Which component of strategy measures the change in operating income attributable solely to changes in a company's profit margins between Year 1 and Year 2?
A)the growth component
B)the price-recovery component
C)the productivity component
D)the cost leadership component

Question

Quizplus · Accepted Answer

The price-recovery component measures the change in operating income attributable solely to changes in profit margins between two periods. This can be caused by a change in selling price, changes in material or labor cost, or a mix shift towards higher-priced products or services. The growth component measures the change in operating income due to changes in volume or revenue, while the productivity component measures the change in operating income due to changes in input usage or efficiency. The cost leadership component measures the change in operating income due to cost reductions, which may or may not be related to changes in profit margins.

Which Component of Strategy Measures the Change in Operating Income