book 3

MBA 620 Company A Information

Location, Size, and Age of the Firm

• Name: • Location: Miami, FL • Size: 165 employees • Age: began operations in 1981

Customer Segment and Target Market

• Market: Caribbean Islands • Destinations: 15 (Guadeloupe, Guyana, Martinique, Puerto Rico, St. Kitts, St. Lucia, St. Maarten, St.

Thomas, St. Vincent, Trinidad, Antigua and Barbuda, Barbados, British Virgin Islands, Dominica, Grenada, and Tobago)

• Market segment: luxury tourist and business class • Aircraft capacities: 20 to 60 • Market share of Caribbean destination airlines: 4th at 18.9% • Customer segment: vacationers, tourists, Caribbean business, and government clients • Retention: 66% return customers • New customer growth: 22% annually • Seat occupancy average: 74% (top quarter of benchmarks) • Average customer fare: $450 USD

Major Competitors

• Delta Connection • American Eagle • Bahamas Charter Airlines • Cape Air • Seaborne Airlines

Company Leadership

Privately held, with a board, president, VP admin, CFO, COO, VP sales

Company Strategy and Direction

The company is well positioned for a transition and strategic investment. Its cash position is especially positive, providing ample flexibility. Long known as a premium upscale provider, there is an awareness of the need to broaden the customer base, attract younger travelers, and modernize both the fleet of aircraft and customer-facing technologies. The president and leadership team have adopted these goals for the coming five years:

• Improve public image and brand in ways that attract new customers • Improve employee retention; reduce turnover by half • Address aging fleet of aircraft; reduce average age of fleet to eight years • Achieve 20% improved fuel efficiency; leverage this into brand and public promotions • Reduce on-ground aircraft turnaround time from two hours down to 45 minutes (industry average

is 90 minutes)

Current Financial Highlights

• Annual revenues: $28–29 million • Annual growth YoY: 2.5–2.9% • Gross profit margin: 45% • Net profit margin: 8% • Aircraft in fleet: 55 • Average age of aircraft: 14 years (25 years of useful life is typical) • See financial statements for further details

Background

• The company is recognized as a premium provider. • In 2016, the company sold a portion of its fleet and its real estate holdings, resulting in a substantial

influx of cash. • Employees (excluding pilots) have frequently discussed unionizing, but have not acted in this

direction. • The management team is experienced and focused on revenue growth and customer satisfaction. • Customer feedback at or above industry benchmarks (at industry benchmarks 60th percentile or

higher; positive feedback): o On-time arrivals/departures o Airplane cleanliness o Amenities o Employee courtesy o In-flight entertainment

• Customer feedback below industry midpoint (negative feedback): o Frequent flier program (none) o Check-in convenience and speed o Baggage handling o Convenient departure times

Internal Process Highlights

• The reservation system is an early version of Radixx Galaxy; cloud-based upgrades have not been implemented.

• Customer check-in and ticketing is manually processed using hard-copy tickets. • Bookkeeping is accomplished using QuickBooks and an external accounting firm. • HR hiring and benefits packages are administered by a third-party provider. • On-ground operations teams rated very good against industry-standard benchmarks.

Human Resource Highlights • Employees: 165 • Employees with a post-secondary degree (two-year or higher): 75% • Average turnover rate: 12% annually • Internal training offered:

o FAA Basics (five-day course, required of all new employees) o FAA Safety Assurance System (online two-hour course; all new hires) o Customer Service (eight hours annually) o Regulation refreshers (20 hours per year) o Quality Control Through Six Sigma (optional, up to eight hours per year) o Using MS Office (on-demand, online offerings; optional

MBA 620 Company B Information

Location, Size, and Age of the Firm

• Name: • Location: Orlando, FL • Size: 98 employees • Age: began operations in 1988

Customer Segment and Target Market

• Market: Florida and nearby destinations

• Destinations: eight (the Bahama Islands; Savannah, Georgia; Atlanta, Georgia; Tampa, Florida; Fort Myers, Florida; Miami, Florida; Tallahassee, Florida; and New Orleans, Louisiana)

• Market segment: tourists and business

• Aircraft capacities: 12–50 seats

• Customer segment: vacationers, tourists, business travelers

• Retention: 40% repeat customers

• Seat occupancy average: 62% (middle of industry benchmark data)

• Average customer fare: $249 USD

Major Competitors

• Delta Connection

• American Eagle

• Sun Country

• Frontier

Company Leadership

Privately held, with a board, president, VP admin, CFO, COO, VP sales

Company Strategy and Direction

As a smaller player, the company is more of a follower than a leader; however, the new president has a desire to shake things up. The image of the company as cheap transportation is no longer sufficient, and the leadership team seeks to demonstrate that even a small company can be an innovation leader. They hope to do this by emphasizing the potential benefits of agile problem solving and a lean and clean working environment. These 10-year goals were adopted in 2015; they were reaffirmed in 2019 shortly before the arrival of the new president:

• Demonstrate adaptability, flexibility, and speed in decision making and innovation

• Build the best workforce; be a winning team

• Do the right thing; provide excellence in customer service

• Enjoy the short run; invest in the long run

Current Financial Highlights

• Annual revenues: $26-27 million

• Annual growth YoY: 3%

• Gross profit margin: 33%

• Net profit margin: 0.2%

• Aircraft in fleet: 40

• Average age of aircraft: 18 years (25 years of useful life is typical)

• See financial statements for more information

Background

• The company is known as a value leader.

• In 2016, the company sold its ownership in a regional hotel chain, resulting in substantial cash holdings.

• The company has strong business relationships with area employers in the theme park industry.

• The company president is new this year; prior experience has been heavily influenced by organizational transformation initiatives.

• Turnover among employees is higher than many airline companies, but average for the central Florida economy; maintenance employees are increasingly more difficult to find and retain; overtime is common in the maintenance department.

• Wage levels in the Orlando area are growing, resulting in upward pressure in compensation.

• Customer feedback received that is at or above industry benchmarks (at industry benchmarks 60th percentile or higher; positive feedback):

o Short wait times at counter o Ease of modifying reservations o Cost o Overall value

• Customer feedback received below industry midpoint (negative feedback): o Airplane cleanliness o Amenities o Food and beverages o In-flight noise

Internal Process Highlights

• Within the last 30 days, an investment and joint venture was established with SITA Horizon software system, including an industry-standard customer portal and a hospitality industry interface functionality.

• Bookkeeping is integrated with the new SITA system; an external accounting firm will still be used for audits.

• HR function is provided by a consortium partner in the local area (outsourced).

• On-ground operations teams rated fair against industry-wide efficiency standards.

Human Resource Highlights

• Employees with a high school diploma or higher: 95%

• Employees with a post-secondary degree or diploma: 60%

• Average turnover rate: 18% annually

• Internal training offered: o Regulatory refresher courses (as needed, with supervisor approval) o Quality and Customer Service Principles (self-study)

Balanced Scorecard-Company A

BASIC BALANCED SCORECARD - Company A

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Balanced Scorecard-Company B

BASIC BALANCED SCORECARD - Company B

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[Provide examples of supporting programs or initiatives in this column.]

[Provide budget allocations for the supporting programs or initiatives in this column.]

[Share your rationale behind your prioritization of the KPIs in this column.]

[Identify the main cause–effect relationships between your chosen KPIs in this column.]

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LEARNING AND GROWTH