6-1 Milestone Two_ Performance Analysis

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Southern New Hampshire University *

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Feb 20, 2024

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6-1 Milestone Two: Performance Analysis Christina H. Mitchell Southern New Hampshire University MBA 620: Measuring Success in an Org. Prof. Alin Tomiaga

Introduction In this comprehensive report, we undertake a detailed evaluation of TransGlobal Airlines, Company A, and Company B, aimed at informing a strategic decision regarding potential acquisitions. TransGlobal Airlines, a major player in the aviation industry, seeks to expand its operations and strengthen its market position through strategic acquisitions. This report delves into an analysis of the current business environments of the three companies, utilizing balanced scorecards to assess internal and external factors that influence their performance. By analyzing the financial, operational, customer, and employee development aspects of Company A and Company B, we aim to provide a well-rounded view of their respective strengths, opportunities, and risks. This evaluation is crucial for TransGlobal Airlines to make an informed decision on acquiring one or both companies, weighing the costs, benefits, and potential impact on its market presence and operational efficiency. TransGlobal Airlines TransGlobal Airlines is a company that values its internal dynamics and recognizes their significance in achieving overall success. This airline giant has established a culture that places a strong emphasis on continuous improvement and employee well-being. At its core, the company aims to address workplace inequities and foster an inclusive culture. While they have made strides in this direction, there's room for improvement, reflecting their commitment to providing a top-notch workplace for their employees. In terms of financial performance, TransGlobal Airlines is thriving. The company reported an impressive annual gross revenue of $13.2 billion, with a net income of $1.5 billion. Additionally, they achieved an adjusted earnings per share of $2.31, marking a substantial 30%

increase year over year. These financial figures highlight the company's financial strength and ability to reinvest in its operations. Human resources play a pivotal role within the organization. The skills, competencies, attitude, dedication, morale, and commitment of the workforce contribute significantly to the company's strengths. However, TransGlobal Airlines recognizes the importance of continuous training and development to keep their employees well-equipped. To this end, the company has set a goal to train every employee in the basics of the FAA's Safety Assurance System (SAS) through a 2-hour web-based training program. This initiative not only aims to enhance employee skills but also potentially attract new hires through positive word of mouth. External Environment TransGlobal Airlines operates in a highly competitive market, facing both international and domestic U.S. airlines as its major competitors. Navigating this competitive landscape is no small feat, and the company's ability to maintain an 80% return customer rate speaks volumes about its commitment to customer satisfaction. This high rate of return customers not only underscores the company's success in satisfying its customers but also hints at the positive word-of-mouth and referrals generated by its loyal clientele. Moreover, TransGlobal Airlines has been proactive in its approach to the external business environment. They have set ambitious goals, including upgrading their reservation and ticketing experience, which involves integrating smartphone apps and collaborating with lodging, ground transportation, and attractions. By doing so, they seek to provide customers with a comprehensive and seamless travel experience. Furthermore, they aim to improve their safety

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rating on airlines.com from 5 stars to an impressive 7 stars, demonstrating their dedication to excellence. The role of media in the external business environment cannot be underestimated. Media has the power to either catapult a company into the limelight or tarnish its reputation overnight. While the assignment prompt doesn't directly address this, TransGlobal Airlines has occasionally utilized media for advertising purposes. Leveraging media platforms helps the company reach potential customers who might not otherwise be aware of its services and regulations. TransGlobal Airlines operates in a competitive market, continually striving to enhance its customer experience and reputation. While the company faces external challenges, its strong financial performance and commitment to employee training and inclusion make it an attractive prospect for further expansion and acquisitions. Balance Scorecard Analysis of Company A Company A’s balance scorecard focuses on crucial aspects of its business. These perspectives collectively form a well-rounded strategy, emphasizing financial growth, operational efficiency, customer satisfaction, and employee development. This comprehensive approach aligns with the company's goal of achieving sustainable growth and enhancing its market position. Company A, established in 1981 and based in Miami, FL, specializes in luxury and business class flights to the Caribbean. With a focus on enhancing its premium brand and expanding its customer base, Company A has set strategic objectives to improve its market position and operational efficiency. The Balanced Scorecard for Company A includes objectives such as maximizing revenue growth and profitability, enhancing operational efficiency and

service quality, strengthening market position and customer loyalty, and fostering employee development and a culture of continuous improvement. Key Performance Indicators (KPIs) like annual revenue growth, net profit margin, on-time departure rate, market share growth, and employee training completion rate are set with ambitious but achievable targets over a three-year period. Investments are earmarked for marketing, fleet modernization, operational upgrades, and employee training programs, all aimed at driving growth, improving customer experience, and enhancing employee skills. Opportunity Cost The opportunity cost associated with acquiring Company A is the combined investment in various strategic initiatives across the four perspectives. This includes expenditures on marketing campaigns, fleet modernization, operational efficiency, system upgrades, staff training, marketing strategies, loyalty programs, and employee development. The total investment is estimated to be $700,000 over the three-year period. Risk Analysis The magnitude of risk associated with acquiring Company A is relatively low to moderate. Company A's strong financial performance, commitment to customer satisfaction, and emphasis on employee development reduce the overall risk. While there are inherent challenges in implementing various initiatives, the potential benefits, such as increased revenue, improved operational efficiency, customer loyalty, and innovation, make the acquisition a favorable opportunity.

In summary, Company A's balance scorecard demonstrates a well-conceived strategy that addresses multiple facets of its business. The opportunity cost of acquiring Company A involves a substantial but justifiable investment in initiatives aimed at driving growth and efficiency. The overall risk analysis suggests that the potential benefits outweigh the inherent challenges, making the acquisition of Company A a promising endeavor for the parent company. Balanced Scorecard Analysis of Company B Company B's balance scorecard outlines its strategic objectives across the four critical perspectives: Financial, Internal Processes, Customer/Market, and Learning and Growth. These objectives collectively drive the company's efforts towards enhancing market share, increasing net profit, optimizing internal operations, boosting customer satisfaction and loyalty, and fostering employee development and innovation. Company B's Balance Scorecard reflects its strategic ambition to excel in the competitive aviation market. With a keen focus on improving financial performance and elevating customer experience, Company B’s scorecard sets forth objectives to optimize internal operations and enhance customer satisfaction. Key Performance Indicators such as Net Promoter Score and Net Profit are central to the scorecard, with targeted improvements over the next three years. The airline should allocate a significant budget towards enhancing customer service, advancing technological capabilities, and executing targeted marketing strategies. These initiatives are designed not only to boost operational efficiency and customer retention but also to drive long-term revenue growth and expand market share, thereby fortifying Company B’s position in the industry.

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Opportunity Cost The opportunity cost associated with acquiring Company B involves a comprehensive investment in strategic initiatives across the four perspectives. This includes funding for marketing campaigns, pricing strategy optimization, targeted promotions, customer service enhancements, technology upgrades, frequent cleaning schedules, employee training programs, and innovation initiatives. The total investment is estimated to be $800,000 over the three-year period. Risk Analysis The level of risk associated with acquiring Company B is moderate, given its focus on enhancing customer satisfaction and loyalty, optimizing internal operations, and fostering employee development. Company B's commitment to these initiatives reduces the overall risk. While there are challenges in implementing various programs, the potential benefits, such as increased market share, improved net profit, higher customer satisfaction, and a culture of innovation, make the acquisition a promising opportunity. Company B's balance scorecard reflects a comprehensive strategy aimed at addressing multiple facets of its business. The opportunity cost of acquiring Company B involves a significant yet justifiable investment in initiatives aimed at driving growth and efficiency. The overall risk analysis suggests that the potential benefits outweigh the possible challenges, making the acquisition of Company B a favorable endeavor for the parent company.

Recommendation For Acquisition In evaluating both Company A and Company B for acquisition, each presents unique strengths and strategic directions. Company A shows a strong focus on enhancing customer experience and operational efficiency. Its Balance Scorecard outlines clear objectives to expand market share, improve operational processes, and invest in employee development. These initiatives, backed by a robust financial standing and a commitment to modernizing its fleet, position Company A as a strong candidate for acquisition, especially for an entity looking to capitalize on a premium brand with a solid market presence in the Caribbean. On the other hand, Company B demonstrates a strategic focus on optimizing internal operations and enhancing customer satisfaction, with a significant emphasis on financial performance and market expansion. The objectives and KPIs in its Balance Scorecard suggest a company that is agile and actively adapting to market demands. The investment in customer service and technology upgrades indicates a forward-looking approach, aiming to improve efficiency and customer loyalty. Considering the strategic alignment, market positioning, and growth potential, Company A stands out as the more favorable acquisition. Its established brand in a niche market, coupled with a clear path towards modernization and operational efficiency, presents a valuable opportunity for expansion and enhanced profitability. Company A's strong foundation and strategic focus align well with long-term investment goals, offering a blend of stability and growth potential.

Conclusion The analysis presented in this report provides a comprehensive overview of the performance and strategic positioning of Company A and Company B, with a focus on their alignment with TransGlobal Airlines' objectives. While both companies exhibit unique strengths and growth potential, Company A emerges as the more favorable acquisition, given its established market presence, commitment to modernization, and alignment with long-term strategic goals. The acquisition of Company A offers TransGlobal Airlines an opportunity to expand into a niche market with a premium brand, enhancing its overall market share and profitability. However, it is important to consider the investment and integration efforts required to realize the full potential of this acquisition. In conclusion, acquiring Company A represents a strategic move for TransGlobal Airlines, promising a blend of stability, growth, and enhanced market positioning in the competitive aviation industry.

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6-1 Milestone Two_ Performance Analysis

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