Case: Airbus A380 – Turbulence Ahead Harvard Case Solution & Analysis

Case: Airbus A380 – Turbulence Ahead Case Solution

Anticipate how investors will react the day after the case, i.e., on June 14th, 2016. Would the reaction to this delay announcement be different from reactions to previous announcements? If so, how and why? In identifying your response, think about the importance of the A380 program to EADS, and the company's financial and operating characteristics

  • The investors of the market have doubt on the company's operating effectiveness, and the delays indicate that the company is not efficiently operating.
  • This news will become as a rumor in the stock market as the company's operations are not meeting with its target and results in delays. (ATTORNEY-GENERAL'S)
  • The delays will lead to the company’s reputation being damaged, which in turn would reduce the profitability of the company.
  • The investors have concern over the reputation and profitability of the company. The reductions in earning will negatively affect the share price of the company.
  • Delays will lead to increased corporate costs and would reduce the earning potential of the organization, and the company's earnings are the key source of market ratio.
  • The market ratio will become negative due to the doubts on the earning of the company.
  • The first announcement of delay might be absorbed by the investors because the market traders faced risk, and then became aware due to the operational issue delay, which took place in the organization.
  • However,the second announcement of delay will affect the company's investors negatively as the investors would think that the major customers of the company might switch from the EADS to any other manufacturer.
  • The company has to pay penalties for the delays in the manufacturing of A380 which would resultin loss of value for shareholders.
  • The A380 is recognized as one of the most innovative planes of the world due to its differentiated characteristics and features. The delay in production indicates that the company might fail in its core operation of manufacturing of plane.
  • The Airbus division of the company generates 80% of total revenue of the organization. Therefore, this division has strategic importance for the company.
  • The A380 program is important for the organization because the major competitors of the company have already launched the new and innovative plane. The company has to complete the program in time to remain competitive.
  • The delays in A380 program will lead to customers switching from the company to the competitors.
  • The company should maintain effective internal controls over the monitoring of production of the new project. Moreover, preemptive course of action should be taken by the senior management.
  • Proper schedule for the production of the new programs should be created along with the comprehensive plan for the proposed project. Therefore, the investors' confidence over the company would increase.
  • The A380 program is important for the company's operation as the different design and features attract the intended airline companies. In addition,high speed and evacuation system of the A38 0program would provide the company motivation.
  • A380 program would enhance the company's staff motivation as they can produce the most top speed plane. Thus, the program has importance for the company's operations.
  • An innovative program of A380 retains the airline companies as well as attracts prospective buyers due to the special feature of the plane. Therefore, the company’s financial performance would enhance due to this program..........................
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Case: Airbus A380 – Turbulence Ahead

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