S.J. Lawson, Inc.—A Performance Measurement Behavioral Audit
4 Pages Posted: 30 May 2017
Abstract
With the encouragement of its overseas parent company, Cochran Consumer Products Inc. (CCPI), the U.S.-based executive team at S.J. Lawson, Inc. (SJLI), was nearly ready to announce the new financial performance measurement focus and economic profit (EP) for the company's product category managers. Currently, the SJLI executive team was finalizing plans for its initial announcement to the subsidiary's five product category managers. The team had received some general guidance from headquarters but it had also been told that because it knew the category managers best, it should develop its own local strategy for introducing the initiative.
Excerpt
UVA-C-2366
Rev. Aug. 18, 2016
S.J. Lawson, Inc.—A Performance Measurement Behavioral Audit
With the encouragement of its overseas parent company, Cochran Consumer Products Inc. (CCPI), the U.S.-based executive team at S.J. Lawson, Inc. (SJLI), was nearly ready to announce the new financial performance metric, economic profit (EP), the company was rolling out for all its product category managers. In fact, the CCPI announcement was scheduled to take place in four weeks. Currently, the SJLI executive team was finalizing plans for its initial announcement to the subsidiary's five product category managers. The team had received some general guidance from headquarters, but it had also been told that because it knew the category managers best, it should develop its own local strategy for introducing the initiative by June 30. CCPI's public announcement would immediately follow all the subsidiary announcements.
The new focus was the result of almost nine months of intensive interviews, frequent meetings, heated discussions, and detailed refinements at both the corporate and subsidiary levels. The new EP metric was intended to extend the product category managers' financial objective from a traditional earnings perspective (i.e., product category profit) to a value-created focus (Exhibit 1). The parent company's global network of subsidiaries was embarking on the very same initiative, all galvanized and coordinated out of CCPI's European corporate headquarters by the conglomerate's CFO and CMO.
Context
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Keywords: local strategy, product category managers, financial performance, economic profit
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