6-1 Milestone Two- Performance Analysis
Subject: MBA 620
Measuring Success in an Organization
Submitted By- Tanisha Das
Submitted To- Professor Jeremy Glines
Date of Submission-10/13/24
Overview of TransGlobal Airlines:
TransGlobal Airlines is a well-established US airline with a total employment of 40,000
people. It was inaugurated in 1951, with its headquarters located in Miami, Florida. It serves
many customers, such as First Class, Business Class, and Economy Class. There is also a large
market share of 18.3% for the U.S. and 18.4% worldwide.
Although in the aviation industry, TransGlobal Airlines had to compete with serious
competitors like American Airlines, Southwest Airlines, their annual revenues touched $13.2
billion and their net income touched 1.5 billion dollars. TransGlobal operates 1062 aircraft
within its fleet, and the average age of the aircraft is 13 years. The airline added 88 new
aircraft in recent times.
Internal Environment of TransGlobal Airlines:
Culture: Customer satisfaction, innovation, care for the environment, as is also borne out by
strategic plan TransGlobal 2030
Leadership: A publicly traded company with clear leadership in the form of a board of
directors, a president, vice-president of administration, CEO, CFO, COO and vice-presidents in
charge of various divisions. This provides accountability and helps in quick decision-making.
Internal Processes: Security, customer service, and care for the environment are operative
words here and help in efficient operations of the organization.
Human Resources: TransGlobal Airlines employs a workforce of 40,000 staff and is
genuinely concerned with creating an inclusive and respectful culture for them. Operations:
With a widespread reach to 242 destinations, it cements its position as strong globally, mainly
in the U.S.
Financial Performance: TransGlobal has enviable financials-an EPS of $ 2.31, 30 % higher
than last year. It boasts healthy financial ratios like a current ratio of 0.681, a gross profit
margin of 37.84%, a return on equity or ROE of 31.03%, and a return on assets or ROA of
7.08%.
External Environment of TransGlobal Airlines:
Competitive: The airline is surrounded by stiff competition provided by the both domestic and
international airlines especially, American Airlines and Southwest Airlines.
Market: The Company operates in an extremely competitive market with the customers who
are becoming increasingly selective and have changing preference and trends.
Regulatory: There are a number of international aviation regulations and safety standards that
need to be adhered to.
Customers: It has a wide range of customers, which is 80% retained. It covers different
classes of customers, from luxury to economic classes. Suppliers: Suppliers are the key
partners in providing vital inputs such as fuel and aircraft, where the company is considerably
dependent on their control over the supply cost and its availability. Stakeholders: This
corporation's strategic planning, TransGlobal 2030, works to strike a balance among the five
constituents: shareholders, employees, customers, regulators, and environmentalists.
Balanced Scorecard Analysis of Company A
Balanced scorecard is a strategic management that shows the performance internally of an
organization and how well aligned the strategy is. The KPIs on which the company would be
reviewed are revenue growth increased, customer retention, and operational efficiency.
Strategic Objectives:
Net profit increase of 2%, 3%, and 4% annually
Stable revenue growth of 5%, 8%, and 10%
Increase in customer satisfaction of 10%, 15%, and 20%
Customer retention of 75%, 80%, and 85%.
Reduce aircraft turnaround time by 30%, 40%, and 50%.
Increase flight punctuality to 90%, 95%, and 98%.
Maintain the employees with the company by 15%, 20%, and 25%.
Uplift the necessary training and skills in the employees by 40%, 50%, and 60%.
Cost-Benefit-Risk Assessment for Company A
Opportunity Cost:
The costs included are marketing, improvement in customer service and ground handling,
training of the employees, and upgrade of technology. Also, Company A's merger into the
parent company would involve facilitation costs for integrating two different cultures and
causing minimal disruption.
Risks:
Market Risk: High. Entry into new markets is fraught with competition, variable demand, and
regulatory obstacles.
Financial Risk: Medium. Initial investments will take some time to recover.
Cultural Risk: Medium. Amalgamation of Company A's culture with that of the parent
company may lead to changes in morale and teamwork of its employees.
Operational Risk: Medium to High. Improvement in operational efficiency may face
technical obstacles and resistance to change.
This acquisition of Company A comes in line with the strategic objectives of its parent
company such as increasing its net profit and improving operational efficiency. By
streamlining the turnaround of aircraft, it will make customers more satisfied and will
eventually lead to brand loyalty and operational effectiveness. In acquiring this company, the
possible risks entailed by this acquisition should be consciously addressed- the major challenge
being faced in market extension and culture integration.
Balanced Scorecard Analysis of Company B:
Company B's performance is also measured with a balanced scorecard.
Strategic Objectives:
Increase financial stability and profitability by 4%, 5%, and 6%.
Ensure the financial growth of 6%, 8%, and 10%.
Improve customer loyalty, ensuring a satisfaction score of more than 80.
Grow the numbers of customers and increase market share by 2%, 2%, and 4%.
Enhance operational efficiency by a minimum of 90%.
Ensure Aircraft Downtime is reduced by 10%, 5%, and 15%.
Enhance employee engagement and skills development by 10%, 15%, and 20%.
Improve employee retention and talent management by 15%, 12%, and 10%.
Cost-Benefit-Risk Assessment for Company B
Opportunity Cost:
This shall involve several investments in the areas of marketing, operational efficiency,
customer service, employee training, and talent retention. Costs shall also be invested in
aligning Company B's operations and culture with that of the parent company.
Risk:
Market Risk: Medium. The company might suffer from competitive pressures and economic
pressures, which may affect financial goals of the deal.
Financial Risk: Medium. A payback of out-of-pocket costs may take some time to liquidate.
Cultural risk - medium. It may be tricky to align the employees of Company B with the value
system followed by the parent company.
Operational risk - medium. Improvement in efficiencies faces problems during
implementation.
Rationale for the acquisition of company B
Company B's acquisition may lead to a manifold increase in financial stability, operational
efficiency, and customer satisfaction. Like Company A, this option also has its share of risks
on the issues of market competition, cultural assimilation, and operational modification.
Conclusion:
Acquiring either Company A or Company B offers the needed opportunities to further enhance
the financial performance of TransGlobal Airlines, customer retention, and operational
efficiency. To a great extent, both these firms bear medium to high risks on their market entry
and especially in cultural integration that would require an extended but calculated planning
phase to guarantee long-term success.
References:
Jeremy Glines, Brightspace, SNHU, September 2024.
https://learn.snhu.edu/content/enforced/1687980-MBA-620-10015.202480-FEW/Course
%20Documents/MBA%20620%20TransGlobal%20Airlines%20Information.pdf?ou=1687980
Jeremy Glines, Brightspace, SNHU, September 2024.
https://learn.snhu.edu/content/enforced/1687980-MBA-620-10015.202480-FEW/Course
%20Documents/MBA%20620%20Transglobal%20AirLines%20Financial
%20Information.xlsx?ou=1687980
