Abstract:

The aim of this report is to conduct an investment analysis of Bombardier Inc. which is an Aerospace and Transportation Company based in Montreal, Canada. This report considers the financial and supplemental data of the organization and forecasts it for potential investors.

Further, this report discusses the benefits and risks of adding financial derivatives to a portfolio and provides recommendation on its use.

Investment Analysis

Background:

In 1942, Joseph-Armand Bombardier founded Bombardier Inc. He was a mechanical engineer,renowned for inventing the first snowmobile that was commercially viable. Headquartered in Montreal, the company was incorporated as “L’Auto-Neige Bombardier Limitée”.(McQuarrie, 2006).Since its inception, the company has emerged as one of the world’s leading manufacturers of trains and airplanes.

In 1949, when the Canadian Government revised its policy for snow removal on rural roads, it adversely affected the newly formed company, the company’s founder showed great entrepreneurial skill by shifting his focus on new markets and developing new products such as the Muskeg Tractor which could function on multiple terrains and be used for mining, forestry and oil work sites (McQuarrie, 2006). In 1966, the company came under the leadership of Bombardier’s Son in law,Laurent Beaudoin who proved to be just as capable of managing the company.

Bombardier Inc Harvard Case Solution & Analysis

In 1970s, under Beaudoin’s leadership, the company expanded and entered the mass transit and locomotive market by acquiring Lohnerwerke, an Austrian manufacturer of trams. The company acquired a majority stake in MLW WorthingtonLtd.which provided them with new Light Rapid Comfortable (LRC) technology. In addition to this, the company made 423 cars for the subway system in Montreal, this was the first contract for mass transit that the company had been successful at obtaining(Company History, n.d.).

To diversify its activities and to expand in Europe, Bombardier Inc. bought 45% interest in a Belgian company in 1980s. The company was named BN Constructions Ferroviaireset Métalliques S.A.In 1986, the company diversified its activities further by entering in the aerospace sector by purchasing Canadair. In the same decade, it acquired France’s ANF-Industrie and Ireland’s leading aviation manufacturer; Short Brothers Plc.(Company History, n.d.).

Since then, the company has continued to grow and has established itself as a significant player in the aerospace and transportation sector. Bombardier Inc. has expanded its operations to areas like Mexico to geographically diversify itself.NetJets Inc. ordered 100 Challenger business jets with a choice to purchase 175 airplanes more, Bombardier Inc. won the contract in 2012 and it was at that time, an unprecedentedly large contract for business jets. If exercised fully, the order is approximately valued at $7.3 billion (Bombardier Inc., n.d.). Over the years, the company has shown tremendous growth especially in the transportation and aerospace segments of its operations.

Company Overview:

The current CEO and President of the company Alain Bellemare and Pierre Beaudoin are the chairmen of the board. The company currently employs 69,500 people, it is operating in 28 countries and has 73 production sites with worldwide service centers(Bombardier Inc., 2017).

The major portion of the company’s revenue comes from transportation at 48% of total revenue, followed by 29% of total revenue in business aircraft, 14% of revenue in commercial aircraft and 9% of revenue in aero structures and engineering services(Bombardier Inc., 2017)............................

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