...American Corporate Analysis ~ Boeing Co. Sheryl Stryker, Ruthie Williams, Kareem Campbell, Tamara Loken, Evelina Delgado ACC/561 December 09, 2014 Dr. Deborah Adkins Introduction Boeing was founded in 1916 in Washington State. They are the world’s largest aerospace company and leading manufacturer of commercial jetliners, a top U.S. exporter, which services customers in 150 countries, employs more than 169,000 people across the U.S. In addition to providing there services they represent one of the most diverse and talented workforces in the world. The journey of Boeing’s history includes many strategic mergers and acquisitions to become prevalent. Boeing continues to introduce these practices in order to drive the financial results and withstand the competition. In order to conduct a comparative analysis for Boeing, and to measure its profitability and liquidity, a vertical and horizontal analysis along with financial ratios will be calculated explaining and interpreting the past two reporting years with comparison to Airbus. Horizontal Analysis A comparative analysis involves analyzing financial statements that utilize comparative and basic tools. Intercompany and intracompany horizontal analysis will be performed on both companies. In addition, an evaluation of Airbus and Boeing’s balance sheet and income sheets data for fiscal years 2012 and 2013 will be reviewed using a horizontal analysis. For instance, by using 2012 as the base...
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...Introduction The goal of the study is to provide overall financial statement overview of The Boeing Company using the knowledge obtained during the Financial Management course. The main question of the study is how financially well the company is at the moment and what investment expectation it generates on the market nowdays. The Boeing Company background The company was originally founded by William Boeing on July 15, 1916, as "The Pacific Aero Products Company". Two years later it was renamed into “The Boeing Company”, on May 9, 1917. Since that date the company grew and acquired a lot of its competitors, including the McDonnell Douglas in 1997. [pic] The Boeing’s structure consists of two main divisions and two supporting divisions: - Boeing’s Commercial Airlines (BCA) - Boeing Defense Space & Security (BDS), which in turn consists of: o Boeing Military Aircraft o Network & Space Systems o Global Services & Support - Boeing Capital Corporation (BCC) - Other segments (including own Fire department and other non-profile activities) [pic] The Boeing Company’s Commercial Airliners division took the leading market positions up to 2003. Financial Ratios Analysis Liquidity Boeing’s liquidity ratios increased in 2010 and 2009 in comparison to 2008 values, but current and acid-test ratios are still below the industry average. Reasons: - the amount of money and short-term investments...
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... 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 stakeholders. As the complexity of business and capital markets increase, companies are required to manage risk and uncertainty in order to satisfy stakeholder needs. The role of transparent and clear financial reporting disclosure has heightened importance...
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...Airbus and Boeing are considered duopoly in a large jet airliner industry. Together, they hold over 60% of the market share with Airbus having 33% and Boeing having 30% of the market. Fig. 1 Airline Industry Market Share Both companies compete largely on the basis on technology, size, and weight of the aircrafts. Airbus A380 is an example of how Airbus competes in terms of size. A380 competes directly with Boeing 747, which is the largest aircraft of Boeing. In terms of the floor space, A380 has 49% more space than the 747, but 747 is 10% lighter; therefore, it reduces trip-cost by 21%. In these ways, Airbus and Boeing constantly compete to create better, bigger, and cost efficient aircraft. Fig. 2 Size comparison A380 vs. 747 In the last decade, Airbus received 8,933 orders and delivered 4,824, while Boeing received 8,428 and delivered 4,458 orders. The comparison suggests that Airbus has a slight edge over the airline industry in terms of orders received and delivered. Airbus A380 has given the biggest competition to Boeing as more airlines are looking for bigger aircrafts to carry more passengers and cargo at once to reduce cost. Boeing is taking a technological route to compete with Airbus by introducing the new Dreamliner with advance technology and eco-friendly engine that significantly reduces cost. Airbus has weaknesses that give Boeing an advantage in the industry. One of the major weakness is that Airbus doesn’t have a defense segment, whereas Boeing is the...
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...Management Planning at Boeing Brian Newton MGT/330 December 1st, 2014 Steven Friloux Management Planning at Boeing To be successful in today’s competitive business world, organization and strong leadership is key. At The Boeing Company, this is no different. As one of the largest corporations in the world, they strive to set goals and plan a future around reaching those goals in a way that they can be the most prosperous. In the complex business economy of today, there are always influences that affect the way leadership paves the way. Issues regarding legality, ethics, and responsibility that follow being a major corporation are just a few. These play a major role in strategic, tactical, operational, as well as contingency planning. The Boeing Company and its leadership continually reach toward improving the organization, and the daily planning is inspired by numerous factors that shape who they are. Planning Functions Having an organized plan can be important to success and growth of a company, and Boeing follows the basic template of the planning process. It begins with the initial goal to be set, followed by an evaluation of the situation to determine what resources will be needed. This analysis is drawn from different areas such as past and current work conditions and how they can improve. A derivative plan is also brought to the table before finalizing the final decision. And lastly is...
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...Jan. 19, 2011 Lufthansa Case Analysis Lufthansa’s chairman, Herr Heinz Ruhnau, purchased twenty 737 jets from Boeing (U.S.) in January 1985. The agreed price of the jets was $500,000,000 payable in one year. The U.S. dollars has been rising steadily and rapidly since 1980, and was about DM3.2/$ in January 1985 (Chart 1). Chart 1- DM/$ Exchange Rate 1980-1985 Herr Ruhnau believed U.S. dollar will depreciate very soon based on its appreciation in last 5 years. That is, exchange rate between DM and USD will favor Lufthansa when the company pays $500,000,000 to Boeing. However, it would be too risky to leave the whole amount uncovered. In order to hedge some risk, Herr Ruhnau used forward contract to cover 50% of the payment, and left the other 50% uncovered. There are five alternative hedging ways to choose: 1. Remain uncovered It is the maximum risk approach. If e= DM2.2/$ by January 1986, payment to Boeing would be DM= 2.2 * 500 million= DM 1.1 billion If e= DM 4/$ by January 1986, payment to Boeing would be DM= 4* 500 million= DM 2 billion 2. Full forward cover This approach would lock in an exchange rate of DM 3.2/$. Payment to Boeing would be DM= 3.2 * 500 million= DM 1.6 billion 3. Partial coverage Cover part of the payment with forward contract. Like Herr Ruhnau did, 50% covered by forward contract, DM= 3.2 * 250 million= 0.8 billion. If e= DM 2.2/$ in January 1986, total cost would be 0.8 billion + 2.2 * 250 million= DM 1.35 billion 4. Foreign...
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...STRATEGIC ACTIONS: STRATEGY FORMULATION 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? Strategy Comparison Boeing Airbus Growth platform Point-to-point Increased fragmentation in travel to solve problem of airport congestion Hub-and-Spoke Expecting growth in travel between major hubs, particularly in Asia Product development Functional product differentiation 787 - mid-size Objective to offer the passenger the most comfortable point-to-point travel experience with as few intermediate stops as possible - more standing room, larger windows and bathrooms, ambient light settings in the cabin to adjust to the time of day, and higher cabin humidity levels. A-380 - superjumbo Will be the largest in the world, holding 550 passengers - will allow 10 million additional passengers per year to fly between airports with no increase in flights - can be configured with bars and specialty boutiques Features Fuel efficiency, eco-friendly, significantly less costly than Airbus' comparable product, light-weight composite materials, simple to operate Commonality - saves airlines costs Estimated release date May, 2008 October, 2007 Supply chain logistics Moving up the value chain - outsourcing - integration and assembly Tighter control over shared knowledge - efficient JIT programs with alliance supply partners Investment in new models $8 billion $14 billion The competitors' views of domestic (regional)...
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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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...Boeing 7E7 It is our understanding that there is a new and better jet to be made. However, with times they way they are, it is extremely risky to embark on an endeavor of this magnitude and not be successful. We have put together a study and recommendation that should assist you in your decision in whether or not to grant final approval to proceed with the project. Although significant investments are required to develop the Boeing 7E7, a competitive advantage cannot be achieved with the Company’s current product scope. Therefore, due to the IRR being higher than the commercial segment’s WACC as well as the need to achieve a competitive advantage in the market, we believe the project should be undertaken. #18 and The Force Executive Summary Due to the above quantitative analysis, it is evident that the project is beneficial to the company. However, several other issues should be taken into consideration before the Board of Directors’ make their final decision. A positive factor is the ability to achieve customer satisfaction as the aircraft will provide 20% less fuel costs than any other plane in its size. There is flexibility of short or long flights and Boeing 7E7 has enhanced passenger features. This will increase the demand for the airplane as customers will face lower operating costs, increased flexibility and will be better able to satisfy their market share. There is a projected rate of annual increase in air travel of 5.1%. This growth in the industry will...
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...much to be a potential investor in Boeing. They need to know whether the company is financially sound or not, in order to decide whether to invest in it or not. As a pension fund invests other people's money, it is even more important that they make a good decision, so they will need to examine all of the information. b. The airline is actually a current or potential customer of Boeing's. As airplane orders usually take several years to fulfill, it is a very long-term relationship. In addition, you have to train your employees to be able to service Boeing airplanes, for example, send them for training about Boeing parts. As a result, the customer needs to know that Boeing will not only continue to survive in the future, but will continue to develop better and better planes in the future. c. The real estate investor is gambling on the future prosperity of the Seattle area. As Boeing is a major employer, their plans will have a great impact on the area. If they continue to grow, more people will move to Seattle or need nicer houses there. If they decline, people will move out, may become unemployed. Therefore the investor needs to have some idea of what Boeing will do in the future, as this will heavily impact the real estate market there. d. Boeing's management needs to see the information to decide how to improve and move forward. Is it worthwhile to develop a new kind of plane specifically to suit a certain market? Is the company doing better in some geographical locations...
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...Boeing: Redefining Strategies to Manage the Competitive Market CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production...
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...CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production industry? Long-term results? STRATEGIC ACTIONS: STRATEGY...
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...Unit 5 Individual Project Business on a Wing and a Plan Introduction For nearly the last 100 years, airplanes have captured the imagination of the world. As the technology has progressed and the airline industry grew, competition has grown as well. Two of the top companies in today’s airline market are Boeing and Airbus. While these two companies are in the same business, they have different development strategies. Comparing the strategies of the two companies will show how each came about their most recent new products. While Boeing and Airbus are part of the top airline manufacturers in the world, there are several other companies hoping to be a part of that elite group. With the intense competition and faltering market, it is important for manufacturers to spread out the risks inherent in the development of multi-million dollar machines. Product Development Strategy Boeing’s approach to product development can be seen throughout the company’s history. It was the science of aviation that dictated what to build. In the case of the Sonic Cruiser, the engineers that develop the planes sought to create a faster and more efficient plane. Starting with a blank sheet, the engineers designed a plane using all the best principles of science, crafting a plane that could transport passengers at nearly the speed of sound. The intent of the Sonic Cruiser was to focus on the idea that the way travelers flew, it made more sense to build a smaller but faster...
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...history of Boeing and salient forces affecting the global aircraft industry, along with the key strategic issues driving Boeing’s competitive strategies. Boeing and Airbus dominate the global aircraft industry, but have very different visions of the future of commercial air travel. Consequently, the strategies they have devised to manage the competitive environment are disparate. The case provides a unique opportunity to explore these differences, how functional strategies support the overall competitive strategy, and the critical decisions now faced by both competitors. The objective of the case study is to evaluate current industry conditions and to make corrective recommendations to improve Boeing’s strategy. The shortcomings of the company’s functional strategies should also be examined in search of measures to improve organizational performance. * Compare the two competitor's strategies. Based on the industry environment, what conclusions can be drawn? * Since Boeing made its decision to pursue a product strategy based on the point-to-point airline business model, what new market conditions have developed? What impact are they likely to have on the company’s success? * Evaluate the pros and cons of Boeing's outsourcing strategy. Is there adequate support for the company's decision to "offload" parts production? * Consider the status of commercial aviation globally. Do Boeing's international strategies position the company to benefit...
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...of: The Boeing Company BA Listed on New York Stock Exchange Prepared for: Dr. Deanne Butchey Corporate MBA Program Florida International University By: Justin Papcun Computations Financial Trend Comparison Liquidity: The Boeing Company financial data shows that the company is in place to settle up its obligations in the short term business strategy. As it appears right now, 1.20 is the current ratio and the company’s assets offset its liabilities by 1:2. The quick ratio of 0.37 is lower than the current ratio due to the variance from competition forming from the industry average. The current ratio posted a value of 1 or above consistently, but the same cannot be said for the quick ratio which posted below the value one for Q1-Q4. This decline comes from a recession, a decrease in airline traffic, and the instability of fuel cost. Despite this the current ratio was able to increase value while the quick ratio decreased while still posting a positive number. This was due to an inventory and production decrease. In current liabilities to inventory sector, the numbers did not suffer. In Q1-Q4 Boeing did not post a value below 1, varying between 1.13-1.21. The cash ratio saw numbers between 0.13 and 0.14 for Q1-Q3, and increasing to a 0.21 for Q4. Assets Utilization: This asset ratio shows Boeing is competently generate profitable sales revenues by properly using investments. Looking at the ratio turnover, you can see the company posted a 1.94 and Boeing would...
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