Productivity and Profitability: Planning and Control
A number of companies use gross margin as a planning and control objective. Their rationale is based on the fact that if the gross margin objective meets budget then the cost of goods sold, operating expenses and contribution to fixed costs and overhead will be covered. The approach developed in the previous chapters adds the dimension of ‘investment’. The availability of more detailed information (in terms of currency and accuracy) enables the performance measurement perspective to include dedicated resources and to consider performance as a ‘return on investment’. The earlier discussion considered the different viewpoints of productivity and profitability. This chapter considers how the model developed in Chapter 6 may be applied across a range of strategic and operational decisions.
KeywordsTrade Creditor Operational Decision Operating Margin Customer Expectation Customer Perception
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