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1、bri75829_ch17.qxd9/5/0810:14AMPage520DivisionalPerformanceEvaluationCHAPTER17CHAPTEROUTLINEMeasuringDivisionalPerformanceCostCentersExpenseCentersRevenueCentersProfitCentersInvestmentCentersTransferPricingEconomicsofTransferPricingCommonTransfer-PricingMethodsReorganization:TheSolutionIfAllElse
2、FailsInternalAccountingSystemandPerformanceEvaluationUsesoftheAccountingSystemTrade-offsbetweenDecisionManagementandDecisionControlSummaryriggs&Strattonwith2007salesof$2.2billionistheworld’slargestproducerofgasolineenginesforoutdoorpowerequipment.1B&Sengines,primarilyB3to25horsepower,arepurcha
3、sedbyoriginalequipmentmanufacturersandincorporatedintolawnandgardenequipmentsuchasmowersandgardentillers.Inthe1980s,mostoftheirmanufacturingplantswereunionized.UnionworkruleslimitedB&S’slaborproductivity,causingB&S’slaborcoststoexceedthoseoftheircompetitors.Toreducetheirlaborcosts,B&Sinvestedh
4、eavilyinautomation.WhileautomationwasconsumingB&S’scapital,competition(primarilyfromJapan)wasre-ducingtheirprofits.Moreover,ashiftfromindependentdealerstomassmerchandisers,suchasWal-Mart,Kmart,andHomeDepot,whoinsistedonpriceconcessionsfromtheirsuppliers,putfurtherpressureonB&S’sprofitmargins.In1
5、989,B&Sreporteda$20millionloss.Theirdeterioratingfinancialsituationcoupledwithachangingcompetitiveland-scapepromptedB&Storeexaminetheircorporatestrategy,toreorganizethefirm,andtoadoptnewperformancemeasurementandcompensationschemes.B&S’straditional1DetailsofthisexamplearefromJ.SternandJ.Shielywit
6、hI.Ross(2001),TheEVAChallenge:ImplementingValue-AddedChangeinanOrganization(JohnWiley&Sons,Inc,NewYork),28–33.EVAisaregisteredtrademarkofSternStewart.www.briggsandstratton.com.bri75829_ch17.qxd9/5/0810:14AMPage521Chapter17DivisionalPerformanceEvaluation521markethadbeenhigh-volumebasicsmallengi
7、nes.Butthefirmhadventuredintothehigh-endmarket,onlytolosemoney.Briggs&Strattonrefocuseditsstrategybacktoitscorebusinesstobecomethelow-costhigh-volumeproducer.Toimplementthisstrategyinthe1980sandtoboostsalestothemassmerchandisers,B&Shadto
