Boeing is an American multinational corporation that designs, manufactures and sells fixed-wing aircraft, rotorcraft, rockets and satellites. It also provides leasing and product support services. Boeing is among the largest global aircraft manufacturers, is the second-largest aerospace & defense contractor in the world based on 2012 revenue and is the US’ largest exporter by dollar value. Boeing stock is a component of the Dow Jones Industrial Average. The Boeing Company’s corporate headquarters are located in Chicago and the company is led by Chairman and CEO James McNerney. Boeing is organized into five primary divisions: Boeing Commercial Airplanes (BCA); Boeing Defense, Space & Security (BDS); Engineering, Operations & Technology; Boeing Capital; and Boeing Shared Services Group. In 2013, Boeing recorded $86.623 billion in sales, ranked 30th on the Fortune magazine “Fortune 500” list (2013), ranked 95th on the “Fortune Global 500” list (2013), and ranked 26th on the “World’s Most Admired Companies” list (2013).
The success of this aviation company began when the founder of Boeing, William E.Boeing, bought a shipyard in Seattle on the Duwamish River, which later became his first airplane factory. Boeing, a graduate from Yale University incorporated Boeing on July 15. 1916 as ‘Pacific Aero Products Co.’ which later transformed the company into a world’s largest aircraft manufacturer throughout the aviation history. Between World War I and II, Boeing grew to be one of the largest aircraft by supplying the military with training and fighting planes, pioneering airmail planes and routes, and developing early passenger planes. During World War II, Boeing was ‘one of the country’s leading defense and space contractors’. The B-17 “Flying Fortress” and B-29 ‘Super Fortress’ bombers were an essential military force, and the B-52, and eight-engine bomber that made debut in 1952, had been used in the Vietnam War, the Persian Gulf-War 1991 and in Afghanistan in 2001. Research and development that took place during the war years set the stage for the coming age of commercial jetliners, which Boeing would dominate for the remainder of the 20th century.
Boeing’s Aircraft Production
Boeing made its entry into commercial aviation in 1954, by introducing Boeing 707 to the world. The aircraft, four-engine jetliner based largely on ‘C-97 Stratofreighter’, a military-tanker transport which competed directly with the Douglas DC-8. While Boeing’s foray into commercial aviation was risky at first, the success of 707 eventually helped establish Boeing as a leader in commercial aviation, which until then had been dominated by DAC (Douglas Aircraft Company). The 707 was followed by the 727 in 1962 and the 737 in 1967, and in 1968, Boeing rolled out the 747-its flagship aircraft and the largest civilian aircraft the time.
757, 767 has been added to the 7-series of jetliners right after the ‘impending disaster’, when the Congress had pulled the plug on funding for development of the Apollo Project. During that time, cyclical aviation industry faced a massive downturn, and Boeing had to bear the high start-up cost. Wilson, the president of Boeing at that ‘downfall period’ was force to cut Boeing’s employees from 105,000 to just 38,000, just to maintain the company’s relevancy on financial.
Throughout the 1980s, Boeing was virtually unrivalled in commercial aviation. Its 2 main competitors, McDonnell Douglas in the US and Airbus in Europe, held less than half of the market share combined ad neither had a family of airplanes that could compete with Boeing’s versatile 7-series. The second half of 1980 and the early 1990s witnessed nearly unmitigated growth for Boeing. Although the defense and space sectors struggles as the US government cut funding, the commercial aviation division prospered. Air travel had been growing steadily since 1970; ad Boeing broke its own sales record for 6 years in a row starting in 1985. In the 1980s alone, Boeing received orders for more than 3,500 jet liners, which represented half of all jetliners sold by Boeing since the first 707 order was placed in 1956, and in 1987, the 737 surpassed the 727 as the world’s best-selling jetliner. In 1989, Boeing announced plans to develop the next airplane in the 7-series, the 777, to be released in 1995.
By 1992, Boeing employed nearly 150,000 people and posted net earnings of 1.5 billion. It was the country’s leading exporter and was considered one of the nation’s most admired companies. The company that started a mere hobby had become ‘the king of the jet makers.’
Throughout the e-Enable program, Lou Manchini, the Vice President of CAS (Commercial Aviation Service), stated that the main goal of the program was to continue running a profitable business while integrating each business unit with the strategy. This strategy was the implementation specifically for Vision 2016, on how to bear the challenges ahead and putting ideas into practice. The entire effort to implement the goals was handed to Chris Kettering, the program director of e-Enabled. ‘e-Enable’, which adverse the cost-cutting of long term financial strength of BOEING, has revealed Scott Carson’s proposal on breaking down sops of communication among different units. In order to sustain the business through cost-management, the problem of this case has been identified as how e-Enabled can aid the program for long-run sustainability. Could e-Enabled provide the advantage that airplanes used to provide? How concrete the advantages were to withstand the tight competition from other makers, and would BOEING’s transition into services prove to be the silver bullet – the solution to the airlines financial woes and to BOEING’s aggressive competition with Airbus?
World leading/largest aircraft company, used by many Airlines Company and military. Having full concentration especially more on R&D activities/ Wide product and service range, which consists of commercial airplanes, defence work and aerospace The practise of having a healthy financial performance, despite some losses from previous business deals. Strong product and strong technology.
Issues of safety (example: 787)
Problems on labour forces due to committing into large numbers of workers. Communication issue between departments in the company because of the company size and high number of staff. In order to stay in business, the company is too dependent with contract with U.S government. Opportunities
Aircraft demands from other continents.
The increased demand for fuel efficiency in aircraft may lead to company to invest in developing efficient aircrafts. Data availability that can be provided to airlines operators, security agencies may lead to improvisation on the products. Military expansion in new country will requires more aircraft. (Eg: U.S invasion to middle-east) The growth of freight transport market.
Competition arises as reported that Airbus are in pursuit to offer services for the military and commercial aircraft sector. New entrants of competitor also exist in defence sector. Uncertain airlines industry environment.
The need for lighter version of fuel-efficient planes.
‘e-Enabled Advantage’ strategy was first unveiled in June 2003, the Paris Air Show. Core concept of the strategy, whereby all data and information system relating to airplane maintenance, flight operations and passenger needs would be seamlessly interconnected to effectively bring the airplane into the airline’s network during flight. Through acquisitions, Boeing has increased the value of its e-Enabled campaign by holdings companies that offered different advantages to support its IT credibility of the airline system and established a consumer-friendly website to increase airline technical awareness. The participating companies are: Companies
Preston Aviation Solutions
A Comprehensive suite of IT Solutions to need the needs of aviation customers. Jeppesen Sanderson Inc.
Provides a full range of print and electronic flight information services. Continental Data Graphic Corp
Customized information and documentation to airlines including illustrating and editing materials. MyBoeingFleet.com
Provides powerful and flexible tools to manage crew scheduling in both regulated and deregulated environments. SBS International
Provides IT maintenance and platform stability
Hughes Electronics Corp.
Recognized as the world leader in, reconnaissance, surveillance, and imaging systems.
After the acquisition, the company further their long-reign campaign IT based strategy with e-Enabled to reach customers on feedback of how to improve the operational quality of Boeing services by introducing ValSim in 2004 (Valuation Simulation), a program that visualized its customer’s business structure using Microsoft Visio to demonstrate how the CAS Software portfolio adds value to the operations. Efficiency is the core success for survival in any airlines industry. When we talk about operational, efficiently is the ‘heart’ that pumps the ‘life’ into the core. With e-Enabled, many within Boeing believed that it is the ‘fundamental’ to deal with the pressures of cost against revenue on demand over supply and aviation competitive market. Also by looking at its e-Enabled environment, the objective is to ensure integrated solutions to services and product will be realized from time to time. As forecasted by analysts, Boeing will have an average of 5% growth in passenger volume over next 2 decades.
Summary & Recommendations
Boeing’s e-Enabled Advantages has proven that’s the functionality of the strategy has strengthen up the company’s financial position as well as embedding better IT solution in aircraft industry. Boeing has proved a strategy that could sustain their organization for many long years ahead, while having a competitive advantage in the airline industry especially to compete with Europe’s Airbus.
One of the most talkative subjects coherent with the powerful e-Enabled Advantage is the Boeing 787 Dreamliner. It is a plane that defined the while e-Enabled Advantage campaign, which fully embedded enabled features. Since the safety of the aircraft is being questioned from time to time, research and development if Boeing still has ample time to carry out strategic analysing on the aircraft in order to strengthen up e-Enabled advantage.
e-Enabled campaign is a serious campaign, thus full support from other bodies and JVs are required for the sake of e-Enabled functionality. This is to recommend that Boeing should look for more promising companies (as a failover backup) that could support e-Enabled if the current supporting bodies fail to deliver through its standards. Other recommendation that can be described in this study case is to offer certain features or software on a free trial or discounted fee to allow airline operator to understand the advantages and scope of e-Enabled services. The awareness and widespread of understanding may need to be improved through not only websites but also other sources of medias.
Courtney from Study Moose
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