Financial Performance of Boeing and Airbus
Question-1
As a consultant, you have been asked to report upon the financial performance of ‘Boeing’ and ‘Airbus’ from the annual reports. You are required to select the annual reports of each of these
two companies for the same year and your annual reports should have been published in the past five years.
Question-2
With your consultancy report you are required to give advise upon the level of disclosure that each of these two companies have provided in the published annual report.
Question-3
Critically examine whether the needs of key stakeholder groups have been sufficiently addressed in the annual reports that you have selected and how the reports could be improved for the
benefit of these stakeholders
How should your final assignment be organized?
a. Cover page
b. Table of contents
1. INTRODUCTION –Backgrounds of ‘Boeing’ & ‘Airbus’ – 300 words!!!
2. MAIN BODY – Analysis & evaluation
• Identification of key stakeholders – 400 words
Key stakeholders will be;
a) Shareholders
b) Employees/management
c) Customers
d) Suppliers
e) Community/society
Analysis of stakeholder information needs! -1,000 words!!!
• A comparative analysis of Boeing and Airbus- Have stakeholder needs been met? -1100 words!!!
• Advise on client improvements? -800 words!!!
• Any further considerations? -400 words!!!
In total the word count should be 4,000 words
• Very important notes that every student has to consider, with regard to the submission of assignment, is clearly outlined in the next 3 slides!!!
• Assignment deadline time should be before, 11.59pm (Sri Lankan time) on the date of the deadline, which will be the cut off time. However, always attempt to, submit the assignment at
least 2 days before the last date of submission!
• The deadline for submission is 28 th August-2014.
No late submissions, after, 28th August-2014, will be allowed, as the submission link will not be accessible after this date.
• All students are advised to refer to the student portal & get a sound awareness on the policies governing late submissions & other academic regulations!
• Student Handbook, MBA Handbook , and academic regulations, external examiners report are all available on the student portal and students must refer to these handbooks
• Re sit policy, and the fact that re sit fees are applicable, are referred to in the handbooks for further details.
• Plagiarism must be well below 10% and always attempt towards, zero plagiarism count!
ANSWERS ARE NOT PERMITTED TO BE INCLUDED IN AN IMAGE FORMAT!
Outline answer plan for question-1:
• Select annual reports of ‘Boeing’ & ‘Airbus’ which was published within the last 5 years!
• Once, a particular financial year has been decided for these two companies, see whether their annual reports ends in the same financial year. Example: The financial year of both
companies must either end on the 31st of March or on 31st of December!
Then, calculate the following ratios for both companies separately for 3 to 5 years;
• Profitability
• Liquidity
• Efficiency
• Investor
• Gearing
• Once you have finalized calculating ratios for both companies, then, you must do a compare & contrast ratio performances ‘within each company’ & ‘with the other company’
• Example: For, Boeing & Airbus, do a comparative analysis of ratios already calculated for 3 to 5 yrs, and also comparing ‘Boeing’ with ‘Airbus’ & vice versa for the same time span.
How can the comparing and contrasting of ratio analysis be done- 3 step approach?
• Analyze what has happened?
Interpret movements in ratio over the time period
• Analyze why it had happened?
This part of the answer requires critical analysis in the areas mentioned in the next slide, but there can be issues not covering these areas too!!!
• Critical analysis connecting the behavior of ratios to areas such as cost control, productivity improvements, capital appreciation, technology up dates, budgetary controls etc. There
must be an integrated picture of ratio analysis performed, on a broader scale
• Was there any merger of demerger in the industry affecting these two companies and in what way if any these effects would have impacted on the performance of these companies?
• Will cost and process improvements impact on the total quality of the company?
How does an efficiency improvement impact cash operating cycle of Boeing & Airbus?
Analyze what are the implications of these ratios, behaving like this?
• Is it a direction towards rationalization?
• Is it a pointer towards merger/acquisition
• Is it requiring high level technology investment to better compete in the aircraft industry?
Outline answer plan for question-2:
• Identification of key stakeholders & analysis of stakeholder information needs!
Key stakeholders will be;
f) Shareholders
g) Employees/management
h) Customers
i) Suppliers
j) Community/society
Analysis of stakeholder needs of – B & A :
Shareholders look for;
i. Past, present and future dividends
ii. Past, present and future profits
iii. Past, present and future cash flows
iv. The movements in share prices
v. The level of business and financial risks
vi. Future management problems, if any, why, and can they be resolved or not
vii. Ethics
You need to present financial information extracted from the annual reports of each company and then ascertain whether each of these information details are met from a shareholder
perspective.
For example, are past, present and future dividends are in accordance with, shareholder requirements? Or has the company ethically behaved from shareholder point of view?
Employees/management look for ;
• Job security
• Promotional prospects
• Salaries and wages position
• The provision of education and training
• Health and safety at work
• Discrimination policies
• For example, have salaries improved over the years in accordance with, employees requirements? Or has the company ethically behaved from discrimination point of view?
Customers look for;
• The product range/product development
• The degree of product innovations
• Pricing policies
• Competitiveness of its products and services
• Customer services
• Value for money
• Ethics
For example, have product range improved over the years in accordance with, customer requirements? Or has the company enhanced the quality after sales service for durable consumer goods?
Suppliers look for;
• Profits of the company
• Liquidity of the company
• Growth prospects of the company
• New product innovations carried out
• Payments patterns
• Fair prices
For example, are product initiatives forthcoming over the years in accordance with, supplier requirements? Or has the company adhered or if it is deferring payments any reasons for this
deferrals?
Community/society look for ;
• Is the company creating more jobs
• Are they paying good salaries
• Committed to protecting the environment
• Is the company a good corporate citizen
• Is it doing business ethically
For example, community may look for the number of local jobs created by the company and their commitment to employee welfare etc. Is it trading with countries where UN may have imposed
trade sanctions?
Outline answer to question-3
You need to critically analyze whether information requirements of key stakeholders has been sufficiently addressed!
You have to analyze the two company annual reports, with regard to key stakeholders and with the information already obtained in part-2, of the answer, now you have to evaluate whether
individual stakeholder information was met or not and how it achieved, and if not achieved, why was it not achieved!!!
1. In the area of shareholder aspirations, if both companies, A & B, show similarities or differences, then you need to critically explain, why are those similarities or differences could be!!!
For example, C-A, shareholders might not be concerned about dividend pay outs , as long as the company is on a growth phase. But, C-B might also be not concerned about dividends
prospects, because it has huge financial committement’s.
2. With regard to employees/management aspirations;
For example, company A, might be in a sector where its products or services might be demand inelastic and therefore salaries and wages will be relatively high compared to company-B, which
might be in a sector, where its products and services are rather elastic in nature, leading to employees receiving low wages.
3. With regard to customers aspirations;
• For example, customers of company-A, might prefer its quality diversity in product/service range, despite relatively high prices, compared to company-B, which might be slow in
product/service innovation.
• For example, suppliers might desire to trade with a company that may be facing short term liquidity crisis, but with sound future development prospects, than with a company, which
though has good profits record, but still be lacking in a sound strategic plan for a competitive environment.
5. With regard to community/society aspirations;
• For example, company-A may not be polluting the environment, but may be exploiting the labor force by way of long working hours and low wages, where as company-B, is seen as to be
adopting fair deals in all their transactions!
Improvements to be made to the annual report to enhance the quality of information for stakeholders:
• If the report places too much emphasis on shareholders’ compared to other key stakeholders, then you have to criticize this issue, especially if the company is found to be interacting
significantly with other stakeholders!
• Client must have a stakeholder mapping process in place. Is this in place?
This explained diagrammatically in the next slide
• Promoters have both great interest in the effort and the power to help make it successful (or to derail it).
• Defenders have a vested interest and can voice their support in the community, but have little actual power to influence the effort in any way.
• Latents have no particular interest or involvement in the effort, but have the power to influence it greatly if they become interested.
• Apathetics have little interest and little power, and may not even know the effort exists.
• Key stakeholders must be directly involved with the setting of vision and mission for overall strategic leadership and management.
• If the company does not provide adequate insight into CSR activities, then this fact must be critically analyzed in your assignment.
• If the company does not focus sufficiently on NFIs’ then, these requirements must included in a balance score card format.
• Financial: encourages the identification of a few relevant high-level financial measures. In particular, designers were encouraged to choose measures that helped inform the answer to
the question “How do we look to shareholders?” Examples: cash flow, sales growth, operating income, return on equity.
• Customer: encourages the identification of measures that answer the question “How do customers see us?” Examples: percent of sales from new products, on time delivery, share of
important customers’ purchases, ranking by important customers.
• Internal business processes: encourages the identification of measures that answer the question “What must we excel at?” Examples: cycle time, unit cost, yield, new product
introductions.
• Learning and growth: encourages the identification of measures that answer the question “How can we continue to improve, create value and innovate?”. Examples: time to develop new
generation of products, life cycle to product maturity, time to market versus competition
• Further considerations that the client should bear in mind
Evaluation of the stakeholder process
• As with anything else you do, it’s important to monitor and evaluate how well stakeholders have been identified, understood, and involved in the course of your effort.
• They can best tell you what did and didn’t work to pull them in and keep them engaged.
• It’s obviously best to involve stakeholders from the very beginning, but it’s never too late to learn from what you’ve done so that you can improve your work.
Here are some evaluation questions the client must consider:
• What could you have done to better identify stakeholders?
• Which strategies worked best to involve different populations and groups?
• How successful were you in keeping people involved?
• Did you provide any training or other support? Was it helpful? How could it have been improved?
• Did your stakeholder analysis and management efforts have the desired effect? Were they helpful?
• Did stakeholder involvement improve the work, effectiveness, and/or political and community support of the effort?
•
Overall presentation
• Include all references & bibliography in Harvard style
• Appendices, if any.
