The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.

Question

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Managers who are solely focused on maximizing return on investment may make short-term decisions that sacrifice long-term growth and development of the company as a whole. This can include cutting back on research and development, laying off employees, or neglecting corporate social responsibility initiatives.

The Use of Return on Investment as a Performance Measure