This case discusses the history of Boeing and salient forces affecting the global aircraft industry, along with the key strategic issues driving Boeing’s competitive strategies.
Boeing and Airbus dominate the global aircraft industry, but have very different visions of the future of commercial air travel. Consequently, the strategies they have devised to manage the competitive environment are disparate. The case provides a unique opportunity to explore these differences, how functional strategies support the overall competitive strategy, and the critical decisions now faced by both competitors.
The objective of the case study is to evaluate current industry conditions and to make corrective recommendations to improve Boeing’s strategy. The shortcomings of the company’s functional strategies should also be examined in search of measures to improve organizational performance.
Compare the two competitor's strategies. Based on the industry environment, what conclusions can be drawn? Since Boeing made its decision to pursue a product strategy based on the point-to-point airline business model, what new market conditions have developed? What impact are they likely to have on the company’s success? Evaluate the pros and cons of Boeing's outsourcing strategy. Is there adequate support for the company's decision to "offload" parts production? Consider the status of commercial aviation globally. Do Boeing's international strategies position the company to benefit from the most promising opportunities in foreign markets?
Compare the two competitor's strategies. Based on the industry environment, what conclusions can be drawn?
Each company monitors market signs to determine its next competitive moves. Forecasts are based on uncertain variables that make accurate projections difficult, and the competitors have adopted views of future trends in domestic and international air travel that are in great contrast. As a result, Boeing and Airbus have taken very different pathways in hopes of increasing their market shares (which is the major determinant of success in the aircraft production industry). The table on the following page highlights the dissimilarities between the companies’ strategies.
Increased fragmentation in travel to appeal to travelers and solve airport congestion Hub-and-Spoke
Expecting growth in travel between major hubs, with an emphasis on Asian markets Aircraft requirements
Increased route flexibility
Fuel efficiency (27% < A380) Significantly less costly than Airbus's comparable product Allows movement of 10 million more passengers/year between major hubs with no new flights Lower operating costs
Extra seats on long-haul routes
Functional product differentiation
Objective to offer passengers the most comfortable point-to-point travel experience with minimal intermediate stops - more standing room, larger windows and bathrooms, ambient light settings in cabin adjust to the time of day, and higher cabin humidity levels A380 - superjumbo
The largest in the world, holding 550 passengers - emphasis placed on comfort, more space per passenger, fresh air, natural light, reduced noise - can only fly into the largest airport facilities (some have had to invest in upgrades) Other Features
Eco-friendly, light-weight composite materials, simple to operate, long-haul capabilities, reduced hazardous materials and emissions, recyclable end-of-life materials, speed to Mach 0.85 Largest civil airline in service (35% larger than the 747) - can be configured with bars and specialty boutiques - “Commonality” contributes to airline efficiency Release date
Mid-2011 (3 year delay)
40 out by end of Dec. 2010
Supply chain logistics
Moving up the...
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