Boeing 7e7 Case Study

Powerful Essays
Case # 10: The Boeing 7E7

Presenting

Date: October 24th, 2012

Course Number: Fire 417 Cases in Financial Management

Section: 901

Instructor: Dr. Manu Gupta

Group Number: 4

Group members: Peter Lee, Siravuth Punyataweekul and Stephen Woolard.

Case Summary:

1.) In early 2003, Boeing announced plans to design and sell an airliner named the 7E7. Boeing aimed for the 7E7 to be more fuel efficient, carry between 200 and 250 passengers, able to accomplish both domestic and international flights, as well as be 10% cheaper to operate than Airbus’s A330-200 aircraft. All of these attributes were attractive to Boeing but would come at significant costs. To accomplish these attributes, Boeing proposed to construct the aircraft primarily out of carbon-reinforced material, add a more fuel-efficient engine, use of composites to reduce manufacturing costs and be assembled in 3 days. There were also some obstacles standing in Boeing’s way of making this aircraft. For this aircraft to be able to accomplish both domestic and international flights, the engineers said they would need two different planes with different wingspans. The second obstacle was Boeing’s board of directors. With the 7E7’s project costs planned to be $10 billion, there was an imminent veto threat if the project costs could not be decreased by billions. The board wanted more specifically to keep the 7E7’s development costs down to 40% and per copy costs down to 60% of the 777 aircraft costs. Boeing’s CEO and chair, Philip Condit, knew that if Boeing did not take risks, their days of being a competitor in the commercial-aircraft industry were numbered.

2.) In 2002 the large plane commercial-aircraft industry is dominated by two big competitors; Boeing and Airbus. Although Boeing had historically held the largest market share, Airbus started closing in. In 2002, Airbus received 233 commercial orders compared to Boeing’s 176. This had Airbus representing a 57% market share and an

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Airbus Q&A

    • 904 Words
    • 3 Pages

    Boeing and Airbus competed in the same 4 segment of the aircraft market. Both companies have been in a tight competition up to the time of the case. In 2005 Airbus sold 82 more airplanes than Boeing did (1,111-1,029), though at the same year Boeing won the orders in “terms of value”.…

    • 904 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    During the 1996-2000 period, Europe-based Airbus boosted its global market share in the over-100-seat airplane market from 21 percent to nearly 50 percent (Matlack et al., 2001). The March 6, 2001 issue of The Wall Street Journal reported (Michaels, 2001): From its base in France, Airbus has eaten steadily into the home market of U.S. aerospace icon Boeing Co. over the past decade, and it hopes to keep biting off market share. Today, almost 10 percent of the big commercial jets flying around the U.S.…

    • 2365 Words
    • 10 Pages
    Powerful Essays
  • Satisfactory Essays

    boeing guideline

    • 305 Words
    • 2 Pages

    competition from Airbus and losing its advantage. Boeing executives wish to come up with a…

    • 305 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Boeing 767 Case Study

    • 1104 Words
    • 5 Pages

    1. How would you describe Boeing’s approach to project management? What are its strengths and weaknesses?…

    • 1104 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Fin 571 Final Exam 3

    • 1594 Words
    • 7 Pages

    6) Boeing Corporation is a world leader in commercial aircraft. In the face of competition, Boeing often faces a critical decision: whether to develop a new generation of passenger aircraft.…

    • 1594 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    Boeing Case Analysis

    • 1908 Words
    • 8 Pages

    Government Role: - Government is an important stakeholder for the aircraft business. Government subsidies and protection play a huge role in the aircraft business. (Discussed later in the write up)…

    • 1908 Words
    • 8 Pages
    Powerful Essays
  • Satisfactory Essays

    Fleet Planning

    • 1046 Words
    • 5 Pages

    One of the most difficult decisions airline managements must make is whether to buy new or used aircraft and what type to purchase. Factors that have an effect on this fleet planning process come from two (2) points of view; the Airline point of view, and the aircraft manufacturer point of view.…

    • 1046 Words
    • 5 Pages
    Satisfactory Essays
  • Powerful Essays

    Boeing Paper

    • 37585 Words
    • 151 Pages

    This paper will first attempt to explain the legal structure of Boeing and then describe any historical, present, or future litigation Boeing is engaged in. Then the paper will detail the business and analyze its strategic situation. This section will focus on Boeing’s core competency and use the five forces framework to analyze its strategic position. The third second of this paper will discuss Boeing’s marketing strategy as well as detail their competition and how they differentiate themselves in the marketplace. The fourth section will analyze Boeing’s principal accounting statements and prepare a valuation for Boeing. It will also attempt to assess Boeing’s financial performance and standing relative to its past performance and that of its competitors. The next section will cover a research…

    • 37585 Words
    • 151 Pages
    Powerful Essays
  • Good Essays

    This is a case about three different companies dedicated to the manufacturing of aircrafts. Those three major companies are: Boeing, Airbus Industry and McDonnell Douglas; each of one was struggling to produce enough aircraft to satisfy a seemingly unquenchable need for passenger and freight transport around the world, developed in this form many kinds of aircrafts in different models and styles.…

    • 1675 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    In this paper Team C has selected to report financial outcomes for the Boeing Company. We will compare and contrast three potential financial outcomes that we envision for the initiative in using the most recent annual report and other financial statements. We will evaluate our discoveries to determine the most likely outcome. We will also include calculations that support our analysis of various financial outcomes and discuss the financial effect on Boeing. Boeing is the largest global aircraft producer that started in the mid-1916 and continues to grow by producing the biggest aircrafts and improving them with today’s technologies.…

    • 1823 Words
    • 8 Pages
    Powerful Essays
  • Powerful Essays

    TN16 The Boeing 7E7

    • 6331 Words
    • 20 Pages

    In 2003, the Boeing Company announced plans to build a new “super-efficient” commercial jet called the “7E7” or “Dreamliner.” This was a “bet the farm” gamble by Boeing, similar in magnitude to its earlier introductions of the 747 and 777 airliners. The technological superiority of the new airframe, as well as the fact that it would penetrate a rapidly growing market segment, were arguments for approval of the project. On the other hand, the current market for commercial airplanes was depressed because of terrorism risks, war, and SARS, a contagious illness that resulted in global travel warnings. Boeing’s board of directors would need to weigh those considerations before granting final approval to proceed with the project.…

    • 6331 Words
    • 20 Pages
    Powerful Essays
  • Satisfactory Essays

    Weaknesses * Growth into congested markets * Heavy dependence on Boeing * Contractual obligations * AirTran integration * Boeing 717s * Labor relations…

    • 613 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    M1 Annotation Example

    • 268 Words
    • 1 Page

    decisions regarding the choices of types of aircraft and how these choices affected each airline’s…

    • 268 Words
    • 1 Page
    Satisfactory Essays
  • Better Essays

    Airline manufacturers must compete with one another to be successful, and have the most birds in the sky. Boeing and Airbus are the two largest manufacturers for commercial aircraft, especially those used for long flights. Iberia Airlines wanted to purchase up to 12 brand new jumbo jets from one of these manufacturers. Enrique Dupuy, Iberia’s CFO, set a price that he wanted the company to pay for the aircraft and then started a bidding war between the two super jumbo jet manufacturers.…

    • 880 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    4.1 Boeing outsourced approximately 70% of development and production to other companies in an attempt to reduce development time and costs (Denning, 2013).…

    • 1209 Words
    • 5 Pages
    Powerful Essays