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Unformatted text preview: s the fundamental purpose of
corporations? Managerial performance should be evaluated
and rewarded based on the Balanced
o Strategic approach and performance management
system Four perspectives – financial, customer, business
process, learning and growth Accept maximization of the value of the firm as
the criterion for making the requisite tradeoffs
among its stakeholders What is the fundamental purpose of
corporations? Should the firm have a single-valued objective
function? What arguments suggest value maximization as
the ‘single value’? Price theory (or the theory of
competitive equilibrium): When people value a good or service highly, the demand for
the product is high and the market produces a high price. This is a signal to producers: if high prices create profit
opportunities (i.e. if revenue exceeds opportunity cost), firms
produce the good. This is efficient since the opportunity cost reflects the
foregone profit from using the resources to produce other
goods, and a lower forgone profit implies a lower valuation of
the other goods (i.e. a lower dema...
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This document was uploaded on 01/15/2014.
- Fall '14