Evaluating Performance Using Metrics
Using the data from the Anthony's Orchards website, write a 1- to 2-page paper identifying the profit centers, cost centers, and investment centers of the company. What are the indicators that each responsible party uses to evaluate performance? How can a manager evaluate each unit's performance based on the metrics (with interpretation)? If put in charge of one of the cost centers, which would you want to manage and how would you propose managing it to ensure both short-term success and long-term sustainability?
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A profit center is one that directly adds to the profit of a firm. A profit center is usually treated as a separate business. It creates profits individually and separately. In case of Anthony's Orchard the profit centers are the apple products making facility, the Pick Your Own Apples program, the Community Supported Agriculture program, and the apple store.
The cost center is a division that adds to the cost of an organization but indirectly adds to its profit. Usually, marketing, and customer service related divisions at Anthony's Orchard are likely to be cost centers. The cost centers at Anthony's Orchard are Fall Harvest Festival, and Educational Programs. Both these programs add to the cost of Anthony's Orchard but indirectly draw customers to Anthony's Orchard and add to its profit (b).
The investment center is treated as a unit which is measured against its use of capital. The investment center performance is measured on the basis o return on investment achieved. The investment center at Anthony's Orchard is the 6,000 acre orchard situated in Wenatchee Valley (a).
What are the indicators that each responsible party uses to evaluate performance?
The responsible party at apple products making facility at Anthony's Orchard ...
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