Business Question

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.

Identify the balanced scorecard component each risk corresponds to.

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.

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Ally Coda
MBA 620-Q3761
Business Environment Analysis Report
March 23, 2024
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With its stronghold in the international aviation sector, TransGlobal Airlines must
contend with a wide range of internal and external influences that mold its working environment.
The company investigates acquisition prospects as part of its quest for sustainability and
expansion. These opportunities include tiny airlines specializing in light aircraft-chartered flights
for opulent vacations. An extensive examination of the business environment is necessary to
make well-informed decisions about these purchases.
The acquisition strategy of TransGlobal Airlines may be considerably impacted by
political factors regarding airline operating regulations, particularly those regarding aircraft
certification and safety standards. One of the objectives of the company’s strategic plan is to
safely reintroduce and market the MAX 737 aircraft (Buye, 2021). Acquisition of smaller airlines
specializing in chartered flights may not be feasible or feasible in the anticipated timeframe if
political changes are made to aviation legislation, such as modifications to safety requirements or
certification procedures required by aviation authorities. Furthermore, political unrest in the
areas where the target airlines are active may provide hazards that should be thoroughly
considered before purchasing.
Variations in fuel prices are an economic aspect that can impact TransGlobal Airlines’
acquisition strategy. Any notable fluctuations in gasoline prices could influence operating costs
and profitability because of the high fuel inventory and fuel card obligations specified in the
financials. Purchasing smaller airlines that focus on charter flights could present chances to
diversify sources of income and reduce the risks related to fluctuations in fuel prices. However,
economic recessions or downturns could influence how consumers travel, influencing the
demand for upscale holiday flights and, consequently, the acquisition’s justification.
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The acquisition strategy of TransGlobal Airlines may be impacted by changing consumer
tastes and travel trends, which is a sociological element. Travelers travelling in first class, luxury,
business class, and economy are among the primary market categories for the organization.
Shifts in sociocultural tastes, such as a greater emphasis on eco-friendly travel or a desire for
unusual travel experiences, may impact the demand for chartered aircraft for luxury vacations.
Purchasing smaller airlines that focus on this niche market may be a good way to meet changing
customer demands and open doors to serve particular market segments looking for upscale travel
experiences.
Technological developments in aircraft technology and airline service digitization could
impact TransGlobal Airlines’ acquisition strategy (Buye, 2021). The strategy plan calls for
implementing smartphone apps, adopting fuel-efficient aircraft, and improving the reservation
and ticketing process. TransGlobal Airlines’ innovative and forward-thinking travel solutions can
be expanded by acquiring smaller airlines with experience using technology to improve
passenger experiences and operational efficiency. But as technology advances, cybersecurity and
data privacy issues also arise, which must be considered when acquiring.
Environmental stewardship and sustainability are becoming increasingly important,
which could impact TransGlobal Airlines’ acquisition strategy. The corporation wants to
accelerate using alternative fuels and fuel-efficient aircraft to reach a net-zero carbon footprint by
2075. TransGlobal Airlines’ long-term objectives align with acquiring smaller airlines that
prioritize environmental sustainability, which also helps the airline’s reputation as an ecologically
conscientious operator. To make sure that the target airlines’ environmental policies and
commitments are in line with TransGlobal Airlines’ sustainability goals, it becomes crucial to
evaluate them.
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The legal requirements and aviation laws may impact TransGlobal Airlines’ acquisition
strategy. Contractual duties, labor rules, aircraft safety standards, and antitrust laws are among
the legal factors to be considered. Extensive due diligence is necessary when purchasing smaller
airlines operating in various jurisdictions to evaluate regulatory compliance and possible legal
issues. The regulatory frameworks governing such transactions may also impact the integration
and transaction structure of airline mergers and acquisitions. Complying with legal regulations
and maintaining regulatory alignment is essential for the acquisition plan’s success.
The PESTEL analysis highlights several external factors that may impact TransGlobal
Airlines’ acquisition strategy. The business environment is shaped by various factors, including
political, economic, sociological, technological, environmental, and legal ones (Moriarity et al.,
2020). These elements also influence the viability and hazards of purchasing smaller airlines
specializing in luxury travel.
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References
Buye, R. (2021). Critical examination of the PESTEL Analysis Model. Project: Action Research
for Development.
https://www.researchgate.net/publication/349506325_Critical_examination_of_the_PEST
EL_Analysis_Model
Moriarity, S., Hopkins, L., & Slessor, A. (2020). TransGlobal Airlines. Management Accounting
Case Book: Cases from the IMA Educational Case Journal, 229.