SmoothAir is a no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare, high-frequency, point-to-point carrier in the Midwest. However, there are several large commercial carriers offering air transportation, and SmoothAir knows that it cannot compete with them based on the services those carriers provide. SmoothAir has chosen to reduce costs by not offering many inflight services, such as food and entertainment options. Instead, the company is dedicated to providing the highest quality transportation at the lowest fare. SmoothAirs balanced scorecard measures (and actual results) for 2013 follow:

1. What is SmoothAirs strategy? Was SmoothAir successful in implementing its strategy in 2013? Explain your answer.

2. Based on the strategy identified in requirement 1 above, what role does the price-recovery component play in explaining the success of SmoothAir?

3. Would you have included customer-service measures in the customer perspective? Why or why not? Explain briefly.

4. Would you have included some measure of employee satisfaction and employee training in the learning-and-growth perspective? Would you consider this objective critical to SmoothAir for implementing its strategy? Why or why not? Explain briefly.

5. Why do you think Smooth Air has introduced environmental measures in its balanced scorecard? Is the company meeting its performance objectives in this area?

Actual Target Performance Performance Objectives Financial Perspective Increase shareholder value Measures Operating-income changes from productivity Operating-income changes from price recovery Operating-income changes from growth Cost savings due to reduction in jet fuel consumption $1,200,000 $450,000 $500,000 $150,000 $1,400,000 $600,000 $660,000 $180,000 Customer Perspective st Increase the number of on-time arrivals 2 in industry FAA on-time arrival ranking in industry Improve brand image Percentage of customer survey respondents with greater than 90% approval rating on company's sustainability efforts 100% 96% Internal-Business-Process Perspective Reduce turnaround time Reduce C02 emissions