BSC CASE AIRLINE INC
• Next slides describe the situation
• It closely resembles a situation where Air Botnia (=
nowadays Blue1) found itself before Scandinavian
Airlines acquired it
• At the end of this document you find more instructions
WHY AIRLINE CASE
• Everyone of us knows something about the business,
we all make choices concerning airlines
• Competitive industry, far less regulation today as before
• Airline business is simple to understand, yet difficult to
manage
-
STARTING POINT FOR AIRLINE INC
•
•
•
•
Small Finnish domestic airline company
Not making big money
Markets dominated by one big competitor
Changes in regulation
-
FIRST EXECUTIVE BOARD MEETING
• Airline Inc management team gathered together
to discuss the challenges of de-regulation
• The aim of the company as a whole was
discussed as well
• As a result, the aim of the company was defined
as to maximize owners wealth, or shareholder
value
-
FIRST BOARD MEETING Cont.
• Growth of the company was seen essential
• Management team decided to hire consultants to do some
background work
– The strengths and weaknesses of the main competitor
– Customer needs and expectations
– Possible partners or co-operators
– A proposal for vision and growth strategy
-
CONSULTING REPORT
• Strengths of the competitor
– Excessive fleet
– Frequent flyer program
– Good routing and schedules
• Weaknesses of the competitor
– Some customers not satisfied to the level of service
– Reliability problems caused by rather old fleet and
problems with employees
-
CONSULTING REPORT
• Customers value security, routing and timeliness,
frequent flyer program, clean and comfortable fleet and
friendly service
• A major Scandinavian airline company as a potential
partner
• Success possible through partnership
-
SECOND BOARD MEETING
Encouraged by the consulting survey:
• A decision to look for a partnership
• A vision for the company:
“Airline Inc will be the leading provider of business
services for passengers in the domestic market area
by the year 2023”
-
STRATEGIC MOVES
• Partnership established with major Scandinavian
company
• A hub for transfer flights in order to attract business
customers heading for international flights
• New fleet for more reliable and comfortable service
• A frequent flyer system together with partner
-
A BUSINESS STRATEGY
• After the successful completion of big strategic steps,
management board gathered together to decide, how to
ultimately reach the vision
• They defined a value proposition, or a strategy for business
operations:
– Provide service that exceeds the service of competitors
– Focus on offering a range of services to a specified
target group of business customers
– Reliability must be much higher than that of competitors
-
THE NEXT STEP - BSC
• To make sure that the strategy translates into action,
management team decided to apply Balanced
Scorecard
-
EXERCISE 1: Specify Strategy Further
• Define a strategy for Airline Inc. which helps it to win customers to
fly with it
• Following questions may help you in this assignment. (There is no
need to hand in answers to these questions)
– Should BSC reflect strategic choices made, strategy for
operations, or both?
– What type of strategies might provide sustainable competitive
advantage?
• Note: you may not change the basic strategy adopted by the firm,
i.e. to become e.g. a low cost carrier is not an option here
• Present your specified strategy in one page / slide
-
EXERCISE 2: Create strategy map and
define measures
• Create strategy map based on your strategy
• Define measures for BSC based on your strategy
and strategy map
• Picture your strategy map and related measures to
one slide
• Hint: It may be useful to think what would be the
indicators for KPI scorecard and what would be the
indicators for strategy scorecard, which is our focus
here
-
GRADING
• I will assess 1) whether the suggested
measurement system is in line with your specified
strategy and 2) can those measures be used in
setting targets for the organization
• Please hand in two pieces of paper (A4), one
containing specified strategy and other containing
strategy map and measures.
• You are allowed (and encouraged) to submit also
max two pages of justifications.