In this project, you will demonstrate your mastery of the following competencies:

Prepare and present internal and external reports.

Monitor and evaluate performance.

Recommend opportunities for performance improvements.

Scenario

You are a former Navy officer and fighter pilot, and you are now the controller of a division of TransGlobal Airlines, a large organization that operates 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 region 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, Company A and Company B, 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 included creating a balanced scorecard for each airline with all four components, financial, internal processes, customers/market, and learning and growth, that will impact the acquisition of each firm.

The CFO has asked you to generate two scenarios for the proposed acquisition based on your analysis and governing or predictive assumptions. They include a worst-case scenario that considers the most serious outcomes that could occur if anticipated targets and assumptions are dramatically wrong; and a best-case scenario if anticipated targets and assumptions significantly exceed forecasts.

Based on your assessment and analysis of the companies in Milestones One and Two, you will create and deliver a PowerPoint Presentation for senior management’s review and analysis. You will also write an executive summary with your recommendations for the leadership team.

Directions

Part 1: Presentation

Record and submit a narrated PowerPoint presentation to share your analysis and recommendations for the proposed acquisitions. Use your data and analysis, along with feedback received from the milestone assignments, to complete your presentation. Note: Remember to use both on-screen text and narration in your PowerPoint slides to convey your information effectively. For example, you can use brief bulleted lists on the slide and include detailed explanations in your narration. A resource is provided under Supporting Materials to help you record your presentation. If you are unable to submit a presentation with narration, be sure to include detailed speaker notes with your submission.

Overview

Situation Analysis of TransGlobal Airlines (parent company). Use the information from the Supporting Materials section to highlight the parent company’s current business environment.

Internal environment: culture, leadership, internal processes, human resources, operations, and financial performance

External environment: competitive, market, regulatory, customers, suppliers, and other relevant stakeholders

Acquisition Rationale: Explain why your company is planning to acquire these airlines. What strategic objectives will the acquisition meet? How might the acquisition support the bigger picture goals of TransGlobal?

Proposed Acquisitions: Using the resources provided in the Supporting Materials section, provide an overview of the two companies under consideration to be acquired. Include the following information for each company:

Location, size, and age of the firm

Customer segment and target market

Major competitors

Company leadership

Current financial and market status

Analysis

Analysis of Company A. Present your data and analysis of Company A. Include the following in your analysis:

Balanced scorecard data: Share the balanced scorecard for Company A. Copy and paste the relevant sections from your Milestone One spreadsheet. 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 impactful key performance indicators.

Explain your rationale for the KPIs chosen, along with 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 KPIs.

Explain your rationale for the KPIs chosen, along with 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 KPIs.

Explain your rationale for the KPIs chosen, along with 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 KPIs.

Explain your rationale for the KPIs chosen, along with the cause-and-effect relationship between the chosen KPIs.

Balanced scorecard analysis: Describe your analysis of Company A’s performance based on its balanced scorecard components. Perform a cost-benefit-risk analysis to explain whether the benefits justify the costs of acquisition.

Opportunity cost: What will it cost to move forward with this opportunity?

Risk: Identify and explain the magnitude (low, medium, or high) of the risks this acquisition poses to the parent company related to its market, financial, cultural, and operational environments.

Analysis of Company B. Present your data and analysis of Company B. Include the following in your analysis:

Balanced Scorecard Data: Share the balanced scorecard of Company B and highlight some key performance indicators, such as net profit, annual growth, and market share. Copy and paste the relevant sections from your Milestone One spreadsheet. 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 impactful key performance indicators.

Explain your rationale for the KPIs chosen, along with 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, along with 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 two key performance indicators.

Explain your rationale for the KPIs chosen, along with 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, along with the cause-and-effect relationship between the chosen KPIs.

Balanced scorecard analysis: Perform a cost-benefit-risk analysis for Company B based on its balanced scorecard components to explain whether the benefits justify the costs of acquisition.

Opportunity cost: What will it cost to move forward with this opportunity?  

Risk: Identify and explain the magnitude (low, medium, or high) of the risks this acquisition poses to the parent company as related to its market, financial, cultural, and operational environments.

Proposal

Recommendation: Recommend whether TransGlobal Airlines should acquire one or both companies.

Rationale: Justify how your recommendation supports the company’s strategic objectives. This includes one or more of its financial, market, competitive, and cultural objectives.

Assumptions: Explain how your acquisition recommendation will impact the company’s success in different scenarios:

A worst-case scenario that considers the most serious outcomes that could occur if anticipated targets and assumptions are dramatically wrong; and

A best-case scenario that considers outcomes that significantly exceed anticipated targets and assumptions.

Part 2: Executive Summary

Submit a Word document summarizing your analysis and recommendations for both companies.

Situation assessment: Briefly summarize your company’s current internal and external business environments and the rationale for acquisition.

Data and analysis: Provide a brief overview of the two airlines under consideration, including your findings and analysis from your balanced scorecards.

Recommendation: Justify your recommendation for the acquisition and explain how it supports the company’s objectives.

What to Submit

Acquisition Proposal Presentation
Using the instructions provided under Supporting Materials below, submit a recorded PowerPoint presentation with 10–12 slides. Sources should be cited according to APA style. Consult the Shapiro Library APA Style Guide for more information on citations. If you are unable to create a recorded PowerPoint presentation, ask your instructor about submitting this assignment in an alternate format.

Executive Summary

Submit a 2- to 3-page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style. Consult the Shapiro Library APA Style Guide for more information on citations.

Introduction

TransGlobal Airlines is a USA-based airline organization that was started in 1951. The Headquarter is located in Miami, Florida. The total number of employees operated in TransGlobal is “forty thousand employees”. The key competitors of the firms are all domestic as well as international U.S airlines. TransGlobal Airlines has grown to two hundred and forty-two designations in 52 countries across six continents, as well as the corporation is looking to acquire either or two additional Caribbean enterprises (Moriarity, Hopkins, & Slessor, 2020). Before acquiring any company, we are required to analyze the situation and performance of the TransGlobal-Airlines and two other firms that the company is planning to acquire. The purpose of the paper is to evaluate the external as well as internal performance as well as the environment of the TransGlobal-Airlines and the risk and opportunity evaluation of the two companies.

Internal Environment

With a powerful customer as well as human resources core of approximately forty thousand, the company culture is centered on innovation, effective communication, as well as teamwork, so it supports and promotes excellence (Pathiranage, 2019). Since its inception in 1951, the company has primarily transformed from a monopolistic or execution towards a quite competitive atmosphere requiring team cohesion and good leadership governance to accomplish its long-term exceptional goal. The segment of leadership skills into various divisions, as well as a great culture entailing staff members in career advancement and innovative thinking, result in all the firm’s operations as well as internal processes. TransGlobal is a public company held by a president, CFO, CEO, VP sales, subsidiaries, board of directors, as well as COO. As the company is a publicly-traded organization, all the profits, as well as assets of the corporation, it goes to its shareholders and all the leadership decisions are made by upper-level management like CFO, VP sales, subsidiaries, president, boards, CEO as well as COO (Ilmas, Tahir, & Asrar-ul-Haq, 2018). The board decided to approve the goals, vision, as well as more focus on the customer. For improving the experience of customers, they want to be more innovative and likely to provide the most exciting as well as forward-thinking travel experience because they want to build a long-term relationship with their customers. As eighty percent of customers return to the company to avail their service, which means the company had built a strong and long-term relationship with their customers (Wu, Lee, & Liao, 2018). As per the revenue, the revenue from domestic flights grows by 7.7 percent. The Atlantic revenue increased by 0.8 percent, Latin revenue increased by 6.7 percent whereas revenue from the Pacific was decreased by 0.5 percent. Furthermore, the current liabilities of the company are less than its current assets which indicates that TransGlobal Airlines face difficulty while paying its current debts. Company total debts are greater than total assets which means that TransGlobal financial position is not stable (Al-Kassar & Soileau, 2014).

External Environment

The market’s external evaluation is extremely competitive. For instance, all internal and overseas airline companies in the United States are competitive since they serve 242 locations in 52 regions across six-continents. The market of the US is ranked second, with such a share of the market of 18.3 percent, a significant advantage over the number one US airline, which has 19.1 percent of the emerging as well as economy penetration. The airplane is ranked 2nd in the globe, with 18-percent of the global market share as well as a market dominance of 18.6-percent. As the state strives to safeguard domestic airlines, there is improved regulation, focused solely on security as well as safety measures, and the firm faces significant challenges functioning in emerging markets (Bremmer, 2014). TransGlobal is required to cooperate with Federal-Aviation-Administration (FAA) as well as Department-of-Transportation (DoT) rules in the domestic market, as well as other regulatory requirements in the international market, where some guidelines are embraced at the international level as well as there has been a greater emphasis on decreasing carbon emissions in the aviation-sector (Updegrove & Jafer, 2017). The firm complies with guidelines and licensing requirements, however, due to regulatory changes, there may be a necessity to modify procedures as well as spend more money. Customers are well-liked, as well as ensuring excellent services is among the company’s core values. Patrons have low-interest however high-power to affect the operations of the company, whereas suppliers have both high power as well as interest. A few of the main suppliers include Boeing, travel companies, as well as fuel companies, however food as well as beverage firms are critical to the firm’s capacity to provide good service.

Analysis of Company A

A cost-benefit evaluation compares the anticipated or predicted benefits and costs (or opportunities) affiliated with a decision of the project to decide whether it tends to make company sense or provide any benefit to the company. As TransGlobal Airline is planning to acquire Company A, we need to analyze its performance (Mishan, 2020). To begin with, the opportunity cost, if company move-forward and acquire company A then it will miss out on several benefits that come from acquiring Company B. The benefit includes financial, growth and learning, market/customer as well as an internal process. The financial benefit company from growth in quarterly sales as well as increased market share which helps in increasing the income of the company. However, if TransGlobal Airline acquires Company A instead of B then it will cost the company gives up the increased sales, market share as well as income. The second benefit is growth and learning benefit. Company B is introducing the novel product and its learning service to improve the service delivery which helps in improved delivery of services. So improved service, as well as the introduction of the novel product, will attract more customers and help in increasing the revenue as well as profitability (Masudin & Kamara, 2017). Therefore, acquiring Company A will cost the company to give up increasing revenue and profitability through the novel product as well as enhanced delivery services. The third benefit comes from the internal process which is competition and yield. The company is taking an initiative to reward their staff to increase their motivation level, this leads to the decreased turnover rate of the staff. Productivity of the employees in an organization is improved or sustained when the staff turnover rate is reduced (Sabir, 2017). So, choosing company A will cost TransGlobal Airline to give up a high productivity level.

The third benefit is responsive supply as well as customer partnership, which means company B pay on time to its supplier which helps in creating a strong as well as a better relationship with the suppliers. Moreover, having a consonant supply from the supplier ensures that the company delivery service is better which also helps in building a better relationship with the customers. Nevertheless, TransGlobal Airline will give up the benefit that comes with suppliers. In order words, acquiring company A will cost TransGlobal to give up all the benefits that the company has in terms of consistent suppliers, reduced employee turnover, improved income, market share as well as sales, and better services. The risks that the acquisition of Company A will impose on TransGlobal would be operational risks and market risks (Pele, Lazar, & Dufour, 2017). Both risk magnitude would be moderate because staff members are uncertain about their corporate position which negatively influence their performance. Moreover, the merger can sometimes negatively influence the parent company’s future growth, stock price as well as capital structure.

Analysis of Company B

For analysis, we are required to do a cost-benefit-risk evaluation to decide whether the benefits of the company are justifying the acquisition cost. If the TransGlobal Airline company acquires company B the opportunity cost would be giving up the benefits that come from acquiring company A. If the company move-forward and acquire company B, then it will miss out on several benefits that come from acquiring company A (Fischhoff, 2015). The benefit includes growth and learning, financial, market/customer as well as an internal process. To begin with growth and learning benefits. Company A is providing training to its employee for better growth and helps staff members to give premium-quality services to its clients as well as make sure that the customers are satisfied and happy with their service. Therefore, improving service helps in increasing sales by 80 percent. However, when TransGlobal acquired only company B instead of acquiring both then it will cost them to lose extra revenue from the sales. The second benefit is new products introduction as well as the share of the purchases. Through marketing campaign. Company A is highlighting its key advantages of flying through their airline, which helps in attracting more customers (Salazar, Mills, & Veríssimo, 2019). In order words, a marketing campaign rises the amount of customers which leads to high profit as well as income. So, the opportunity cost of acquiring only company B is losing more customers and revenue. The third benefit has surged market share as well as ROE. Company A is offer discounts that help the company to increase their market share and cash flow leads to increased revenue and helps company A to become more sustainable. This activity helps to increases the sales of the ticket. However, acquiring company A will cost TransGlobal Airline to lose the increased revenue, market share, and cash flow (Salama, Moselhi, & Al-Hussein, 2018).

The fourth benefit that comes from acquiring only company A is service excellence and design productivity. Company A is implementing an effective ICT system that will make sure that payment is effectively tracked as well as tickets are appropriately scheduled. This prevents fraudulent activities and promotes accountability. Nevertheless, the cost that TransGlobal Airline will face is internal control which helps in making a good image of the company in the financial market. In order words, the opportunity cost for acquiring only company B is loss of revenue, income, brand image, as well as increased market share & cash flow. The first risk that would be imposed on the parent company (TransGlobal Airline) is the financial risk and its magnitude is high. Since acquisitions and mergers required a lot of capital to invest that TransGlobal Airline makes which means that imposes a burden on the parent company (Bartram, Brown, & Waller, 2015). Moreover, company B’s liabilities are quite high which means acquiring company B can impose a financial burden on TransGlobal Airline. Furthermore, the second risk is cultural risk and its magnitude is moderate. When a merger or acquisition takes place, sometimes employees cannot accept the other company culture and norms which can negatively influence the productivity of the employees (Dang & Zhao, 2020).

Conclusion

To sum up, TransGlobal Airline is a US-based Airline company with 40,000 employees. The company revenue increased from every region except the Pacific. However, the company wants to acquire one or both companies A and B, so the analysis shows that company A has more assets as compared to liabilities. Whereas company B has more liabilities and its retained earnings value is also negative. Therefore, company B needs more cost for acquiring. Additionally, acquiring company A will impose two types of risks that are market and operational risk and its magnitude is moderate, but acquiring company B will impose financial and cultural risks whose magnitude is high. Therefore, TransGlobal should acquire company A only because the risk that will impose on the parent company from acquiring company B is high as compared to acquiring company B. There can be the case that TransGlobal can be bankrupt because of high risks and liabilities when acquiring both companies and only company B.

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