Performance measurement for divisionalised companies in Tanzania

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Date
2006
Journal Title
Journal ISSN
Volume Title
Publisher
University of Dar es Salaam
Abstract
Most of large organizations adopt divisionalisation structure as a strategic alternative to manage and control diversity and complexity of their activities. A divisionalised organization structure results in the decentralisation of decision-making process in which the divisional managers are given discretion and authority to make decisions in their divisions. This study examined the divisional performance measurement in Tanzanian companies with focus on measurement of managerial and economic performance of the divisions. Using data collected from 35 firms situated in Dar es Salaam, it was found that meeting targets set in budget is the measure mostly used. Profitability measures such as divisional net profit and profit margin are also used though not so widely. Among the non-financial measures identified are delivery schedule and customer relation. Difficulties in separating a division nom the rest of the firm, problem of transfer pricing due to interdependence of divisions and difficulties in measuring the output of non- financial performance are the main problems. The level of autonomy granted to divisional head was found to be substantial in determining the quantity of output in the operating items while low or even no autonomy was given to divisional managers in specifying the amount of capital expenditure in the annual budget and determining long temp borrowing in investment and financing items respectively. The findings reveal that though firms are divisionalised. which entails decentralization of decisions making, still firms do not grant fully autonomy to divisional heads. The recommendation presented herein is !for the head office to grant more autonomy to divisional heads, particularly in operating yeas so that the organization could benefit from the advantages of divisionalisation.
Description
Available in print form, University Dar es Salaam, Wilbert Chagula
Keywords
Performance measurement, Divisionalised companies, Tanzania
Citation
Malimi, S.C(2006)Performance measurement for divisionalised companies in Tanzania,Master Dissertation, University of Dar es salaam