The activity-based models are most effective when universities meet cer-tain conditions. They are most useful for a large university with a number of different services and variations on those services. A small liberal-arts institution with a limited number of classes, no clinical programs, and little funded research may fnd the activity-based approach more trouble than it is worth. With a limited number of core services to which to allocate expenses, it might favor the traditional model. However, a large public or private research institution can gauge the fnancial health of the different types of courses, research efforts, and clinical work through this approach and illuminate the cross-subsidies between them. In the corporate world, small businesses seldom utilize the activity-based approach effectively, but multi-billion-dollar companies such as Hughes Aircraft, Caterpillar, and Whirlpool have achieved many effciencies and savings, and have reworked specifc activities based upon an activity-based fnancial analysis.1
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