Comparison of profit variance frameworks reveals importance of strategic context in business analysis.
This paper uses a disguised case to compare and contrast three different frameworks in analyzing profit variances—two that are in common usage today and one that is not but, in our view, should be. The purpose of the paper is to demonstrate how variance analysis needs to be tied explicitly to the strategic context of the firm and its business units.
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Govindarajan et al. (1989) studied this question.
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