Question

competitive advantages of return of investment?

Answer 1

ROI is the measure which helps in measuring the profitability of different investments. In other words it helps in determining return on investments in relation to their cost. There can be many advantages of ROI such as

1. Since it shows the return on investment. Is shows the profitability of investment. Good return can only be earned if assets and investments are managed efficiently. Hence will encourage the personalls of the company to utilise the assets efficiently creating a competitive environment.

2. ROI Can be used to make comparisons within the company of different units or outside the company of the same industry. Since it facilitates comparison. Deviations can be found and rectified which can in turn helps in understand what are the problems in investment and how they can be managed efficiently

3. on the basis of comparison and deviations found It can help in making changes to the strategies of the company. It shows which strategies are good and ensures profirability and which are not. It helps in analysing which strategy is helpful in earning a good return and which are generating losses and should b changed or eliminated

4. Since ROI helps in measuring profitability of company it can be used to provide greater value to its customers. Performance measurements can be used to identify pros and cons of the compnay and use it to be better and providing greater competitive advantage.