Module 1

1. Module 1 The Aerospace/Defense Industry Boeing Company Tyler Saucedo

2. Module 1 overview • Organization of steps to take in valuation: • 1. How to know a company’s environment • 2. How to isolate a company’s enterprise operations • 3. How to determine the current status of a company • 4. How to formalize expectations of where the company is going • 5. How to calculate what the company is worth

3. Module 1 overview cont. • This approach on financial statement analysis and valuation: • Explicitly links the 5 steps together • Focuses on valuation of the company’s operations (not its financing) • Covers both cash flow and accounting based methods of valuation

4. Step 1: Knowing the Business Environment • Important because without a proper understanding of the environment, we may misinterpret the information analyzed. • i.e. understanding the potential for a possible technological advance and its impacts on the company’s enterprising activities. • Patents are key in the Aerospace/Defense industry but are only exclusive for so long. • Different methods of formalizing the knowledge of an enterprise

5. Aerospace/Defense Industry • Predominantly manufacturing and technology development • Big Players: Lockheed Martin, Raytheon, Northrop Grumman, Boeing • Products include aircraft, missiles, space technologies, intelligence/information systems, sensors, mission systems, etc.

6. Boeing Company • Divided into 5 business segments • 1. Commerical Airplanes: -passenger and cargo planes i.e. 747 and 777 • 2. Boeing Military Aircraft: - manned and unmanned army aircraft with weapons systems i.e. F-15 Strike Eagle • 3. Network & Space Systems: - electronics and information systems, especially communications and intelligence systems i.e. commercial satellite launch vehicles

7. Boing Company Cont • 4. Global Services & Support: -mission readiness and total support solutions. Provides maintenance, integrated logistics to sustain aircraft with full spectrum of products and services • 5. Boeing Capital: -Provides financing solutions for commercial airplane customers.

8. Porter’s value-chain model

9. Porters cont. • Firm Infrastructure: legal, accounting, etc. • Human Resource management: recruiting, personnel, training • Technology/product development: Product and process design, R&D • Procurement: Supplier management, funding

10. Porters- Primary Activities • Inbound logistics: quality control, receiving raw materials • Operations: manufacturing, production control • Outbound Logistics: Delivery • Marketing & Sales: Order taking, promotion • Servicing: maintenance, training, upgrades

11. SWOT Analysis • Strenghts (Internal)- patents/intellectual property for products resulting from Boeing’s own R&D products. • Weakness (Internal) – Highly dependent on raw materials such as aluminum and titanium • Opportunities (External)- Chances to diversify • Threats (External) – Reduced government spending on defense.