Introduction:

EU Design is a successful company in the field of fashion and merchandising,

supplying trim to many fashion companies. With over 80% of their sales coming from this small

group of stores, EU is extremely dependent on them. The fashion industry has focused on a

relationship basis for finding suppliers rather than cost, and therefor EU figured if they could

retain these major customers by continuing to provide great service. While this strategy worked

for many years, with the financial downturn approaching they may need to put more emphasis on

keeping prices low. In regards to EU Design’s structure, it has been very informal. It has been

successful for them for many years since they were such a small company, but as they grow their

management style needs to as well. Although adding more structure into the environment will

lessen independence and creativity, there needs to be some kind of standard way of doing

business. A solution to their rising problems would be to develop a balance scorecard focusing

on customer satisfaction, employee satisfaction, and expanding their business externally.

Employee satisfaction:

Based on survey results in Exhibit 5, there were many more weaknesses identified

within the company than strengths. Most of these weaknesses were not present to external

individuals, which is why I think they are showing successful financials. This also told me that

employees were not experiencing optimal job satisfaction as Berardi had intended with his

informal management style. One issue that seemed to lead to many of the weaknesses stemmed

from a lack of structure. As the company continues to grow, Berardi can’t continue to oversee

everybody. If he hired an upper level manager for the Hong Kong office it would lead to better

communication between offices, more accuracy of Hong Kong’s employees performance, more

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effective use of the office’s money and supplies, and also give Berardi more time to seek new

clients.

Promoting an employee from within, to become this manager, would also show

Berardi’s respect for loyalty. This would lead to higher salary for the employee and training cost

of a new employee to take the originals role. In order to see if the installing a manager in Hong

Kong is cost effective for the company, they need to be able to measure the results. Results

should be measured each year after implementation to make sure it is a continuous improvement

for the company’s financials and also employee satisfaction. Surveys should continue to be sent

out annually to monitor progress. Net income could be measured to ensure that the company is

increasing profitability even though they increased salaries expense.

Also, I think it would be beneficial for Berardi to implement a web based ERP system

that could link the New York office with Hong Kong better. Customer order forms would be

stored here allowing for both offices to use them. Planning, production, and shipping schedules

could all be stored on here to help measure efficiency within processes. They could also add a

video conference feature. If Berardi required a meeting every Monday morning between the two

offices, it would help keep the two informed of each other’s work. In these meetings, Berardi

could address an agenda for the week, current goals, and other important topics.

Customer satisfaction:

Customer satisfaction has been high in the past, so EU Designs must maintain that as
they grow. They also need to market at lower prices to stay competitive through this economic

downturn. EU should benchmark with their competitors to find good price points. Management

should also communicate directly with customers to find out exactly what they find important.

One way of collecting this information is through surveys that can be packaged with the box

when their order arrives. EU Design should include a return envelope that is pre-stamped for the

customer. This would increase the response rate while also allowing the company to choose

where the results should be mailed. If it’s faster lead times, EU needs to implement a tracking

system from the day an order is placed to when it arrives at its final destination. If customers are

looking for quality, EU should track and focus on lowering their return rate. Along with

implementing these systems, they should also be setting goals to compare their results to. The

results versus set goals should be a metric that bonuses should be based on.

Expansion:

In efforts to expand their customer base EU design needs to hire an official

salesperson. Currently, Berardi is positioned in this role. With Berardi trying to manage the

company and attract new customers, both are falling short. If he can focus his efforts onto one of

these task, I think it would benefit the company. I suggested him hiring a new salesperson for the

company because they will be experienced in the industry, and will be able to dedicate their full

attention to attracting these customers.

Bonuses:

Mentioned above, most of the goals are incentivized by a bonus metric. This not only
is beneficial to the success of the company, but also to the employees. There needs to be a system

that can balance all the different goals set and their importance. These goals need to be

communicated to all employees so they know what is expected of them. A set number should be

established to where if you meet that, you will receive your bonus at the end of the year. A

template similar to the one below could be used. It incorporates the company’s goals and also

management’s opinion of the individuals work performance. New clientele should be tracked by

the individual, while lead times and return rates should be tracked by office. This mix keeps

employees motivated while also ensuring team work.

Goal Measurement Factor Weight Total

New Clientele % increase .3 =.3* % increase
Lead Times % decrease .2 =.2*% decrease
Return Rate % decrease .2 =.2* % decrease
Managerial Score % out of 100 given by .3 =.3*% out of 100
manager given by manager
Total =Sum

The combination of these strategies and goals is what the balanced scorecard is centered around.

If EU Design can be successful with its goals, I think they will be able to secure continued

growth.