1. Which of the following is not a criticism of using return on investment (ROI) for divisional performance evaluation?

Multiple Choice

ROI fails to capture broader elements of "performance," beyond financial performance.

The ROI metric has a short-term focus/orientation.

ROI does not take into consideration the amount of capital invested in the division whose performance is being evaluated.

There is a disconnect between models used for the analysis of long-term capital investment projects and subsequent evaluation of the financial results of those projects using ROI.

ROI may not capture and reflect value creation in the "new economy."

2. Which of the following statements concerning value chain analysis is false?

Multiple Choice

All of the statements are true.

The goal of value chain analysis is to find areas where a company can either add value or reduce cost.

The value chain focuses on the entire production process, as well as the sale of the product and service after the sale.

Throughout most industries, the most successful firms are the ones that operate within the entire value chain, thereby overseeing every aspect of the value chain for the customer.

If a company cannot compete in a specific area of the value chain, it might consider the option of outsourcing that portion of the value chain to someone who can perform it better.