ADMS 3510 Chapter Notes - Chapter 18: Performance Measurement, Risk Aversion, Total Absorption Costing
27 Apr 2019
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Document Summary
Performance measurement: process by which managers at all levels gain information about the performance of tasks within the firm and judge that performance against expectations established in budgets, plans and goals. Management control: evaluation of the performance of mid-level managers by upper- level managers. (strategic performance measurement: long-term, strategic issues use management-by-objective which is where long- term objectives are determined, and performance is periodically measured against these goals. Operational control: evaluation of operating-level employees by mid-level managers (operational performance measurement) Strategic business unit (sbu): a well-defined set of controllable operating activities over which an sbu manager is responsible. Principal-agent model: a conceptual model that contains the key elements that contracts must have to achieve the desired objectives. Uncertain: events out of control of the manager (machines breaking down) Risk aversion: with uncertainty, there is a certain amount of risk that must be taken, and the risk preference of the manager must be taken into account.
