Fiedler International You work on a team that reports to the chief financial officer of Fiedler International, a consumer products company that manages a variety of consumer beauty brands (shampoos, facial seaps. deodorants). Your team evaluates possible acquisitions. You are currently analyzing the possible purchase of Lush, a manufacturer of face moisturizers with UV a blockers. Lush is a small pub licly traded company that has no single large shareholder. Most of the stock is held by institutional investors and Lash managers hold a small percentage of the stock The materials you have received from Lash include information about its senior management performance evaluation and incentive compensation plans. Les uses a balanced Scorecard to evalo ate and reward senior managers Managers can cam up to 50 percent of their salary as a bonus depending on four balanced Scorecard metries customer service, human resources and innovation, operational efficiency, and financial performance. Each of the four metrics is scaled between 0 and 1 Seties managers receive up to 25 percent of their homes for each metric the customer service met- ric is 0.67, and a particular manager's salary is $400.000. then for customer service that manager receives $33.500 (S05 x 5600,000 x0,67 x 251. The competion committee of Lust's board of Other operating cost of $150 per two boke set in contant des at vary with the amount spent on quality directors sets the scale for each of the four metrics. For example, the financial performance metric is economic value added, or EVA. Last year's EVA was $13. The compensation committee sets the lower and upper bound of EVA a $12 million and $16 million. Hence, if the current year's EVA is $12 million, the financial performance metrics. Y EVA is $15 million, the metrie is 0.75 CS15 - SI2M516-12M), and the manager caming the 200.000 salary would receive a bonus of $37.500 (50% x 400.000 X 0.75 x 255). Fourteen separate metrics are used to compute the formetries. The following metrics are com puted and then aggregated to form the four metrics Service Retums Peramme EVA Customer complaints Resources and Immo New products Percent of new products developed time and budget Employee satisation Employee turnover Employee On-site customer training seminars Shipping erres Safety cies Dollars of some Lush has been using the balanced Scorecard for three years and the achieved levels of each metric for the last three years are Ey Service 0.86 2015 2016 2017 Performance 0.79 0.73 0.91 0.94 Write a memo to your acquisition team describing balanced Scorecards and the primary reasons they are used, and the likely effect of Lasse of the balanced secard in terms of how Fiedler should be evaluating Lush. Specifically: (a) briefly describe balanced Scorecards and why firms use them, and (b) analyze Lush's use of the balanced second and how this might affect Fiedler's evaluation of Lush as a posible sakeover target
