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R & D Storage Is a Small, but Diversified, Moving

question 57

Essay

R & D Storage is a small, but diversified, moving and storage company.In recent years its corporate income has declined to unacceptable levels.To change the direction of the company, the board of directors hired a new chief executive officer.She is currently considering three alternative ways as to how division managers are rewarded for their performance.They are; ROI, RI, and EVA.Required:
Evaluate the CEO's plans by comparing the similarities and differences of the three methods.


Definitions:

Organizational Architecture

The structure and systems used by a firm to align its strategies with the behavior of its employees, comprising decision rights, rewards, and organizational boundaries.

Customer Location

Refers to the geographical area where a company's potential or actual customers are situated.

Divisions Defined

The categorization and separation of organizational tasks or functions into distinct units for management purposes.

Transfer-Pricing

The pricing of goods, services, and intangible property bought and sold by operating units or divisions within the same company.

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