2. Agenda
• The Boeing Company
– Background/Five Forces Analysis
• Boeing in the 1990’s
• The e-Enabled Advantage
• Analysis
• Recommendations
3. Boeing Through the Years
g h e s
June 17:
Boeing unveils
their new
May 17: strategy “e-
July 15: The July 15: Delivery of Enabled” at the
Boeing Boeing enters Airbus Paris
the first
Airplane commercial outsold International
Dec 1: Boeing 777
Company is aviation with Boeing for Air Show
July 28: Airbus to United
World War named the Boeing 707 the first
enters the Airlines
I Begins time
market
1914 1916 1917 1939 1954 1968 1970 1982 1995 1996 1999 2001 2003 2004
Sept 1:
June 15: World April 29: Feb 19: Sept 11:
War II Dec 15: Terrorist Jan 14:
Boeing Thornton “T” The
Begins Boeing Attacks on Connexion
took B&W Wilson became Boeing
mergers the United by Boeing
Seaplane President – forced 757
with long- States begins
for first to cut workforce makes its
time rival commercial
flight from 105,000 to first
flight McDonnell service on
38,000 Douglas Lufthansa
Airlines
4. Background
• Founded in 1916, Boeing’s first customer was the
government of New Zealand
• George Conrad Westervelt and William Boeing
built planes as a hobby
• The first plane, named the B&W Seaplane was used
for pilot and airmail
• Boeing became the largest aircraft manufacturer
in the US during WWI
and WWII
5. Background
• In 1954, Boeing successfully entered commercial
aviation with the Boeing 707
• Unfortunately, 1968 brought crisis to the aviation
industry and the company was forced to lay off
60,000 employees
• In the 1970’s Boeing regained profit by releasing
several new 7-series models and becoming an
industry leader
7. Porter’s Five Forces for the Airline Industry
Low – New entrants need to invest
Threat of tremendously as a substantial amount of
Entry money is needed for the production of
commercial airplanes.
Low –The company has
the power to negotiate
the price of supplies Suppliers Buyers
due to global
economies of scale.
Low – For many years Boeing has
been one of the leading aviation
manufacturers in the worldwide
commercial airline industry.
Rivalry
Substitutes
High - The commercial airplane
marketplace is a duopoly
market, largely Airbus and High – The passenger airplane can be
Boeing, resulting in low profit substituted with a train, a ship, a car, a
margins in the airline industry. helicopter or a private jet.
8. Case Questions
1. As case background, discuss the challenges
and opportunities that Boeing faced in the
late 1990s.
2. What steps did Boeing take in its journey to
build its e-Enabled Advantage?
3. Is the e-Enabled advantage a sustainable
advantage and, if so, for how long?
4. What recommendations do you have for
Scott Carson, leader of the company’s e-
Enabled Advantage initiatives?
9. Boeing in the 1990’s
• Boeing enjoyed great success through the 1980’s
– Virtually unrivaled
• Boeing > McDonnell Douglas & Airbus
– Broke its own sales record six years in a row
• Challenges arose for Boeing in the 1990’s
– Gulf War
– Economic downturn
• Boeing’s production: inefficient model caused
orders to plunge
– Earnings shrank by nearly half
– 9,300 of 126,000 employees were laid off
10. Challenges & Opportunities
• Boeing released the 777 in 1995
– United Airlines flew the first 777
• Onboard local area network (OLAN)
• Onboard server
• Boeing spent years advertising these new
systems
– The airlines did not know what to do
with all the data
– Boeing did not have a good answer
– The technology was ahead of its time
11. Challenges & Opportunities
• Phil M. Condit: CEO from 1996-2003
– “Boeing will not be able to survive on selling
airplanes alone”
• Transformation
– Agile
– Geographically diverse
– Broadly based company
– Less dependent on the highly cyclical
commercial jetliner market
12. Challenges Opportunities
1997: Boeing experienced a August 1996: Boeing became
production delay which resulted “one of the world’s strongest
in a lost of $178 million and a aerospace
reported 90% profit drop Q1 1998
1999: Airbus outsold Boeing for Mid-1990s Boeing dominated
the first time commercial aviation and signed
military and space contracts
1998: Production reform –
adopted simpler procedures for
configuring aircraft to customer
specifications, scheduling and
ordering parts, and managing
inventory
14. Vision 2016
• “An integrated aerospace company and a global
enterprise, designing, producing, and supporting
commercial airplanes, defense systems, and cival
space systems.”
– Run a healthy core business
– Leverage strengths into new products and new
services
– Open new frontiers
15. 1. Maintenance performance toolbox
2. Airplane health management
(AHM)
3. Electronic Flight Bag (EFB)
4. Electronic Log Book
5. My Boeing Fleet
6. Connexion by Boeing
7. Solutions Consulting
16. Steps to e-Enabled
1. Problem with differentiation from Airbus
2. Management strategy formulation
3. Communication of new changes across the
company
4. Strategies communicated to individuals
business units
5. Intelligent acquisitions
6. CAS (Commercial Airlines Services)
7. OLAN (Online Local Area Network)
17.
18. Analysis of the e-Enabled Advantage
• Will serve as a sustainable advantage
– Strategic positioning
– Innovation ability
• Provides stakeholders with resources to reduce costs
– By increasing operational efficiencies, Boeing can
develop a virtuous cycle
19. IT Utilization
• IT will serve as the main driver of Boeing’s
sustainable advantage
– Employ highly competent IT leaders
– Institute a lean, yet agile infrastructure
• Embed IT into existing products/newly launched
services
– Will drive revenue growth
– Creates high switching costs
20. Sustainable Advantage
• Provides information-enabled products and
services
– Information is easily customized
• Drives asset efficiency, cost savings, and revenue
growth
• Unpredictable lifespan
– As long as Boeing maintains innovation
capabilities and leads technology growth
21.
22. Recommendations
1. Boeing must implement the consultative selling
approach and provide services that move toward
a partnership relationship with customers. This
involves altering the business plan to fit the
demands of the environment.
2. Boeing needs to emphasize the importance of
communicating the value of e-Enabling to their
customers.
3. Boeing must utilize large scale system integration
to equip all products with the IT capabilities
associated with e-Enabling.
23. “It’s going to happen, and the mindset is, if Boeing doesn’t do
it first, someone else will.”
“Right now, it’s sort of like a very pre-emptive chess game.
The e-Enabled environment is going to happen, and the
question is, are we going to be following or leading?”
