Why Isn’t Boeing #1?
Title of the Case
The rivalry between Boeing and Airbus, the only manufacturers of large, medium, or long-range passenger aircrafts, has today reached epic proportions. Scenario
Airbus overtook Boeing about five years ago to be number one, mostly through the success of its medium capacity long-haul Airbus A-330 and its shorter-range variations such as the A-340. Even though the number of orders is higher with Airbus in 2004, the total revenues of Boeing are still much higher than that of Airbus. This is due to the fact that Boeing gains profit from other activities such as military aerospace, defense, and space businesses. With the launch of Airbus A380, the market share in the coming year will have a slight change that is better for Airbus. However, Boeing will be able to regain its market share thanks to the new model of 7E7, Dreamliner and making the competition more aggressive. In order to see where and how Boeing can improve is to look at their SWOT and PEST Analyses. Analysis
The SWOT (Strengths, Weaknesses, Opportunities, and Threats) and PEST (Political, Economic, Social, Technological) Analysis are two tools that have different areas of focus. SWOT explores these factors at a business, product-line or product level. PEST looks at "big picture" factors that might influence a decision, a market, or a potential new business. The fact that Airbus was taking the lead of market shares had Boeing needing to create something innovative for both commercial jets. In order to do this, they needed to first look at their SWOT Analysis, which is a simple but useful tool for analyzing an organization's strengths and weaknesses, and the opportunities and threats that one faces. It helps an organization focus on their strengths, minimize threats, and take the greatest possible advantage of opportunities available to them (Mindtools.com, 2013). Strengths: Boeing offers lower cost airplanes that use 20% less fuel and 30% less maintenance. They also have higher revenues due to more flying days, more frequency of planes being used, and new direct routes. Boeing has also improved environmental performance with lower emissions, less manufacturing waste, and less noise (Boeing.com, 2013). They also believe that sustainability is an element of delivering value; they are looking to leave a smaller carbon footprint. “Sustainability is the focus on maintaining operations that are both profitable and non-damaging to society or the environment” (Swink, 2011, p.34). Boeing also has a broad product line that covers most major market niches/R&D development. The company has about eight different planes with more than 14,000 commercial jetliners in service worldwide, which is roughly 75% of the world fleet. Its product line is continuing to expand, creating new versions of its family of commercial airplanes. This pioneering technology development helps ensure Boeing stay as one of the leaders in the industry. Weaknesses: When production problems delayed delivery, Boeing was forced to increase its work force, working in three shifts, to complete the planes. This inexperienced work force created additional problems and the cost per plane is increased substantially. Also, the inexperienced workforce found the aircraft design too complex to implement. The managers ordered forced overtime and 50-to-60-hour workweeks became common. The problems affected other Boeing airplanes and complaints from customers began to mount. The Federal Aviation Administration (FAA) ordered special inspections of all Boeing jetliners produced since 1980 to look for defects that might affect safety (Chernykh, 2006). Production delays due to extensive global supply chains causing it to be about three years behind schedule and landing gear problems are undergoing investigations (glitch could slow down production). “Ensuring that the right purchases are available at the right time to support new product launches, production, and shipments is an...
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