Comparative Study Of Strategic Performance Factors In Actual And Simulated Business Environments

Abstract

Performance measures such as return on assets, return on equity, and market value/common equity have been widely used in both actual business and simulated business environments. Woo and Willard ( 983) have slated that such measures of profitability as return on assets and return on equity are essential to measurement of strategic performance, despite their many limitations (Dearden, et al). Drucker (1988) states that profitability related to the use of company resources should be measured as the product of profit margin multiplied by capital turnover and that while it may be easier to increase profitability by increasing turnover, both profit margin and turnover should be increased in order to achieve the best balanced results.