Compatibility of divisional performance measure

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Reference no: EM133225961

Assignment:

Details: Cooler manufactures and installs air-conditioning systems for commercial clients. Cooler started its operations in 1998 in the western region, but had since expanded its businesses to the eastern region in 2014. The market for air-conditioning systems has been expanding over the past decade. The directors of Cooler have set the company's goals to be the market leader; and to strive to deliver the best quality air-conditioning system that produces the coolest and cleanest air. To achieve its goals. Cooler relies on a strategy of continuous innovation to produce quieter and energy-conserving air-conditioner models. The company also invests in marketing efforts to create awareness of its state-of-the-art products.

Given that Cooler's mission is ultimately to maximise shareholder wealth, the directors currently use total shareholder return as the measure of overall corporate performance. The CEO is concerned about the compatibility of ROI (used to evaluate the performance of divisions) with the overall measure of corporate performance (total shareholder return).

QUESTION: Appraise the compatibility of divisional performance measure with the overall corporate performance measure.

Reference no: EM133225961

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