EMGT 835 FIELD PROJECT: Feasibility Study for a New Business Jet By Yasser Abdullah Mousa Master of Science The University of Kansas Fall Semester, 2009 An EMGT Field Project report submitted to the Engineering Management Program and the Faculty of the Graduate School of The University of Kansas in partial fulfillment of the requirements for the degree of Master’s of Science. ________________________________ Linda Miller Date Committee Chair ________________________________ Tom Bowlin Date Committee Member ________________________________ Herb Tuttle Date Committee Member Table of Contents Acknowledgement ........................................................................................................................................4 Executive summary.......................................................................................................................................5 1: Introduction ..............................................................................................................................................6 2: Literature Review......................................................................................................................................8 2.1: Customer analysis ..............................................................................................................................8 2.1.1: Market definition:.......................................................................................................................8 2.1.3: Customers Segments: ...............................................................................................................12 2.1.4: Product groups:.........................................................................................................................15 2.2: Industrial analysis.............................................................................................................................17 2.2.1: Macro‐economy factors............................................................................................................17 2.2.2: Market factors ..........................................................................................................................22 2.2.3: Industry structure factors .........................................................................................................25 2.3: Competitor analysis .........................................................................................................................28 2.4: Opportunities and threats ...............................................................................................................38 3: Project Methodology ..............................................................................................................................39 3.1 Market Evaluation.............................................................................................................................39 3.2: Market selection ..............................................................................................................................42 3.3: Product Positioning..........................................................................................................................43 3.4: Profitability analysis.........................................................................................................................51 4: Findings ...................................................................................................................................................57 5: Conclusion...............................................................................................................................................59 6: Recommendations for Future Research .................................................................................................60 References ..................................................................................................................................................61 Appendix A..................................................................................................................................................64 Appendix B ..................................................................................................................................................65 Appendix C ..................................................................................................................................................67 1 Table of Figures: Figure 1: Transportation industry Classification ...........................................................................................9 Figure 2: Market definition system.............................................................................................................10 Figure 3: Age Distribution (US Census Bureau, 2008).................................................................................18 Figure 4 : Business Jet Market Size (GAMA, 2008) .....................................................................................23 Figure 5 : Business Jet Delivery Unites (GAMA, 2008)................................................................................24 Figure 6: Business Jet Market Share in 2008 ..............................................................................................29 Figure 7: Perceptual Map (Price Vs Seats) ..................................................................................................44 Figure 8: Perceptual Map (Price Vs Speed).................................................................................................44 Figure 9: Perceptual Map (Price Vs Range).................................................................................................45 Figure 10: Early adoption sales projection..................................................................................................52 Figure 11: Moderate adoption sales projection .........................................................................................52 Figure 12: Late adoption sales projection...................................................................................................53 2 Tables: Table 1: Gross Profit Margins.....................................................................................................................25 Table 2: Number of business jet aircraft in service and under development per company ......................28 Table 3: Market size evaluation..................................................................................................................39 Table 4: market growth evaluation.............................................................................................................40 Table 5: Market life cycle evaluation..........................................................................................................40 Table 6: sensitivity to business cycle ..........................................................................................................41 Table 7: Entry barriers.................................................................................................................................41 Table 8: Risk‐to‐benefit of introducing new technology ............................................................................41 Table 9: Competition intensity....................................................................................................................42 Table 10: Market selection .........................................................................................................................42 Table 11: Business jets' parameters ...........................................................................................................46 Table 12: VLJ aircraft preference ................................................................................................................47 Table 13: Attribute level .............................................................................................................................47 Table 14: Dummy coding for independent variable ...................................................................................48 Table 15: Worth utility calculations............................................................................................................48 Table 16: Attributes weight ........................................................................................................................49 Table 17: Market share results ...................................................................................................................50 Table 18: Adoption Scenarios .....................................................................................................................51 Table 19: Input design parameters.............................................................................................................54 Table 20: Cost estimation model results ....................................................................................................54 Table 21: Aircraft cost estimation...............................................................................................................54 Table 22: Bas‐case cash flow.......................................................................................................................55 Table 23 : The effect of change in market condition in IRR........................................................................56 3 Acknowledgement I would
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