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While reading the case study Airbus: living through yesteryears contradictions: 1. What are the main abnormal drivers of costs at Airbus 2. Looking back at the financials of YoY, what can you say...

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While reading the case study Airbus: living through yesteryears contradictions:

1. What are the main abnormal  drivers of costs at Airbus

2. Looking back at the financials of  YoY, what can you say about what happened to airbus?

3.  Emphasize similarities and dissimilarities with the failed attempts by Airbus then EADS to by BAE system?

Answered Same Day Oct 24, 2019


David answered on Dec 27 2019
135 Votes
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Question 1
Abnormal drivers of costs are those cost that is not incu
ed in the normal course of business. A380 Ai
us manufacturing plant was in Hamburg and was over the river Elbe that was frequently resulting higher building construction costs and roads were reshaped, enlarged to manage the boat rides and movement of employees. Choosing of inappropriate places is one of the main reason for the increase in costs. Frequent investment in the maintenance of the building is an abnormal cost driver. Improper designing and poor market analysis resulted in huge costs for the aircraft remodeling, thus remanufacturing of all the A350 was an abnormal cost driver. More resources were taken for manufacturing and releasing one single product in the market which is one of the abnormal costs drivers.
New aircraft required more skilled employees resulting in an abnormal increase in the costs. Scandal at EADS has caused more tension in the business operation, and they are an abnormal cost driver for the company. Poor production created more abnormality and increased the costs. More trouble in the management and has caused more challenge in the decision making and operations of Ai
us that caused more delay in the manufacturing process. Delay is one of the main abnormal cost drivers for the company that resulted in huge costs. EADS intervention in the management and operations caused more job losses resulted in more delay in the job performance which is an abnormal cost driver. Ai
us faced more issues mainly due to improper planning and execution. For a high capital-intensive industry, it is essential for the company to perform a market research before launching a product, unlike Ai
us that resulted in more financial trouble to the company. The abnormal cost driver is an ineffective design of the product and redesigning and manufacturing of the product.
Question 2
Observing at the income statement from Exhibit 3 it is clear that there was an increase in the revenue generated by the company. Ai
us revenue from 2003 began to stabilize and provides a signal of improvement in their performance. Ai
us revenue was fluctuating over the period, but the performance has improved significantly by 2006 when compared to the previous years i
espective of issues faced due to A350. The financial statement of the company indicates about the dramatic increase in the cost of goods sold that resulted in the poor gross margin. Due to abnormal expenses, the overall costs associated with the business has increased, and it resulted in pulling down the net income and profitability. There is a dramatic decrease in the profitability of the company. It resulted in a drastic decrease in the earnings per share of the company.
Observing at the Exhibit 4 the balance...

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