...427 – Global Issues in Business November 16, 2014 Case Analysis: Closing Case: Building the Boeing 787 SUMMARY: Boeing decided to build a new jet aircraft known as the wide-bodied 787. Boeing had aspirations of the aircraft being an example of the future. “Designed to fly long-haul point-to-point routes, the 250-seat 787 is made largely out of composite materials, such as carbon fibers, rather than traditional materials such as aluminum.” Hill, 2011 Since, 80% of the aircraft was made out of composite materials, it allowed the plane to be 20% lighter than the average aircraft of similar size. The end result of that was to reduce and save jet fuel consumption. Upon building the aircraft, Boeing decided to outsource 70% of its manufactured parts. By outsourcing, Boeing felt they could work with some of the more efficient producers to help build the new aircraft. Boeing had a plan in place, they were to design, market, sell, and assemble the plane in their Everett plant in Washington State, after each manufacturer has delivered their specific pieces. Albeit, Boeing having a strategic plan in place, there were some minor issues that led to trouble for the aircraft company. Some of its manufacturers that were building their outsourced materials did not finish on time for Boeing to assemble and reveal their plane on schedule. When the outsourced materials were finished, the items did not fit nor meet the quality standards. Even though Boeing had issues with its outsourcing...
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...Aircraft Manufacturing Industry Outsourcing in a Global Market Aircraft Manufacturing Industry Outsourcing in a Global Market Table of Contents Table of Contents 1 Abstract 2 Introduction 3 Growth of Outsourcing 5 Benefits of Outsourcing 6 Disadvantages of Outsourcing 8 The Global Market and Aircraft Manufacturing 9 Conclusion 12 Bibliography 13 Abstract The aircraft manufacturing industry is dominated by a few key players: Bombardier, Boeing, and Airbus being the most prominent. It is in a constant struggle to deliver ever more intricate machinery that are safe and reliable - while maintaining a competitive cost structure. With countries such as China and India becoming more commercialized, air travel will continue to grow at a consistent rate; however, steady growth is not without its challenges: rising fuel prices and mounting material costs have forced aircraft manufacturers to look for other ways of maintaining a competitive structure. One way of maintaining a competitive cost structure is through outsourcing of non-fundamental core jobs. This practice has become so prominent with some of the world’s major aircraft manufacturers that the parts used to build planes today come from all over the world. The airline industry is a fairly resilient industry, even with slow economic times the need for people to travel for business and pleasure is still present. Outsourcing of non-core jobs may be the answer for cost efficiencies but can have serious...
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...The Boeing 787 Experiment Joe Appleby Saint Leo University The Boeing 787 Experiment Many of the normality’s of our everyday are often go unthought-of of about what it took to make them a reality. Take flying for instances. Many of us, myself included step on or use an airplane to travel for leisure, to conduct day-to-day business, use for supply chain movement and never even think twice about what goes into making an aircraft. One of what is considered an elite aircraft manufacturing company; Boeing knows all too well what it takes to deliver a premier aircraft to service. Boeing did not arrive at this point easy as they found out when trying to launch their Boeing 787 aircraft. This essay will give a brief company profile of the Boeing Company and in addition the major problem the company experienced when launching its Boeing 787 aircraft and recommended solutions. The problematic area that will be highlighted is Boeings supply chain management, which caused Boeing to rethink its 787 strategy. The History of Boeing The history of Boeing began essentially with the vision of five men. William Edward Boeing, born in 1881 in Detroit, Mich., began building floatplanes near Seattle, Wash. Donald Wills Douglas, born in 1892 in New York, began building bombers and passenger transports in Santa Monica, Calif. James Smith McDonnell, born in 1899 in Denver, Colo., began building jet fighters in St. Louis, Mo. James Howard "Dutch" Kindelberger, born in 1895 in Wheeling...
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...Boeing Case Study Group 2 Embry Riddle Aeronautical University Question 1 The benefits of Boeing outsourcing are; cost in manufacturing 787 parts and labor, finding experts that make specific parts, and introducing the 787 to different countries expecting to increase sales. The risks of having different manufactures to make one plane include; delays in manufacturing parts, factories having to move or close, costs of resources in different parts of the world can fluctuate, and taxes and tariffs can change during the course of manufacturing. If the company can produce the 787 cheaper by outsourcing then, yes the benefits do outweigh the risk. However, from the scenario there are several drawbacks of the foreign companies and the risk is too high. Boeing should do the work themselves. Question 2 Boeing failed to ensure that the other nations brought onboard to manufacture certain components of their aircraft were properly set up and prepared to start manufacturing. Boeing should have had more oversight of Italy’s issues with building a factory and they should have required proof that Italy already had adequate property to build the factory. Boeing also should have verified that there would be no local government interference that would hinder the ability to meet delivery deadlines. The other issue was one of their suppliers, Vought, outsourced to a different nation. Boeing should have had a clause in their contract with Vought, stating that if they outsourced...
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...STRATEGIC ACTIONS: STRATEGY FORMULATION 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? Strategy Comparison Boeing Airbus Growth platform Point-to-point Increased fragmentation in travel to solve problem of airport congestion Hub-and-Spoke Expecting growth in travel between major hubs, particularly in Asia Product development Functional product differentiation 787 - mid-size Objective to offer the passenger the most comfortable point-to-point travel experience with as few intermediate stops as possible - more standing room, larger windows and bathrooms, ambient light settings in the cabin to adjust to the time of day, and higher cabin humidity levels. A-380 - superjumbo Will be the largest in the world, holding 550 passengers - will allow 10 million additional passengers per year to fly between airports with no increase in flights - can be configured with bars and specialty boutiques Features Fuel efficiency, eco-friendly, significantly less costly than Airbus' comparable product, light-weight composite materials, simple to operate Commonality - saves airlines costs Estimated release date May, 2008 October, 2007 Supply chain logistics Moving up the value chain - outsourcing - integration and assembly Tighter control over shared knowledge - efficient JIT programs with alliance supply partners Investment in new models $8 billion $14 billion The competitors' views of domestic (regional)...
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...Boeing: Redefining Strategies to Manage the Competitive Market CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production...
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...company profile as this will help you to understand where the company stands in the market place and the importance of how they handled the project. I hope you like airplanes, as it would help with enjoying this project. Introduction:- Boeing is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. Additionally, Boeing designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. As a major service provider to NASA, Boeing operates the Space Shuttle and International Space Station. Corporate Profile: 1. Boeing corporate office is located in Chicago, Illinois. 2. Boeing employs more than 158,000 people across the United States and in 70 countries 3. Manufactures commercial and military aircraft, designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. Boeing also operates the Space Shuttle and International Space Station. 4. Boeing outsource some of their manufacturing to national and foreign suppliers and assemble and manufacture in their Everett plant in Washington. 5. Boeing aggressively advertises its Commercial Airplanes' and run a special television add on Memorial Day to honor veterans. 6. A TV ad on Memorial Day as a reminder of their military involvement and advertise their commercial airplanes worldwide...
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...CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production industry? Long-term results? STRATEGIC ACTIONS: STRATEGY...
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...STUDY BUILDING THE BOEING 787 PREPARED BY: PERCIVAL IGNATIUS V. SIVANANDAN Q1. What are the benefits to Boeing of outsourcing so much work on the 787 to foreign suppliers?What are the potential risks?Do the benefits outweigh the risk? Benefits :- A. Outsourcing reduces the risks associated with technological gamble i.e. always abreast with latest design innovations. B. In return for a share of the work the partners would contribute towards the estimated $8 billion in development costs. C. Able to tap expertise of most efficient producers worldwide, hence driving downcost of making plane. D. Outsourcing some work to foreign countries will help to garner sales in those Countries E. Outsourcing the design of so many components could cut down time to develop aircraft to four years from six years. Potential risks:- A. Not being able to meet Boeing delivery schedules B. Possibility of paying millions in penalty clause for late delivery. C. Parts not assembled as required D. Assembly instruction not available in English E. Partners may outsource mission critical design work to other company F. Other company might find it hard to meet Boeing quality standards G. Since other company reporting to partners and not Boeing, it takes times for Boeing to know the problem ...
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...By early 2011, Boeing had announced its 7th delay1 and delivered the first plane in the third quarter of 2011, more than three years after it had announced that it would do so. Specifically, Boeing seemed to have made radical changes to its outsourcing processes that caused a breakdown in supplies. This process called business processing reengineering (BPR)2 enabled Boeing, to aggressively change the production process on the Dreamliner. To offset the $10billion3 in cost development, Boeing authorized some of its suppliers to build portions of the plane while finally assembly would take place in the Seattle factory but the result of that strategy was long delays and frustrated customers. Boeing had the responsibility to mange its supply chain but the 50 + suppliers from all over the world proved too much of a challenge to manage them correctly. Boeing miscalculated the capability of their suppliers and the first problems were exposed six months in the trial production, when bubbles in the fuselage emerged. That delayed the project by only a month but other issues like the nose section and software glitches created longer delays. Some suppliers were not ready for the business the Boeing was giving them. As an example, one of its suppliers Alenia3 based in Italy had to build a new manufacturing building to house the fuselage. Normally that would not be a problem but they planned to build on a 300 yr. old olive tree, which they had to get approval resulting in more delays. Another...
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...Global Issues in Business Professor Lui Hebron 2/15/15 Case Analysis: Chapter 14 Closing Case on pages 490–491, questions 1, 2 and 3. Summary Founded in July 1916, in Seattle, WA, Boeing is one of the top bestselling aircraft company in the world. For a long time, the company has been able to keep up with its competition, and generate a steady revenue every year. The efficiency in their work, satisfying their customers’ expectation, and meeting delivery deadlines has for a long time made the company reliable among one of its biggest competitor, Airbus. For years, they provided the world with innovation, by introducing countless aircraft models. From the Boeing 707 to the 757, the company has been able to execute efficiency and on time delivery to its long time partners. But few years later, things changed, when Boeing first introduced their newest aircraft, the Boeing 787 Dreamliner, which was considered the most innovated aircraft of its time. Until late 2007, the strategy seemed to be working remarkably well. Boeing had booked orders for more than 770 aircraft, worth more than $100 billion, making the 787 the most successful aircraft launch in the history of commercial aviation. (Page 491, Chapter14). Things seemed to be doing very well, but behind closed doors, it was a different story. The company was not able to meet delivery deadlines, and ended up losing a lot of money in penalties and other fees related to production. ------------------------------------------------- ...
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... Boeing is one of the United States’ largest exporters and is a predominant aerospace and defense corporation. Boeing is the world’s largest global aircraft manufacturer (by deliveries and revenue), and the second-largest defense and aerospace contractor (ranking in Defense News). The history of Boeing is as exciting as any in history, and encompasses thousands of individuals, innovations, and spectacular technological developments in airline design and manufacturing. Of course, most everyone is familiar with the 1903 Wright Brothers flight at Kitty Hawk, North Caroline. That same year, 22 year old William Boeing left college at Yale and moved forward to the West Coast. Through a series of events, Boeing wanted to learn more and more about aviation finally partnering with George Westervelt, a former engineer and airline enthusiast. By 1915, Westervelt and Boeing designed a new twin-float seaplane called the B&W (Yenne, 2005, 3-18). What followed was a series of challenges, setbacks, successes, and innovations. During World War II, Boeing was responsible for building up to 350 bombers per month. After the war, the company quickly tried to recoup its production and in the 1950s developed numerous new military applications and the Boeing 707 jetliner, one of the most successful aircraft ever designed. The 1950s also saw Boeing move into the development and production of advanced weaponry, securing a place in the burgeoning Cold War defense industry. In 1960 Boeing improved...
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...(1) (a) What are the benefits to Boeing of outsourcing so much work on the 787 to foreign suppliers? - risks associated with technological gamble – 70% to foreign nations - in return for a share of the work, partners would contribute toward the 8b in development costs for the 787 - tap into the expertise of the most efficient producers, thereby driving down the costs - Boeing believed that outsourcing to other countries would help it gather sales in those countries - believed that by outsourcing the design of so many components, it will cut the time to develop the aircraft from six to four years (b) What are the potential risks? - 17 partners from 10 countries were selected to produce parts for the aircraft - the rear fuselage was to be made in SC, the middle fuselage sections and the horizontal tailpieces were to be made in Italy, three Japanese were to produce the plane’s wings, the nose was to be made in Canada - these were bulky pieces – shipped to Washington state for final assembly - cracks in a globally dispersed supply chain - mid 2007 – might be a few months late – 12 mths for first delivery - additional in 2b developmental costs - possibility of millions in penalty costs for the late delivery - several key partners were not able to meet boeing’s schedules - were the partners – technology ready to produce - component parts did not meet the required quality standards - language barrier – instructions...
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...International Legal and Ethical Issues In the “Addressing Legal and Ethical Issues Simulation” a number of issues were addressed. The most complex issues were surrounding the proposed jurisdictions of the courts where legal disputes would be argued. The central issues were the time and expense involved in the resolution of potential disputes. At issue were the distance (time and expense) of litigating in US courts versus the immediacy of litigating in the courts of Candore. The enforceability of any judgment was questionable. In the opinion of the Team, non-binding arbitration subject to international law could be the best solution for this question. The recent acceptance of Candore into the WTO should encourage compliance with decisions made in non-binding arbitration and would expedite resolution in a timely and less expensive to both parties and in the event of continued disagreement the parties would have recourse in international law. The alliance between CadMex Pharma and Gentura has been a successful one and both companies have cross-licensing agreements for several other drugs and techniques. CadMex and after 5 years of doing business with Gentura is now facing a dilemma due to the change in political system in Candore a new government is now in place also the country is in the midst of an viral epidemic affecting more than 1% of the population, ViroBlax is a drug CadMex licensed Gentura to market is one of the drugs used in the treatment should CadMex allow Gentura...
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...Outsourcing of the Boeing 787 | | | | | | |David Mahmoodi | |01/31/2009 | |How much of a service can be outsourced before the benefits stop outweighing the costs? For the first time in the history of the company, Boeing is| |outsourcing more than 70% of the production of its new aircraft the 787 Dreamliner. This is not just the production or assembly of the plane, but | |also the specifics of engineering the individual parts. With so many parts being designed and assembled in other countries there have been | |communication issues, lengthy delays and increased costs. This paper will explore the benefits and costs of outsourcing such a big public project. | |It will discuss how Boeing or similar companies can better mange outsourced projects or more efficient alternatives to outsourcing them all | |together. ...
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