Divisional performance

4 important questions on Divisional performance

When is a group structure applicable?

  • Strong difference in activities and markets
  • independence of activities
  • extra profit own division does not lowe profitability of the whole company

When a measure becomes a target it ceases to be a good measure

Goodhart's law

The more a metric counts for real decisions, the greater the pressure for corruption, the more it distorts the situation it's intended to monitor

Campbell's law
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Division profit as a percentage of invested capital

ROI

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