Milestone Two
Blake A. Davis
MBA 620
11/24/2024
Situation Analysis of TransGlobal Airlines
TransGlobal Airlines operates withing a rapidly evolving market. What makes this
market change like it does is that there are a lot of competitors and laws and regulations.
Internal Environment
The vision of TransGlobal Airlines remains clear to operate with a customer first culture
by offering its customers top of the line travel experience. “Management is doing things right;
leadership is doing the right things.” Peter Drucker. As a publicly held company TransGlobal
has a strong leadership that comprised of a Board of Directors, President, Vice president, Chief
Executive officer, Chief Financial officer, Chief Operation Officer, Vice President of Sales,
Division Vice Presidents, and Subsidiaries. TransGlobal Airlines has a 2030 vision to lead the
industry in three critical areas safety, excitement, and stewardship.
Transglobal employs about forty thousand people. Leadership has established a target to
rank in the top 10 of the 2030 World's Best Workplace rankings as part of the TransGlobal 2030
strategy. The responsibility of creating a customer-focused, safety-first culture will fall on human
resources. In order to guarantee regulatory compliance, human resources will also make sure
that every employee completes the two-hour training on the fundamentals of the FAA's Safety
Assurance System.
TransGlobal is a multinational airline that mostly operates in the United States. At the
moment, TransGlobal serves 52 countries on six continents and provides travel to 224 locations.
TransGlobal provides a variety of travel alternatives, including economy, business, and first-
class luxury. The past three years have seen steady financial growth for TransGlobal. As of right
now, net income is $2.099 billion and gross sales is $20.683 billion annually. Compared to the
previous year, their adjusted earnings per share have increased by 28%. Despite a 6% increase in
capacity, its domestic revenue increased 7.7% in the most recent quarter. By purchasing newer
aircraft to increase efficiency and introducing 88 new aircraft this year, TransGlobal has
demonstrated its dedication to safety and putting consumers first.
External Environment
The airline industry has many external factors that can impact TransGlobal's performance
along with its ever-changing market. Such as travel demands, direct competition, and FAA and
SAS regulations. TransGlobal serves a global customer demographic. TransGlobal market
consists of passengers flying luxury, first class, business class, and economy. Prior to the
COVID19 pandemic, TransGlobal saw a new customer growth rate of 27% annually. A
pandemic such as COVID19 had a significant impact on many airlines due to travel bans.
TransGlobal has maintains an 80% customer retention rate. This shows TransGlobal
commitment to customer satisfaction and building brand loyalty. TransGlobal remains
competitive ranking 2nd in both global and U.S. market share with 18% and 18.3%.
There are many entites within the airline industry including government and regulatory
bodies, the customers, competitors, supplier, and employees. Stakeholders will monitor the
performance and will focused on safety, reliability, and affordability practice of TransGlobal to
ensure its sustainability for future investment.
Focus on safety is highly regulated within airline industry. Failure to comply with
regulations imposes safety risks for passengers and could destroy the business reputation its
barnd, and also could present legal implications. Compliance with regulatory guidelines is
extrely importion to the success of the TransGlobal brand.
Balanced Scorecard Company A
The balanced scorecard is used to investigate four important areas that assist in measuring a
company's overall performance. These include financials, internal procedures, customer/market,
and learning and growth. Exploring the opportunity cost by doing a cost-benefit-risk analysis
will reveal what benefits Transglobal may forego if it decides to acquire this company. After
completing Company A's balanced scorecard, we can see that the company is operating quite
well and has a growth strategy. The four objectives' key focus areas include boosting income,
reducing on-ground turnaround time, improving the brand to attract new clients, and improving
personnel retention and turnover.
Cost-Benefit-Risk Analysis
Over the last three years, Company A's finances have grown slowly but steadily. The net
profit margin decreased somewhat in the same year that the cost of goods increased, which
directly influenced profitability, but increased the next year while the cost of goods remained
unchanged. With Company A being profitable, the cost of acquiring this airline will likely be
significant. Acquisition negotiations must take into account what Company A and TransGlobal
stand to gain. TransGlobal sees Company A's modest liabilities and debt as a good indicator of
its financial stability.
This company's internal processes must be improved, such as minimizing on-ground
aircraft turnaround times. This can be accomplished by investing in updated ticketing technology
to increase efficiency and eliminate waits. Customer satisfaction and turnover rates are slightly
low, but they can be increased by tailoring marketing campaigns to new consumers and
providing prizes or incentives to repeat customers. Employee turnover and retention rates at
Company A are rather low, but they may be improved by investing in training and providing
additional possibilities for professional development.
The advantages of acquiring Company A include growing market reach, becoming
recognized as a premium provider, and generating revenue. TransGlobal would face an
opportunity cost if it considered internal expansion and organic growth. There is always the
possibility of risk along with any benefit. Upgrades to technology to improve ticketing and
bookings, as well as investments in newer planes to increase fuel efficiency and operations,
would necessitate a large investment. This is a big risk for TransGlobal Airlines. If there is not
an appropriate return on investment, TransGlobal Airlines' bottom line may suffer. TransGlobal's
expansion into the Caribbean market offers a medium risk.
With a concentration on business class clients and luxury tourists, Company A currently
holds the fourth-largest market share. The Caribbean is becoming a very popular travel location,
which increases competitiveness. Gaining more market share will require more funding to
develop improvements that will draw in new customers. There are two types of operational risk:
low and high. The costs of buying new aircraft and updating technologies will be very high. Any
of these improvements could interfere with travel if they are not executed correctly. Given
Company A's strong work culture and low employee turnover, the cultural environment appears
to be low risk. Nonetheless, during the purchase process, communication between the leadership
of both companies is essential. When they first start, employees may be unsure of their future.
Balanced Scorecard Company B
After analyzing the measures of Company B's balanced scorecard, we can see that there
are numerous areas for improvement. In 2019, this corporation hired a new president who
restated its strategic objectives. Those goals include establishing a better workforce, providing
excellence in customer service, and adopting an innovation-oriented culture
In terms of finances, Company B's gross profit margin is 33% and its net profit margin is
0.2%. Due to rising product costs, we had the same decline in revenue as Company A in 2018,
but Company B's net profitability suffered. Although their net earnings improved in 2019, they
still performed much worse than they did in 2017. Aircraft cleanliness needs to be improved by
internal procedures because it is currently below industry requirements. This will be achieved
through investing in better cleaning technologies, keeping an eye on compliance, and retraining
staff on cleaning methods. Improving amenities like Wi-Fi and entertainment offerings would
help the consumer/market achieve its goal of providing exceptional customer service. SITA
Horizon Software recently launched a joint venture and investment to increase client interface
capabilities. The high personnel turnover rate at Company B is worrisome. Improved
engagement through training and career advancement opportunities will be necessary to lower
employee turnover.
Cost-Benefit-Risk Analysis
After a precipitous decline to negative net earnings in 2018, Company B's financial
situation has somewhat improved. Although this shows that they can bounce back from a
financial crisis, there is not enough evidence to ensure that they will be financially stable. A
positive sign is that Company B has consistently kept its total assets equal to its liabilities plus
equity. Since Company B is a smaller airline and has not demonstrated strong profitability,
takeover negotiations would be less aggressive.
The advantages of acquiring Company B would include higher revenue and market share.
Company B's financials are not solid, but they have showed the ability to recover from losses.
The opportunity cost for TransGlobal would be to focus on organic expansion rather than
acquiring a potentially unstable company. To preserve a competitive advantage, this corporation
will have to raise ticket prices in order to increase revenue. By expanding domestic travel options
within Florida and to surrounding places, market share will grow. TransGlobal faces a significant
risk in this position. Company B has been a value airline, and with low cleanliness and amenity
ratings, brand reputation is an important concern. A major investment in cleaning standards and
amenities, as well as marketing, would be required to rename the airline. Due to the industry's
competitive nature, TransGlobal faces a medium to high risk in the market. Company B now has
a 40% client retention rate, which could change dramatically depending on demand. Operational
hazards are moderate to high. Aging aircraft reduces efficiency and would necessitate a
substantial investment to replace. Company B has already made some progress by collaborating
with SITA Horizon software to strengthen its technology, which could assist TransGlobal.
Culturally, the risk is moderate to low. Company B has a high turnover rate and struggles to
retain maintenance employees. Furthermore, the Florida economy demands a greater living
income. Investing in training programs focused at improving job skills and providing
certification chances will increase employee value and aid in retention. Additionally,
TransGlobal would be able to supply personnel to cover coverage shortages.
In order to make an informed choice that maximizes the results for both organizations, the
acquisition process is complex and demands significant thought. In order to make a strategic choice that
enables sustainable growth and creates value in a highly competitive business, TransGlobal must take
into account the distinctions between Company A and Company B.
