In the Airbus case we are faced with a capital budgeting decision. It is the planning process used to determine whether a firm's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.
Capital budgeting decisions are crucial to a firm's success for several reasons. First, capital expenditures typically require large outlays of funds. Second, firms must ascertain the best way to raise and repay these funds. Third, most capital budgeting decisions require a long-term commitment. Finally, the timing of capital budgeting decisions is important. When large amounts of funds are raised, firms …show more content…
This strategy may divert sales from the A3XX.

Ignoring the threat from the new Airbus aircraft would be also a possible solution for Boeing since they have the power to compete with its existing planes and they can concentrate on the production of its existing product line.
The development of a stretch version of the 747, was also a solution for Boeing, which is what they actually did. Boeing 747 got an efficient make over to challenge A3XX. The new 747-8 may look like just another 747, but in addition to the new engines and swept wings, the new airplane is stretched more than 18 feet, increasing the volume by 16 percent. With the extra size and most importantly, extra efficiency Boeing may attract customers away from the Airbus A3XX. But with a first flight still ahead of them, Boeing has some catching up to do.
In an effort to bring down those seat per-mile costs, and offer the maximum number of routes for the airlines, Boeing opted not to challenge the Airbus A3XX directly with a new super jumbo. Instead, the company opted for the smaller, point-to-point efficiency with the 787 Dreamliner. But the company didn’t want to give away the jumbo jet crown without a fight. So instead of developing an all-new airplane to compete in the relatively small jumbo jet market, the company