Measurement and Control of Economic Activities from the Standpoint of Profitability

Abstract

It is possible to go a long way toward optimizing the profitability of a complex enterprise by: 1) getting each local management team to commit itself in advance regarding the activities it believes to be marginal, then measuring the profitability of the marginal activities; 2) comparing the performance of company components with that of outside independent agencies; and 3) designing compensation schemes that properly reward efforts aimed at achieving long-and short-term goals.