Measuring Success

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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 divisions 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 componentsfinancial, internal processes, customers/market, and learning and growththat 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 to create a balanced scorecard for each company. Specifically, you must address the following rubric criteria:

Use the data given in and 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.

Sample Solution

Before we delve into creating the balanced scorecards for Company A and Company B, it’s essential to clarify a few points:

  • Data Availability: The prompt mentions using data from specific sources, but the actual data is not provided. For this response, I will provide a hypothetical structure for the balanced scorecards based on industry standards and best practices. Real data would be necessary to populate the scorecards with specific metrics and targets.
  • Balanced Scorecard Template: A standardized template would be helpful for this analysis. While I can provide a general structure, a specific template used within your organization would be ideal.

Creating Balanced Scorecards for Company A and Company B

Balanced Scorecard Structure

A balanced scorecard typically includes four perspectives:

  • Financial Perspective: Measures the financial performance of the organization.
  • Customer Perspective: Evaluates how customers view the organization.
  • Internal Process Perspective: Assesses internal processes to ensure they support the creation of value.
  • Learning and Growth Perspective: Identifies the capabilities the organization must master to achieve its vision.

Company A Balanced Scorecard

Financial Perspective

  • Key Performance Indicators (KPIs):
    • Revenue per available seat mile (RASM)
    • Operating profit margin
  • Rationale: RASM is a critical metric in the airline industry, measuring revenue generated per seat flown one mile. It reflects pricing strategies, load factors, and overall revenue efficiency. Operating profit margin assesses the company’s profitability after operating expenses.

Internal Processes Perspective

  • Key Performance Indicators (KPIs):
    • On-time performance
    • Aircraft turnaround time
  • Rationale: On-time performance is crucial for customer satisfaction and operational efficiency. Aircraft turnaround time impacts flight frequency and resource utilization.

Customer Perspective

  • Key Performance Indicators (KPIs):
    • Customer satisfaction score
    • Net promoter score (NPS)
  • Rationale: Customer satisfaction is a direct measure of customer experience. NPS gauges customer loyalty and advocacy.

Learning and Growth Perspective

  • Key Performance Indicators (KPIs):
    • Employee turnover rate
    • Training hours per employee
  • Rationale: Employee turnover impacts operational efficiency and service quality. Training hours measure the company’s investment in employee development.

Company B Balanced Scorecard

The process for creating a balanced scorecard for Company B would follow the same steps outlined above. However, the specific KPIs and their definitions might vary based on the unique characteristics of the company.

 

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