Question
A company has two divisions, Small and Big. Big Division has net assets of H8 million, and makes an annual profit of 900,000. Small
A company has two divisions, Small and Big. Big Division has net assets of H8 million, and makes an annual profit of 900,000. Small Division has net assets of $400,000 and makes an annual profit of 90,000. The cost of capital for both divisions is 10% and 80% of profits are controllable. Required: Compare the performance of the two divisions using: a) ROI b) Residual income c) Comment on your results d) Explain the levels of autonomy/authority in divisionalized organisations e) State the advantages of divisionalization
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Project Management A Systems Approach to Planning Scheduling and Controlling
Authors: Harold Kerzner
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978-047027870, 978-0-470-5038, 470278706, 978-0470278703
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