The use of return on investment (ROI)as a performance measure may lead managers to reject projects that would be profitable for the company as a whole.

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ROI as a performance measure only looks at the financial return of a project, without considering other potential benefits that may be harder to quantify, such as strategic advantages or increased customer loyalty. As a result, managers may opt to reject projects with lower ROI even if they would contribute positively to the overall success of the company.

The Use of Return on Investment (ROI)as a Performance Measure