(TCO) rises with multiple planes in a fleet (pilot/mechanic training‚ increased spares‚ maintenance‚ etc.). Thus new entrants are unlikely to be able to garner many buyers. A steep learning curve also makes it difficult to enter this industry. Boeings actions to outsource more parts design may lower a barrier to entry because it enables suppliers to vertically integrate. Also‚ the govt. policy change will lower the barrier to entry because the duopoly will no longer have a subsidy to operate.
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1. Why is Airbus interested in building the A3XX? What are its objectives? Airbus predicts that there would be demand for more than 1500 super jumbos over the next 20 years that would generate sales in excess of $350 billion. And they could sell as many as 750 over jumbos over the next 20 years with a break even on undiscounted cash flow basis with the sales of only 250 planes. There is a huge profit in this business if Airbus succeeds in the industrial launch of A3XX jumbo jets. In addition‚
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industry‚ accounting for roughly 60% of all funding (The US Defense‚ 2004). With the number of US air travelers projected to increase annually over the next 20 years‚ Boeing has a good chance of avoiding job-losses related to government budget cuts and may be the most reliable provider of long-term employment out of the three companies. Boeing has also outsourced their product worldwide‚ receiving approximately 50% of funding from domestic sources and the other 50% from international (The US Defense‚ 2004)
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WACC Weighted Average Cost of Capital Formula The WACC Weighted Average Cost of Capital formula is complex‚ and can be broken into several components. The individual component costs are provided in the following sections. WACC Weighted Average Cost of Capital Variables V=Firm Total Value (Debt + Preferred Shares + Common Equity + Retained Earnings) Md=Market Value of Debt Mp=Market Value of Preferred Shares Mc=Market Value of Common Equity Mr=Market Value of Retained Earnings K=Current
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Boeing Case Study: Questions 1. The market structure for the Dreamliner could be said to somewhat fall under the Oligopoly structure which is a market dominated by a small number of firms that together control the majority of the market share. Or a under the monopoly structure because it is the only firm that produced the Dreamliner of its kind that was unique in its own way. And there is no replica of it. The demand of the Dreamliner from its customers proved to be off the roof and attracted
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Executive Summary: The purpose of this paper is to identify the weighted average cost of capital (WACC) in relation with the firm value. Also‚ there are some aspects discussed in the paper regarding when a firm should accept a project and when to reject. Systematic risk will be also discussed in the paper concerning their target market and how risky is that. Finally‚ the approach that BlackBerry took into consideration to overcome their risk. Discussion: All companies’ assets are financed by
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Boeing 777 Project: Summary for the Board of Directors Boeing is currently operating with the majority market share of the commercial sector of aircraft manufacturing. Frank Shrontz‚ our CEO‚ has recently stated his goal to increase the company’s return on equity from its current average of 12%. The following summary will delve into the most appealing project for the future of this firm: the 777 aircraft. The purpose of this new product is to maintain our competitive advantage in commercial airline
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4/23/2012 Company Description The Boeing Company has been a leader in the aviation industry for decades. It has not only had a critical part in the Civil Aviation industry‚ but more importantly has been a cornerstone in protecting American interests throughout the world for the last century. From the B-17 Bombing raids over Germany during World War 2‚ to the modern joint effort with Lockheed Martin’s F-22 Raptor program‚ Boeing has been a leader throughout its history and the future
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Boeing-Case Study ase Study- Problems at Perrier (Chapter 6‚ pg 183) 1. Identify the key elements of the resistance to change described in this situation. The key elements of the resistance to change described in the Perrier case are: Lack of communication and the companies inability to inform the employees of what changes affected production at Perrier‚ the company made excessive changes‚ the company introduces a series of changes and the people felt the changes were unnecessary‚ and they
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Bonds Microsoft’s long-term debt is composed of eight long-term bonds. It also has two short-term bonds that mature this year and early next year. These bonds were neglected in this report. In this report the required return was calculated by using the coupon rates‚ market values‚ time until maturity‚ and tax rate. These values were all found on Microsoft’s 2012 financial statement. The weighted average cost of debt was then found through the multiplication of each bond’s required return and their
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