You work on a team that reports to the chief financial officer of Fiedler International, a consumer

Question:

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 soaps, deodorants). Your team evaluates possible acquisitions. You are currently analyzing the possible purchase of Lush, a manufacturer of face moisturizers with UV sun 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 Lush managers hold a small percentage of the stock.
The materials you have received from Lush include information about its senior management performance evaluation and incentive compensation plans. Lush uses a balanced scorecard to evaluate and reward senior managers. Managers can earn up to 50 percent of their salary as a bonus depending on four balanced scorecard metrics: customer service, human resources and innovation, operational efficiency, and financial performance.
Each of the four metrics is scaled between 0 and 1. Senior managers receive up to 25 percent of their bonus for each metric. If the customer service metric is 0.67, and a particular manager€™s salary is $ 400,000, then for customer service, that manager receives $ 33,500 (50% $ 400,000 0.67 25%). The compensation committee of Lush€™s board of 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 million.
The compensation committee sets the lower and upper bound of EVA as $ 12 million and $ 16 million. Hence, if the current year€™s EVA is $ 12 million, the financial performance metric is 0. If EVA is $ 15 million, the metric is 0.75 [($ 15 $ 12)/($ 16 12)], and the manager earning the $ 400,000 salary would receive a bonus of $ 37,500 ( 50% $ 400,000 0.75 25%). Fourteen separate metrics are used to compute the four metrics. The following metrics are computed and then aggregated to form the four metrics:

Lush has been using the balanced scorecard for three years and the achieved levels of each metric for the last three years are:

Required:
Write a memo to your acquisition team describing balanced scorecards and the primary reasons they are used, and the likely affect of Lush€™s use of the balanced scorecard interms 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 scorecard and how this might affect Fiedler€™s evaluation of Lush as a possible takeovertarget.