4 Miramar Industries Quinn Snyder, the Vice President of Miramar Industries' Earthworks and Excavation Division, located...
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4 Miramar Industries Quinn Snyder, the Vice President of Miramar Industries' Earthworks and Excavation Division, located in Wellington, New Zealand, sat at his desk trying to make sense of the numbers that lay before him. Tomorrow morning he was due to make his year-end divisional report to the company's Board of Directors. Based on the numbers themselves, he could see that he would face an uphill battle trying to convince the Board that he and his division had performed well. Although his sales had increased significantly (see Exhibit 4.1), his division recorded a loss for the year. Since the company used ROI to evaluate performance, he realized that his performance for the year would look particularly bad. Although Quinn had always been suspicious of the utility of the company's ROI system, he was especially perturbed this year. Looking at the numbers, he could see that there had been a substantial increase in the amount of corporate service costs allocated. Part of the reason was due to the five-week power outage suffered in Auckland during February 1998, which caused the shutdown of the corporate services unit for nearly a month. A significant amount of overtime was incurred getting the unit current again. Just then the phone rang. It was Denise Green, the Vice President of the Landscape Design Division. She asked Quinn if he had seen the latest corporate results (see Exhibits 4.1 and 4.2). Denise went on to crow about how this year's results represented the fourth straight year that her pre-tax ROI was at or above 45 per cent, and this was after her division had paid a massive NZ$300,000 dividend to the parent company during 1998. Quinn 4 Miramar Industries Quinn Snyder, the Vice President of Miramar Industries' Earthworks and Excavation Division, located in Wellington, New Zealand, sat at his desk trying to make sense of the numbers that lay before him. Tomorrow morning he was due to make his year-end divisional report to the company's Board of Directors. Based on the numbers themselves, he could see that he would face an uphill battle trying to convince the Board that he and his division had performed well. Although his sales had increased significantly (see Exhibit 4.1), his division recorded a loss for the year. Since the company used ROI to evaluate performance, he realized that his performance for the year would look particularly bad. Although Quinn had always been suspicious of the utility of the company's ROI system, he was especially perturbed this year. Looking at the numbers, he could see that there had been a substantial increase in the amount of corporate service costs allocated. Part of the reason was due to the five-week power outage suffered in Auckland during February 1998, which caused the shutdown of the corporate services unit for nearly a month. A significant amount of overtime was incurred getting the unit current again. Just then the phone rang. It was Denise Green, the Vice President of the Landscape Design Division. She asked Quinn if he had seen the latest corporate results (see Exhibits 4.1 and 4.2). Denise went on to crow about how this year's results represented the fourth straight year that her pre-tax ROI was at or above 45 per cent, and this was after her division had paid a massive NZ$300,000 dividend to the parent company during 1998. Quinn
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