Situation Analysis of TransGlobal Airlines

Performance Evaluation
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Performance Evaluation
A. Situation Analysis of TransGlobal Airlines
a. Internal Environment:
TransGlobal is a publicly held company with a board, president, VP, and other administrators. There is a focus on improving service delivery, treating the customers with respect, and valuing the employees, customers, and business partners. There is also training on safety assurance. The process of travelers and airline interaction begins with booking and ends with boarding the planes and baggage claim.
TransGlobal is the major airline competitor seeking to expand operations beyond the domestic market and become more competitive. The TransGlobal company's primary source of revenue is the passenger market segment, with revenues being $ 11,635 in 2017 and increased gradually to $ 13,313 million in 2019. While the revenue from cargo also increased passenger revenue remains essential to the company's growth. Both the annual gross revenues and the annual net income have increased in the financial years 2017 to 2019 as a global airliner with most operations in the US; leveraging the global destinations has the potential to increase the company's market share.
b. External environment
There is increased competition in the international market where there are dominant players in different market segments. More low-cost airlines are now following new business models and offering competitive prices while maintaining low operating costs. The level of competition is expected to intensify in the future as the dominant players have greater financial resources further. Replacing old planes will be considered in the future, but some foreign competitors getting government backing may be better placed to operate at the global stage. There are growth prospects in the airline industry, but still, the company may need to spend more capital expenditure on improving its competitiveness.
There is increased regulation, mostly focusing on safety and security measures, and the company faces challenges operating in new markets as the government seeks to protect domestic airlines. TransGlobal needs to comply with the Federal Aviation Administration (FAA) and the Department of Transportation (DoT) regulations in the home market, and there are other regulations in the global market (Cavazos & Washington, 2018). Some regulations are adopted at the global stage, and there is increased focus on reducing the environmental pollution in the aviation industry.
The company complies with standards and licensing requirements, but there may be a need to update processes and spend more based on regulatory changes. There are good relations with the customers and providing high-quality services is one of the company’s values. Customers have low interest but high power to influence the company’s operations compared to suppliers with high interest and high power. Boeing, online travel agencies, and fuel companies are some of the major suppliers, but food and beverage companies are crucial to the company’s ability to offer good service. The primary customer market segments are economy, first-class, and business class. The volatile fuel prices and disruption of the supply of aircraft fuel may affect operations and relations with the suppliers, thereby hampering the company’s position. TransGlobal actively engages with stakeholders, including the customers, employees, suppliers, shareholders, and the government, to meet stakeholders’ needs.
B. Balanced Scorecard Analysis of Company A
a. Opportunity Cost:
Opportunity cost represents value sacrificed when the choice necessitates giving up an alternative course of action. These costs are significant when there are limited resources to carry out the activities. The cost of acquisition will mean the parent company will spend more to grow through acquisition and consolidation (Shah & Khan, 2017). However, the company gives up increasing capital expenditure for the parent company to increase productivity and efficiency. In the financial perspective of the balanced scorecard, there is a focus on improving income and revenue and reducing costs. Acquiring Company A is also focused on reducing costs associated with growth processes and expanding in new geographic areas. This improves overall profitability when the company meets its objectives while also become more competitive in a foray into a new market.
One of the main benefits is increasing financial profit, and there would be a focus on increasing the capital invested. Profit generated by the company in relation to the investment in the assets necessary to carry out other activities. Ratio analysis further provides insights into the opportunities to increase profitability. There are changes where data is contrasted with the parent company A and company B is helpful to determine whether the acquisition is beneficial.
There are expectations that foray into the new market will increase dominance and generate a bigger market share, but there could also be cannibalization. Acquisition may result in the parent company operating in many of the destinations where the company already operates without necessarily experience huge growth in the new markets. As such, the likelihood that TransGlobal would not get the expected profits and growth c...