BUS 322 Lecture Notes - Lecture 6: Organizational Structure, Performance Measurement, Cash Flow

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 322
• Professor: Mahmoudian Fereshteh

Document Summary

Organizational design, responsibility accounting, evaluation of divisional performance. Individual goal congruence: personal goal = org goal. Behaviour congruence: behave in org best interest regardless personal goal => measure manager achievement. Decentralized: decision made at divisions, assign responsibilities to sub units. Autonomy = training opportunity for increased responsibility. Positive motivation, lighten time burden upper manager, timely response to problem solving. Responsibility accounting: internal reporting tailor to specific structure, aggregate cost/profit/return at subunits => evaluate manager performance at subunits properly. Discretionary cost centre: unwell defined activity cost. Performance report: actual vs budget tailor to goal of responsibility centre => identify who should be blamed. Flexible budget: benchmark for compare actual revenue, profit, cost. Roi = income/ invested capital or (income/ revenue x revenue/invested capital) => increase by increase income, reduce investment or both. Residual income = profit - (invested capital x interest rate) Imputed interest rate: rate of return on investment of similar risk being forgone.