Contents

1. Introduction 1. Purpose And Objective Of Report 2. Background Case 1. Analyzing Airbus’ Objectives 2. Analyzing Boeing

2. Capital Structure 1. Assumption Of No Interest Payments

3. Demand Forecast 1. Key Competitive Characteristics Of the Commercial Jet Aircraft Industry 2. Boeing’s Response 3. Forecasting Demand In The Very Large Aircraft (VLA) Market

4. Net Present Value Analysis 1. Data Given and Assumptions Made 1. Financial Data Given 2. Assumptions On The NPV Calculation 3. Assumptions On The Rates Of Return 2. Base Case Calculation 3. Conclusions Of NPV Analysis

5. Breakeven Analysis 1. Breakeven Quantity 2. Conclusions Of
We should hence analyze the sustainable competitive advantages that Boeing possesses before we can make conclusions on their courses of action they would employ.

The core competencies of Boeing Company would no doubt be its political strength that is of significant importance to the US economy. With 190,000 employees, it is also the largest single contributor to the US balance of payments. Being the 2nd largest defense contractor, it also leverages on its manufacturing and defense experience to be the world’s leading producer of aircraft.

As of 1999:

Financial Leverage Ratio:

Debt Ratio = = = 0.18624

Asset Management Ratio:

Total Asset Turnover = = = 1.60437

Profitability Ratio:

Return on Asset (ROA) = = = 0.06388

High efficiency with which different assets are utilized to generate sales coupled with a low extent of firm’s debt burden is sufficed to show the financial strength of Boeing (with reference to exhibit 4A from the case). This, too, translate to being one of Boeing’s competitive advantages.

1. Capital Structure

1. Assumption Of No Interest Payments

Currently the funding for Airbus on the development and launch of the A3XX relies on 3 primary sources.

a.