Boeing

In: Business and Management

Submitted By george0422964
Words 2228
Pages 9
What Went Wrong At Boeing?

My article, The Boeing Debacle: Seven Lessons That Every CEO Must Learn, elicited spirited
conversation. Several commentators noted that, in addition to the general lessons, Boeing made
specific errors in the way it handled outsourcing and offshoring. Let’s take a closer look at those
specifics.
Boeing enthusiastically embraced outsourcing, both locally and internationally, as a way of
lowering costs and accelerating development. The approach was intended to“reduce the 787′s
development time from six to four years and development cost from $10 to $6 billion.”
The end result was the opposite. The project is billions of dollars over budget and three years
behind schedule. “We spent a lot more money,” Jim Albaugh, Chief of Commercial Airplanes at
Boeing, explained in January 2011, “in trying to recover than we ever would have spent if we’d
tried to keep the key technologies closer to home.”

The right goal: add value for customers
Let’s start with what Boeing did right. After losing market share to Airbus (owned by EADS) in the
late 1990s, Boeing could have decided to focus on reducing the costs (and the selling prices) of
its existing aircraft. That would have led inexorably to corporate death. Instead Boeing decided—
commendably—to innovate with a new aircraft that would generate revenues by creating value
for customers.
First, Boeing aimed to improve their travel experience for the ultimate customers, the
passengers. As compared to the traditional material (aluminum) used in airplane manufacturing,
the composite material to be used in the 787 (carbon fiber, aluminum and titanium) would allow
for increased humidity and pressure to be maintained in the passenger cabin, offering substantial
improvement to the flying experience. The lightweight composite materials would enable the 787
to fly nonstop between any pair of…...

Similar Documents

Boeing

...Boeing Rocked by Scandal Jerry Gosh PHL/323 April 25, 2010 Chuck Thompson The Boeing Scandal In a New York Times, article my eyes affixed on a topic about The Boeing Company. Since the merger of McDonnell Douglas Corporation and Boeing, Boeings reputation started a downward spiral of ethical misconduct that tarnished the company, causing the companies aircraft market to plummet. The ethical misconducts lead to the resignation of Boeings chief executive, Philip M. Condit, in 2003. The world's largest aerospace company needed to change its reputation fast to stop the onset possibility of a corporation sell out of even worst the end to the Boeing corporation. Boeing called Harry C. Stonecipher out of retirement to be the next chief executive. Mr. Stonecipher was the key person who helped lead the merger of McDonnell Douglas Corporation and Boeing back in 1997. The number 1 priority is to restore Boeings credibility of these two areas, Defense Department, and Boeings civilian customers. The struggles of a company, long admired as one of the greatest American industrial successes, as it tries to expand its military business to compensate for losses to a European rival, Airbus, in commercial aircraft. During investigations, the chief financial officer, Michael Sears, for Boeing was dismissed for connections of ethical misconduct (Bowermaster, 2003). The investigations uncovered business dealings of misappropriation of funds proposed in supplying refueling...

Words: 691 - Pages: 3

Boeing

...Boeing is one of the leaders of the aerospace industry. Boeing makes a wide assortment of aircraft which includes military crafts, commercial aircraft and even weapons such as missiles. Boing also designs and manufactures electronic and communication systems. Boeing is major service provider for NASA and operates the Space Shuttle and International space station. Boeing is successful and owes a large portion of that success to its ability to plan around complicated issues such as legal and ethical standards. Boeing has to comply with legal requirements that make planning a challenge at times. Boeing must handle internal and external affairs which can either shine a negative light on the company or a positive one. An example of this is a lawsuit that was filed in 2000 that claimed pay differential between the two genders at Boeing. Though there was evidence that supported the claim of pay differential, Boeings lawyers were able to protect the company from public scrutiny. The case was settled out of court. Boeing is well known for its dedication to social responsibility. Boeing has been philanthropic and will likely continue to be. The company is a member of the Foundation for Corporate and Social Responsibility. Some examples of its efforts in the community are the refurbishing of the Chicago Air and Water show and the Royal Aeronautical Society in London. Economic conditions have a direct impact on Boeing and its planning. With the economy at a down swing and...

Words: 567 - Pages: 3

Boeing

...THE BOEING 7E7 Teaching Note Synopsis and Objectives In 2003, the Boeing Company announced plans to build a new “super-efficient” commercial jet called the “7E7” or “Dreamliner.” This was a “bet the farm” gamble by Boeing, similar in magnitude to its earlier introductions of the 747 and 777 airliners. The technological superiority of the new airframe, as well as the fact that it would penetrate a rapidly growing market segment, were arguments for approval of the project. On the other hand, the current market for commercial airplanes was depressed because of terrorism risks, war, and SARS, a contagious illness that resulted in global travel warnings. Boeing’s board of directors would need to weigh those considerations before granting final approval to proceed with the project. The task for students is to evaluate the 7E7 project against a financial standard, the investors’ required returns. The case gives internal rates of return (IRR) for the 7E7 project under base-case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis, the students identify the key value drivers and distinguish, on a qualitative basis, the key gambles that Boeing is making. The general objective of this case is to exercise students’ skills in estimating a weighted-average cost of capital and cost of equity. The need for...

Words: 7346 - Pages: 30

Boeing

...Case Study Company Profile World’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined Goal Leverage global partners to reduce cost, speed time-to-market and increase customer value while maintaining the highest level of safety Challenge How to maintain visibility and control while transitioning from a vertically integrated manufacturing model to a global partner model that leverages providers of best value components and technology Solution Exostar’s Supply Chain Management Solution powered by E2open software to provide endto-end management of the order, inventory, and planning processes executed across multiple tiers of supply partners Expected Results ■ Eliminate latency in communicating demand/supply changes and change impacts across partner tiers ■ Ensure continuity of supply while minimizing supply disruptions ■ I mprove on-time delivery and ship-tocommit date with end customer ■ Provide global visibility to all partners involved in the delivery of the completed assemblies ■ Reduce total manufacturing cost by leveraging best price and value partners globally BOEING 787: GLOBAL SUPPLY CHAIN MANAGEMENT TAKES FLIGHT Leveraging Global Partners to Maximize Customer Value The new Boeing super-efficient jetliner is the 787 Dreamliner. Scheduled for delivery beginning in 2008, the Dreamliner provides passengers with a better flying experience and operators with a more efficient commercial jetliner. Because it uses 20...

Words: 2309 - Pages: 10

Boeing

...Project 1 - MANAGEMENT DISCUSSION AND ANALYSIS INFORMATION- MD&A Revenues in 2011 increased by $4,429 million or 7% compared with 2010. Commercial Airplanes revenues increased by $4,337 million due to higher new airplane deliveries, including the impact of entry into service of the 787-8 and 747-8 Freighter, favorable new airplane delivery mix and higher commercial aviation services revenues. BDS revenues increased by $33 million primarily due to higher revenues in the Boeing Military Aircraft (BMA) and Global Services & Support (GS&S) segments, partially offset by lower revenues in the Network & Space Systems (N&SS) segment. Revenues in 2010 decreased by $3,975 million or 6% compared with 2009. Commercial Airplanes revenues decreased by $2,217 million due to lower 777 deliveries primarily resulting from a production rate change from 7 to 5 per month beginning in June 2010 and no deliveries on the 747 program due to the transition from the 747-400 to the 747-8. These were partially offset by increases in commercial aviation services business. BDS revenues decreased by $1,718 million primarily due to lower revenues in the N&SS segment. The increase in contractual backlog during 2011 and 2010 was due to commercial airplane orders in excess of deliveries and changes in projected revenue escalation for undelivered commercial airplanes. The decrease in unobligated backlog during 2011 is due to decreases at BDS of $3,135 million compared with 2010......

Words: 350 - Pages: 2

Boeing

...Boeing Company Abstract The essay is a discussion about the success factor in business activities. A case study of Boeing and airbus companies has been used to analyze the application of strategic management topics. The introduction to the essay explains the development of the two companies and the various products manufactured by the companies. Success factors that can be seen from the case studies have been discussed to integrate the two aspects. A conclusion to the essay indicates the summary of the essay. Introduction Boeing Boeing Company was founded in 1916 by William E. Boeing in Seattle, Washington with headquarters in Chicago, Illinois (Kennedy et al 2000). The company has made many strategies for expansion to cater for its international market and compete with the increasing number of competitors in the market for aeroplanes, jets and military space machines. In 1997 Boeing merged with McDonnell Douglas to expand its manufacturing and marketing strategies. The company has competed globally and has emerged the largest aircraft in the world in terms of revenues, orders and delivered products. It is has achieved the position as the third largest aerospace in defense contracts. Boeing has dominated the market for aircraft and has the highest value of exports in the economy of the United States (Herzog, 1994). The company started by manufacturing seaplanes. William E. Boeing is an entrepreneur who initially worked in the timber industry. She accumulated...

Words: 473 - Pages: 2

Boeing

...Hi, I can help you with a few pointers to start you off on this project. You would begin by completing the 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...

Words: 1356 - Pages: 6

Boeing

...Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top U.S. exporter, the company supports airlines and U.S. and allied government customers in 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing has a long tradition of aerospace leadership and innovation. The company continues to expand its product line and services to meet emerging customer needs. Its broad range of capabilities includes creating new, more efficient members of its commercial airplane family; integrating military platforms, defense systems and the warfighter through network-enabled solutions; creating advanced technology solutions; and arranging innovative customer-financing options. With corporate offices in Chicago, Boeing employs more than 170,000 people across the United States and in 70 countries. This represents one of the most diverse, talented and innovative workforces anywhere. More than 140,000 employees hold college degrees -- including nearly 35,000 advanced degrees -- in virtually every business and technical field from approximately 2,700 colleges and universities worldwide. Our enterprise also leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers...

Words: 6266 - Pages: 26

Boeing

...Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top U.S. exporter, the company supports airlines, U.S., and allied government customers in 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing has an overarching company Vision, which provides a broad and lofty inspiration goal to its employees. The Boeing Company Vision is: "People working together as a global enterprise for aerospace leadership." Beyond the reference to leadership, the company Vision doesn’t provide much specific guidance, so Boeing employees are also provided with a set of Boeing Business Imperatives, which Boeing believes will help the company achieve its vision. The Boeing Business goals are: - Detailed customer knowledge and focus that understand, anticipate and respond to customer needs. - Large-scale systems integration that continually develops and advances technical excellence. - A lean enterprise characterized by efficiency, supplier management, short cycle times, high quality and low transaction costs. Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Defense, Space & Security. Supporting these units are Boeing Capital Corporation, a global provider of......

Words: 288 - Pages: 2

Boeing

...WHAT CHALLENGES AND OPPORTUNITIES DID BOEING FACE IN THE LATE 1990s? Boeing wanted to save billions of dollars and reduce developmental time which led them to lose their market share to Airbus. In hindsight Boeing should have reduced airfare and focused more on innovation landing them a head of their competitors. Instead it cost them billions, put them three years behind schedule and allowed Airbus to succeed. Seeing their mistakes, Boeing turned it around by creating an aircraft that would add value to the consumer and generate profits for the company. Boeing took the opportunity to research composite materials to improve passenger cabin comforts and an overall flying experience compared to the aluminium they had been using previously. Then Boeing wanted to add value to the consumer. Using the new composite materials and upgrading the electrical system to lithium-ion batteries fuel surcharges were reduced and Boeing was able to pass along the savings to the consumers. The increased durability of the aircraft also led to reduced maintenance costs therefore reducing the replacements necessary and in turn having cost saving effects for Boeing and the consumer. Consumers were happy and stock prices increased. Although things appeared to be going wonderfully, there was a huge concern with overheating batteries and it needed to be rectified as soon as possible. Because the batteries were outsourced, there should hae been support integrated ito the design plan for...

Words: 953 - Pages: 4

Boeing

... Business Study Report: Boeing Table of Contents 1. Executive Summary 3 2. Introduction 4 3. Introduction to the Business and General Business Environment 5 3.1 Major Customers of Boeing 5 3.2 Competitors of Boeing 5 3.3 Business Environment 6 3.4 Market Structure: Oligopoly 7 4. Production Costs and Scale 7 5. Macro Business Environment 9 6. Sustainability Practices of the Business 12 6.1 Sustainability in the Production Process 12 6.2 Sustainability in the Consumption of the Goods 12 7. Conclusion 13 References 15 1. Executive Summary This report has been developed for Boeing, which is the leading manufacturing company of airplanes, space-crafts and defense systems. The main quest of this report is to explore the business and the general business environment. It has also covered the major competitors of the company and the demand curve. The report has also covered the fixed and variable costs of the business and how it has affected the cost structure of the business. The report has also explored the macroeconomic environment in which Boeing is operating and what implications it has on the business of the company. Further, the report has also included the sustainability practices of Boeing and its initiatives to reduce the negative effects on the environment from its product. 2. Introduction Boeing is a multinational corporation with its roots in Seattle, USA that manufactures and design airplanes, satellites and space shuttles. It is the largest...

Words: 3772 - Pages: 16

Boeing

...THE BOEING 7E7 Teaching Note Synopsis and Objectives In 2003, the Boeing Company announced plans to build a new “super-efficient” commercial jet called the “7E7” or “Dreamliner.” This was a “bet the farm” gamble by Boeing, similar in magnitude to its earlier introductions of the 747 and 777 airliners. The technological superiority of the new airframe, as well as the fact that it would penetrate a rapidly growing market segment, were arguments for approval of the project. On the other hand, the current market for commercial airplanes was depressed because of terrorism risks, war, and SARS, a contagious illness that resulted in global travel warnings. Boeing’s board of directors would need to weigh those considerations before granting final approval to proceed with the project. The task for students is to evaluate the 7E7 project against a financial standard, the investors’ required returns. The case gives internal rates of return (IRR) for the 7E7 project under base-case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis, the students identify the key value drivers and distinguish, on a qualitative basis, the key gambles that Boeing is making. The general objective of this case is to exercise students’ skills in estimating a weighted-average cost of capital and cost of equity. The...

Words: 7290 - Pages: 30

Boeing

...Case Study: Boeing 42 The long list of Boeing's woes seems to have reached its pinnacle in late 2003 with the scandal surrounding the Pentagon deal that alleged inappropriate behavior and the loss of documents by Boeing officials. After his seven-year reign at the head of the organization, December 2003 saw the eventual resignation of Phil Condit. Many breathed a sigh of relief at the news. The problems at Boeing were reportedly endless. From a stock price that had decreased by 6.5 percent while the company was under his leadership to increasing competitive pressures, the future for Boeing was in doubt and changes were needed. For many years Boeing graced American corporate news for their prowess as the leading manufacturer of aircraft. However, in 1994 Airbus—their main rival—booked more orders. This shocked the management executives and began a series of changes that were implemented to overcome the bureaucratic structure, outdated technological systems, and unnecessary processes in a company that had reportedly changed little since World War II. THE BEGINNING OF CHANGE AT BOEING In 1997 market demand increased dramatically and Boeing attempted to meet this surplus of orders by doubling their production capabilities instantaneously. A manufacturing crisis ensued and Boeing's reputation took a dramatic turn for the worse when they were required to halt production of the 747 aircraft for 20 days. The company had “stubbed its toe,” according to the then-president of the...

Words: 1159 - Pages: 5

Boeing

...The Boeing Company, Part II Political The Boeing Company is very involved in the politics of the industry. Therefore, Boeing has a Government Operations office located near Washington D.C., and the office serves the company in three ways. One way is that they work with government officials and organizations to protect and advance the company's interests, competitiveness, and reputation. This is very important because as the world’s largest aircraft manufacturer, Boeing does not want to get surprised by a policy or rule that could hurt the company. In addition, another service is to win government contracts. Recently, Boeing won a contract with the U.S. Navy for an order of 20 P-8A airplanes for $2.5 billion (Smith, 2016). Due the location of the office, Boeing was able to secure this contract, as well as many others over the history of the company. Lastly, Boeing and the government works hard to shape public policy issues that impact the company. The office works with public officials across all levels of government, federal, state and local, to work with the government to be compliant. Boeing’s team also works with various third party organizations such as associations, public policy groups, and international organizations (Boeing, 2009). The effective income tax rates for 2014, 2013, 2012 were 23.7%, 26.4% and 34.0%, respectively. Boeing’s 2014 effective tax rate was lower than 2013 primarily due to tax benefits of $265 million related to tax basis adjustments and...

Words: 3951 - Pages: 16

Boeing

...Case Summary The Boeing 767: From Concept to Production (A) By: Runit Marda (115) The case deals about the issue faced by Dean Thorton, Vice president – General Manager of the Boeing 767 program. The company had lobbied for Federal Aviation Administration (FAA) for permission to build wide body aircraft with two-person cockpits (rather than 3). Now, being granted the permission, the issue was that already 30 of the aircrafts were into various stages of production. Now, how should Thorton handle this situation? What are the options that he has? The decision had to be taken fast as the delivery dates were fast approaching. Commercial aircraft manufacturings posed various complexities as there were over 3.1 million parts to be connected by wiring over 85 miles. In 1981, three companies dominated the market: Boeing, McDonnell Douglas and Airbus. Launching a new plane was a daunting task as the manufacturing required $1.5-2 billion (which was considered to put the whole companies’ net worth on the line!!). But, any successful product was expected to lead to heavy profits and tie up the market segment for at least 15-20 years. Buyers, comprising mainly of the top 50 airliners, negotiated on price, after sales parts and service, design modifications etc. to make the task even tougher. In 1981, Boeing was the industry leader in terms of sales, having net sales of $9.2 Billion ($5.1 Billion of the aircraft manufacturing division). Boeing partnered with subcontractors on a......

Words: 338 - Pages: 2