...A1. Airbus is interested in building the A3XX because it did not have any large aircraft to compete with 747-XXX airplanes of Boing. Boing with its 747-xxx aircraft had the monopoly position in very large aircraft market; therefore, Airbus with the building of A3XX wanted to enter the very karge aircraft market. From the other side Airbus was of the beleif that very growing economies would play major role in creating high demand for the VLA in future. One of the other reason of Airbus interest in building A3XX was the effective revenue which could be acheived through A3XX. VLA had a better operating economy over long distanations. The operating cost for the VLA was only 12% higher in compare to 747-xxx airplane but it provided 35% more space. A3XX new design and its 4 engines provides saver flights over long distances. Q2. How many aircraft does Airbus need to sell in order to break even on the investment? Hint: consider all capital providers as a single entity and calculate the break even return to them collectively. To calculate the break-even number of planes calculate the present value of a growing perpetuity if cash flows from plane sales beginning in 2008. Please assume an equity risk premium of 6% in your analysis. A2. Q3. What is the total demand for VLA aircraft. Analyze the sensitivity of demand to small changes in assumptions regarding growth, conversion rates and market share. A3. Q4. How should Boeing respond to...
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...Case Air Bus X Boeing Analysis Developing a larger version of 747 AIRCRAFT If Boeing develops a larger version of 747, it would have to disburse a sum of U.S. $ 4 billion. When announced the decision to develop a larger version of 747, its shares fell 1.7% on the same day, giving signals to the company that it would not be accepted by its shareholders. But if Boeing uses it, it would not be worth for Airbus to launch the A3XX, because it could not raise the price and still have to divide the market. Then the NPV would be U.S. $ 650 million to a negative value close to selling $ 225 million per unit, assuming sale of 34 units (30% loss of market), with operating margin of 20%, preventing the launch. Lower the Value of 747 Aircraft If Boeing had lower the value of 747, it would have a reduction in their profit margin, and could not compete in technology, comfort and operational efficiency with the A3XX. With this decision Boeing required Airbus to reduce the value of the aircraft arriving at a price of U.S. $ 180 million per aircraft on condition of selling 48 units, with an operating margin of 20%, obtaining an NPV of U.S. $ 61 million. Accordingly the Airbus could enter the market without a high profit. Developing an Airplane Super Jumbo to compete with the A3XX Boeing brings a negative past experience, which almost led to bankruptcy. The estimated investment would be U.S. $ 13 billion for this development, and that cause the fugue of its shareholders...
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...Unit 3 – Resourcing Case study – AIRBUS | Airbus, a European leader in aeronautic manufacturing, has decided to close three of its ten sites situated in Toulouse and its suburb. Following this, employees of the closing factories will have to move to other plants if possible. But this is not an easy thing to do, indeed, often people can disagree or being reluctant in moving because of different causes such as personal matters like : where they live, the fact that their children are already going to a certain school, that if they don’t move out, the travel time from their home to their workplace could be costly and be very long, and so on. In order to encourage and promote mobility within Airbus, we will highlight different solutions. In order to promote mobility within Airbus, the company need to focus on how these closures will affect the employees concerned. Indeed, most of the staff will have to redeploy to another sites and so many will have to review the way they will go to work, if their living location are still adequate, if they need to move out to another place, if they will have to change their means of transport in order to take less time as possible and to save money. In order to facilitate the private and professional life of the staff, the company will need to firstly percentage the different existing opportunities concerning the seven other plants. Detailed informations mails, letters and tracts presenting the possible...
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...AIRBUS CASE ANALYSIS The possibility of an investor surviving a competition depends on the ability to overcome internal and external threats, while at the same time developing a strategy that creates aspects of differentiation, driven by economic logic. The airline industry has been a competitive industry, especially over the last half century. The two main competitors: - the Airbus and Boeing have exhibited a long-term rivalry for the market share. While the two have had a different staging of their businesses, the businesses have faced great challenges, both from within and external threats. Boeing had been the market leader until the later years of the century, when airbus, driven by the zeal and zest of becoming the market leader, experienced an accelerated growth and expansion to dominate the industry. Airbus manufacturing was a response to the increasing U.S dominance in the aircraft production industry. The initiative was launched in 1960s by three European nations, mainly Britain, France and West Germany in order to counter the increasing influence of the United States manufactures in the air transport industry. The investment was a joint product of the three nations in terms of financial input and human resources. Soon after the launch, British pulled off due to self-interests, but joined later by injecting a 20% stake in the manufacturing process. The plant was first based in Paris, France and governed under French law, which did not allow making public the financial...
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...Finding the Right Location: Four Dimensions of Successful Foreign Direct Investment. Airbus Assembly Line – Mobile, Alabama Overview With the announcement earlier this year by Airbus that it plans to invest $600 million to build jetliners in Mobile, Alabama, the Southeast U.S is well positioned to attract foreign direct investment and U.S suppliers to the region. Central to the supply chain discussion are location strategies that optimize the value chain, drive innovation through the involvement of education and academia in proximity/joint working relationships and provide flexibility for adapting to business change. Location decisions such as these are special events that require careful attention to many conflicting strategic, operational, financial and intangible factors that can set the stage for either great success or fantastic failures. these issues will be one of the biggest challenges facing the industry in the coming years. This whitepaper explores the key drivers impacting the aerospace industry, the process for developing a comprehensive location strategy in response to industry expansion, and these critical locations factors that lead to location strategy success in the Southeast U.S.: Global commercial aircraft orders have increased six percent in 2011, with accelerating demand for new, more fuel efficient and technologically advanced aircraft. According to a number of studies, the industry will have to increase production by 45 percent to meet demand in...
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...companies of commercial aircrafts and other aircraft related products. The founding city was Seattle, Washington by William E Boeing. It was founded in 1916 and integrated on July 19th, 1934. Acquirement of defense in 1996 and space unit of Rockwell International expanded its market size. Later it merged with Mc Donnell Douglas to become the largest aerospace company. Boeing Company manufactures markets commercial aircrafts. It also provides associated support services to profit-making airlines across the world. It keenly engages in research and growth of armed weapon systems for defense purposes. In addition, the corporation broadened its expansion in information systems and space surveillance systems. Boeing faces a solid contest from Airbus Company, which is its leading rival. The healthy competition has enabled them to enjoy duopoly in developing innovative aircraft with new sophisticated skill. However, Boeing benefits a larger market share for having a wide range of products and services. For instance, it supplies defense system to the United States government and space systems to NASA. The current forces of competition have made Boeing focus deeply on research and development to cater the need of consumers. In order to survive, Boeing reduces running costs by outsourcing production and maintaining access to foreign markets Smith, Mercia. 'U.S. Space Programs: Civilian, Military, and Commercial'. Congressional Research Service 6, no. IB92011 (2015): 1-19. Smith uses budgetary...
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...Boeing versus Airbus: The End Results becomes an Air Force Debacle Jason Bourne Park University November 17, 2009 Abstract This paper explores the highly controversial bid process and subsequently protest for the Air Force’s KC-X refueling tanker. The main participants for the new refueling tanker contract were Boeing and Northrop Grumman (NGC) as prime contractor through a joint venture with the European Aeronautic Defense and Space Company (EADS). The Boeing Corporation has been the standard in the aerial defense industry. Their challengers, NGC and EADS, the owner of the Airbus, comprised of two very formable entities capable of taking on the aerospace giant Boeing. There were a lot at stake. Boeing has considered in being the “pride of American aerospace” unseated from the top perch of the aerospace industry by losing military contract potentially worth about $100 billion dollars. (Herszenhorn and Bailey, 2008) Overall, Boeing was a heavy favorite to win the contract being that it has manufactured tankers in the past for the Air Force. Two weeks later after the announcement, Boeing filed an appeal through the General Accountability Office (GAO) to protest the Air Force’s decision. This paper will discuss the Boeing’s basis of appeal and contrast them with the GAO’s findings in their protest. The source selection of the aerial refueling tanker contract became one of the most controversial procurement process in the history of the United States. Boeing versus...
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...Business Case Analysis Wael M. Zaoud MGT 521 May 28, 2012 Clance Doelling MBA, BSME Business Case Analysis Executive Summary The third week assignment examines The Boeing Company (BA) strategic initiatives taken in relative to the organization and operation adaptation to the developing competitive environment. Boeing operates as a global company and facing tough competition recently from Airbus, Lockheed Martin, EADS, Northrop Grumman, etc. Politics, finance, economy, and resources (to name a few) impact the global market in which Boeing operates. As a result, Boeing needs to constantly evaluate its global strategy and the tactics it uses to capture the market and maintain growth. Economic Trends Recent global events, including regional political turmoil, natural disasters, and debt crises, have affected global economic growth. While global growth is expected to recover, the risk of persistent high oil prices and debt contagion could have lasting effects on the economy (The Boeing Company, n.d.). Economic growth also could be affected by slowing trade liberalization in some regions. Reduced liberalization could prolong the recovery period, affecting the demand for air travel and new airplanes. Though recent data indicates that the global economy continues to recover, the pace of the recovery in 2011 has moderated compared to 2010. High oil prices, natural disasters (Japan earthquake) and resulting consequences in a politically unrest Middle East area pose as primary...
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... COLOMBO CAMPUS SRI LANKA MBA FOR EXECUTIVES Module Name: Financial Analysis and Management Student Name: Anuradha S. Illeperumaarachchi Module Lecturer: Mr. William Parrott Module Tutor: Mr. S. Skandakumar Date Submitted: 10/07/14 Total Word Count: 4193 Table of Contents 1.0 Introduction to the Report 3 2.0 Introduction to Airbus 3 3.0 Introduction to Boeing 5 4.0 Analysis of Financial Management 6 5.0 A comparative analysis of Airbus and Boeing 7 5.1 Airbus Group 7 5.2 Boeing 11 6.0 Examination of Key Stakeholders and Information Disclosure 14 6.1 Customers 15 6.2 Suppliers 16 6.3 Employees 16 6.4 Shareholders 17 7.0 Way Forward 18 8.0 References & Bibliography 19 1.0 Introduction to the Report This Consultant’s report has been compiled based on information gathered from the annual reports and financial statements of The Boeing Company and the Airbus Group (formerly EADS) for the year 2012. While analyzing the level of disclosure of both companies, this report aims to shed light on industry standards and critically examine whether the needs of key stakeholder groups have been sufficiently addressed in the chosen annual reports. Further suggestions for the improvement of these reports are also made in order to increase benefits for named...
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...demand for new aircraft or commercial airplanes that are more fuel-efficient. In addition, the rising fuel prices have taken a big effect on the economy. As fuel prices affect consumer goods and spending, leisure travel is expected to decrease, thus affecting the airline industry's bottom line. Furthermore, since the economy has gradually moved into a recession from the effects of rising fuel prices, many airlines that are struggling to stay out of bankruptcy, are looking for more ways to become cost effective. Thus, further fueling the demand for new commercial aircrafts to become more fuelefficient (2007 Annual Report). In order to save on costs so that Boeing can provide lower prices to its customers, Boeing and its competitor, Airbus, have both turned to outsourcing. Outsourcing has allowed Boeing to become more competitive. Furthermore, the option of outsourcing also allows Boeing to share risks and focus on their relationship with marketing and suppliers. However there is a down side when Boeing decided to outsource. Engineers feel that outsourcing is not a great idea for the company (Hit, Ireland and Hoskisson: 52). One of the reasons why engineers are against outsourcing is because they feel that their job is at stake...
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...current demand for new aircraft or commercial airplanes that are more fuel-efficient. In addition, the rising fuel prices have taken a big effect on the economy. As fuel prices affect consumer goods and spending, leisure travel is expected to decrease, thus affecting the airline industry's bottom line. Furthermore, since the economy has gradually moved into a recession from the effects of rising fuel prices, many airlines that are struggling to stay out of bankruptcy, are looking for more ways to become cost effective. Thus, further fueling the demand for new commercial aircrafts to become more fuelefficient (2007 Annual Report). In order to save on costs so that Boeing can provide lower prices to its customers, Boeing and its competitor, Airbus, have both turned to outsourcing. Outsourcing has allowed Boeing to become more competitive. Furthermore, the option of outsourcing also allows Boeing to share risks and focus on their relationship with marketing and suppliers. However there is a down side when Boeing decided to outsource. Engineers feel that outsourcing is not a great idea for the company (Hit, Ireland and Hoskisson: 52). One of the reasons why engineers are against outsourcing is because they feel that their job is at stake and the company has lost...
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...Henderson MKT 370 Case Study 2-4 Airbus 1. In each of the cases described who benefited and who suffers from the alleged ethical and legal lapses of Airbus? Competitors like Boeing benefited in the short term due to their Airbus lapses, but in the cases who was the winners and losers are as followed. In the Kuwaiti Kickbacks the one who gained from the benefit was Kuwait Airways Corporation (KAC) Al Mishari, and ALAFCO’S El Fekih Airbus for the first few planes purchased alone with Airbus who also suffered, because in the end they were the one who lost the deal. Both Airbus and Boeing competed for Kuwait Airways Corporation order. KAC choose Airbus but it seemed like Boeing would be chosen, even when Boeing offered $100 million cheaper package. KAC’s chairman Ahmed al Mishari was involved in the corruption. Indian Ink Rajiv Gandhi benefited and his Indian Airlines Mishari and Airbus for the first few planes purchased associated and of course Airbus Ind. Airbus also suffered in this case as well Mishari’s plans to bypass the formal deal when the Indian Government has declined the government approval by forming ALAFCO has purchase 43 Airbus planes worth $2 billion. In 1984, Indian Airlines (IA) had pad a deposit for 12 of Boeing 757s and in 1986, IA ordered 19 Airbus A320s. Although Boeing offered to supply 35 of its 757s with a discount of $5 million per plane, IA refused the deal. Mounties and Banks Karlheinz Schreiber Airbus Senior benefited, because Airbus denied paying off...
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...Financial Management Case - Boeing 7E7 1. Background 1.1 General introduction of Boeing Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Defense, Space & Security. According to Boeing’s 2002 Annual Report, the revenues split between its commercial airplanes division and its integrated defense systems division is about 50/50. Boeing has been the premier manufacturer of commercial jetliners for more than 40 years. Today, the main commercial products are the 737, 747, 767 and 777 families of airplanes and the Boeing Business Jet. New product development efforts are focused on the Boeing 7E7. 1.2 Basic information of Boeing 7E7 Boeing 7E7 was expected to enter service in 2008 with three versions: a baseline model with 200 seats and a range of 7,800 nautical miles; a lighter version with a 3,500 nautical-mile range; and a stretch version with 250 seats and a 8,300 nautical-mile range. The 7E7 is intended to replace the 757, 767 and A300 and even the successful A330. This is why Boeing has a lot of opportunities in this market segment. With almost every U.S. major airline operating a large fleet of 757/767 aircraft, this will be the main target market for Boeing's 7E7. American Airlines, Delta Airlines and United Airlines may all be the customers we want to pay attention to. American Airlines also operates...
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...solved the technology issues, then slowing to improve. According to the case study (Boeing), the six-box organisational model provides a framework that succinctly identifies the key factors at the centre of the Boeing situation. It explains the following according to Palmer et al. (2009): 1. Strategy – was to update their technology systems, downsize their operations, and re-establish relationships with their suppliers and the only feasible way costs could be cut. 2. Structure – the problem of 1994 airbus which shocked the management executives and began a series of changes that were implemented to overcome the bureaucratic structure, outdated technological systems, and unnecessary processes in a company that had reportedly changed. 3. Systems – Boeing adopted the principles of lean manufacturing and aimed to rejuvenate their reputation by making their production more efficient. The object of the project was to implement an automated system of assembly lines. 4. Style – the decision was made to diversify from the traditional commercial airline industry and the many acquisitions that were made created integration issues for the company. The aim again was to add more stability to the business by diversifying into information services and the space industry that providing services with elevated margins that would reflect on Boeing’s bottom line. 5. Staff – according to the CEO of Airbus Noel Forgeard, the process of diversification was ‘extremely demoralizing...
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...MSL 687-90 Case Study #1 – Boeing 1. I believe there are one or more diagnostic models that provide a framework that succinctly identifies the key factors at the center of the Boeing situation. The first diagnostic model is 7-S Framework. According to our text, the 7-S Framework model is based on the proposition such as the organizational effectiveness that comes from the interaction of multiple factors and secondly successful change that requires attention to the interconnectedness of the variables. This diagnostic model consists of seven factors: structure, strategy, systems, style, staff, skills, and superordinate goals. The first part of the framework is structure; the way the company is structured when it comes to staff and management and also the way activities is coordinated in the organization. In the case, the problem with the 1994 airbus shocked the management executives and began a series of changes. These changes were implemented to overcome their historical bureaucratic structure, which has made it hard to be flexible and adapt to the external environment systems. Second part is strategy, which includes the update of their technology systems, downsize their operations, and re-establish relationships with their suppliers and the only feasible way costs could be cut. In 2001, Boeing tried to implement lean manufacturing, but they face great problems due to decentralized information system. The object of the project was to implement an automated...
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