In recent years, Diageo plc has made a significant strategic commitment to reducing the company's carbon footprint. An unusual opportunity arose to make progress against this corporate goal by having a Canadian subsidiary substitute methane pumped from a local landfill for natural gas to power its manufacturing facility. Doing so, however, would negatively impact the income of the subsidiary and the performance evaluation of this investment center's management. The managers were assured by the corporation that adjustments would be made to their performance evaluations if they went ahead with the methane project. This incident illustrates the use of:
A) Subjective performance evaluation.
B) The industry volume variance.
C) The market share variance.
D) Expectancy theory.

Question

Quizplus · Accepted Answer

This incident illustrates the use of subjective performance evaluation, where adjustments are made to performance evaluations based on factors not directly tied to financial metrics, such as the decision to use a more environmentally friendly but less profitable energy source.

In Recent Years, Diageo Plc Has Made a Significant Strategic