Fancy Flowers is an online florist that delivers flowers and related goods to offices and homes. It has been operating successfully for the past two years. However, competition is becoming more intense, particularly in the trendier suburbs of the city. Mark Fisher, the managing director, no longer directly manages the operations or the delivery service and is interested in developing a performance measurement system that can help him to evaluate the relative performance of each product line and to provide signals of likely future performance issues. It is important that he knows of any problems, particularly those concerning customers and cost overruns, as soon as they happen. He would like to know this information for each of his three major product lines: floral arrangements, boxes of roses and floral wreaths. In this type of business, customer loyalty can be short-lived and profits may be erratic.

Required:

1. Advise Mark on how he should set about designing a performance measurement system. In your answer, consider the various features of an effective performance measurement system.

2. Select some performance measures that address customer satisfaction and cost. Make sure that the measures are tailored specifically to the online florist business.

3. Develop a Du Pont chart, similar to that in Exhibit 14.7 to show how the performance measures flow through to improving profit?