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16 Cards in this Set
- Front
- Back
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Decentralization
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The delegation of freedom to make decisions. The lower in the organization that this freedom exists, the greater the decentralization
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Segment Autonomy
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The delegation of decision-making power to managers of segments of an organization
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Incentives
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Those informal and formal performance-based rewards that enhance managerial effort toward organizational goals
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Agency Theory
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A theory that deals with contracting between an organization and the managers that it hires to make decisions on its behalf
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Return on Investment (ROI)
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A measure of income or profit divided by the investmenet required to obtain that income or profit
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Return on Sales
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Income divided by revenue
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Capital Turnover
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Revenue divided by invested capital
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Residual Income (RI)
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After-tax operating income less a capital charge
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Capital Charge
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Company's cost of capital x amount of investment
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Cost of Capital
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What a firm must pay to acquire more capital, whether or not it actually has to acquire more capital
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Economic Value Added (EVA)
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Equals adjusted after-tax operating income minus the cost of invested capital multiplied by the adjusted average invested capital
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Gross Book Value
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The original cost of an asset before deducting accumulated depreciation
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Net Book Value
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The original cost of an asset less any accumulatged depreciation
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Transfer Price
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The price that one segment of an organization charges another segment of the same organizatgion for a product or service
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Dysfunctional Decision
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Any decision that is in conflict with organizational goals
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Management By Objectives (MBO)
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The joint formulation by a manager and his or her superior of a set of goals and plans for achieving the goals for a forthcoming period
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