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Trump Inc, has two regional divisions with headquarters in Windsor and an office in London. Trump Inc, uses a decentralized strategy. Selected data on the
Trump Inc, has two regional divisions with headquarters in Windsor and an office in London. Trump Inc, uses a decentralized strategy. Selected data on the two divisions follow: Required: 1. For each division compute the following performance measures: a. Return on Investment (ROI) in terms of margin and turnover. b. Residual Income (RI) assuming that the minimum required return for any division is 15%. 2. The CFO of Trump Inc. would like you to assist her in comparing the performance of the two divisions using both ROI and RI and which division is a better performer. 3. The CFO of Trump Inc. would like to know your thoughts on the following: a. She would like you to explain the advantages and disadvantages of the decentralization strategy, please provide two (2) examples of each. b. Finally, she is concerned that ROI or RI might not be sufficient to measure and manage effectively the performance of the two regional divisions. She would like to know if she should only rely on financial metrics to evaluate performances. If not, what other performance measurement models are available, please briefly explain this performance measurement model
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