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Is it true that divisions are called centers such as there are 4 centres such as:
1) Cost centres
2) Revenue centres
3) Profit centres
4) Investment centresBut what are their roles & responsibilities in decision making?
They are stating what it is that the divisional manager is responsible for (and is therefore how their performance will be measured.
If it is a cost centre then they are being measured on how they manage the costs, if a revenue centre then on how they manage the revenue, if a profit centre then on how they manage the profits, if an investment centre then they are measured on how well they are investing in assets and to measured on their ROI or the RI.
It is investment centres that are relevant in the exam as far as calculations are concerned.
I explain all of this in my free lectures on performance measurement. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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