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University of West Alabama *

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300

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Management

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Apr 3, 2024

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pptx

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Uploaded by karnasandesh7

TRANSGLOBAL ACQUISITION

OVERVIEW

INTERNAL ENVIRONMENT Culture: Cultivating customer relations and inclusiveness takes precedence at TransGlobal Airlines. Leadership: TransGlobal 2030 has a well-structured team of leaders and a plan that is comprehensive. Internal Processes: There are strong internal processes and special operations in place to ensure efficiency in this regard. Human Resources: It aims for an inclusive workplace culture and seeks to be named among the top 10 workplaces by 2030 according to World’s Best Workplaces list Operations: This company operates across six continents, serving a total of over two hundred destinations while also having operations in several segments of the market. Financial Performance: A strong financial performance was achieved with annual gross revenue of $20.683 billion, annual net income of $2.099 billion, and operating margin at 14.08%.

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EXTERNAL ENVIRONMENT Competitive: The intense competition from various international airlines as well as domestic U.S ones is the greatest challenge facing TransGlobal Airlines. Market: Let me tell you that transglobal airlines work in global airline industries all around the world having 242 destinations on six continents through which it operates where it falls within multiple market segments Regulatory: Airline industry is subject to strict regulations which require compliance by such carriers as TransGlobal Airlines with FAA laws and other regulatory bodies’ requirements Customers: TransGlobal Airlines’ customers include first class passengers, luxury travelers, business class individuals, economy travelers who return for more than three times with eighty percent return rate Suppliers: Actually, some suppliers such as aircraft manufacturers; fuel vendors; maintenance providers or others are critical for airline sector

PROPOSED ACQUISITIONS- COMPANY A Location, size, and age of the firm: Miami, FL, 165 employees, was established in 1981. Customer segment and target market: Luxury tourism and business class in the Caribbean Islands with a fleet of 15 destinations ranging from 20-60 seats. Major competitors: Delta Connection, American Eagle, Bahamas, Charter Airlines, Cape Air, and Seaborne Airlines. Company leadership: Privately owned, with a board, president, VP admin, CFO, COO, and VP sales. Current financial and market status: Annual revenues of $28-29 million, YoY growth rate of 2.5- 2.9%, gross profit margin of 45%, and net profit margin of 8%.

PROPOSED ACQUISITIONS- COMPANY B Location, size, and age of the firm: Company B is a privately held airline from Orlando, Florida, with 98 staff members, was established in 1988. Customer segment and target market: Participants served by Company B include tourists and business travelers to eight Florida-based and nearby destinations, threshold aircraft capacities ranging from 12 to 50 seats. Major competitors: Company B, however, meets competition from major airlines like Delta Connection, American Eagle, Sun Country, and Frontier. Company leadership: Company B has a board, president, VP admin, CFO, COO, and VP sales with a newly elected president who was oriented towards agile problem-solving and lean and clean working practices. Current financial and market status: Company B produces $26-27 million in revenues each year and has a YoY growth rate of 3% and gross profit margin of 33%.

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ANALYSIS

ANALYSIS OF COMPANY A

BALANCE CARD COMPANY A Catego ry STRATEGIC OBJECTIVES KEY PERFORMAN CE INDICATORS TARGET VALUES KPI ACTION PLAN DETAILS STUDENTS KPI SELECTION RATIONALE YEAR 1 YEAR 2 YEAR 3 EXAMPLES OF PROGRAMS/INITIATIVE S BUDGETS SELECTION RATIONALE CAUSE-EFFECT RELATIONSHIP FINANCIAL Increase Market Share Financial Strength 5% 7% 9% Increasing flights into smaller, less popular cities in the caribbean. Average $5- $7 Million year over year, this includes fuel, flight costs, airport fees, crew. For Company A to establish themselves as the premier company that runs in the Caribbean, they need to be willing to provide flights that other airlines do not want to. All while needing to decrease their avg ticket price. The changes will not reflect increase in profit right way as the changes needs to marinate but by the end of the year the company should start seeing profits increase especially from this region. Decrease Cost Financial Strength $15 $30 $45 Annunal Revenue Financial Strength $1.5 M $2 M $2.5 M INTERNAL PROCESSES Employee Satisfaction Face of Operation 70% 75% 80% Understanding that the employees are the most important area of the whole operations, from flight crew to ground crew to gate crew. All of the employees toghter make the flight operations run smoothly. $75-$100 for gifts and or gift card extra, few vacation days or slary increament based on performance The employees are the the most important component that makes this whole operation run, especially the customer facing and needs to be appreciated. Employees truly can make or break an organization and are the biggest factor behind their success. If employees feel appreciated, then their happiness will reflect on their work which in turn will make the customers day livelier before the trip they are taking. Recognizatio n of Employees Face of Operation 75% 85% 95%

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BALANCE CARD COMPANY A CUSTOMER/ MARKET Brand Awareness Mark et Stren gth 3% 5% 7% Exposure of the airlines needs to increase for the company to build on and reach the numbers pre coivd. $10-$30 M, company needs to buy slots for commercial, like during super bowl or NBA finals which are events that garner a vast number of viewers. Sponsor a local MLS MLB NFL or NBA, don’t have to be majority sponsor but just enough to get their brand on the shirts. Sports Events or any events have become a primary means of how most viewers get to know about new products, with cable tv being less and less relevant and commercial- free streaming being irrelevant. Exposure to the brand comes in many ways but sports consistently garner 10s to 100s of millions of viewers, from all over the country and world. Marketing Marke t Stren gth 5% 10 % 15 % New Customer Growth Marke t Stren gth 7% 14 % 21 % LEARNING AND GROWTH Improving Traning and Performance Tech Stren gth 5% 15 % 45 % Investing in newer tech will help make the customer $10M, invest in newer and more effective boarding process, invest in newer flight to cut the delay times. The most annoying parts on flying is the boarding and delays, airlines could intregrate a way that lets the consumer their boarding is about to start or if there is a If the customer is told ahead of time about their flight ahead of time their anger at the gate will Improve Tech/Skills in Tech Stren 10 40 80

BALANCED SCORECARD ANALYSIS Company A has set four categories of strategic objectives and has a cost-benefit-risk analysis to support its acquisition cost. Opportunity Cost: Potential risks of going ahead in achieving goals include losing revenue or productivity if things don't go as planned. Risk: Risks connected with the implementation of changes are moderate and are worth careful analysis and planning, especially considering economic, financial, cultural, and operational conditions.

ANALYSIS OF COMPANY B

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BALANCE CARD COMPANY B Catego ry STRATEGIC OBJECTIVES KEY PERFORMAN CE INDICATORS KPI TARGET VALUES KPI ACTION PLAN DETAILS STUDENTS KPI SELECTION RATIONALE YEAR 1 YEAR 2 YEAR 3 EXAMPLES OF PROGRAMS/INITIATIVE S BUDGETS SELECTION RATIONALE CAUSE-EFFECT RELATIONSHIP FINANCIAL Increase Market Share Financial Strength 5% 10% 15% The company needs to be like Hawaiian Airlines or JetBlue, where they control majority traffic in their respective areas. Avgrage $5-$7 Million year over year, this includes fuel, flight costs, airpor fees, crew. Being an airline that serves small area, gives Company B an advantage to weed the competition and being the premier Airlines of the region, they can create that by increasing their presence in the area through bigger fleet. The company needs to own the area, especially for a small airline company as they need to always be on top or they will seize to exist. Projecting Financial Strength 3% 7% 10% Annunal Growth Financial Strength 2% 4% 6% INTERNAL PROCESSES Employee Satisfaction Face of Operation 75% 85% 95% Employees are the backbone of the company, and everyone has a specific role making the company successful. $75-$100 for gifts and or gift card extra, few vacation days or slary increament based on performance It is important a small airlines company to have happy employees because the size of the employees being small means they are not aexpandable. Small team means they are a tight knit team and making changes in the team could be met with fierce oppotions. Recognizatio n of Employees Face of Operation 75% 80% 85% Average Turn Over Face of Operation 10% 6% 4%

BALANCE CARD COMPANY B CUSTOMER/MARKET Brand Awareness Market Strength 50 % 55 % 60 % Customer Retention should be a priority for the airlines as it builds loyalty towards the brand. $10-$30 M, company needs to buy slots for commercial, like during super bowl or nba finals which are events that garner a vast number of viewers. Sponser a local MLS MLB NFL or NBA, don’t have to be majority sponser but just enough to get their brand on the shirts. Loyalty programs, could help increase clients and bring in new customer to the airlines.Specially if there is a lucrative offer like lounge access. For a small airlines new customers are hard to comem, but if the company build on retenting customers they can have huge impact on their finance. Retention Market Strength 65 % 70 % 75 % New Customer Growth Market Strength 10 % 20 % 30 % LEARNING AND GROWTH Improving Traning and Performance Tech Strength 3% 5% 7% Investing in newer tech will help make the customer experience better by 50 folds. $10M, invest in newer and more effective boarding process, invest in newer flight to cut the delay times. The most annoying parts on flying is the boarding and delays, airlines could integrate a way that lets the consumer their boarding is about to start or if there is a delay than get to know about it ahead pf time instead of at the gate. If the customer is told ahead of time about their flight ahead of time their anger at the gate will be cut down by a lot. Improve Tech/Skills in Tech Tech Strength 7% 10 % 13 %

BALANCED SCORECARD ANALYSIS Balanced Scorecard Analysis: Company B has aligned objectives and KPIs, but the advantage of the acquisition does not justify the cost. Opportunity Cost: Buying Company B will be at a high acquisition price and integration cost. Risk: Risks connected with the acquisition of Company B have a high level of risk that involve in market, financial, cultural, and operational environments. The balanced scorecard analysis shows that Company B has identified appropriate objectives and KPIs. In conclusion, cost-benefit-risk analysis and opportunity costs should also be considered for a successful acquisition.

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PROPOSAL

RECOMMENDATION The acquisition of Company A by TransGlobal Airlines will serve to support the strategic goals of the airline. RATIONALE Acquisition of Company A will help TransGlobal Airlines to achieve its financial, market, and competitiveness goals. Company A aims to achieve three strategic objectives such as increase revenues, boost customer retention, and satisfaction rates while dropping COGS and employee turnover rates. These goals are in line with the objectives of TransGlobal Airlines to grow the company’s profitability and competitiveness. Company A's investment in infrastructure will also contribute to TransGlobal Airlines' operational efficiency, which is essential for the company to remain successful in the long term.

WORST-CASE SCENARIO Should unforeseen external shocks such as a global economic recession or a natural disaster occur, demand for air travel by TransGlobal Airlines may fall. This decline could translate into Company A having reduced needs for the services it offers. Nevertheless, if Company A is acquired by TransGlobal Airlines, Company A will enjoy the higher operational efficiency and increased competitive advantage, helping it to graze over the storm better than if it did not acquire Company A.

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BEST-CASE SCENARIO In a perfect scenario, the merger of Company A would be more than the expected objectives and presumptions. The goals of Company A would be attained much quicker and with significant success, translating into higher revenue, increased customer satisfaction, and greater operational efficiency. This would make TransGlobal Airlines the pioneer in the market, getting more customers and consequently increasing its competitive edge.

BIBLIOGRAPHY • Strakova, J., Pártlová, P., Dobrovič, J., & Váchal, J. (2018). (PDF) Situational analysis and its role in the process of strategic business management . ResearchGate. https://www.researchgate.net/publication/330331174_Situational_analysis_ and_its_role_in_the_process_of_strategic_business_management • Tuovila, A. (2020, January 28). Cost Accounting: Definition and Types with Examples . Investopedia. https://www.investopedia.com/terms/c/cost-accounting.asp • Office, U. S. G. A. (2021, October 21). COVID-19 Pandemic: Observations on the Ongoing Recovery of the Aviation Industry . Www.gao.gov. https://www.gao.gov/products/gao-22-104429

Final

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