Developing A Balanced Scorecard 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 c

Developing A Balanced Scorecard 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 c
MBA 620 Company A Information Loca tion, 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 b usiness 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% annua lly • Seat occupancy average: 74% (top quarter of benchmarks) • Average customer fare: $450 US D 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 kn own 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 g oals 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 act ed 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 o r 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 har d-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 S ystem (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; optio nal
Developing A Balanced Scorecard 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 c
MBA 620 Company B Information Loca tion, 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 busi ness • 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 US D 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 ev en 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 b efore 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; inve st 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 subs tantial 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 Orl ando 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 v enture 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 )