BUS 424 Lecture Notes - Lecture 8: Profit Center, Operating Lease, Uptodate

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 424
• Professor: Johnny Jermias

Document Summary

Market measures = focus on managing investor expectations, not value create [ no surprises during earnings announcements, punishing analysts no favorable recommendations, fixing the game ] Investment: uncertainty benefit investments = expensed (r&d) = forgo investments. Operating: accelerating/delay shipment, channel stuffing (selling more products to distributors/retailers than they can sell to customers) Reduce pressure short-term profit: not use/reduce annual profits for rewards, emphasize longer-term goals: market share, technical breakthroughs, make short-term targets easier to achieve => easy targets not motivate. Responsible for operating perf only: not responsible for developmental expenses (cost of bigger projects) + pre action reviews approve dev expenses proposed by profit centre managers => no clear distinction, investment decision passed to top mgm. Extend measurement horizon: congruence between acct measures and economic income: long term perf indicator (average earnings growth rate, cumulative return on capital) + bonus deferral => difficult, managers expect higher payoffs if have to wait.