Case – TAP

Q1 – Does TAP has any Competitive advantage? Are they sustainable?

Solution- VRIN/VRIO, though not much has been mentioned in the case about the capabilities of
the company.

Q2 – Should TAP expand into ASIAN markets?

Exhibit 5 – growth of each continent market.

1. Demand side angle - Asian Market is showing growth in global light vehicle production
(which accounts for 25% of TAP’s revenue) while North America is declining (45% of
TAP’s revenue) and Europe is showing no growth (35% of TAP’s revenue)
2. Supply side angle - Cost to produce and run a plant – Asian markets have access to
cheap labor for engineering and manufacturing costs. (Page 2, first Para of case)

Q3 – Which department (economy or luxury) has performed better on BSC in the last 6 months.

Luxury:

1. BSC of the luxury segment is wrongly made. It focuses too much on financial Focusing
too much on financial metrics: While financial metrics are important, they are not the
only indicators of performance. Focusing solely on financial metrics can lead to a lack
of attention to other key areas of the business, such as customer satisfaction,
employee engagement, and process efficiency.

2. Although financials have been achieved, other factors are not performing this might be
short-term results. The performance in financial goals has not come from cause and
effect relation between financial and other 3 perspectives, and hence whatever
strategy was implemented in last 6 months, cannot be said for sure will work for
future as well.
3. Since the strategy map is not comprehensive, long-term goal achievement seems
difficult. Failing to establish clear cause-and-effect relationships: A strategy map
should clearly show the cause-and-effect relationships between strategic objectives
and the measures used to assess progress towards those objectives. Without these
clear relationships, it will be difficult to determine how well the strategy is being
executed.

4. In the luxury segment, innovation was required to achieve the long-term goal but in
R&D partnership only 50% of target was achieved.
5. Objectives were too narrow, as important parameters like performance, employee
competency etc. were not accounted.

Economic:
 1. While the financials were not achieved, it has been just 6 months since the strategy was
implemented and the balanced scorecard focuses on long-term growth; thus 6 months is
too short a time period to judge the financials.
2. Comprehensive Balance score ----> focus on customer perspective ---- target
achievement at lower levers-- long-term foucs
3. The economy segment has achieved all the goal related to learnings and growth, which
lays the foundation for future implementation of the strategy sought by TAP economy
division.

Q4 – Was closing the midprice and truck segment a wise decision?

- Exhibit 4 for operating income.

Q5 – Is Ellen Bright’s vision of achieving a ROCE of 8% and positive cash flow achievable?

Yes, with downsizing of the asset class it is achievable.

Q6 – What are TAP’s most important challenges?

8% ROCE

Positive cash flow

Innovation

Lean + cost effective

Market expansion

Creating lost-cost products with the tangible benefit of improved quality and life

Q7 - What is the vision & mission statement of TAP?

Q8- write factors in each bucket of PESTEL, Porter’s 5 forces, VRIO.

Value chain analysis is used for: (Session-7)

1. Evaluate cost structure.

2. Coordinate between linkages.
3. Analysis of product supply chain
4. Positioning within industry value chain
Case – Easy Jet
1. How does easyJet create value for its customer?

- Low cost (No travel agent, same type of planes, no frills, no seat booking system, outsourcing
ground, and booking operations, higher plane utilization, lower turnaround time)

- Differentiation in offerings

- Excellent customer services (Punctuality, refunds, safety, point to point travel, Internet and call
ticket booking, unique marketing tactics – setting right expectations and then exceeding them)

2. Is the budget airline segment an attractive place to compete?

- Apply porter’s 5 forces here + Pestel

3. What is the vision & mission statement of EJ?

4. write factors in each bucket of PESTEL, Porter’s 5 forces, and VRIO.

5. Perceptual map of airlines

- Take X axis as price and Y axis as customer service offered. We can see that easyjet
operates in a zone which was gap earlier and hence shows that they created a blue ocean for
themselves by using low cost + differentiation strategy.

6. value proposition diagram of EJ (Session 7)

Limitations of BSC
The Balanced Scorecard is a popular framework used by organizations to align their strategic
objectives with their performance measurement and management systems. However, like any
management tool, it has some limitations. Some of the limitations of the Balanced Scorecard
include:

Implementation challenges: Implementing the Balanced Scorecard can be a complex process,

requiring significant resources and coordination across the organization. This can make it challenging
for smaller organizations or those with limited resources to adopt the framework.

Limited focus on financial performance: While the Balanced Scorecard aims to measure performance
across multiple dimensions, it can still be limited in its focus on financial performance. This can make
it difficult to measure the impact of non-financial initiatives, such as those related to employee
engagement or customer satisfaction.
Lack of clear cause-and-effect relationships: The Balanced Scorecard assumes that there are clear
cause-and-effect relationships between different performance measures. However, in reality, these
relationships can be complex and difficult to measure, making it challenging to establish a clear link
between performance measures and overall organizational performance.

Over-reliance on quantitative measures: The Balanced Scorecard is primarily focused on quantitative

measures, which can be difficult to develop for certain types of initiatives, such as those related to
innovation or sustainability. This can lead to a lack of emphasis on these important areas of
performance.

Limited applicability to certain industries: The Balanced Scorecard was originally developed for use in
the private sector and may not be as applicable to public sector or non-profit organizations, where
the focus may be on different objectives and outcomes.

Notes:

Pg. 42, 44-52 for all kinds of ratios From whatever file Tarun Sent