Boeing 777 Case Solution Essay
Group Number: 3
Participating Group Members:
In October 1990, the Boeing Company announced that it was launching a new aircraft model, the 777. The company praised the superior technology of the product and the fact that it filled a gap in Boeing’s product line. Moreover, it was targeted to service routes in a critical high growth market segment. The chief objective of the analysis is to evaluate the 777 against a financial standard. The case gives internal rates of return (IRRs) for the 777 project base case and alternative forecasts. The principal analytical problem of the case is an …show more content…
The aircraft industry is an oligopoly market industry with three dominated players, the Airbus Industry, MacDonnell Douglas and Boeing. It is very sensitive to variations in consumer and business confidence; it has a huge out lays for individual airframes, a high investment in R&D and have a long life cycle therefore cash-flow for companies in this industry is extremely important. Basic strategies: customer focus; diversify the business, divide market to different segments. In the long run, companies in the aircraft industry should introduce successful products and having financial deep pockets with which to survive the cash flow through
5. Characterize the nature of risk taking in this industry. The aircraft industry relies highly on customers and business confidence that could be easily influenced by accidents like war, risen of fuel price, fuel supply, global economic low down, key supplier risk, security incident.
In October 1990, the prime question was whether the Boeing 777 project remained a sensible investment for Boeing. Political and economic conditions worsened. The economy was slowing and entered into a recession in July 1990. On August 2, Iraq invaded Kuwait. A major concern was the threat Iraq now posed to Saudi Arabia. The United States assembled a coalition of forces to oppose Iraq’s