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Solved: Evaluating managers ROI DuPont method value

chain analysis of
Evaluating managers ROI DuPont method value chain analysis of

Evaluating managers, ROI, DuPont method, value-chain analysis of cost structure. Peach
Computer Corporation is the largest personal computer company in the world. The CEO of
Peach is retiring, and the board of directors is considering external candidates to fill the position.
The board’s top two choices are CEOs Peter Diamond (current CEO of NetPro) and Norma
Provan (current CEO of On Point). As a board member on the search committee, you collect the
following information (in millions):

In early 2009, a leading computer magazine gave On Point’s main product five stars, its highest
rating. NetPro’s main product received three stars, down from five stars a year earlier. In the
same article, On Point’s new products received praise; NetPro’s new products were judged as
“mediocre.”
1. Use the DuPont method to calculate NetPro’s and On Point’s ROIs in 2007 and 2008.
Comment on the results. What can you tell from the DuPont analysis that you might have
missed from calculating ROI itself?
2. Compute the percentage of costs in each of the four business-function cost categories for
NetPro and On Point in 2007 and 2008. Comment on the results.
3. Relate the results of requirements 1 and 2 to the comments made by the computer
magazine. Of Diamond and Provan, whom would you suggest to be the new CEO ofPeach?

Evaluating managers ROI DuPont method value chain analysis of

ANSWER
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