a) Fresh Cuts is a chain of hairdressers, which has its salons in cities in the north of England. It started as a single salon in 1980, and its original owner Aurora Rossi was both a good hairdresser and a good businessperson, and by 2010 the single Salon had been expanded to a chain of 50 salons. However, in 2010 Aurora retired and handed her business over to her daughter Giulia. Unfortunately, Giulia was not such a good businessperson and by 2015 the chain was in major financial trouble. In 2015 Giulia sold the chain to Cuts for Style a large chain of salons based largely in the south east of the UK. Cuts for Style saw this acquisition as a way of entering the northern market.
Cuts for Style has a good brand name in its existing markets, but is not well known in the north. Its prices are about 25% higher that Fresh Cuts. Because of these differences, the owners of Cuts for Style decided to set up Fresh Cuts as a separate division and appointed Prisha Singh to manage the division. Prisha has been tasked with improving the financial performance of the Fresh Cuts division, but has not been given any finance for new capital investment. If she wishes to open any new salons, she will need to do this from the operating cash flows of Fresh Cuts division.
Before Prisha can improve the financial performance of the Fresh Cuts division, she needs to evaluate the results of the division so that she can uncover the key issues. Prisha is considering using the Balanced Scorecard.
Required:
- Analyse the Balanced Scorecard as a suitable technique to evaluate the results of the Fresh Cuts Division. (8 marks)
- Prepare a Balanced Scorecard for the Fresh Cuts division and its individual salons describing suitable goals and performance indicators.
(8 marks)
Consider suggested issues that may be uncovered because of the implementation of your balanced scorecard.
