EXECUTIVE DIAGNOSIS THROUGH COMPONENT ANALYSIS Available to Purchase

Component analysis is a simple technique which can be readily used by all those in general management to determine which are the most profit sensitive variables over which they have control. Using basic financial data, the analysis has five steps starting with the now familiar return‐on‐investment tree and ending with a ranking of the firm's performance sensitive components according to feasibility for improvement. Using this analytical approach, general managers are able to concentrate their scarce time on a small number of activities that will produce the greatest amount of profit and the maximum return‐on‐investment. A modified form of component analysis has been successfully used over the past eighteen months in all the subsidiary companies of a recently formed conglomerate.