Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 12

Compensation; Strategy Digital Business Incorporated (DBI) is a worldwide manufacturing company that specializes in high technology products for the aerospace, automotive, and plastics industries. State-of-the-art technology and business innovation have been key to the firm's success over the last several years. DBI has 10 manufacturing plants in six foreign countries. Its products are sold worldwide through sales representatives and sales offices in 23 countries. Performance information from these plants and offices is received weekly and is summarized monthly at the Toronto headquarters.
The company's current bonus compensation plan focuses on giving rewards based on the utilization of capital within the company (i.e., management of inventory, collection of receivables, and use of physical assets). The board of directors is concerned, however, with the short-term focus of this plan.
Some employees believe that the company's current compensation plan does not reflect its stated goals of maintaining and enhancing its global position through innovative products.
Required Develop a bonus package that considers DBI's strategic goals and the global environment in which it operates.