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Performance Measurement & Transfer Pricing - Coggle Diagram
Performance Measurement & Transfer Pricing
The Balanced Scorecard
Balance
Financial & Operating
Performance & Rewards
Diversity of goals
Cause & Effect Relationship
Learning and Growth
Investment in development
Internal Business Process
Improvement in after-sale service
Customer
Increase customer satisfaction
Financial
Increase profits
Issues
Cost
Time
Difficult to spread the culture
Economic Value Added
Operating Profit after Tax - Returns on Investors x Capital Invested / Total Assests
Postive EVA means increasing shareholder wealth
Method to improve EVA
Reducing expenses
Increasing sales
Use capital investment efficiently
Reduce return rate (loan capital)
Divisionalisation
Product basis
Geographical basis
Structure for large organisations
Decentralised decision making
Controlled by Head Office
Coordinate activities
Set financial targets
Determine policies
Raise capital funding
Advantages
Faster decisions
Avoid delay in decisions
Motivation for HO
Greater sense of responsibility with employees
Disadvantages
Not helpful for another part of the organisation
Needs more communiation across the whole
Fail to feel the integrity
Aims of Good Measurement
Set clear goal for organisation
Balance long-term and short-term target
Measurement can be easily monitored
Acceptable by all employee
Can be applied regularly
Traditional Measurement
Disadvantages
Dissatisfaction with financial-oriented measurement
Only focus on outcomes not activities
Tend to looking back
Little attention on external measures compared to internal measures