You have been asked to evaluate Company A and Company
Scenario
You have been asked to evaluate Company A and Company B and make your recommendation for acquiring one or both companies. Based on your initial assessment, you have created balanced scorecards for both companies. You are now ready to analyze the information you have gathered so far about the two companies so that you can compare the costs, benefits, and risks associated with acquiring each company and make a well-informed decision.
In this milestone, you will first analyze the current situation of TransGlobal Airlines using the given data and other sources to understand their business environment. You will also evaluate the performance of Company A and Company B using the balanced scorecards you created in Milestone One.
Prompt
Write a report with your performance evaluation of the three companies involved in the acquisition.
Specifically, you must address the following rubric criteria:
- Situation Analysis of TransGlobal Airlines (parent company). Use the provided TransGlobal Company Information and Financials to highlight the 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
- Balanced Scorecard Analysis of Company A. Using the balanced scorecard for Company A from Milestone One, describe your analysis of Company A’s performance. 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.
- Balanced Scorecard Analysis of Company B. Using the balanced scorecard for Company B from Milestone One, describe your analysis of Company B’s performance. 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.
Guidelines for Submission
Submit a 6- to 8-page Word document using double spacing, 12-point Times New Roman font, and one-inch margins. If references are included, they should be cited in APA format. Consult the Shapiro Library APA style guide for more information on citations.
Balanced Scorecard-Company A
| BASIC BALANCED SCORECARD TEMPLATE | 3 | |||||||||||||||||||||||||||||||||||||||||||||
| COMPANY NAME | ||||||||||||||||||||||||||||||||||||||||||||||
| ADDRESS | [Insert text | CITY | STATE | ZIP | ||||||||||||||||||||||||||||||||||||||||||
| Category | STRATEGIC OBJECTIVES | KEY PERFORMANCE INDICATORS | TARGET VALUES | KPI ACTION PLAN DETAILS | STUDENTS KPI SELECTION RATIONALE | |||||||||||||||||||||||||||||||||||||||||
| YEAR 1 | YEAR 2 | YEAR 3 | EXAMPLES OF PROGRAMS/INITIATIVES | BUDGETS | SELECTION RATIONALE | CAUSE-EFFECT RELATIONSHIP | ||||||||||||||||||||||||||||||||||||||||
| FINANCIAL | Offer discounts for fast payments | $0 | Increased cash flow and market share helps the company revenue to increase and become sustainable | Increases number of tickets sold | ||||||||||||||||||||||||||||||||||||||||||
| Survive | Cash flow | |||||||||||||||||||||||||||||||||||||||||||||
| Prosper | Surged ROE and market share | |||||||||||||||||||||||||||||||||||||||||||||
| INTERNAL PROCESSES | Design Productivity | Engineering efficiency | Enact appropriate ICT systems | $1,500 | Enact ICT structures to ensure payment are tracked and tickets are scheduled appropriately | Increases internal control | ||||||||||||||||||||||||||||||||||||||||
| Service excellence | yield | |||||||||||||||||||||||||||||||||||||||||||||
| CUSTOMER/MARKET | Marketing campaign that highlights benefit of flying with this airline | $3,000 | The marketing campaigns will ensure that the brand name is well known attracting more clients | Increases the number of clients | ||||||||||||||||||||||||||||||||||||||||||
| New products | % of sales from novel goods | |||||||||||||||||||||||||||||||||||||||||||||
| Preffered supplier | Share of key accounts purchases | |||||||||||||||||||||||||||||||||||||||||||||
| LEARNING AND GROWTH | Employee training for surge in growth | $8,000 | Trained staff provide high quality services ensuring clients re satisfied with the services | Improved services | ||||||||||||||||||||||||||||||||||||||||||
| Technology leadership | Time to develop next generation | |||||||||||||||||||||||||||||||||||||||||||||
| Service focus | % of service that results to 80% of sales | |||||||||||||||||||||||||||||||||||||||||||||
Balanced Scorecard-Company B
| BASIC BALANCED SCORECARD TEMPLATE | 3 | |||||||||||||||||||||||||||||||||||||||||||||
| COMPANY NAME | ||||||||||||||||||||||||||||||||||||||||||||||
| ADDRESS | [Insert text | CITY | STATE | ZIP | ||||||||||||||||||||||||||||||||||||||||||
| Category | STRATEGIC OBJECTIVES | KEY PERFORMANCE INDICATORS | KPI TARGET VALUES | KPI ACTION PLAN DETAILS | STUDENTS KPI SELECTION RATIONALE | Category | ||||||||||||||||||||||||||||||||||||||||
| YEAR 1 | YEAR 2 | YEAR 3 | EXAMPLES OF PROGRAMS/INITIATIVES | BUDGETS | SELECTION RATIONALE | CAUSE-EFFECT RELATIONSHIP | ||||||||||||||||||||||||||||||||||||||||
| FINANCIAL | Consider selling tickets online | $500 | Increase convenience | Increase income | FINANCIAL | |||||||||||||||||||||||||||||||||||||||||
| Prosper | Surged market share | |||||||||||||||||||||||||||||||||||||||||||||
| Succeed | Quarterly sales growth | |||||||||||||||||||||||||||||||||||||||||||||
| INTERNAL PROCESSES | Reward programs for staff | $2,000 | Increase motivation | Reduce staff turnover | INTERNAL PROCESSES | |||||||||||||||||||||||||||||||||||||||||
| Service excellence | Yield | |||||||||||||||||||||||||||||||||||||||||||||
| Technology capability | Competition | |||||||||||||||||||||||||||||||||||||||||||||
| CUSTOMER/MARKET | Pay timely delivery for supplies | $5,000 | Create a good rapport with suppliers | Have a consistent supply to ensure better service delivery | CUSTOMER/MARKET | |||||||||||||||||||||||||||||||||||||||||
| Customer partnership | Number of cooperative engineering efforts | |||||||||||||||||||||||||||||||||||||||||||||
| Responsive supply | On time delivery | |||||||||||||||||||||||||||||||||||||||||||||
| LEARNING AND GROWTH | Create programs to enhance service delivery | $10,000 | Train staff | Effiient delivery of services | LEARNING AND GROWTH | |||||||||||||||||||||||||||||||||||||||||
| Time to market | Novel product introduction | |||||||||||||||||||||||||||||||||||||||||||||
| Service learning | Process time to maturity | |||||||||||||||||||||||||||||||||||||||||||||
,
INSTRUCTIONS
BigCo_BalanceSheet2019
| 3/4/21 | |||||||||||||||||||
| TransGlobal Airlines, Inc. | |||||||||||||||||||
| Consolidated Balance Sheet | |||||||||||||||||||
| (For instructional purposes only) | |||||||||||||||||||
| (in millions, except share data) | 12/31/19 | 12/31/18 | |||||||||||||||||
| ASSETS | |||||||||||||||||||
| Current Assets: | |||||||||||||||||||
| Cash and Cash Equivalents | $ 908 | $ 493 | |||||||||||||||||
| Accounts receivable, net of an allowance for uncollectible accounts of $4.1 and $3.8 at December 31, 2019 and 2018, respectively | 899 | 729 | |||||||||||||||||
| Fuel Inventory | 230 | 186 | |||||||||||||||||
| Expendable parts and supplies inventories, net of an allowance for obsolescence of $25.8 and $32.12 at December 31, 2019 and 2018, respectively | 164 | 146 | |||||||||||||||||
| Prepaid Expenses and Other | 397 | 443 | |||||||||||||||||
| Total Current Assets | $ 2,598 | $ 1,996 | |||||||||||||||||
| Noncurrent Assets: | |||||||||||||||||||
| Property and Equipment, net of accumulated depreciation and amortization of $5,360 and $4,983 at December 31, 2019 and 2018, respectively | 9,860 | 8,923 | |||||||||||||||||
| Operating Lease Right-of-Use Assets | 1,772 | 1,888 | |||||||||||||||||
| Goodwill | 3,080 | 3,080 | |||||||||||||||||
| Identifiable Intangibles, net of accumulated amortization | 1,626 | 1,521 | |||||||||||||||||
| Cash Restricted for Airport Construction | 200 | 358 | |||||||||||||||||
| Other Noncurrent Assets | 1,186 | 1,212 | |||||||||||||||||
| Total Noncurrent Assets | $ 17,724 | $ 16,981 | |||||||||||||||||
| Total Assets | $ 20,321 | $ 18,978 | |||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||
| Current Liabilities: | |||||||||||||||||||
| Current Maturities of Debt and Finance Leases | 72 | 478 | |||||||||||||||||
| Current Maturities of Operating Leases | 252 | 301 | |||||||||||||||||
| Air Traffic Liability | 1,611 | 1,468 | |||||||||||||||||
| Accounts Payable | 1,028 | 937 | |||||||||||||||||
| Accrued Salaries and Related Benefits | 1,165 | 1,035 | |||||||||||||||||
| Loyalty Program Deferred Revenue | 1,014 | 941 | |||||||||||||||||
| Fuel Card Obligation | 232 | 339 | |||||||||||||||||
| Other Accrued Liabilities | 339 | 352 | |||||||||||||||||
| Total Current Liabilities | $ 6,362 | $ 5,850 | |||||||||||||||||
| Noncurrent Liabilities: | |||||||||||||||||||
| Debt and Finance Leases | 2,794 | 2,599 | |||||||||||||||||
| Pension, Postretirement, and Related Benefits | 2,662 | 2,885 | |||||||||||||||||
| Loyalty Program Deferred Revenue | 1,105 | 1,150 | |||||||||||||||||
| Noncurrent Operating Leases | 1,667 | 1,827 | |||||||||||||||||
| Deferred Income Taxes, net | 458 | 51 | |||||||||||||||||
| Other Noncurrent Liabilities | 436 | 305 | |||||||||||||||||
| Total Noncurrent Liabilities | $ 9,123 | $ 8,818 | |||||||||||||||||
| Commitments and Contingencies | |||||||||||||||||||
| Stockholders' Equity: | |||||||||||||||||||
| Common Stock at $0.0001 par value; 1,500,000,000 shares authorized | |||||||||||||||||||
| Additional Paid-in Capital | 3,505 | 3,675 | |||||||||||||||||
| Retained Earnings | 3,922 | 3,161 | |||||||||||||||||
| Accumulated Other Comprehensive Loss | (2,516) | (2,464) | |||||||||||||||||
| Treasury Stock, at cost | (74) | (62) | |||||||||||||||||
| Total Stockholders' Equity | $ 4,893 | $ 4,310 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ 20,321 | $ 18,978 | |||||||||||||||||
| Copyright, SNHU, 2021. All rights reserved. | |||||||||||||||||||
Big_INCOME_2019
| 3/4/21 | ||||||||||||
| TransGlobal, Inc. | ||||||||||||
| Consolidated Statement of Operations (INCOME STATEMENT) | ||||||||||||
| (For instructional purposes only) | ||||||||||||
| All values in millions, except per-share data | 2019 | 2018 | 2017 | |||||||||
| Operating Revenue: | ||||||||||||
| Passenger | $13,313 | $12,519 | $11,635 | |||||||||
| Cargo | 237 | 272 | 234 | |||||||||
| Other | 1,252 | 1,202 | 1,085 | |||||||||
| Total operating revenue | 14,803 | 13,994 | 12,954 | |||||||||
| Operating Expense: | ||||||||||||
| Salaries and related costs | 3,535 | 3,383 | 3,167 | |||||||||
| Aircraft fuel and related taxes | 2,683 | 2,840 | 2,127 | |||||||||
| Regional carriers expense, excluding fuel | 1,129 | 1,083 | 1,091 | |||||||||
| Contracted services | 832 | 685 | 664 | |||||||||
| Depreciation and amortization | 813 | 733 | 700 | |||||||||
| Passenger commissions and other selling expenses | 628 | 611 | 575 | |||||||||
| Landing fees and other rents | 555 | 523 | 473 | |||||||||
| Aircraft maintenance materials and outside repairs | 551 | 496 | 501 | |||||||||
| Profit sharing | 517 | 410 | 335 | |||||||||
| Passenger service | 394 | 371 | 354 | |||||||||
| Ancillary businesses and refinery | 392 | 534 | 471 | |||||||||
| Aircraft rent | 133 | 124 | 111 | |||||||||
| Other | 558 | 543 | 507 | |||||||||
| Total operating expense | $12,718 | $12,336 | $11,076 | |||||||||
| Operating Income | $ 2,084 | $ 1,658 | $ 1,879 | |||||||||
| Non-Operating Expense: | ||||||||||||
| Interest expense, net | (95) | (98) | (125) | |||||||||
| Gain/(loss) on investments, net | 37 | 12 | – | |||||||||
| Miscellaneous, net | (75) | 50 | (22) | |||||||||
| Total non-operating expense, net | (132) | (36) | (147) | |||||||||
| Income Before Income Taxes | 1,952 | 1,622 | 1,732 | |||||||||
| – | ||||||||||||
| Income Tax Provision | (451) | (383) | (723) | |||||||||
| Net Income | 1,501 | 1,239 | 1,009 | |||||||||
| Basic Earnings Per Share | $2.31 | $1.79 | $1.40 | |||||||||
| Diluted Earnings Per Share | $2.30 | $1.79 | $1.40 | |||||||||
| Cash Dividends Declared Per Share | $0.48 | $0.41 | $0.32 | |||||||||
| Copyright, SNHU, 2021 All rights reserved. | ||||||||||||
BIGCASHFLOW2019
| 3/4/21 | |||||||||||||||||
| TransGlobal, Inc. | |||||||||||||||||
| Consolidated Statement of Cash Flows | |||||||||||||||||
| (All data are for educational purposes only) | |||||||||||||||||
| (in millions) | Year ending December 31, | Year ending December 31, | Year ending December 31, | ||||||||||||||
| Cash Flows From Operating Activities: | 2019 | 2018 | 2017 | ||||||||||||||
| Net income | $ 1,501.1 | $ 1,239.1 | $ 1,009.3 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | $ 812.76 | $ 733.40 | $ 699.71 | ||||||||||||||
| Deferred income taxes | $ 463.85 | $ 429.52 | $ 706.01 | ||||||||||||||
| Pension, postretirement and postemployment payments greater than expense | $ (290.34) | $ (248.77) | $ (1,039.80) | ||||||||||||||
| Changes in certain assets and liabilities: | |||||||||||||||||
| Receivables | $ (244.05) | $ 34.01 | $ (134.78) | ||||||||||||||
| Fuel inventory | $ (43.77) | $ 102.03 | $ (125.02) | ||||||||||||||
| Prepaid expenses and other current assets | $ 29.60 | $ (138.56) | $ (17.95) | ||||||||||||||
| Air traffic liability | $ 142.96 | $ 93.53 | $ 89.43 | ||||||||||||||
| Loyalty program deferred revenue | $ 27.40 | $ 100.45 | $ 125.65 | ||||||||||||||
| Profit sharing | $ 111.47 | $ 73.37 | $ (16.06) | ||||||||||||||
| Accounts payable and accrued liabilities | $ 45.35 | $ (131.63) | $ 300.73 | ||||||||||||||
| Other, net | $ 96.67 | $ (77.78) | $ (15.43) | ||||||||||||||
| Net cash provided by operating activities | $ 2,653.0 | $ 2,208.7 | $ 1,581.7 | ||||||||||||||
| Cash Flows From Investing Activities: | |||||||||||||||||
| Property and equipment additions: | |||||||||||||||||
| Flight equipment, including advance payments | $ (1,053.03) | $ (1,166.39) | $ (851.49) | ||||||||||||||
| Ground property and equipment, including technology | $ (501.32) | $ (461.01) | $ (373.79) | ||||||||||||||
| Purchase of equity investments | $ (53.53) | $ – 0 | $ (392.05) | ||||||||||||||
| Sale of equity investments | $ 87.86 | $ 8.82 | $ – 0 | ||||||||||||||
| Purchase of short-term investments | $ – 0 | $ (45.66) | $ (291.28) | ||||||||||||||
| Redemption of short-term investments | $ 64.87 | $ 241.21 | $ 183.90 | ||||||||||||||
| Other, net | $ 18.26 | $ 39.68 | $ 66.44 | ||||||||||||||
| Net cash used in investing activities | $ (1,436.9) | $ (1,383.4) | $ (1,658.3) | ||||||||||||||
| Cash Flows From Financing Activities: | |||||||||||||||||
| Payments on debt and finance lease obligations | $ (1,045.47) | $ (961.07) | $ (396.14) | ||||||||||||||
| Repurchase of common stock | $ (638.30) | $ (495.97) | $ (528.09) | ||||||||||||||
| Cash dividends | $ (308.60) | $ (286.24) | $ (230.19) | ||||||||||||||
| Fuel card obligation | $ (106.75) | $ 2.20 | $ 200.28 | ||||||||||||||
| Proceeds from short-term obligations | $ 551.08 | $ – 0 | ` | $ – 0 | |||||||||||||
| Proceeds from long-term obligations | $ 647.75 | $ 1,179.30 | $ 772.76 | ||||||||||||||
| Other, net | $ (6.61) | $ 18.26 | $ (48.49) | ||||||||||||||
| Net cash used in financing activities | $ (906.9) | $ (543.5) | $ (229.9) | ||||||||||||||
| Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $ 309.23 | $ 281.84 | $ (306.40) | ||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | $ 865.35 | $ 583.51 | $ 889.91 | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ 1,174.6 | $ 865.3 | $ 583.5 | ||||||||||||||
| Supplemental Disclosure of Cash Paid for Interest | $ 151.5 | $ 118.4 | $ 122.8 | ||||||||||||||
| Non-Cash Transactions: | |||||||||||||||||
| Treasury stock contributed to pension plans | $ – 0 | $ – 0 | $ 110.2 | ||||||||||||||
| Right-of-use assets acquired under operating leases | $ 146.1 | $ – 0 | $ – 0 | ||||||||||||||
| Flight and ground e
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