1.

0 Case Summary
Boeing is the aircraft manufacturing company which are currently become one of the
leading companies in this industry. Boeing was established by William E. Boeing in July 15,
1916 known as Aero Products Company. In 1922 Boeing had been signing the contract with
the military and thus become powerhouse in large part due to its war efforts because of
military ordered numbered B-17 Bombers. After the war, Boeing tries to diversify their
product by selling the luxurious engine for commercial aircraft that known as Stratocruiser.
However the effort is not succeed.

In 1945, Boeing becomes the leader for the commercial jet manufacturing for United
Stated. While 1994, under the leadership of Frank Shrontz, Boeing developed the 777 which
entirely designed by the computer. In the process, they are able to eliminate the cost and full
scale mock-up. Boeing 777 aircraft become the longest range twin-engine aircraft in the
world. In 1972, under the Thortorn T Wilson, he led Boeings development of the single-aisle
757 and the larger twin-aisle 767 in the wake of a new European competitor, Airbus. During
the year, Boeing also participated in the space programs and military projects.

Then, in 1992, the parent of Airbus, EADS together with Boeing are agreed to joint
study about the prospect for the superjumbo aircraft for the growth of the market industry.
After forecasted the annual growth both Airbus and Boeing had reach different conclusion
regarding their market trend the strategies approach by both company are different, thus the
joint effort was cancelled.

The he underestimate of the Airbuss ability to compete in 1996 under the leadership
of Philip M.Condit, they receive more intense rivalry with the Airbus and by 2003, Airbus
able to become market leader in this industry and send Boeing to pursue new project of Sonic
Cruiser. The Sonic Cruiser is aimed to please the customer with faster and more comfortable
ride in long distance travel.

Throughout the timeline, Boeings leaders are trying to improve the organization and
prepare the proper strategic planning for the Boeing to sustain in the market. Thus, it is
important for the Boeing to looked back on their current strategies either in be improve or to
change the strategies in order for them to be able to compete with the Airbus company which
are manufactured large aircraft that are currently needed to support the growth the of the
airlines industry.

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2.0 Major Issue

The major issue identified in this case is the implementation of the strategies that used
by Boeing to ensure their sustainability in the industry. Since they have the biggest
competitor, which is Airbus whom obviously took different strategies to sustain their
companys growth. Thus, it becomes the issue for the Boeing in order to implement the right
strategies for them to compete and become the market leader in the industry. Boeing need to
review back their whole strategies for the organizations operation in order to maintain their
performance and improve their competitive advantage that will allow them to have the ability
to be at the top in the industry and able to sustain in the industry in the long run.

2.1 Decision Maker

In this case, Board of Directors of Boeing is the decision maker, as they are the one
who are responsible to approve any decision making. Before carry out the decision, every
executive managers need to get approval from the BOD before implementing any strategy
and program for Boeing. It is important to have approval from all members of BOD that are
involved in the organization to prevent any conflict inside the company that would affect the
efficiency and effectiveness of the management and operations of the company.
2.2 When
Boeing should analyse their strategy as soon as possible since there is high possibility
that Airbus or other competitors can surpass their company reputation. If Boeing delayed
their strategy analysis, other competitors can grab the chance easily by snatching Boeings
market share in the industry.
3.0 Alternatives
The suggested alternatives are whether Boeing should maintain and improve on their
current strategies which are producing small to midsized aircraft and outsourcing their supply
chain or change their strategies by offering large aircraft as new product line and make in-
house production.
4.0 Analytical Tools
4.1 Costs and Benefits Analysis
Based on exhibit 1, it lists the costs and benefits for Boeing to maintain on their two
main current strategies which are producing small and midsized aircraft and outsourcing their
supply chain that can enable them to expand their market share in the industry. Firstly, the
benefits of producing this type of airplanes is that Boeing can increase their performances by
only focusing in the niche market segment. As stated in the case, the most profitable

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commercial aircraft for Boeing is from small and midsized airplanes. Therefore, by focusing
on their market segmentation, Boeing can easily identify and obtain the demands of their
customers and provide the products that have superior quality than other competitors by using
their own class of specialty.
In addition, the increasing of low cost carriers industry has also led to growth in
demand of this type of products too. According to Agense France (2017), the growing
existence of low-cost carriers outstandingly in emerging economies impacted to the overall
growth of passenger traffic. Thus, Boeing should take this opportunity to provide planes that
are favourable for low cost airlines to buy their products since most of low cost carriers
operated with small and midsized airplanes rather than large airplanes due to lower fares.
Besides, Boeing has been known as producer of products that have fuel efficiency, they
should improvise it more, so that they can attract those low cost airliners to acquire their
products.
However, by producing only small and midsized airplanes, Boeing might not be able
to react faster to the rapid changes of customers need especially to cater the needs of those
airliners that want to transfer many people as much as possible in one time. Other than that,
this type of strategies also led to increase the air traffic congestion as this type of airplanes
has to run many times to transfer many passengers. This fact has been agreed by Craig (n.d.)
in which he stated that due to so many people are flying on so many planes, the airports and
airways of the United States are no longer sufficient to move them efficiently to their
preferred destinations.
Furthermore, the benefit of Boeing strategy to outsource one of their value chain
activities is that they can improve their efficiency in their production. According to the article
entitled Business Process Outsourcing: Increased Efficiency, it is stated that outsourcing
activity will provide the company with more time to concentrate on their core business
activities. Moreover, it also can make Boeing to gain benefits with their suppliers while
reducing some of the risks that they may encounter by insourcing like high cost of
production, personnel issues and difficulties on getting skilled workers. This strategy help
Boeing to compete efficiently in the current globalization as it allows them to improve their
relationship with its partnership by acquiring productive resources through strategic
partnership. Besides, as mentioned earlier, this strategy can reduce the cost of production and
it will enable Boeing to have an opportunity to state price lower than the other competitors.
Nevertheless, this type of strategy also has their own drawbacks which is they may
lose their competitive advantage by giving out their vital knowledge to outsiders. Since they

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are already exposing their crucial knowledge, it can lead to the establishment of new
competitors. In addition, this strategy also incurs more work in terms of monitoring their
suppliers job in order to avoid any error in production later on. Furthermore, as stated in the
case, by having many suppliers, it can lead to increase the rate of error in assembly process.
Based on exhibit 2, it lists the costs and benefits for Boeing to produce large planes
and change to in-house production strategy. The benefits that Boeing can get from producing
large airplanes are that they can gain new market demand and will have comparable products
with Airbus. Since they have comparable product, they are able to challenge Airbus
weaknesses by producing a better planes in terms of hi-technology product and fuel
efficiency and also deliver the product at an agreed upon time, without delay. Moreover, as
Airbus always delays in delivering their product, Boeing should grab this chance to steal their
market share. Besides, as they already have knowledge in this type of plane, it is unneeded
for them to incur more cost on Research and Development department. In addition, as
mentioned in the case, there are circumstances that there are many airliners that forfeit their
contract with Airbus, and decided to make new engagement with Boeing. Therefore, by
producing large planes, Boeing can retain its customers loyalty by offering new product line
that will impact Boeing sales increase.
However, this strategy is not economically feasible for Boeing to implement as their
financial resources currently are not enough to cover it. Even Boeing going to ask fund from
the government, it will only take too much time as they are already have a complaint reported
to WTO concerning the government subsidies issue. As for other options, they may issue
bond to increase their financial, but then their debt to equity ratio is already higher than the
industry standard, thus it will only increase their debt if the development of large planes is
unproductive since producing a new product always derives with the highest business risk.
As for in-house production strategy, one of the benefits of this strategy is that they can
safeguard their competitive advantage since the outsiders will not know their specific skills.
Furthermore, it also can reduce the risk of revealing the crucial knowledge to the outsiders.
Other than that, insourcing will cause the production process to be easily synchronize and
easy for the workers to detect any problem that arise. But, this strategy also has the
disadvantages in which it requires Boeing to additional machines to ensure a smooth
production process. Moreover, Boeings will also be affected as they need to do all the value
chain logistics process by their own. Finally, it will also have an impact on workers
workload to be increased and it is also difficult to acquire skilled worker in the current
situation.

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4.2 SWOT Analysis
SWOT is used to analyse the strength, weaknesses, opportunity and threat of the
Boeing. Strength and weaknesses are the internal analysis while opportunity and threat are
the external analysis for the Boeing. Thus, SWOT Matrix analysis is to evaluate the internal
and external analysis. Firstly is the combination between the strength and the opportunity of
Boeing. In this relationship it can help Boeing to develop and taking an action on the
opportunity using the strength of the company. As mentioned, Boeing are specialized in small
to midsized aircraft which are demanded in many airlines sector which are very convenience
in both small and larger airport without any restriction. Thus, this can give benefits for
Boeing to increase their market demand throughout the global airlines product because they
can promote their specialized in manufacturing midsized aircraft which can be affordable and
highly demanded by all airlines company.

Currently publish on Nov 9, 2015 in article the article Boeing Could Sell Thousand
of Midsize NMA Jets which stated that the growing market for a middle-of-the-market
(MOM) of aircraft seating between 220 and 280 passengers can be sales in the thousand.
This shows that there are high demands for the middle size of aircraft. In addition from
Aviation Daily added that the product of new commercial middle-of-the-market (MOM) that
are considering the midsize which are more convenience are currently demanding in the
market where most airlines around the world are ready to have the airplane. Hence, this can
help Boeing to develop and increase their market share by specializing in the midsized
aircraft assist the company to compete globally in the industry.

The second connection between opportunity and weaknesses is regarding the

weaknesses of Boeing was conflict with the employees and engineer regarding the offload
strategies. Even though the high manager had explained the strategy is for cost reduction of
the organizations. They have the high technology evolutions which are the fuel efficiency for
their aircraft and good reputations of the company. Thus, the employees should help and
maintaining also those specialty to improve the managements operations. Employees can
divided and segregate into the relative department such as marketing department which help
in order to increase their sales and do promotions to acknowledge the industry about their
specialized aircraft. There are also some expertize such as competent engineers to always
look up and make some quality check-up on the aircraft production and oversight the
suppliers and production process. They can be the quality control team for the organizations

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to ensure all the production and manufacturing process are done properly and all elements are
added up into the aircraft.

As had been stated in the official website of their rival, Airbus, the company have
stated that Creating the best and safest aircraft as the Airbus mission. Hence they have
several quality control on their aircraft manufacturing where Airbus are ensuring that the
process of the manufacturing and productions work are complies with the certification target
which had been laid down by the European Aviation Safety Authority and the US Federal
Aviation Administration. They also run several test on their aircraft before it been achieve the
final certificate such as 1,200 hours of flying test. Thus, Boeing should also take it as their
quality control process. The respective department need to be in charged to evaluate and
monitoring the production and manufacturing process and gone through all the important test
and get approval from the US Federal Aviation Administration and follows all the
requirement imposed by the European Aviation Safety Authority. The important thing is that
all the check-up need to be done several time and approved by the authority of the safety
department before the aircraft ready to be use.

The link between the strength and the threat can be analysed when there are threat of
delaying in the production and massive order due to the outsourcing strategy. Abhijeet Pratap
(2016) mentioned that Boeings business are full in risks if the disruptions affect the ability of
the company to deliver its product and service in timely manner. This problem may occur due
to the complexity of the production process. Thus, with the technology advanced that Boeing
had required, the delays product can be reduced and avoid as long as the technology can be
used properly. According to the John Schmidt (2014), the concept of digital is not new in an
aerospace industry. The new concept of coalescing digital mind-set is aimed to ensure the
industrys digital pipes connecting the product development, engineering, supply chains and
the in-service keep flowing smoothly with high-quality data which currently often lacking.
This evolution can change the way aerospace and defence of the companys operation.
Boeing could use their advanced technology to develop this digital mind-set to them
monitoring the employees, supply chains, suppliers in their production and manufacturing
process.

Besides, the good monitoring and oversight from the management could help more in
preventing the delaying of the productions. Again stated in the Vantage website, the practices
of oversight throughout the life of the contract could give the huge effect to the companys

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production. The monitoring concept can help company to ensure the production and
manufacturing process run smoothly and follow the right track to the date of completion.

Lastly, it is about the relationship between weaknesses and threat of the company.
Boeing have the opportunities to expand their market share globally, thus they need to
overcome the weaknesses and trying to prevent all the treat of the company. The segregation
of duties among the employees need to be improved and secured their interest in the
company. So that the turnover rate of the employee can be improve. Moreover, the
technology had been exposed to the suppliers can be the huge threat for the company. The
suppliers might take advantage on the technology and build their own aircraft that could lead
to the new competitors. For example, China currently plans to build 100 airports for domestic
travel. Since China had become one of the big suppliers to Boeing, thus this opportunity took
by the China to become one of the competitors for Boeing in line with the Airbus Company.

As stated by Abhijeet Pratap (2016), the new entrant from China, Russia and Japan
become the pressure to the brand of Boeing and also threat to the changing of economic and
geopolitical tides for the company. This new entrants from the big country will more or less
effect the company and could led to the regulatory pressure. Thus, Boeing need to improve
their management systems and strengthen their operation to able them lead the industry and
ensure the sustainability of the company in the industry and able them to compete with others
aircraft company in the industry. Boeing also needs to ensure the contract applied between
the company and suppliers will toughen their interest in the production and manufacturing
process.

4.3 Porters Five Forces Analysis

There are five porter forces analysis for the Boeing. Firstly is the threat of new
entrants. Outsourcing strategy could give benefits to others suppliers to take advantage on the
technology could open the new entrants for the new competitors. Currently, Chinas state-run
Comac in the global commercial aircraft market will give effect to the position of Boeing in
the industry. China is the fast catching up with the US aircraft industry. Stated in Forbes,
China have constitute growing share of the global commercial aircraft market which
approximately 16 per cent of the worlds total airplane deliveries are from China. Boeing
need to ensure that the effect and impact from the new entrants from the other company and
region into the aviation industry will not give a huge impact on the consistency and

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sustainability of Boeing in the industry and continues to become one of the most leading
companies in the industry specialized in midsized aircraft market.

Secondly is the threat of substitute of the other companies. Since Boeing have the
support and their brand and quality are approved globally and good reputation of the
company, this problem will not give the huge impact to the Boeing since they already have
their loyal customers and support. The quality and the brand brings by the Boeing had been
qualified with the requirement by the aviation industry. Thus, threats of substitute are not the
big impact to the Boeing. However, Boeing needs to improve their strategy and improve their
technology advance to ensure the efficiency and effectiveness of their aircraft and meet the
customers satisfaction. Customers have choice to select the best for their benefit. Hence, it is
importance for the Boeing to evaluate and examine the customers satisfaction to ensure their
product will always be selected.

Next, bargaining power of the buyer is the following forces which could be mild for
the Boeing. From Amish Dhungel, he stated that the bargaining power from the buyer could
affect the operations of Boeing. Buyer could purchase in bulk which is high bargaining power
of the buyer. They also could involve in high capital investment by the buyer in purchasing
the aircraft. Besides, the switching cost also will be higher because of the technology factors
of the Boeing. Thus, from this bargaining power from the buyer, Boeing should evaluate all
the trend and trying to meet these situation to ensure their ability to sustain in the industry
and ensure their ability to led the market and compete with others aviation industry such as
Airbus and the new entrants from China and Russia.

Bargaining power from the suppliers was the other factors for Boeing. It stated that
Boeing had an offload strategy for their production, manufacturing and maintaining of the
aircraft. Hence the bargaining power for the supplier is quite low and Boeing will able to
control the demand from the suppliers. Stated by Amish Dhungel, Boeing can negotiate the
price with suppliers due to the economic scale. Boeing has the power to negotiate with their
suppliers since company had more than 100 suppliers throughout the globe. This shows that
the bargaining power of the suppliers is lower. However, Boeing needs to ensure their good
relationship with the suppliers and ensure the production and maintenance process are
properly run and the operations could be managed efficiently.

Lastly, the competitive rivalry which are higher where currently there is no clear
market leader in the aviation industry. However, Boeing and Airbus are competing actively

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with each other to win the market and the industry of the aircraft also known as duopoly
market. Hence both companies are fighting for more share of the industry. Both have
different strategy for their operations, thus it is depending on how Boeing plan their strategies
to win over the Airbus. Point-to-point (P2P) strategies are more focus on the midsized
airplane which are specialized by Boeing, however, currently in 1990s the growth of the
airlines industry more needed on the superjumbo or large size aircraft which are specialized
by Airbus company which their focus are hub-to-hub travel. Thus, Boeing need to strengthen
their strategies and improve their operation to ensure they are in the right track and focus on
the advantages of the midsized aircraft which could give more advantages on their customers
prospect. Thus, Boeing needs to review and improve their strategies to ensure they are able to
compete with the Airbus Company.

5.0 Recommended Alternative

It is recommended for Boeing to maintain and improve on their current strategies
only in which producing small to midsized aircraft and outsourcing. The suggestion is based
on few factors portrayed in the analysis. Firstly, based on the costs and benefits analysis, it
shows that the benefits of implementing this type of strategies really outweigh the drawbacks.
In addition, the benefits are noticeable in a brief time and can be maintained throughout the
future period. Besides, the advantages of applying this strategy can be resolved with a proper
short term and long term action plan.
Furthermore, according to mind tools website, it stated that SWOT analysis will help
an individual to get a better understanding of the strategic choices that they face. Thus, from
the swot analysis that had been done, it can be concluded that this strategy is the better option
for Boeing to implement. Moreover, this analysis also indicates that if Boeing decided to
concentrate on their forte, they can enhance their own strength quality and make it feasible
for them to encounter any weaknesses and threats as well as build-up their capability in
pursuing the opportunities available for them.
Thirdly, according to the article entitled the five forces, porters five forces analysis
can assist companies to assess the industry attractiveness, how trends will affect industry
competition, which industries a company should compete in, and how companies can position
themselves to be success. To review the threats on new entrants in the industry, it is hard for
other competitors to surpass the position of Boeing and Airbus in the industry. But this
situation may change in the next ten to twenty years. Thus, it is advisable for Boeing to be
always ensured that the other competitors cannot influence the position of Boeing in the

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industry. To conclude from this analysis, it can be said that Boeing is still in the good position
in the industry except on the appearance of new competitors other than Airbus will be
expected to occur in the future. Therefore, in order for Boeing to remain competitive, it is
suggested that the research and development of Boeing department should emphasise on fuel
efficiency, components and parts of the airplanes that is easily to be maintained and the
efficient design of the airplanes to increase the performance. In conclusion, it is really
desirable for Boeing to maintain and improve the elements in their current strategies in order
for them to stay competitive in the industry. They should not take for granted on their current
position as one of duopoly in the industry as it will only endanger their position in the
industry.
6.0 Recommendation
As the alternative chosen for Boeing is to maintain and improving their current
strategy, it is recommended for Boeing to solve the issue regarding outsourcing in its short
term plan. Boeing should ask the employee that in charge about supplier agreement before
this, to re-evaluate the agreement. Through this re-evaluation process, this should reduce the
risk that had been faced by Boeing for outsourcing. As example, if the supplier company
provide items that are defect to the Boeing, they should be responsible if anything bad
happened to Boeing. This will become one of the cautionary steps that should be done by
Boeing. Other than that, before choose certain suppliers Boeing should ensure that the
suppliers really have the credibility in producing product that have high quality. Furthermore,
the product quality is important for Boeing to make their client to have trust on their product.
The safety of aircraft is important, thus the equipment used in the aircraft should always be
productive.
In the long term, Boeing may produce large aircraft for the next ten or twenty years
after they have enough financial resources that can cover the cost of producing large aircraft
and the losses if this project fail without affecting the position of Boeing in the industry. This
plan should be accomplished due to address the issue of air traffic congestion since
superjumbo aircraft may help to reduce the air traffic congestion a little bit even it is not
much. As has been known, superjumbo aircraft can transfer many people at once, so the
amount of planes in the air may reduce if Boeing also offers this type of planes. Moreover,
Boeing should produce this type of airplanes that will enable low cost carriers to afford it too.

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7.0 Appendix

Exhibit 1: The costs and benefits for maintaining the current strategies which are producing
small and midsized planes and outsourcing.

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Exhibit 2: The costs and benefits for producing large planes and insourcing.

Exhibit 3: SWOT Analysis

QUESTIONS

1. Compare the strategies of Boeing and Airbus. Based on your knowledge of the
industry what conclusion can you draw?

BOEING AIRBUS
Focus on point-to-point (P2P) Focus more on hub-and-spoke (H&S)

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Keep on midsized aircraft for their Produce more on superjumbo and large
convenience to access into both small and sized of aircraft
large airport
Offload strategies In-house production strategies
The product are not standardized and no The products are standardized and
commonality commonality

From the table we can see that both Boeing and Airbus are seriously taking different
approach on their strategies. However, we cannot judge which are most preferable to be
applied in this industry, what are the strategies taken by the company need to be applied
efficiently and effectively so that their strategies can be succeed and able the company to
sustain in the industry and improved their market share.

For Boeing, the focus of the company is more on point-to-point (P2P) travel which is
more focus on the midsized aircraft which can access into all types of airport small and
big. There are advantages of P2P travel which are according to Flynn Casey in the article
stated that the main advantage of P2P is it allows for the great reducing time of travelling
which connect directly to the destination. For example from Kuala Lumpur it will take
directly to London without need to stop at the middle. It will reduce the time of travelling.
The system required about 45 routers to connect all the destinations. Besides that, this
system will be most beneficial when each node has the facilities for process cargo and
albeit on a small scale. This type of travel is most needed by the businessman or
businesswoman who is always busy and need to reach the destination on time for their
pack schedule. Even though this travel will incur more cost but it is more efficient in time
saving and more effective for the working person to travel from one place to another.

However, for Airbus Company, they are focus on the hub-and-spoke (H&S) travel
which needs more on large sized aircraft. The strategies of H&S need to focus on the size
of the aircraft and their effective travelling time. It is mentioned in the article by
Alexander (2016), H&S are the network which are all node are connected to one central
point which known as hub. It can be illustrated for example from Singapore to Penang;
the airplane will fly from Singapore airport to the Kuala Lumpur International Airport and
take another flight to Penang International Airport. There are two point of travelling for
the H&S network. This could take sometimes for the travelling time. Price ticket for this

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types of network could be affordable by all the customers, however time taken are not
efficient for the most of the people which more focus to reach direct to their destination.

In term of offload and in-house production strategies, both outsourcing and insourcing
strategies have pros and cons. For outsourcing strategies, the company could give more of
their focus to improve their operations and managerial of the company rather than juggle
with the production process. The production process still can be monitored by the selected
department to oversight the production process. Meanwhile, for the in-house production
strategy, it is more organized where the company can monitored and ensure the
technology used are secured and all the production made according to the companys
standard.

Thus, as the conclusion both airlines have their best interest for their strategies and
both have good effort to improve their market share in the industry. However, for our
conclusion, P2P travelling network will be more efficient and effective for the passengers
and the airlines industry. P2P travels are more favourable and had great economic
success.

2. Evaluate the pros and cons of Boeing are outsourcing strategy. Do you agree with
the companys decision to offload parts production? Why or why not?

PROS CONS
Cut the operation cost Technology can be stolen by the suppliers for
their own benefits
Improve their production design and Led to new entrants of the competitors in the
technology of the aircraft industry
Have good relationship with the suppliers and The production process could be delays
increase their supply chain because of the complexity of the production
process
Give Boeing the ability to compete in global
industry

The strategy of Boeing to offload their production process is the good strategy made
by the organization. Even though there are the threats of outsourcing the production, there
are more advantages for the strategy. According to the journal of air transportation
worldwide, Outsourcing as an Airlines Strategies stated that outsourcing could give
benefit to the company to remove the distractions and focus on the managerial of the

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operations and improve their best function of the company rather than juggle with all the
production operations. Besides that, the company could control their operations cost by
reducing the cost of production and negotiate the best price with their suppliers, they also
can improve the efficiency of the operations and lastly can increase the profitability of the
company as a whole.

Moreover, Boeing can create the strategic alliance between the suppliers and increase
the supply chain. The relationship could help Boeing to expand their market share
throughout the globe and furthermore can increase their competitive advantages in world
wide. Boeing also can use this strategy for their marketing strategy to introduce their
product worldwide and increase their market share in the industry and strengthen their
position and able them to sustain in the industry.

Thus, we agreed with the decision made by the Boeing to offload part of their
production process as one of their strategies to improve the efficiency and effectiveness of
the companys operations.

3. Review Boeing's cooperative strategy. What are the risks of its partnership
arrangements?
Cooperative strategy is an attempt by a firm to realize its objective through
cooperation with the other firms. This strategy involves the strategic partnership and
outsourcing globally between Boeing, Japan, India and China. This strategy helps Boeing
to reduce cost and generate sales by penetrating the market in which suppliers operate.
Besides, Boeing also indirectly enjoys the incentive provided in the partners respective
government. As has been mentioned before, outsourcing can enhance Boeing work
efficiency. On top of that, this strategy can decrease the risk by distributing some of the
risks that linked in the production of airplane since to build each airplane incurred large
cost of investments.
The risks of Boeing partnership arrangements are regarding high possibility of hand
on a vital knowledge to the partner and that will encourage the birth of new competitors in
the long run. Moreover, due to the sharing skills and capacity in the partnership, the
technology and defense of Boeing used may eventually be shared with the partners. Lastly,
this partnership agreement could contribute to the rising of aerospace in Japan. As has
been mentioned in the case, the Japanese government and its heavy industrial firms have
openly sought to establish Japan as an aerospace power for generations. This situation

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would pose a huge threat to both of Boeing and Airbus because Japan would be able to
capitalize on political and trade ties with the flourishing Asia-Pacific markets.
4. In what ways can Boeing's international strategy be improved? Briefly explain.

Boeings international strategy can be improved in terms of their offload strategies.

They can provide full report of agreement which mentioned all the prohibited rules and
regulations that the suppliers need to follows- if the suppliers cannot follows the rules the
company have right to sue and penalized the suppliers. As example, Boeing should
consider to add some conditions in the supplier agreement in the part of confidentiality
clause. In that part, it should state that any knowledge transfer by Boeing to supplier
cannot be used for their own self-interest except for the benefit of Boeing only. Next, it is
in terms of improving Boeing quality control by sending their key professionals like their
own engineers to do close supervising on continuing basis at suppliers place instead of
just on irregular basis, and lead the suppliers during the production process in order to
avoid producing any defect product that can give bad image on Boeing in the future.
5. What are some of the near-term results you anticipate in the airplane production
industry? Long-term results?
The near-term results that we anticipate in the airplane production industry are
regarding the growth of orders for Boeing due to the delay of Airbus in delivering their
product. Then, as mentioned in the case that Boeing also experienced a slight delay in
delivering their product. But, we anticipate that this incidence will not be happened much
as we assume that Boeing already take a cautious step in order for the incident will not be
occurred again. In addition, we expect that the market share of Boeing will be increased
more due to increase in demand of their product. Then, Boeing will have a huge number of
backlog requests that need to be completed.
Furthermore, we expected that Airbus will have a high possibility of continue losses
of orders from their frustrated customers because of the late services from them in near-
term results. Airbus might be also experienced significant reduced in their financial
growth. Then, Airbus may already finish the design for A-350 model that can compete
with Boeings 787. Lastly, Airbus could not be able to break-even on the investment of A-
380 due to loss orders and received huge amount of penalties from the client.
As for the long-term results, it is predictable that there will be the emergence of new
aircraft manufacturers and as this industry is also highly related with innovation, the new
technologies of aircraft will also be introduced. Based on the article entitled new aircraft
take-off delayed, it stated that new aircraft design will not be easily introduced in a short
time, so it need a long time process to introduce new aircraft design. Therefore, we
assumed that in a long term results, there will be new aircraft design being introduced.
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 Moreover, we also predict that the position of Boeing and Airbus as a duopoly may be
affected due to intense competition in the future. From the same article that has been
mentioned above, it stated the potential competitors in the future are from Chinese
manufacturer and Irkut, which is part of Russias state-owned United Aircraft Corporation
(UAC). Lastly, in the long term, we also predict that there will be increased in demand of
new planes as the airliners want to replace their old planes and the existence of many new
airliners enter into the market. This could be an opportunity for Boeing to ensure that they
have enough resources to fulfill all of the demands from clients. According to the article
entitled why the plane market is unlikely to crash, it depicts that the airlines are busy
changing old jets for new ones because the aircraft manufacturers have brought out more
fuel-efficient versions of the Boeing 737 and Airbus A320, their short-haul models; and
introduced new long-haul models, the Boeing 787 Dreamliner and Airbus A350, which are
also more economical than older equivalents. So, it is agreed that the demand for new
planes will be increased.

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8.0 References
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