Monthly Archives: October 2013

Japan Airlines Deal With Airbus Is Blow In Boeing Stronghold

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Stung by all the problems with its new 787 Dreamliner over the past decade, Boeing waited too long to start updating its larger 777 jets, giving Airbus an opening to break into the Japanese market that Boeing had dominated for decades, aviation analysts said Monday. (NY Times)

Problems Boeing is now facing:

– 777X lost its differentiation advantage
– European companies announced a big order from Japan Airlines for A350 wide-body jets
– Two longtime Boeing customers order Airbus planes
– Relationships with an investing country is threatened

Boeing 777x is expected to replace Boring 777, featuring fuel-saving structure and larger capacity, and Boeing is supposed to dominate in the sales of midsize and larger jetliners. However, “this may not be playing out as planned.”

We assume that Boeing mainly focuses on differentiation strategy, and Boeing obviously has already had skilled scientific research as well as product development. Boeing’s failure this time indicates the weakness in Boeing’s marketing plans and a lack of forecasting. Even though comprehensive consideration is needed before launching a new product, too much waiting-time could result in imitation by competitors, losses of differentiation advantage and the best time of introducing it to market.

Boeing could have won.

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Source:
http://www.nytimes.com/2013/10/08/business/international/jal-orders-9-5-billion-worth-of-airbus-jets.html?ref=business

Accounting Policies Adopted in Coca-Cola 2012 Financial Statements

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Basis of Presentation:
-consolidated financial statements
-involves estimates and assumptions
-use the equity method
-eliminate all significant inter company transactions

Principles of Consolidation:
-consolidates all entities that they control

Assets and Liabilities Held for Sale
-classifies long-lived assets to be sold as held for sale (if criteria are met)
-any loss resulting from this measurement is recognized
-gains are not recognized until the date of sale

Risks and Uncertainties
(a long list of variables noted here may be useful for other case studies)
-try to minimize the impact

Revenue Recognition
-recognized when title to products is transferred to bottling partners, resellers or other customers

Deduction from Revenue
-incentives to customers –> costs–> deductions from revenue (net operating revenues)

Advertising Costs
-count advertisement cost as of the first date the advertisements take place
-all other marketing expenditures: in the annual period in which the expenditure is incurred
-for interim reporting: allocate expenditures proportionally

Shipping and Handling Costs
-are included in the line item cost of goods

Net Income Per Share
-weighted average number

Cash Equivalents
-classify highly liquid investments as cash equivalents(0-3 months)

Short-Term Investments
-investments(3-12 months)

Investments in Equity and Debt Secuirities
-equity method

Trade Accounts Receivable
-record it at net realizable value

Inventories
-valued at the lower of cost or market

Derivative Instruments
-risk management tool

Property, Plant and Equipment
-stated at cost
depreciation recorded by the straight-line method

Goodwill, Trademarks and Other Intangible Assets
-intangible assets: 1.with definite lives subject to amortization 2.indefinite lives not subject to amortization 3. goodwill

Contingencies
-legal proceedings and tax matters
-a liability

Stock-Based Compensation
-Black-Scholes_merton option-pricing model
-on a straight-line basis(?)

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Source:
Notes To Consolidated Financial Statements
2012 Annual Report – The Coca Cola Company
http://www.coca-colacompany.com/annual-review/2012/pdf/form_10K_2012.pdf