Boeing 787 Dreamliner

Boeing’s History Five Forces S.W.O.T Boeing vs. Airbus Market Analysis Introduction to the 787 Dreamliner Advantages of the 787 787’s Value Chain “7-Late-7”- Issues with Delays Boeing’s Reaction: Supplier Buyouts Moving Forward: Future Options

Outline

Boeing’s History

Industry

Rivalry

Potential Entrants

Buyers

Substitutes

Suppliers

Five Forces

50+ Firms

worldwide supplying

components

847 Orders from airlines, leasing companies, governments, and private buyers

Airbus A350-XWB

EmbraerBombardi

er

SukhoiCHINA

S.W.O.T

Brief Flashback… Major players of the 70s and 80s

◦ Boeing◦ Lockheed Aircraft Corporation◦ McDonnell Douglas Corporation◦ Airbus Industrie

Boeing vs. Airbus

◦ 1967 : Airbus begins with a Memorandum of Understanding between French, West German, and British Governments

◦ 1970: Airbus Industrie officially created. Spain joins consortium in ‘71◦ 1974: Airbus A300 makes first commercial flight from Paris to London with Air

France◦ 1981: Airbus’s position as a major industry competitor was secured with the

introduction of the A320◦ 1991: Airbus’s first operating profit achieved, work started on “superjumbo jet”,

the future A380◦ 1993: Long range A340 enters service with Air France and Lufthansa◦ 1998: Airbus controls 52% market share ◦ 2000: Airbus consortium comes under umbrella of newly formed European

Aeronautic Defence and Space Company (EADS), Airbus officially launches A380◦ 2003: Overtakes Boeing in number of finished aircraft deliveries for the first time◦ 2005: A380-worlds largest passenger plane revealed◦ 2007: After overcoming delays due to technical issues, the A380 enters service

with Singapore Airlines◦ 2010: Composite component testing started for the A350-XWB-the future 787

competitor

Airbus Timeline

Advantages◦ Resources and talent from multiple countries.◦ Cross-crew qualification ability on Airbus aircraft◦ Prevents intra-European rivalries◦ Governmental funding

Disadvantages◦ Labor costs◦ 787 competitor A350-XWB will not service until 2013 not

counting delays and it will be more expensive than the 787◦ Challenges with A380 sales

Airbus Advantages & Disadvantages

Narrow-body Single-aisle passenger planes Short-range aircraft (up to 6,000 km) Typically carry between 100 to 200 passengers The leading aircraft in this category are the Boeing 737 and

the Airbus A320

Wide-body Double-aisle passenger planes Long-range aircraft (up to 14,000 km) Typically carry between 200 to 450 passengers. A380 can

carry almost 1000 passengers depending on configuration Leading aircraft in this category - Boeing 747, 777, 787,

and the Airbus A330, A340, and the A380

Aircraft Types

Technology as a differentiator

Airbus Introduced fly-by-wire

technology with the A320 Airbus family commonality

between models◦ A pilot trained to operate

one aircraft can operate any of the others with minimal additional training.

Advanced technology used in A380 being applied to new A380-XWB

Boeing Invented Jumbo category

with 747 787 is the first to use

composites for most of its structure

Transfers knowledge gained in defense business into its commercial products

Orders from 2006-2010

0

200

400

600

800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Airbus

Boeing

Year Airbus Boeing2006 790 10442007 1341 14132008 777 6622009 271 1422010 328 392

Deliveries from 2006-2010

0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Airbus

Boeing

Year Airbus Boeing2006 434 3982007 453 4412008 483 3752009 498 4812010 380 346

Boeing’s Market Forecast Increase in global

population World will continue to

be increasingly interconnected

Passengers of the future◦ Cost conscious◦ More

environmentally aware

◦ Ease of travel (Increased travel)

Boeing will target Point-to-Point long distance travel

Best selling new airplane in history (847 orders) First ever composite aircraft Globalized production process Electric architecture First ever dual assembly lines (Everett, WA & Charleston,

SC) Focus on passenger comfort 20% better fuel consumption than current in-service aircraft 30% savings in maintenance costs

Introduction to the 787

Wide use of composite materials

Globalized Production

ComponentSuppliers

BOEING

Airlines

787 Value Chain

Evaluate Solutions to Delay More Conservative Initial Timeline Improvement of Logistics Supplier Relationship Changes Consolidation of Supply Chain

More Conservative Initial Timeline

Pros◦ Limit Financial Penalties & Negative Press

Reasons Conservative Timeline is Unnecessary◦ Buyers Order in Advance◦ Signaling Advantages◦ Buyer Switching Costs◦ Incumbency of Buyers, Loyalty

Logistics Software

50 Suppliers, 28 Outside of United States◦ Exostar Supply Chain Management Software

Learning Economies Will Lead to Future Advantages

Supplier Relationship Changes

Penalties Where is Power, with the Supplier or

Boeing?◦ Supplier

Outsourced Production Relinquishes Power Switching Costs

◦ Boeing Flexibility of Replacement Components, i.e. Engines.

Relationships Must be Improved

Consolidation of Supply Chain

Pros◦ Control Processes & Timelines Internally

Cons◦ Reverses Their Intent for Global Participation◦ Slows Innovation◦ Unable to Capitalize on Countries’ Competitive

Advantages

Conclusion Globalization Requires Continual

Improvement Learning Advantages Require Stumbles Dreamliner Will Be Considered a Success