P$14\mathrm{.}40$ Designing a performance measurement system; Du Pont chart: service firm

LO $14\mathrm{.}3,14\mathrm{.}10$

Master Bakers is an on$-$line business that delivers cakes and party supplies 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. Amy Simpson, 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 her evaluate the relative performance of each

product line and provide signals of likely future performance issues. It is important

that she knows of any problems, particularly those concerning customers and cost

overruns, as soon as they happen. She would like to know this information for each

of the three major product lines: cakes, drinks and decorations. In this type of

business, customer loyalty can be short$-$lived and profits may be erratic.

Required

Page $659$

$1.$ Advise Amy on how she should set about designing a performance measurement

system. In your answer, consider the various features of an effective performance

measurement system