An enterprise has identified these causes for inefficient CAPEX spending:
•CAPEX planning is driven by technology and not by business objectives.
•The CAPEX planning team lacks the data it needs to perform due diligence tasks.
•The organizational structure lacks sufficient accountability and incentives.
Which corporate cultural change contributes to improving the effectiveness of CAPEX spending?
- Build a financial control function that delivers high-quality reports on operational expenses for business insight and financial reporting.
- CxO-level staff must have a full technical understanding but the should not trust their technical leaders fully.
- Adopt new organizational models that promote real accountability for ROI, not just revenue, EBITDA, and cash.
- Marketing and product management divisions must reduce their CAPEX budgets significantly to drive the change.
Answer(s): C
Explanation:
The corporate cultural change that will contribute to improving the effectiveness of CAPEX spending is to adopt new organizational models that promote real accountability for ROI. This means that the organization needs to create a culture where people are rewarded for making decisions that drive ROI, not just revenue, EBITDA, or cash.
The other options are not as effective in improving the effectiveness of CAPEX spending. Option A, building a financial control function, can help to improve the visibility of CAPEX spending, but it does not address the root cause of the problem, which is the lack of accountability for ROI. Option B, having CxO-level staff with a full technical understanding, can help to improve the decision-making process, but it does not address the need for real accountability. Option D, reducing the CAPEX budgets of marketing and product management divisions, can help to reduce waste, but it does not address the need for a culture of accountability.