To evaluate the success of its strategy, a company can subdivide the change in operating income into growth, price-recovery, and productivity components.

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Subdividing operating income into growth, price-recovery, and productivity components is a common way for companies to evaluate the success of their strategy. The growth component measures the increase in operating income attributable to revenue growth. The price-recovery component measures the increase in operating income attributable to price increases. The productivity component measures the increase in operating income attributable to cost reductions or efficiency improvements. By analyzing these components, a company can determine which aspects of its strategy are driving its performance and make adjustments as needed.

To Evaluate the Success of Its Strategy, a Company Can