Scribd Logo
Upload

Welcome to Scribd!

  • 845 views

    Boeing Bets The Company Case Study

    Uploaded by

    student
    Boeing was losing market share to Airbus, so it decided to develop the Boeing 787 aircraft to regain market leadership. The 787 would be more fuel efficient and cheaper to operate than existing aircraft. Meanwhile, Airbus planned to develop the larger A380, believing future demand would be for very large planes. However, Boeing predicted demand would instead be for smaller, more fuel efficient planes enabling direct flights. It decided to outsource more production to focus on assembly and deliver the 787 on time to compete with Airbus.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Boeing Bets The Company Case Study

    Uploaded by

    student
    845 views3 pages
    Boeing was losing market share to Airbus, so it decided to develop the Boeing 787 aircraft to regain market leadership. The 787 would be more fuel efficient and cheaper to operate than existing aircraft. Meanwhile, Airbus planned to develop the larger A380, believing future demand would be for very large planes. However, Boeing predicted demand would instead be for smaller, more fuel efficient planes enabling direct flights. It decided to outsource more production to focus on assembly and deliver the 787 on time to compete with Airbus.

    Original Title

    432152464-Boeing-Bets-the-Company-Case-Study.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Boeing was losing market share to Airbus, so it decided to develop the Boeing 787 aircraft to regain market leadership. The 787 would be more fuel efficient and cheaper to operate than existing aircraft. Meanwhile, Airbus planned to develop the larger A380, believing future demand would be for very large planes. However, Boeing predicted demand would instead be for smaller, more fuel efficient planes enabling direct flights. It decided to outsource more production to focus on assembly and deliver the 787 on time to compete with Airbus.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    845 views3 pages

    Boeing Bets The Company Case Study

    Uploaded by

    student
    Boeing was losing market share to Airbus, so it decided to develop the Boeing 787 aircraft to regain market leadership. The 787 would be more fuel efficient and cheaper to operate than existing aircraft. Meanwhile, Airbus planned to develop the larger A380, believing future demand would be for very large planes. However, Boeing predicted demand would instead be for smaller, more fuel efficient planes enabling direct flights. It decided to outsource more production to focus on assembly and deliver the 787 on time to compete with Airbus.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Business Policy

    Case Study: Boeing Bets The Company

    Submitted by:
    Abdullah Amin (17E01019)
    PMBA
    Section A
    Business Policy MBA

    Boeing Bets the Company

    Introduction

    Boeing, the maker of Boeing 747, has been slowly losing its market share to the European based
    Airbus since 1990. In 2001, the board of directors of EADS (Airbus) vowed to take the market
    leadership in commercial aviation from Boeing by building the largest jet plane in the world, the
    Airbus A380. This new aircraft would be designed to carry 481 passengers as opposed to 400
    passengers by its counterpart Boeing. This new plane would cover greater distances and the
    operating cost would reduce by 15%-20%.

    Boeing, after reeling through an acquisition, concentrated on its aerospace and defense units while
    ignoring its mainstay: commercial aviation. This has cost them a lot as the manufacturing cost
    increased by 10%-20%, therefore, increasing the price tag. This has resulted in the slip of market
    share from Boeing. Realizing their mistake, CEO of Boeing decided to concentrate on their
    commercial aviation unit and to come up with a strategy to regain the market share. To that end,
    Boeing came up with an idea of launching a new aircraft Boeing 787 that would be a midrange
    aircraft capable of carrying 220-250 passengers with 20% less fuel consumption and 10% cheaper
    to operate.

    The future outlook of both, Being and Airbus, was totally different. Airbus believed that the future
    of aviation would be larger aircrafts that would be operating on “hub and spoke” principal i.e. the
    travelers would first gather at one central airport and from there everyone board the plane. Their
    estimate was that in future airlines would demand 1500 big planes like A380.

    On the other hand, Boeing’s has a completely different perspective of the future. They estimated
    that no more than 320 extra-large planes would be sold in the future and the airline industry would
    move away from the hub and spoke networks towards direct flights. They took Southwest and
    other low cost airlines as an example and consumers interest their low fares. Their primary
    rationale was revolving around lower cost that could only be achieved by less fuel consumption.
    Boeing forecasted that this new aircraft has a market of 2000-3000 numbers.

    1|Page
    Business Policy MBA

    Each of these companies has their separate strategic positions with their own understanding of the
    future. Keeping in perspective both companies’ position, I believe the Boeing’s prediction of the
    future is more potent.

     As the world is becoming more concerned about the cost and with an emergence and success
    of Airlines such as Southwest, that provides low cost travel, they are becoming increasingly
    famous among the consumers.
     In addition to the huge cost of development of Airbus A380, there needs to be a lot of
    investment in terms of infrastructure at airports to cater these huge planes.
     The composite material from which Boeing 787 is to be build would be much lighter and that
    would give this plane a competitive edge in terms of cost saving in fuel and operating cost.
     It will be easier for the airlines to purchase more of these planes, instead of just a few oif Airbus
    A380s and would therefore cater to more travelers.

    To achieve this task of manufacturing Boeing 787, the company has to make changes to its current
    operations. As Bowing was once a market leader in commercial aircrafts, they can still achieve
    this by achieving economies of scales. For this, they have to change their vertical integration
    strategy and outsource their operations. This would give them time to just concentrate on the final
    assembly and deliver the plane in time.

    2|Page

    You might also like