INTRODUCTION

The airline industry just like the technology, automotive, and plenty of different industries face a
very competitive market. The commercial jet aircraft market involves competitors who are
intent on increasing their market share, such as Airbus, Embraer & Bombardier, and other
entrants from Russia, China, and Japan. During the 2000’s, the market for large commercial jet
aircraft was dominated by just two companies, Boeing and Airbus. Boeing was founded in 1916
in Seattle, Washington and became one of the World’s largest and leading manufacturers in
making commercial and military aircrafts. The company has been involved in acquiring
international firms and making strategic alliances with many aerospace pioneers. The Boeing`s
airplanes fly in every part of world. Almost all airline companies worldwide have Boeing in the
fleet. Some of fleet contains by only Boeing airplanes. The company manufactures different
types of aircraft. The current popular civil series: 737,747,767,777,787.

CASE SUMMARY
Between 2001 and 2005, the European company regularly garnered more new orders than
Boeing. The tide started to turn Boeing’s way in 2003, when it formally launched its next
generation jet, the 787. Built largely out of carbon-fiber composites, the wide-bodied 787 was
billed as the most fuel-efficient large jetliner in the world. The 787 was forecasted to consume
20% less fuel than Boeing’s older wide- bodied jet, the 767. By 2006, the 787 was logging
significant orders. This, together with strong interest in Boeing’s best-selling narrow bodied jet,
the 737, helped the company to recapture the lead in new commercial jet aircraft orders.
Moreover, in 2006 Boeing’s rival, Airbus, was struggling with significant production problems
and weak orders for its new aircraft, the A380 super-jumbo. Over the next few years, Boeing
encountered a number of production problems and technical design issues with the 787 that
resulted in the in production of the 787 being delayed 5 times. The 787 is now scheduled to enter
service in late-2011, more than 3 years later than planned. The main competitor for the 737 has
long been Air- bus’ A320. In late-2010, Airbus announced that it would build a new version of
the A320NEO estimated to be 10–15% more efficient than existing engines by August 2011, the
aircraft had garnered an impressive 1,029 orders. Airbus’ success here forced Boeing’s hand.
However, the company still must decide whether to totally redesign the 737, taking advantage of
knowledge gained during the process of developing the 787, to build an all-new 737 out of
composites that would also be designed with more efficient engines. The R&D and tooling costs
associated with developing a new airliner are very high. Boeing spent some $5 billion to develop
the 777. Its latest aircraft, the 787, was initially expected to cost $8 billion to develop, but delays
have increased that to at least $12 billion. Boeing has suggested that the total world market will
be for not more than 320 aircraft over the next 20 years. At several times in the history of the
industry, problems with the supply of critical components have held up production schedules and
resulted in losses. Boeing outsourced about 65% of the aircraft production, by value, excluding
the engines. While helping to reduce costs, contracting out has placed enormous onus on airline
manufacturers to work closely with its suppliers to coordinate the entire production process. The
airline industry has long been characterized by excess capacity, intense price competition, and a
perception among the travelling public that airline travel is a commodity. The bill for jet fuel
represented over 25% of the industry’s total operating costs in 2006, compared to less than 10%
in 2001. The key to the success of the budget airlines is a strategy which gives them a 30–50%
cost advantage over traditional airlines. Boeing estimates that North America will account for
22% of all new orders, Asia Pacific for 34% and Europe for 23%. Passenger traffic is projected
to grow at 7% per annum in Asia, versus 2.3% in North America and 4% in Europe. Boeing has
a data that the growth in airline travel since 1995 has been met by the introduction of new
nonstop flights between city pairs, and by an increased frequency of flights between city pairs,
and not by an increase in airplane size. In the 2000s, three things dominated the development of
Boeing Commercial Aerospace. First, the company accelerated a decade-long project aimed at
improving the company’s production methods by adopting the lean production systems initially
developed by Toyota and applying them to the manufacture of large jet aircraft. Second, the
company considered, and then rejected, the idea of building a successor to the 747. Third,
Boeing decided to develop a new wide bodied long haul jetliner, the 787.
Production at Boeing was formerly focused upon producing parts in high volumes, and then
storing them in warehouses until they were ready to be used in the assembly process. Boeing set
aside space and time for teams of creative plant employees—design engineers, maintenance
technicians, electricians, machinists and operators to start experimenting with machinery. They
called these teams “moonshiners.” Soon, empowered moonshine teams were designing their own
equipment small-scale machines with wheels on that could be moved around the plant, and that
took up little space. Another example of a moonshine innovation concerns the process for
loading seats onto a plane during assembly. By 2005, assembly time for the 737 had been cut
from 22 days to just 11 days. In addition, work in process inventory had been reduced by 55%
and stored inventory by 59%.Boeing and airbus considered establishing a joint venture to share
the costs and risks associated with a developing a super-jumbo aircraft, but Boeing withdrew in
1995 citing costs and uncertain demand prospects. After taking a close look at the market for a
super-jumbo replacement to the 747, in early-1997 Boeing announced that it would not proceed
with the program because of the limited market and high development costs, which at the time,
were estimated to be $7 billion. There were also fears that the wider wing span of the new planes
would mean that airports would Boeing stated that the fragmentation of the market due to the rise
of “point-to-point” flights across oceans would limit demand for a super-jumbo. Instead of
focusing on the super-jumbo category, Boeing stated that it would develop new versions of the
767 and 777 aircraft that could fly up to 9,000 miles and carry as many as 400 passengers.
Boeing developed a more conventional aircraft using composite technology. The plane was
initially known as the 7E7 (the plane was renamed the 787 in early-2005) and it got the largest
launch order in Boeing’s history. In early-2011, the WTO ruled on the complaint by Boeing.
WTO stated that Boeing, had benefited from improper subsidies, including $5.3 billion from the
United States Government to develop the 787.
Boeing ran into a number of production and design problems with the 787 that resulted in 5
delay announcements, pushing out the first deliveries more than 3 years. For the 787, Boeing
outsourced an unprecedented amount of work to suppliers. This was seen at the time as a risky
move, particularly given the amount of new technology incorporated into the 787. As it turns out,
several suppliers had problems meeting Boeing’s quality specification, supplying substandard
parts that had to be reworked or redesigned. The issues included a shortage of fasteners, a
misalignment between the cockpit section and the fuselage, and microscopic wrinkles in the
fuselage skin. In addition, Boeing found that it had to redesign parts of the section where the
wing meets the fuselage. Boeing executives complained that their engineers were often fixing
problems “that should not have come to us in the first place.”

CONCLUSION & RECOMMENDATIONS

Boeing is a well-known company with some weakness which area are typically attainable to
manage. The internal and external business environments of Boeing were evaluated critically to
spot at what extent the corporate is strategically compatible with its current business
environments. As a results of strategic analysis of Boeing, that company is presently facing the
matter of delay in developing Boeing787 Dreamliner. The delay issue has been caused by supply
chain management issues for outsourcing of each design and also the manufacturing services in
creating 787 Wide backlog and new orders can secure company with funding for next decade.
However, I developed the recommendations which will strengthen the positions in market. Some
of recommendations related with diversification product line, which also would positively affect
profitability. The recommended strategy focused on Boeing's existing Supply Chain Information
System being improved by a People, Process, and Technology strategy in order to create an
integrated management system to maintain supplier relationships to overcome.
The recommendations for Boeing future strategy: BA should enlarge their corporate sector and
develop new models and introduce them to sector. They should try to move assembly and
manufacture lines for lower labor costs. For Example from China, Vietnam such countries. BA
should focus on developing and build own engine that will reduce the cost of building new
aircraft. They should focus on innovations related with cost reducing. BA should focus on more
composite material, instead of titanium and aluminum that will decrease their reliance on
suppliers. They should enhance their technical support center that will add customer satisfaction
value. They should establish new assembling lines to speed up the backlog .The airplane
manufacturing is limited with physic laws and fuel types, therefore at the certain moment
the company will be stacked with creating the new types. Although, diversification will
provide Extra profit and market share. Fasten the positions in U.S. Market to prevent the Airbus
market share growing. The nuclear, solar or hydrogen would be the good Substitute to the
current jet fuel. They should continue to develop biofuel researches. Globalized transnational
strategy will also needed. However, BA should work on becoming the benchmark for aircraft
quality.