Description
Scenario
You are a former Navy officer and fighter pilot who is now the controller of a division of TransGlobal Airlines, which utilizes a fleet of corporate jets for charter at several airports in the southeast part of the United States. Your division’s private charter clients include several Fortune 500 companies in the region. The Chief Financial Officer (CFO) has informed you that the company is considering the acquisition of two smaller aviation firms in the Caribbean specializing in chartered flights for luxury vacations using light aircraft (60 passengers or less). The CFO has tasked you with assessing the organizational benefits of acquiring these aviation firms. The CFO intends to develop a new business plan for the organization if your analysis recommends moving forward with the acquisition.
After an initial assessment, the company has shortlisted two airlines they want to examine further for acquisition. To understand all aspects of the two airlines under consideration, you have visited each proposed site to assess their performance. The assessment includes creating and analyzing a balanced scorecard for each airline with all four components—financial, internal processes, customers/market, and learning and growth—that will impact the acquisition.
In this milestone, you will use the given information to create balanced scorecards for Company A and Company B.
Prompt
Use the Basic Balanced Scorecard Template to create a balanced scorecard for each company. Specifically, you must address the following rubric criteria:
Use the data given in Company A Information and Company A Financials to create a balanced scorecard for Company A. The balanced scorecard should highlight key performance indicators, such as net profit, annual growth, and market share, and include the four components:
Financial: Complete the financial section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Internal Processes: Complete the internal processes section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Customers/Market: Complete the customers/market section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Learning and Growth: Complete the customers/market section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Use the data given in Company B Information and Company B Financials to create a balanced scorecard for Company B. The balanced scorecard should highlight key performance indicators, such as net profit, annual growth, and market share, and include the four components:
Financial: Complete the financial section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Internal Processes: Complete the internal processes section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Customers/Market: Complete the customers/market section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
Learning and Growth: Complete the customers/market section of the balanced scorecard template, identifying two of the most relevant key performance indicators.
Explain your rationale for the KPIs chosen, with an explanation of the cause-and-effect relationship between the chosen KPIs.
What to Submit
Submit two completed Excel spreadsheets using the provided template.
Unformatted Attachment Preview
BASIC BALANCED SCORECARD TEMPLATE
COMPANY NAME
ADDRESS
Category
[Insert text
STRATEGIC OBJECTIVES
CITY
TARGET VALUES
KEY PERFORMANCE INDICATORS
CUSTOMER/MARKET
INTERNAL PROCESSES
FINANCIAL
YEAR 1
LEARNING AND
GROWTH
STATE
YEAR 2
ZIP
KPI ACTION PLAN DETAILS
YEAR 3
EXAMPLES OF PROGRAMS/INITIATIVES
BUDGETS
Provide examples of supporting programs or
Provide budget allocations for the
initiatives in this column
supporting programs or initiatives in ths
column
STUDENTS KPI SELECTION RATIONALE
SELECTION RATIONALE
CAUSE-EFFECT RELATIONSHIP
Share your rationale behind your prioritization of
Identify the main cause-effect relationships
the KPIs in this column
between your chosen KPIs in this column
3
BASIC BALANCED SCORECARD TEMPLATE
COMPANY NAME
ADDRESS
Category
[Insert text
STRATEGIC OBJECTIVES
CITY
KPI TARGET VALUES
KEY PERFORMANCE INDICATORS
CUSTOMER/MARKET
INTERNAL PROCESSES
FINANCIAL
YEAR 1
LEARNING AND
GROWTH
STATE
YEAR 2
ZIP
KPI ACTION PLAN DETAILS
YEAR 3
EXAMPLES OF PROGRAMS/INITIATIVES
BUDGETS
Provide examples of supporting programs or
Provide budget allocations for the
initiatives in this column
supporting programs or initiatives in ths
column
STUDENTS KPI SELECTION RATIONALE
Category
between your chosen KPIs in this column
INTERNAL PROCESSES
Identify the main cause-effect relationships
the KPIs in this column
CUSTOMER/MARKET
Share your rationale behind your prioritization of
FINANCIAL
CAUSE-EFFECT RELATIONSHIP
LEARNING AND
GROWTH
SELECTION RATIONALE
3
A_CO_FIN
Learner Copy
COMPANY A
Illlustrative Data for Educational
Income Statement
Revenue
Cost of Goods Sold (COGS)
Gross Profit
Expenses
Salaries and Benefits
Rent and Overhead
Depreciation and Amortization
Interest
Total Expenses
Earnings Before Tax
Taxes
Net Earnings
Balance Sheet
Assets
Cash
Accounts Receivable
Inventory
Property and Equipment
Total Assets
Liabilities
Accounts Payable
Debt
Total Liabilities
Shareholders’ Equity
Equity Capital
Retained Earnings
Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
Cash Flow Statement
Operating Cash Flow
Net Earnings
Plus: Depreciation and Amortization
Less: Changes in Working Capital
Cash from Operations
Investing Cash Flow
Sales (Investments) in Property and Equipment
Cash from Investing
Financing Cash Flow
Issuance (repayment) of Debt
Issuance (repayment) of Equity
Cash from Financing
Net Increase (decrease) in Cash
Opening Cash Balance
Closing Cash Balance
Supporting Schedules
Working Capital Schedule
Accounts Receivable
Inventory
Accounts Payable
Net Working Capital (NWC)
Change in NWC
Depreciation Schedule
PPE Opening
Plus Capex
Less Depreciation
PPE Closing
Debt and Interest Schedule
Debt Opening
Issuance (repayment)
Debt Closing
Interest Expense
COMPANY A
Illlustrative Data for Educational Purposes
All values shown are in thousa
2017
2018
27.981
15.389
12.592
28.772
18.997
9.775
4.510
1.804
2.814
900
10.028
2.564
4.500
1.804
2.806
900
10.010
(235)
718
1.846
(65)
(170)
2017
2018
62.265
1.380
3.078
37.413
104.136
61.708
1.419
3.799
37.408
104.334
1.560
30.000
31.560
1.926
30.000
31.926
33.685
38.891
72.576
104.136
33.685
38.723
72.408
104.334
2017
2018
1.846
2.814
(10.312)
14.972
(170)
2.806
394
2.242
2.706
2.706
(2.800)
(2.800)
–
–
17.678
44.587
62.265
(558)
62.265
61.708
1.380
3.078
1.560
2.898
(10.312)
1.419
3.799
1.926
3.292
394
37.521
2.706
2.814
37.413
37.413
2.800
2.806
37.407
30.000
30.000
30.000
900
30.000
900
Rev 6/19/21
All values shown are in thousands.
2019
29.580
16.285
13.295
4.480
1.804
2.806
900
9.990
3.305
925
2.380
2019
44.319
1.460
3.257
37.403
86.439
1.651
10.000
11.651
33.685
41.103
74.788
86.439
2019
2.380
2.806
(226)
5.411
(2.800)
(2.800)
(20.000)
(20.000)
(17.389)
61.708
44.319
1.460
3.257
1.651
3.066
(226)
37.407
2.800
2.806
37.402
30.000
(20.000)
10.000
900
MBA 620 Company A Information
Location, Size, and Age of the Firm
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Name:
Location: Miami, FL
Size: 165 employees
Age: began operations in 1981
Customer Segment and Target Market
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•
•
•
•
•
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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
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•
•
•
•
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:
•
•
•
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•
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
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•
•
•
•
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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
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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
•
•
•
•
•
•
•
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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
B_CO_FINANCE
Learner Copy
COMPANY B
Illlustrative Data for Educational Purposes
Income Statement
Revenue
Cost of Goods Sold (COGS)
Gross Profit
Expenses
Salaries and Benefits
Rent and Overhead
Depreciation and Amortization
Interest
Total Expenses
Earnings Before Tax
Taxes
Net Earnings
Balance Sheet
Assets
Cash
Accounts Receivable
Inventory
Property and Equipment
Total Assets
Liabilities
Accounts Payable
Debt
Total Liabilities
Shareholders’ Equity
Equity Capital
Retained Earnings
Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
Cash Flow Statement
Operating Cash Flow
Net Earnings
Plus: Depreciation and Amortization
Less: Changes in Working Capital
Cash from Operations
Investing Cash Flow
Investments in Property and Equipment
Cash from Investing
Financing Cash Flow
Issuance (repayment) of Debt
Issuance (repayment) of Equity
Cash from Financing
Net Increase (decrease) in Cash
Opening Cash Balance
Closing Cash Balance
Supporting Schedules
Working Capital Schedule
Accounts Receivable
Inventory
Accounts Payable
Net Working Capital (NWC)
Change in NWC
Depreciation Schedule
PPE Opening
Plus Capex
Less Depreciation
PPE Closing
Debt and Interest Schedule
Debt Opening
Issuance (repayment)
Debt Closing
Interest Expense
COMPANY B
Illlustrative Data for Educational Purposes
All values shown are in thousa
2017
2018
27,981
15,389
12,591
26,302
18,411
7,891
2,910
1,354
2,814
2,700
9,778
2,813
2,600
1,354
2,806
1,800
8,560
(669)
788
2,025
(141)
(529)
2017
2018
82,445
1,380
3,078
37,413
124,316
82,914
1,297
2,018
37,007
123,236
1,560
90,000
91,560
1,009
90,000
91,009
33,685
(929)
32,756
124,316
33,685
(1,458)
32,227
123,236
2017
2018
2,025
2,814
(10,312)
15,151
(529)
2,806
(592)
2,869
(2,706)
(2,706)
(2,400)
(2,400)
–
–
12,445
70,000
82,445
469
82,445
82,914
1,380
3,078
1,560
2,898
(10,312)
1,297
2,018
1,009
2,306
(592)
37,521
2,706
2,814
37,413
37,413
2,400
2,806
37,007
90,000
–
90,000
–
90,000
2,700
90,000
1,800
Rev 3/14/21
All values shown are in thousands.
2019
27,091
18,151
8,940
2,910
1,354
2,776
1,800
8,840
100
21
79
2019
72,944
1,336
1,989
37,032
113,301
995
80,000
80,995
33,685
(1,379)
32,306
113,301
2019
79
2,776
25
2,830
(2,800)
(2,800)
(10,000)
(10,000)
(9,970)
82,914
72,944
1,336
1,989
995
2,331
25
37,007
2,800
2,776
37,032
90,000
(10,000)
80,000
1,800
MBA 620 Company B Information
Location, Size, and Age of the Firm
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Name:
Location: Orlando, FL
Size: 98 employees
Age: began operations in 1988
Customer Segment and Target Market
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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
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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:
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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
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Annual revenues: $26-27 million
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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
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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
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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
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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)
Purchase answer to see full
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