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Instructions:
Overview
When performing an evaluation to determine the performance or health of a company, it is important
to identify and evaluate any current or potential risks the company might face.
In this assignment, you will perform a risk assessment for TransGlobal Airlines to better understand its
business environment.
Prompt
Perform a risk assessment for TransGlobal Airlines and write a report describing the results.
Specifically, you must address the following rubric criteria:
•
Identification : Identify two risks the company is facing, including at least one high-impact risk.
o
Identify the balanced scorecard component each risk corresponds to.
o
Classify the risk based on these two types:
▪
Operational
▪
Strategic
•
Evaluation : Determine whether the probability and impact of each identified risk is low,
medium, or high. Justify your evaluation of the impact and probability of each risk.
•
Mitigation : Recommend a possible risk-prevention or mitigation strategy for each identified
risk.
Guidelines for Submission
Submit a 1- to 2-page Word document using double spacing, 12-point Times New Roman font, and oneinch margins. Sources should be cited according to APA style.
BASIC BALANCED SCORECARD
COMPANY A
ADDRESS
Category
CITY
123 Rountree Place
STRATEGIC OBJECTIVES
TARGET VALUES
KEY PERFORMANCE INDICATORS
YEAR 1
Ensure the business is sustainable.
Net profit
Assess the available operational funds by
subtracting existing liabilities from the existing
Net Working Capital
assets.
FINANCIAL
Ensure the business`s ability to pay for its
routine operating expenses.
Operating Cash Flow
by the shareholder through evaluating the
Increase the net profit
profit by 10%
by 15%
Increase the
Increase the NWC by
NWC by 10%
15%
Increase the
OPC by 10%
Increase
Debt to Equity Ratio
business funds
total liabilities against the net worth of the
by 10%
business or shareholders equity.
Raise the business solvency through the
Increase the
division of the total assets by the current
Current Ratio
liabilities.
YEAR 2
Increase the net
Enhance the efficiency of how the business
can fund its growth and utilize the investments
STATE
Miami
ratio from 3.3 to
Increase the
operating cash flow
by 20%
Increase business
funds by 15%
Increase the ratio to 4
4
production performance, labor, material,
Overall Operational Efficiency
KPI ACTION PLAN DETAILS
BUDGETS
Increase the net
Increase the bulk rate sales. Develop new revenue
Introducing new airline will require new labor
sources through introduction of new airline
supply (40 employees), resources (10
destinations and routes( 10 new destinations).
aircrafts). The budgetary allocation for the
Enhancing the value proposition of the company.
two will be $300 Million.
profit by 20%
Increase the NWC
by 20%
Reduce various costs of business.
Increase the OPC
by 25%
Increase the
business funds by
25%
Increase the ratio
to 8
Reduce and replace the ageing aircraft fleet to an
$50 Million
average age of 8 years and below. Reduce on-
times or speed
Reduce the cycle time
of concluding
by 20 %
Reduce the cycle
time by 10%
ground turnaround time of the aircrafts to 45
minutes.
delivery of
INTERNAL PROCESSES
service ) by 30%.
Ensure the company is able to fully achieve the
Increase
maximum with its resources i.e. human
resource, machinery and equipment, and
Capacity Utilization
matching the operating rates with these
low reject ratio, high delivery performance,
Quality
reduced material costs and customer issues.
Ensure fulfillment of operating margins
Increase capacity
Increase capacity
utilization by
utilization by 20%
utilization by 25%
and
Enhance quality and
performance by
performance by 20%.
10%
Cut process
through eliminating stock-outs, equipment
and machinery faults, reduced employee
capacity
15%
Enhance quality
resources.
Ensure high level of customer satisfaction, a
Process Down Time
down time by
50%
downtime, and eliminated unscheduled
Cut process down
time by 75%
Increase quality
and performance
by 30%.
Cut process down
time by 100%
downtime.
Ensure the company is able to retain its
CUSTOMER/MARKET
customers i.e. whether customers return.
Ensure growth in the customer base
Ensure the company focuses on a viable
customer base.
Ensure the airline company experiences full
capacity through bookings.
Customer Retention
0.66
0.8
Customer Growth
0.22
0.35
Market Segmentation
Proper
High
Seat Occupancy Average
0.74
0.85
33101
EXAMPLES OF PROGRAMS/INITIATIVES
time (Delivery
technology, and short lead-times.
ZIP
YEAR 3
Reduce the cycle
Ensure high operating efficiency in terms of
FL
0.95
0.5
Potential Airline
Customers
0.97
Enhance public image, brand loyalty and brand
development to attract new clients.
$10 Million
Enhance public image, brand loyalty and brand
$10 Million
CUSTOMER/MARKET
development to attract new clients.
Ensure 50%
training
LEARNING AND GROWTH
Provide strong communication business and
employee development.
Investment Rate
programs
completion
among
Ensure 100%
Ensure 75% training
training programs
programs completion
completion
among employees
Focus on the development of employees
Employee Turn Over
average
Increase the average
turnover rate
turnover rate from
from 12% to
20% to 40%
20%
among
employees
employees
Increase the
Increase the
average turnover
rate from 40% to
50%
Enhance employees training programs, and
investment in up-to-date technologies
$5 Million
STUDENTS KPI SELECTION RATIONALE
SELECTION RATIONALE
CAUSE-EFFECT RELATIONSHIP
The KPIs in the financial category illustrate the
The sustainability of the business in the long term
profitability of company A, and various
is explained by the business financial position in
improvement contexts of how the company can
terms of making profits.
fund its operations.
Operational efficiency, capacity utilization, quality
Internal processes of Company A are affected by
and process downtime demonstrates the
the overall operational efficiency, the level of
smoothness of internal processes at Company A
capacity utilization, quality standards and the
and how it enhance these issues.
downtime of the company`s internal processes.
The rate of customer retention, customer growth,
The public image, business loyalty, and the
viability of the target market segment and the
development of the brand affects the rate of
average of seat occupancy illustrates or indicates
customer retention, growth of customer base, and
improvement points and the customer or market
access by customers to the services offered by the
position of Company A.
Company A. To transform these concepts,
company must pursue a more diversified market
segment.
The rate of customer retention, customer growth,
The public image, business loyalty, and the
viability of the target market segment and the
development of the brand affects the rate of
average of seat occupancy illustrates or indicates
customer retention, growth of customer base, and
improvement points and the customer or market
access by customers to the services offered by the
position of Company A.
Company A. To transform these concepts,
company must pursue a more diversified market
segment.
Employee turn over and the rate of Company A
Employee turn over and the investment rates
investments showcase the objectives and the goals
affects the level of business` learning and growth.
of the company to learning and growth strategies.
Investments into training programs influences the
employee turnover rates.
3
BASIC BALANCED SCORECARD
COMPANY B
ADDRESS
Category
CITY
987 Jouster Drive
STRATEGIC OBJECTIVES
Earn a high return on investments.
Net Profit Margin
FL
ZIP
Enhance and streamline the internal
operations to deliver quality outputs.
INTERNAL PROCESSES
Work closely with other industrial key players
to maximize value.
Enhance competitive market prices with
competitive services.
CUSTOMER/MARKET
Diversify customer segment.
Efficiency Standards
Industry Functionality
Average Prices
Customer segment
32817
KPI ACTION PLAN DETAILS
YEAR 3
EXAMPLES OF PROGRAMS/INITIATIVES
Increase the
Annual Revenue will be increased through entry of
YEAR 1
YEAR 2
Increase the
Increase the
annual
annual
revenue to
revenues to
to $36-38
$30-32
Enhance the
$33-35 million
Enhance the
net profit
net profit
million
Enhance the
margin to
margin to
0.4%
0.6%
Increase
Increase
output by
output by
20%
Increase
25%
Increase
industrial
industrial
partnerships
partnerships
In the long-
In the long-
term
term
Increase
Increase
average prices
average prices average prices
airport transportation. Company B can also increase
by 15%
Add a new
by 20%
Add two
by 25%
Add three
redevelopment of the current services.
customer
customer
customer
segment
segments
segments
annual revenue
BUDGETS
$40 Million
different market segment and region through
opening of new destinations and routes
net profit
margin to 0.8%
FINANCIAL
Enhancing the profitability of the company
KPI TARGET VALUES
KEY PERFORMANCE INDICATORS
Annual revenues and growth
STATE
Orlando
Increase output
by 30%
Increase
Third party partnership with different key players in
$2 Million
the industry. Enhance efficiency standards by
engaging and outsourcing from external functions
industrial
partnerships In
the long-term
Increase
Adding multi-service and product packages such as
value of their services through innovativeness and
$3 Million
Adding multi-service and product packages such as
$3 Million
airport transportation. Company B can also increase
value of their services through innovativeness and
CUSTOMER/MARKET
redevelopment of the current services.
Reduce
average
Ensure employee retention.
Average turnover rate
employee
LEARNING AND GROWTH
turnover by
Enhance employee skillset and job standards.
Keep Smart (Learning through training and continuing
education)
Reduce average
Introduction of regulatory refresher courses and self
average
employee
self-study customer service and quality principles
employee by
turnover by
such as Workplace safety, diversity training and
workplace substance use.
Reduce
50% to 9%
Increase
75% to 4.5%
Increase
100% to zero
Increase
internal
internal
internal training
training
training
(regulatory
(regulatory
(regulatory
courses and
courses and
courses and
quality
quality
principles) by
principles) by
quality
principles) by
100%
$1 Million
STUDENTS KPI SELECTION RATIONALE
SELECTION RATIONALE
Category
CAUSE-EFFECT RELATIONSHIP
Market segment significantly determines the
Company B has a limited market segment and few
firm`s revenue level and consequently its net profit
destinations. Adding the destinations will give
margin, because the former and the latter rely on
access to new customers which in turn enhances
the level of sales or business transactions
annual revenue.
FINANCIAL
conducted.
Efficiency standards and Industry functionality
Third party relationships and engagement with
illustrates the performances of internal processes
different industry key players dermines the firms
and how those performances allow the firm to fare
efficiency standards especially because the firm is
or stay competitive in the industry.
able to focus on its key competencies and engage
Average prices and customer segment dictates and
To compete among the big players Ian the
indicates the firm`s performances in the market.
industry, companies must abandon providing
They also demonstrate the firms ability to
cheaper prices but instead raise the level of
generate revenue in the market while also
services that match the customer segment and
highlighting the level of service offered by
quality demands of the industry. The two KPIs
Company B.
determine the next steps of developing into an
innovative market player.
CUSTOMER/MARKET
promotes industrial functionality.
INTERNAL PROCESSES
with professional key players in other areas which
industry, companies must abandon providing
They also demonstrate the firms ability to
cheaper prices but instead raise the level of
generate revenue in the market while also
services that match the customer segment and
highlighting the level of service offered by
quality demands of the industry. The two KPIs
Company B.
determine the next steps of developing into an
innovative market player.
The selection rationale of picking the two KPIs for
The relationship between the two KPIs is that the
company B is to enhance its employee retention
airline transportation industry is a highly intensive
and foster a skilled and appropriate workforce
industry that requires constant enhancement of
essential for developing the learning and growth
skills. To foster a consistent workforce that meets
objectives of the company. Company should
industrial standards, company B must step up its
reduce its 18% turnover rate to ensure a more
internal training to also reduce the average
consistent and productive workforce and also
turnover rate.
enhance the skills of its 40% employees without a
diploma or a post-secondary degree.
CUSTOMER/MARKET
To compete among the big players Ian the
indicates the firm`s performances in the market.
LEARNING AND GROWTH
Average prices and customer segment dictates and
3
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