Boeing Case Summary

The Boeing Company designs, develops, manufactures, sells, services, and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. It operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital. The Commercial Airplanes segment develops, produces, and markets commercial jet aircraft for various passenger and cargo requirements; and provides related support services to the commercial airline industry. This segment also offers aviation services support, aircraft modifications, spare parts, training, maintenance documents, and technical advice to commercial and government customers. The Boeing Military Aircraft segment researches, develops, produces, and modifies manned and unmanned military aircraft, and weapons systems for global strike, vertical lift, and autonomous systems, as well as mobility, surveillance, and engagement. The Network & Space Systems segment researches, develops, produces, and modifies strategic defense and intelligence systems, satellite systems, and space exploration products.

Airbus was planning to introduce the A380 in direct competition to Boeing 747 to compete in the large aircraft sector. The rivalry between Airbus and Boeing was already intense. Boeing’s market share reduced from 70% in 1974 to 45% in 1990 while Airbus’s market share had increased from 1% to 34% during the same time (Exhibit 5). Encouraged by this increase in market share, Airbus was contemplating the introduction of A380. Development of new product line is extremely expensive in the Aircraft sector. Following is a quantitative analysis of the project to calculate the risks involved in introducing a new line of Aircrafts.

In September 2005, a former senior executive from Wal-Mart de Mexico sent an email to a high-ranking Wal-Mart lawyer, referencing on how Wal-Mart de Mexico had bribed foreign officials to expedite permits to win market control in Mexico. The emails and subsequent conversations gave specific names, dates and bribe amounts. Wal-Mart followed up with an internal investigation and eventually found a paper trail of suspect payments. In addition, they found documentation implicating that, not only did the top Wal-Mart de Mexico executives know about the payments, but they had also taken pre-cautions to hide them. The lead investigator documented the findings by stating

In 2002, Darleen Druyun; a member of the Senior Executive Service (SES) and Principal Deputy Assistant Secretary of the Air Force for Acquisition oversaw negotiations between the Air Force and Boeing, in which Boeing was awarded a contract to lease 100 Boeing KC 767A tanker aircraft to the Air Force. Mrs. Druyun, at the time was also negotiating an employment offer with Boeing. Her financial interest in Boeing was in violation of Title 18, United States Code, Section 208(a) and 216(a)(2). Mrs. Druyum found guilty of misconduct in the case brought against her, "United States of America v. Darleen A. Druyun". This is one example of many misconduct and ethical breaches that have occurred in the government contracting arena.

During the 2018 Senate budget accountability meeting, Senator Bernie Sanders says, “since 1995 Boeing, Lockheed Martin and United Technologies have paid nearly $3 billion in fines or related settlements for fraud or misconduct- $3 billion collectively. Yet those three companies received about $800 billion of defense contracts over the past 18 years” (Senate). All of these companies are private defense companies that design and manufacture weapons for the Department of Defense if the money if followed. These defense companies have paid 0.375 percent in fines for fraud compared to the amount they were given by the Department of Defense over eighteen

The following case is one of the most famous white-collar crime cases known to date. Enron Corporation was an American energy company based out of Houston, Texas. Kenneth Lay formed Enron in 1985 after a huge merger. Over time Enron’s Chief Financial Officer (CFO) and other corporate executives misled auditors and the board of directors in major financial transactions. Thus, $11 million dollars was lost by shareholders after Enron’s stocks dramatically fell in the end of 2001. Enron was then bankrupt. In this case, many Enron executives were sentenced to prison, a rare punishment for white-collar crime. As a result of this incident, the Sarbanes- Oxley Act was enacted. This act ensured that there would be

1. Why would a large and complex company like Boeing employ off-the-shelf application-specific software for accounting, human resources, supply chain management and other core business processes? And why do they choose to own, host and operate all of their own software rather than to for example outsource payroll to ADP Corporation or sales force management to Salesforce.com? [list]

Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars. They were also accused of bribing foreign governments to win contacts and manipulating both the California and Texas power markets (Patsuris, 2002). Following these allegations, Arthur Andersen was investigated for, allegedly,

In Tides v. Boeing Co., Matthew Neumann and Nicholas Tides were employed by the company’s SOX audit group. The employees allege that they were pressured by supervisors to provide reports giving favorable reviews to internal controls despite their concerns that said controls were vulnerable to manipulation by unauthorized users. Notwithstanding a published company policy prohibiting employees from speaking to the press, both employees provided information about what occurred to a newspaper reporter who incorporated the information in a published article. The Ninth Circuit held that the plaintiffs could not avail themselves to retaliation remedies in the SOX because “[l]eaks to the media are not protected.” The court articulated that SOX

What is an appropriate required rate of return against which to evaluate the prospective IRRs from the Boeing

Due to these criminal activities, many top executives were convicted fraud and sentenced to spend time in prison. WorldCom activities did not align with the company's overall mission and goals. The actions taken by management were not in the best interest of the customer instead they were consumed with acquisitions and increasing the value of WorldCom Shares. The management also should have considered general accounting practices during their strategic planning. Furthermore, create procedures that protect all stakeholders within the firm.

Boeing Company has been and is still at the forefront of the aviation industry. The late 1990s were a time of trial and transition where the company encountered and overcame a number of

1. What is the appropriate required rate of return against which to evaluate the prospective IRR 's from the B ANSWER:The appropriate rate of return against which to evaluate the IRR is the risk-free rate, plus the market risk

The airline industry can be considered an imperfect oligopoly. There are several large carriers that dominate long distance flights, and many small carriers that compete for short distance flights. Competition is fierce, and the return for most carriers is very low. Some airlines are trying to differentiate themselves, like JetBlue for example, by offering superior services at low prices. Other low cost airlines, like Southwest, offer low costs with no frills. Most airlines offer a frequent flyer programs in order to develop brand loyalty. In recent years there has also been several alliances formed between airlines. These alliances enable

It was stated in an article in the March 2008 Tribune Business News that, “Although the relationship did not directly violate Boeing's code of conduct, the board determined that there were