Based on the latest development in the company and the suggestion of the CEO, discuss in detail four ways on how to improve the current performance measurement systems in the company can be further improved. Include in your discussion the significance of the suggestions.

QUESTION 2 Office Dotcom Sdn Bhd (OD) supplies modern contemporary office equipment and machinery to local customers. The company manufactures and assembles multiple products; operating in two (2) main divisions: Manufacturing Division and Assembly Division. Each division is responsible to generate adequate returns for all the investment projects they made. The mission of the company is "to maximise the shareholder's value through delivering good quality equipment for our valued customers". The investment decisions are mainly made by each divisional manager based on return on investment (ROI) measure. Last year, the divisions recorded an average ROI of 22.7% and it is OD's policy to reward any division that reports growth in its yearly ROI. The members of the division(s) will be entitled to cash bonuses and also benefits if the preceding year's ROI is exceeded. Besides the ROI measure, the managing director of the company is proposing the use of non-financial performance measures to assess divisional performance, which would include human resource development, operational efficiency, product quality and also innovation. As the time to conduct a yearly assessment of the division is approaching, you have asked a senior management executive to prepare a performance report for the divisions and the whole company. Without delay, the management executive emailed you the following report as requested: Manufacturing Assembly Office Dotcom Division Division San Bhd Average total investments (RM'000) 58,625 33,210 98,840 Return on investment 24% 27.1% 19.0% Residual income (RM'000) 5,2762 4,9648 3,944 Sales growth 5.0% -1.2% ? ? RM'000 RM'000 RM'000 Sales revenues 63,200 37,550 100,750 Cost of sales 17,810 12,600 30,410 Staff costs 16,220 5,910 25,330 Other operating costs 15,100 10,040 26,240 Operating profit 14,070 8,950 18,770Additional information: Manufacturing Assembly Office Dotcom Division Division Sdn Bhd The number of staff: at year start 256 184 450 at year-end 231 173 414 Number of staff's training sessions 18 7 25