Boeing
Summary
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Boeing was a leader in the aircraft industry,
until it met its competitor, Airbus, in the
1970’s.
Boeing’s biggest mistake was ignoring this
strong competitor, and assuming that
business would remain the same.
However, this arrogant approach led to a
loss of market share, and total profits.
Summary
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Boeing’s acquisition with Rockwell
International defense business and
McDonnell Douglas helped Boeing regain
some of the market share, and profits that
were lost to Airbus.
Boeing’s arrogant approach to
competition
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Boeing focused too much on retaining its 60%
market share, and not enough on it’s competitor’s
strategies.
Once Boeing acknowledged the strength of their
competitor, they attempted to secure larger orders.
However, because of their inefficient production
system, they were unable to keep up with the
numerous orders coming in, which resulted in
delayed deliveries, and loss of customers.
Boeing’s arrogant approach to
competition
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Boeing’s focus was on quality and
customization, even after 9/11. However,
they didn’t take into account that the airline
industry was hurting at this time, and was
acting solely on cost.
Inefficient Production and
Strategy
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Boeing’s production goals demanded more
aircrafts to be produced faster than the
inventory could get through the supply
chain.
Boeing has been unable to implement
computer processes for company
operations, and as a result, their production
processes are inefficient.
Inefficient Production and
Strategy
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Boeing was focusing too much on short
term conditions in creating their strategy
which hurt them in the long run.
Instead of adequately planning for the
future, Boeing reacted to the current market
condition which left them unprepared and a
step behind the industry.
Key Takeaways
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3 C’s: Complacency, conservatism, and conceit
– Complacency- no longer striving for innovative improvements
and are content with current practices
– Conservatism- managers did not see changes necessary
– Conceit- we are the best mentality and not realizing Airbus’s
potential
Their 3 C’s mind-set caused them to not predict market place demands.
This one sided mind-set can be applied to any other situations and inhibits
the ability to see the need for change.
Current Conditions
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Regained market share over Airbus in 2000.
Largest producer of aircrafts
Largest US exporter
75% of worlds commercial aircrafts are produced
by Boeing
Set to introduce the new and innovative 787
Dreamliner in 2008
Made changes to reclaim market share as
frontrunner of commercial jetliner industry
Exam Questions
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Question 1: What key mistake did Boeing make in
selling planes to airline companies after 9/11?
– Answer: They focused to heavily on quality and
customization and ignored the significance of price.
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Question 2: What anomaly faced Boeing after the
creation of the high-tech 777?
– Answer: They were able to create the 777 using all
computer designs, but were unable to utilize computers
to streamline their operations.
Airbus S.A.S.
the Basics
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1970 consortium:
Aerospatiale (France) and Deutsche Aerospace (Germany) CASA (Spain in
1971)
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A300, the first twin-engine wide body airliner
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Streamline Operations
2001 formed The European Aeronautic Defense and Space Company (EADS)
David vs. Goliath
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Commercial airline production became a commodity
business because of low differentiation, this creates pricebased competition
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Airbus has a much smaller production capacity, but more
efficient production, this means they can compete with
Boeing on price, even though they are smaller and thus
gained market share
A3XX
SuperJumbo
Airbus A380
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Double Decker
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555-800 seats!
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Duty Free Shops w/...Casino!
A3XX
SuperJumbo
Do you think Airbus’ more passenger
A380
friendly designs give it Airbus
a significant
competitive advantage? Why or why
not?
....Who is the Customer?
the Talk
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What is Airbus’s forecast concerning future
air travel? How do they plan on preparing?
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What was the 2005 backlog for Airbus?
What does this mean?
Sources
Ford and Firestone
Firestone/Ford Explorer Tire
Disaster
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Ford and Firestone have been doing business
together since 1895
The first signs of trouble came in 1999 when 14
fatalities occurred in Saudi Arabia
By May 2000 four U.S. fatalities had been
reported
In December 2000 Firestone blames Ford for the
problems
In April 2001 Ford blames Firestone for the
problems
On May 21, 2001 the 95 year association was
ended
Where the Blame Lies
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Ford decided to use the less heat resistant C grade
tires rather than the more heat resistant B grade
tires
Also recommended a lower air pressure in tires
that helped contribute to the problem
Firestone used shoddy manufacturing processes in
it’s plant in Decatur, Illinois
A majority of the recalled tires came from this
plant (Whistle Blower)
In reality both were to blame in some aspect
Lessons Learned
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Emotion influences company reputation
After incident Bridgestone/Firestone replaced
Phillip Morris as having the worst reputation in
America
Suspicions and complaints about product safety
must be thoroughly investigated
In the worst case scenario go with an appropriate
salvage strategy
In the case both companies tried to combat the bad
press, denied responsibility, blamed someone else
and resorted to the strongest possible legal defense
Lessons Learned cont.
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They should have done what Johnson & Johnson
did when someone died from tainted Tylenol
Full admission of problem and removal of risk
It is expensive but you save money in the long run
by avoiding potential lawsuits and saving
company image
A full recall would have also likely saved many
lives
Bottom line – the two companies should have
worked together to solve the problem instead of
Questions
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1. If you had been the CEO of either Ford or
Firestone how would you have handled the
situation?
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2. Would you feel safe buying a car
mounted with Firestone tires?