APPENDIX 2

Responsibility Centers

Any commercial activity basically involves three elements: Input → Processing → Output. We start with inputs, process them to turn them into outputs. Or, to put it differently, capital is applied to resources to generate revenue (Figure A2.1). The relative importance of each of these elements depends on the type of commercial activity. On a very general level, the processing segment becomes strategically important for capital-intensive companies such as steel plants. For manufacturing-intensive companies such as the automotive industry, both input and processing segments assume importance, while the processing and output segments are significant for innovation and research and development (R&D)- focused companies. ...

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