Senior management is concerned that solely focus on ROI in measuring divisional performance could have an adverse long-run effect on Fairmont Publishing’s customers. What other measurement, if any, would you recommend Fairmont to use? Explain
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Senior management is concerned that solely focus on ROI in measuring divisional performance could have an adverse long-run effect on Fairmont Publishing’s customers.
What other measurement, if any, would you recommend Fairmont to use? Explain
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- The OakTree Group is a 75-year old company founded in Hong Kong. The Group comprises of two majorbusinesses: a publishing business known as Fairmont Publishing and an insurance business namedGeneralife. The Group is currently organized in a decentralized manner with two businesses running asinvestment centers. However, with the recent retirement of many senior staff in OakTree, the CEO is verymuch concerned regarding the performance of the company under a new generation of leadership. In fact,the CEO is considering the possibility of restructuring the Group into a centralized structure.Fairmont Publishing is organized as a divisional structure with the presence of two divisions: Printed Mediaand Online Media. The following are summary financial information for 2019 and 2020: Printed Media Online Media 2019 2020 2019 2020 sale $18900 $19320 $25200 $26880 SG&A expenses $6590 $6520 $6092 $8564 Current assets $5670 $6600 $4050…The OakTree Group is a 75-year old company founded in Hong Kong. The Group comprises of two majorbusinesses: a publishing business known as Fairmont Publishing and an insurance business namedGeneralife. The Group is currently organized in a decentralized manner with two businesses running asinvestment centers. However, with the recent retirement of many senior staff in OakTree, the CEO is verymuch concerned regarding the performance of the company under a new generation of leadership. In fact,the CEO is considering the possibility of restructuring the Group into a centralized structure.Fairmont Publishing is organized as a divisional structure with the presence of two divisions: Printed Mediaand Online Media. The following are summary financial information for 2019 and 2020: Printed Media Online Media 2019 2020 2019 2020 sale $18900 $19320 $25200 $26880 SG&A expenses $6590 $6520 $6092 $8564 Current assets $5670 $6600 $4050…The OakTree Group is a 75-year old company founded in Hong Kong. The Group comprises of two majorbusinesses: a publishing business known as Fairmont Publishing and an insurance business namedGeneralife. The Group is currently organized in a decentralized manner with two businesses running asinvestment centers. However, with the recent retirement of many senior staff in OakTree, the CEO is verymuch concerned regarding the performance of the company under a new generation of leadership. In fact,the CEO is considering the possibility of restructuring the Group into a centralized structure.Fairmont Publishing is organized as a divisional structure with the presence of two divisions: Printed Mediaand Online Media. The following are summary financial information for 2019 and 2020: printed media Online Media 2019 2020 2019 2020 sale $18900 $19320 $25200 $26880 SG&A expenses $6590 $6520 $6092 $8564 Current assets $5670 $6600 $4050…
- The OakTree Group is a 75-year old company founded in Hong Kong. The Group comprises of two majorbusinesses: a publishing business known as Fairmont Publishing and an insurance business namedGeneralife. The Group is currently organized in a decentralized manner with two businesses running asinvestment centers. However, with the recent retirement of many senior staff in OakTree, the CEO is verymuch concerned regarding the performance of the company under a new generation of leadership. In fact,the CEO is considering the possibility of restructuring the Group into a centralized structure.Fairmont Publishing is organized as a divisional structure with the presence of two divisions: Printed Mediaand Online Media. The following are summary financial information for 2019 and 2020: Printed Media Online Media 2019 2020 2019 2020 sale $18900 $19320 $25200 $26880 SG&A expenses $6590 $6520 $6092 $8564 Current assets $5670 $6600 $4050…The OakTree Group is a 75-year old company founded in Hong Kong. The Group comprises of two majorbusinesses: a publishing business known as Fairmont Publishing and an insurance business namedGeneralife. The Group is currently organized in a decentralized manner with two businesses running asinvestment centers. However, with the recent retirement of many senior staff in OakTree, the CEO is verymuch concerned regarding the performance of the company under a new generation of leadership. In fact,the CEO is considering the possibility of restructuring the Group into a centralized structure.Fairmont Publishing is organized as a divisional structure with the presence of two divisions: Printed Mediaand Online Media. The following are summary financial information for 2019 and 2020: Printed Media Online Media 2019 2020 2019 2020 sale $18900 $19320 $25200 $26880 SG&A expenses $6590 $6520 $6092 $8564 Current assets $5670 $6600 $4050…Penco Ltd’s board of directors are looking into expanding the company’s business operations. Before investing in a new product, the board conducted one focus group, and based on this one bit of feedback, invested $5m of company funds to develop the product. Within two years, the company had lost $8m due to poor sales. Shareholders are furious and wish to hold directors personally liable for this loss. Analyse the likely outcome for directors if shareholders were to accuse the board of breaching CA s 180.
- Maya company has seen slow but steady growth over the past 10 years. Maya company started small, and all of the employees were family members. However, the business is now big enough that it is important to start setting up a more sophisticated internal control structure, including segregation of duties. What are the three specific functions that must be kept separate?Betty’s Fashions operates retail stores in both downtown and suburban locations. The company has two responsibility centers: the City Division, which contains stores in downtown locations, and the Mall Division, which contains stores in suburban locations. Betty’s CEO is concerned about the profitability of the City Division, which has been operating at a loss for the last several years. The most recent City Division income statement follows. The CEO has asked for your advice on shutting down the City Division’s operations. If the City Division is eliminated, corporate administration is not expected to change, nor are any other changes expected in the operations or costs of the Mall Division.Pacific Rim Industries is a diversified company whose products are marketed both domestically and internationally. The company's major product lines are furniture, sports equipment, and household appliances. At a recent meeting of Pacific Rim's board of directors, there was a lengthy discussion on ways to improve overall corporate profitability. The members of the board decided that they required additional financial information about individual corporate operations in order to target areas for improvement. Danielle Murphy, the controller, has been asked to provide additional data that would assist the board in its investigation. Murphy believes that income statements, prepared along both product lines and geographic areas, would provide the directors with the required insight into corporate operations. Murphy had several discussions with the division managers for each product line and compiled the following information from these meetings. Furniture 132,500 $ 10.00 6.00 2.00 Product…
- Your organization is planning to implement an ERP system. Some managers in the organization favor the big bang approach. Others are advocating a phased-in approach. The CEO has asked you, as project leader, to write a memo summarizing the advantages and disadvantages of each approach and to make a recommendation. This is a traditional organization with a strong internal hierarchy. The company was acquired in a merger 2 years ago, and the ERP project is an effort on the part of the parent company to standardize business processes and reporting across the organization. Prior to this, the organization had been using a general ledger package that it acquired in 1979. Most of the transaction processing is a combination of manual and batch processing. Most employees think that the legacy system works well. At this point, the implementation project is behind schedule.Exeter Group is a large retail company that has brick-and-mortar outlets throughout the Southeast. They have been in business for many years, but two years ago started an online sales channel to offset slowing in-store sales. The human resources (HR) department at Exeter handles tasks for the two divisions that make up Exeter: Retail and Online. Retail Division manages the company’s traditional business line. This business, although still profitable, is currently not growing and may be shrinking slightly. Online Division, on the other hand, has experienced double-digit growth from the beginning. The cost allocation system at Exeter allocates all corporate costs to the divisions based on a variety of cost allocation bases. HR costs are allocated based on the average number of employees in the two divisions. There are two basic activities in the HR Department. The first is employee maintenance (payroll administration, benefits, and so on), which is an ongoing activity and requires the…Exeter Group is a large retail company that has brick-and-mortar outlets throughout the Southeast. They have been in business for many years, but two years ago started an online sales channel to offset slowing in-store sales. The human resources (HR) department at Exeter handles tasks for the two divisions that make up Exeter: Retail and Online. Retail Division manages the company's traditional business line. This business, although still profitable, is currently not growing and may be shrinking slightly. Online Division, on the other hand, has experienced double-digit growth from the beginning. The cost allocation system at Exeter allocates all corporate costs to the divisions based on a variety of cost allocation bases. HR costs are allocated based on the average number of employees in the two divisions. There are two basic activities in the HR Department. The first is employee maintenance (payroll administration, benefits, and so on), which is an ongoing activity and requires the…