboptimaldecisions
Harder to transfer bestpractices
ResponsibilityCentres
1 CostCentres controls onlycosts
2 ProfitCentre controls revenue costs
3 Investmentcentre controlsrevenue costs assets
FinancialPerformance clleasures
1 ROI Return on investment
ROI Operating Income Average OperatingAssets
Ways to improve ROI
Increase sales
Reduce expenses
Reduce assetbase