Boeing

Introduction.

This paper seeks to explore the negotiation strategies and tactics of three executives in the airline industry and the marketing strategies of the aircraft makers involved in an article critique.

Mr. Leahy of Airbus is a persistent negotiator who investigates the client’s target price and carefully places his bargain around this price to ensure that his competitors do not close the gap a head of him. Knowing that the competitors are better off in terms of plane capacity, he offers guarantee on the future value and lower price which appeals to Mr. Dupuy. Mr. Leahy bases his bargain on what is offered by the competitor especially on price and the client requirement. Mr. Bright tend to shy away from competition especially on price as the Boeing is more expensive than Airbus and would rather negotiate based on larger plane capacity, lower operational cost with a promise of comfort and increased revenue to the airline company. Mr. Dupuy has the habit of setting the two plane making companies against each other to achieve lower prices through discounts for a reliable, cheap and assured future resale values. During the negotiation, he makes the salesmen aware of the offer that each side has brought forward. This makes the teams work on compromising their stand especially on price. Mr. Bright sees lower price as a reduction in product standard while Mr. Leahy is more willing to compromise price in the client’s favor. (Daniel, M 2003, p.658)

According to Daniel, M (2003, p. 659), the Airbus’s flexible bargaining powers make it popular with Iberia airline company hence higher sales compared to Boeing. Boeing is very conservative in its strategy trying to avoid competition with Airbus especially on price and prefer direct sales without much competitive bidding. The Airbus has learned to capture the market by simpler and cheaper planes which eliminate the cost spare parts, maintenance or training costs. This meets Iberia’s taste for cheaper and easy to operate planes. Mr. Leahy won the Iberia bid by presenting the new A340 which could fly further with more lifting power than Bright’s Boeing 777. Leahy also offered a lower price on the Airbus which was uniform with Iberia’s existing fleet. The other factors which pushed Airbus a head of Boeing were offering guarantee on the planes future value, lower maintenance costs as well as opportunity for attractive financing terms. Airbus focuses more on the client needs hence offering a product that is most likely to meet client target while Boeing’s focus is more on the plane cost and the expected revenue to the airline company.

In order to secure a Jetliner deal with Iberia, Mr. Bright needs to keep a breast of information about Iberia’s tastes especially as regards to Mr. Dupuy pricing strategy that sets a lower target price but does not divulge it during negotiations. This is because he had lost the deal to Leahy who was more aware of Mr. Dupuy’s strategy.  Mr. Bright should investigate this privately including consulting those who have dealt with Iberia before to negotiate the sales from a point of knowledge. Mr. Bright should also focus on issuing guarantee on the planes future value as this appeal greatly to Mr. Dupuy. The lower price set by Mr. Dupuy can only be achieved if Mr. Bright improved their financing strategy to reduce the cost. This may involve Boeing approaching engine manufactures and supplies for discounts on engine prices and developing cheaper and simpler Jetliners. (Daniel, M 2003, p.661)

Conclusion.

            Although Mr. Bright appears to be aggressive in helping Boeing to capture the market, Mr. Leahy combines aggressiveness with tact and his moves are defined by the client’s pre conditions.

Reference.

Daniel, M (2003). Boeing and Airbus in dogfight to meet stringent terms of Iberia’s executives.

                       Wall Street Journal. New York: Dow Jones & co. p. 658-661.

Airbus v. Boeing Unit 8 Case Study MT330-01 International Marketing Kaplan University Christina Olson November 14, 2011 Airline manufacturers must compete with one another to be successful, and have the most birds in the sky. Boeing and Airbus are the two largest manufacturers for commercial aircraft, especially those used for long flights. Iberia Airlines wanted to purchase up to 12 brand new jumbo jets from one of these manufacturers. Enrique Dupuy, Iberia’s CFO, set a price that he wanted the company to pay for the aircraft and then started a bidding war between the two super jumbo jet manufacturers.

Negotiation between two major companies like Airbus and Boeing can make a marketing strategy very strong or the complete opposite, it can cause a strategy to crumble to pieces in an instant. Airbus and Boeing both have dedicated sales representatives, Bight of Boeing and Leahy to their jobs very serious and developed a marketing plan like none other. These two gentlemen understood one important thing when it comes to marketing, plans must be able to adapt to change at any given moment. Prior to the beginning of the negotiation Airbus had an advantage of Boeing.

Iberia Airline were currently using the manufacturers largest plane (Michaels, 2003). Airbus had already established a solid reputation with the airline company. Dupuy was familiar with Airbus’s resale guarantee, which was hard to beat by any other company (Michaels, 2003). Although Airbus had previous history with the airline company, Dupuy wanted to look at other manufacturers to get the best competitive price. Bright was personally contacted by Iberia Airlines to begin a negotiation process in hopes that he would be able to meet the predetermined price set by Dupuy (Michaels, 2003).

Bright’s marketing strategy was geared to the fact that these planes could save more money in the long run while earning more revenue. He not only explained to Dupuy Boeing 777 could hold 24 more seats than Airbus which generated more revenue per flight (Michael, 2003). These aircrafts also used less fuel, allowing for expense to be dispersed to areas other than fuel (Michaels, 2003). Leahy did not let the extra seats and lower fuel usage discourage him during negotiations.

During the meeting with Dupuy, Leahy reminded Dupuy that Airbus guarantees resale value of all aircraft plus the lower initial cost of purchasing the aircraft (Michaels, 2003). He provided numbers of how much the company would save by keeping Airbus, the price of extra parts and pilot training (Michaels, 2003). All of these costs were expense that would save the airline company millions of dollars upfront. Despite the good marketing and negotiation strategies by both manufacturing companies, Dupuy was not happy.

Dupuy set a price that he wanted the two corporations to meet, or he would look into purchasing used aircraft (Michaels, 2003). This made both men return to their home company and refigure the marketing strategies. Each company offered perks such as financing, maintenance discounts, and sufficient amount of parts. Negotiation between the aircraft manufacturer and the airline company was not an easy task. Each time Bright or Dupuy offered a new contract; Dupuy rejected it asking for more discounts in price.

He would also contact the other manufacturer, causing uproar to try to beat the prior suggested contract. The negotiation between Iberia Airlines and the manufacturing companies went on for over a year. Bright and Leahy were constantly adjusting their marketing strategy to fit the need of the airline company. These two men had to not only negotiate with the airline company but with the finance company and the company that makes the parts and engines (Michaels, 2003). It was a never ending task until Dupuy finally decided on which company enter into contract with.

During the end of the negotiations, Dupuy stood firm in his set price; he refused to settle. Boeing and Airbus had very strong marketing strategies that had to change constantly in order to not only meet the expectations of the buyer but to overcome the bid of the competitor. Even though Boeing had strong factors, such as the decreased fuel expense and increased income from more passengers, Airbus won the negotiation. Leahy was able to meet all of the expectations set by Dupuy, better financing, decreased price but most of all the guarantee return on sale of the aircraft for 20 years (Michaels, 2003).

During the negotiation process both aircraft manufacturers were focused mainly on numbers. Another aspect of a marketing strategy should have been safety and consumer choice. Airbus was noted to have a system that not all pilots trust “Fly-by-the-wire,” causing planes to malfunction and plunge 100s of feet in seconds (Bland, 2009). Both of these factors can play a major role in how many passengers choose to fly with one airline company over another because of the aircraft used.

Had either of the manufacturers used these two simple areas in their marketing strategy the negotiation outcome could have been different. Reference Bland, A. (July 1, 2009). The Big Question: Why was another Airbus crashed, and is flying Becoming more risky?. The Independent, Retrieved from http://www. independent. co. uk/news/world/africa/ the-big-question-why-has-another -airbus-crashed-and-is-flying-becoming-more-risky-1726056. html Michaels, D. (March 10, 2003). Boeing and Airbus in the Dogfight to Meet Stringent Terms of Iberia’s Executives. The Wall Street Journal Europe, Dow Jones & Co. –

The planetary aircraft fabrication industry can be separated into two cardinal sections. Military and infinite application and civil or commercial aircraft. Commercial Aircraft comprises of little and big traveler aircrafts and even the lading aircrafts. The big aircraft fabrication is chiefly done by Boeing company of the United provinces of America and Airbus company of the European brotherhood. In the yesteryear, Boeing has been achieved success in taking over Martin Marietta and McDonnell Douglas, both had besides been in the industry of aircraft fabrication. Presently, the big aircraft fabrication industry is an oligopoly, dominated by Airbus and Boeing, which are in a ferocious competition against each other. There are other big makers besides, for illustration there is one in Russia but its consequences were irrelevant because its clients were limited to air hoses from Vietnam, Russia and other states of the former Soviet Union.

The universe aircraft industry has gone under a really steady growing. Boeing estimates that the worldwide aircraft market would be deserving 5.4 trillion US dollars by 2024 to counterbalance a 5.2 % addition in world-wide air travel. It is estimated that 12,000 to 15,000 will be needed by 2020 to run into the turning demand.

PESTLE Analysis

Political

Liberalization of travels between the European Union and the United States has resulted in demand of more aircrafts.

The Aircraft Industry is a duopoly industry comprising of Airbus ( EU ) and Boeing ( US ) . If there are to be viewed from political consensus they are bipartisan political system. Anthony Downs proposed a authoritative theoretical account in the political scientific discipline that suits the state of affairs in the perfect manner. His proposal reversed the conservative connexion between party political orientations and elections. He said that alternatively of parties accomplishing triumph in the elections on the footing of the rightness of their docket, his findings give elections pre-eminence, with innuendo that all actions taken by the party are aimed at maximizing ballots. Harmonizing to Downes, both parties will seek to resemble each other every bit much as possible. Both parties will maintain their policies modestly different from each other. Besides bulk of electors merely want to see minor changes in authorities functionality. The Market of big and mid size aircrafts works on the same political orientation. There is an huge consensus among market participants to what an attractive merchandise comprises, that is, an economically efficient and safe aircraft. But there are besides some involvement cabals that have wagered in merchandise design, merely as there are much possible groups within a democratic system.

A The Government of the United States and its Federal Aviation Administration ( FAA ) are considered to be influential as they look upon the largest air conveyance market in the universe. Regulations laid by the European and United states authorities will turn out to be a major drive force for orders of new aircraft in the coming old ages. In the similar manner, the deregulating of European air hoses, which begun in 1990 ‘s, promises to spread out the markets for smaller regional jets. Trade of big commercial jetliners has been tariff free under the understanding of General Agreement on Tariffs and Trade ( GATT ) .

The high grade of political intercession has consequence on the purchase of aircraft. The determination of purchasers to purchase which aircraft depends on the political grounds because the support and intervention from the authorities could consequence the hereafter of purchasers. For Example, soon Boeing ‘s biggest market is China and is estimated to be for following twenty old ages. As a consequence China ‘s purchase of boeing aircrafts has led to batch of political influence in the United States.

Economic

Air traffic in US and UK is likely to increase as they have merely recovered from the recession. The commercial aircraft is estimated to lift deserving US $ 2 trillion in the approaching 20 old ages, which will ensue into demand of 16,600 new aircrafts ( estimated ) . The largest demand is expected to come from air hoses from China, US and India. Huge sum of growing is expected from the Middle East states. It is expected that China entirely will necessitate 2,200 new aircrafts to run into its travel demands. Besides, international cargo sector is estimated to turn by 253 % in the following 20 old ages.

China being the biggest emerging market and sing its population size, the growing in air riders is likely to hit up which would ensue in increasing demand for new aircrafts.

High Oil monetary values: looming oil monetary values have elevated the operating cost of air hoses. In the twelvemonth 2007, the world-wide air hose industry had to pay 136 billion US dollars for fuels, its a 300 % addition compared to what they had to pay in 2003. Even in 2008, when petroleum oil monetary values fell dramatically, it still accounted for 32 % of the operating disbursals.

Global GDP- the primary factors in finding the demand of aircraft and growing in the industry is the GDP, which is expected to turn by 3.2 % by 2030

The planetary recession: The recession which impelled a theatrical bead in load factors in the center of 2008. In response, air hoses have been seting aircrafts out of service and rethinking programs to order replacing for the bing aircrafts. In the 3rd one-fourth of 2008 24 air hoses went bankrupt. The loses during this period were estimated about 4-8 billion US dollars.

The recognition crunch: The recognition crunch in combination with the above mentioned factors, has made it difficult to buy new aircrafts, air hoses are happening troubles to finance new aircrafts. Despite of the recognition crunch, orders for concern and commercial jets have seen addition at the beginning of 2008, but the recognition crises has resulted in holds and recesss and failure to take bringing of many aircrafts.

Social

Recent alterations in society have led to increase in air travel.

Besides alterations in life manner of people and the point of view of air journey being a executable option.

Demand of air travel is driven by convenience. However, the tendency is altering as the consumers travel determinations is chiefly based on monetary value. Rising cost and competition produced by low-priced bearers is impacting bulk of Airlines. Business travels, one time a stalls of income, now is a behavior by corporate travel guidelines. As a effect, air hoses are uniting their webs to use economic systems of graduated table, minimise environmental impact and offer smaller markets with new and improved services.

The noise generated and CO2 emanation near the airdrome is besides a thing of higher concern as people populating near the airdrome are supercharging governments to alter thier operating manner.

Technological

In the commercial air power industry, there are immense sum of costs connected with Research and development for the development of a new aircraft. European Union authoritiess sustain European engineering R & A ; D sector, merely as the united provinces authorities does, though FAA, NASA, Department of Defence ( DOD ) and plans that reliefs export revenue enhancement. Though United provinces has three times more support than the European brotherhood.

The Aircraft industry is really demanding with really high measure of clip and money dedicated to inventions and R & A ; D.

Now a twenty-four hours ‘s C fibre is used for the building of an Aircraft organic structure. ( illustration: A350 XWB with 50 % C fiber organic structure )

Concentration on development on doing more fuel efficient engines for longer scopes.

Use of alternate beginnings of fuel to antagonize raising oil monetary values

The development of supersonic aircraft is besides a opportunity because it will take to creative activity of whole new market section. Commercial bearers will purchase these aircrafts to run into clients demand of making the finish rapidly and on clip.

The largest and cost efficient promotion for commercial aircraft industry is the faster designing of planes. The augmented fabrication clip will salvage aircrafts makers clip on labour and assist them to break utilize resources. For Example: Boeing 777 used computing machine to plan a paradigm, this saved them the cost of constructing a existent paradigm.

In today ‘s competitory universe, automatons are besides considered an effectual tool for the fabrication of aircraft.

Legal

There are many limitations when it comes to come ining the market but due to globalization fortunes have changed and besides due to US unfastened skies understanding. Open skies understanding has led to smooth flow of national and international flights in and out of US, promoting Tourss and concern activities, bettering productiveness and creative activity of occupation chances and economic growing.

United province ‘s unfastened skies policy has been proved really effectual in air hose globalisation. It enabled the air hose bearer ‘s limitless entree in the spouses market and right to travel to all center and beyond points. This understanding has offered the most operational flexibleness for air hose alliances. This understanding has been successful in accomplishing over 100 spouses from every portion of the universe and every degree of economic growing.

Besides there is IATA ( International Air Transport Association ) . Its purpose is to supply aid to air hoses to diminish complexness of their procedure and increase rider convenience, diminishing costs and develop efficiency. The open uping simplifying the concern strategy is critical in this country. Furthermore, IATA ‘s primary precedence is safety and its purposes to continuously better safety criterions via IATA ‘s Operational safety audit ( IOSA ) .

Environmental

Environment factors by and large include ecological facet of clime and conditions alteration, which in bend can act upon industries such as insurance, touristry and agriculture. Today, there is an consciousness of clime alteration in the heads of people, which is going a make up one’s minding factor on how companies function and what are their offerings, because it can take to formation of a new market or devastation of the present market.

ACARE is an European group of airdromes, eurocontrol, air hoses, makers, universities and members of EU and EU committee. Its primary challenges are – safety, sensible, quality, environment and security. Some of their aims are to cut down air accidents to 80 % , 15 minute less wait clip on airdromes for small distance finishs and 50 % less clip needed to market. One of most popular purpose of ACARE was to cut down specific CO2 discharge by 50 % , the discharge of NOx by 80 % , and to diminish the exterior noise of fixed wing aircraft by 10 dubniums per operation. For example- Boeing is a major component of the commercial air power industry. It is put to deathing some new programs to better its aircrafts environmental public presentation. Compared to show It besides claims that it will cut down its nursery gas emanations by 25 % by 2020.

The intent of ACARE clearly reflects the demand of society, particularly in the country of security and stableness of environment. Besides, their purpose reflect the demands of aircraft operators, which are major driver for invention in engineering.

The ACARE aims reflect demands which are demanded by society, peculiarly in the countries of environmental compatibility and security. On the other manus, the ACARE aims besides reflect the demands of aircraft operators, which are an of import driver for technological betterment. On the other manus, the mounting force per unit area from society sing emanations, noise around airdromes are impacting air hose operations.

In add-on, with increasing force per unit area from society as a whole, every bit good as from local communities around airdromes, noise and local emanations have an impact on air hose operations.

Management is one of the important factors that are involved in the running of an organization. Without proper management, companies are bound to collapse and close down. Management varies from one company to another. All those people who are involved in the management levels are all focussed to seen the company goes through all its functioning with ease and without shortcoming which may lead it to difficulties. However, it often appears that different management style differs as some companies’ fail to achieve its goals due to poor management.

Generally, there are several types of management styles which are applicable in management of an organization. There are many effective management styles in business organization which are used to achieve and strategise the company’s activities. The application of any of the management style depends on some factors that are of key importance in bringing a particular company’s mission, vision and goals into accomplishment. Thus, the choices of the style should make sure that the business is put in right track to reach far to its goals.

(Benfari, 1995) While our eyes focuses on the above two companies airbus and Boeing, there are similarities and differences on their management styles. As we focus on their similarities, the two companies are employing corporate management in which different bodies are involved in the running of the organizations’ managerial duties. Secondly, they are both managed from above. That is the decisions are made by those in the higher ranks in the authority profile.

Thus, those individuals who are much lower in the authority are given ready made materials for them to carry the work of implementation of the duties in to material which will yield firm’s profits or losses. On the other hand, the main difference lies in the process administering the decisions that are made. The airbus managers have much characteristic that can be attached to leadership kind of management. This is because they are courteous to the junior employees and they do respect them while they are carrying out their duties.

The airbus managers do some consultation with the supervisors who are the mediators of the top level management staff and the employees at the grass roots. The Boeing company managers are depicted in several reports and sources that they commonly use command phrases towards their juniors. Thus, they portray a dictatorship kind of leadership style. This does not evoke the dedication of the workers. Hence workers are having no willing efforts to put in order fort the company to get better results.

(Benfari, 1995) Boeing Company is one of the widely famous companies around the world. Its fame has been achieved through it ardent efforts that it has put in its advertising. The company spent millions it revenues on advertisings of its manufactured commercial aeroplanes. They not only lead in the advertisement of the commercial aeroplanes but they also lead others in advertising their space technologies defence’s aircraftman systems for communication purposes.

They carry out their advertising materials mainly by using corporate commercial televisions which are viewed by most people in most part of the world. Secondly, they have ensured that their advertisements are broadcasted at the television programs which are striking for most people to watch. During their advertising, they bring very striking models which are clearly elaborated thus passing very clear messages and information to viewers. The clarity of their adverts is due to inclusion of legible text messages which accompanies the designed models.

Their popularity has been augmented by inclusion of their adverts in all materials they produce like in calls for job recruitments. The great devotion has enabled the company to be one of the companies which are offering a very stiff competition to the airbus counterpart company. Due to its advertising campaigns, it has been able to close the gap that that had existed between their perceptions and the true scope of their global status. (Fill, 2002)

On international matters, the airbus company is the leading in corporation with the outside world. This is evidenced by the support it receives from the government of the country and the aid awarded to it by the foreign countries. Airbus Company has severally been given opportunities to invest in other countries more than Boeing. For instance, during the year of 2004, the airbus company was given the opportunity to launch an investment in the European countries. This was to be a bilateral trade between the United States and the European Union.

However, Boeing has established in its own organizational body which is helping the company to create a challenging in competition with airbus in the field international matters. The Boeing Company is working hard to diversify its marketing and market places through connecting itself with communities through participation in community activities. By realising that communities are the core values of their business, the company is sponsoring numerous students world than airbus. This has enabled it to increase its stakeholders tremendously in the past ten years.

Through the activities of aligning, integrating interests and motivating for stakeholder, the company has convene and collaborated with more people from foreign countries thus leading to the improvement of its market and international relations. (Baker, 2000) References: Baker, M. (2000): Marketing Management and Strategy, 3rd edition, Macmillan Business. Fill, C. (2002): Marketing Communications, Contexts, strategies and applications, Prentice Hall Ekahitanonda, S. (1995): transnational Corporations in the Manufacturing Sector Benfari, R. (1995): Changing Your Management Style. Lexington

Boeing Learns From 787 Mistakes: Using Technology to Create Supply Chain Success Introduction The Boeing Company is one of the largest Aerospace and Defense enterprises in the world. Presently headquartered in Chicago, Illinois; they have contributed to some of the largest breakthroughs in aviation technology ” breakthroughs that greatly enhance the lives of the world’s people. Boeing began as a small startup in 1916; but by the Korean War, defense efforts had grown Boeing to one of only 23 companies with $1 Billion in annual revenue.

Boeing parlayed this growth into being ne of the premier designers and manufacturers of commercial aircraft. Designs such as the 707, 737, and 747 cemented their role as the leader in the industry until 2003 when Airbus first surpassed Boeing in annual sales and order backlog. (Nolan 2012) CEO Phil Condit saw Airbus making progress well prior to 2003, however. In 1996 Condit determined that the Boeing Company needed to be refocused in order to compete with the European conglomerate.

Airbus had an advantage in innovation and manufacturing because it used collaboration amongst many suppliers to roduce quality aircraft in the most cost effective way possible. In order to continue in its global leadership position, Condit set Boeing along a path to leverage their core competencies, “with detailed customer knowledge and focus on operating lean and efficient systems. ” This plan would be called the “2016 Strategy’ and it would see Boeing change its relationship with suppliers from third-party contract-based to close, strategic partners. Nolan 2012) In future designs, Boeing would rely on these partners to not only build, but also design subcomponents for aircraft. Boeing knew hat it must have a way of coordinating the design process among all suppliers, which cleared the way for a powerful Enterprise Resource Management (ERP) tool. Boeing selected Exostar’s Supply Chain Management Solution to coordinate the design and supply chain for the first project under the 2016 Strategy, the 787. (PRNewswire 2013) The 787 was conceived as a revolutionary design that would be a replacement for the aging 767, cost about the same, but be 2 more tuel efficient.

It would accomplish this by utilizing a construction of 50% composite – something never before attempted in the commercial aviation arena. In summary, Boeing was endeavoring to build a brand new clean-sheet aircraft from materials never used, using methods never attempted, and using a supply chain more far reaching than ever experienced by the plane maker. In retrospect, it may be easy to see why the 787 has had so many problems. The problems are so large that Forbes was prompted to publish an article titled, “What Went Wrong at Boeing. (Denning 2013) Boeing has worked through most of its supply chain woes and has delivered over 60 787s to date. Boeing is now designing a next generation version of its supremely popular 777, the 777-8/9. Boeings desire to reduce costs and production time by relying risk-taking suppliers to design and produce major aircraft components has led to many failures and cost overruns in the 787 program. In order for Boeing to avoid the pitfalls of the 787 program, Boeing must take the lessons of the past in concert with good technology to ensure good management of the new 777 supply chain.

Literature Review Boeing’s move toward a supply chain that relied on utilizing risk-taking suppliers for the 787 was meant to reduce the design timeframe and shorten the production cycle, owever it actually placed the future competitive ability of Boeing in peril. The present paper specifically focuses on the practice of outsourcing design of the aircraft to the aforementioned suppliers and how improper oversight of the process led to delay, cost overruns, and the loss of intellectual property. The literature reviewed during this investigation is both peer-reviewed and Journalistic in nature.

The following review is presented in a logical flow to show why Boeing chose this new strategy, some select major problems that occurred, and finally the actions that were taken to rectify those problems. Christopher S. Tang and Joshua D. Zimmerman (2009) begin their Journal article, Managing New Product Development and Supply Chain Risks: The Boeing 787 Case, by laying out the drivers for the 787 design strategy. In the 1990s, Boeing had decided that it must offer more customer value to compete with EADS’ Airbus in the commercial aircraft industry.

Ultimately, Boeing settled on designing a new mid-size, wide body Jet that would offer a superior passenger experience and burn 20% less fuel. To bring the Jet to market faster and cheaper, Boeing wanted to move away from its role as a manufacturer and become ore of a systems integrator. Tang, et al. say this strategy intended to save $4 billion in development cost and shave 2 years off the design period. (Tang, Zimmerman, ; Nelson, 2009) Boeing refers to these risk-sharing partners as “Global Supply Partners” (6SP).

During an interview with World Trade; Steven Schaffer, then vice president of Boeing Commercial Airplanes’ Global Partners, said the name change “reflect[ed] a deeper business relationship. ” (Bernstein, 2006) In Chapter 8 of Cases on Supply Chain and Distribution Management: Issues and Principals, the nature of he relationship is further discussed. The suppliers are called “risk-sharing”, because they invest much of their own money into the success of the final assembled product. In fact, Boeing was able to get $4. billion of the $10 billion design budget from 6SPs around the world. These suppliers nave significant risk since they don’t see any income until the aircraft are delivered. (Garg ; Gupta, 2012) In a seminal ex post analysis of the 787 outsourcing plan, Ehsan Elahi (2012) of the University of Massachusetts Boston asserts that improper monitoring and suboptimal supplier election led to the appearance of many “hidden costs” and that Boeing didn’t have an adequate understanding of the operational risks associated with outsourcing new product development.

He concludes that these oversights led to poor stock performance, a drop it Boeings credit rating, and late delivery penalty payments for customers. The research by Elahi in the UMASS paper, along with his contribution to the Chapter in Miti Garg and Sumeet Gupta’s book, lays out a great case for how too much reliance on outside design can lead to a loss of intellectual property. On pages 67-169 of the book, Elahi discusses how these partners were given the opportunity to learn how to build aircraft from composites without Boeing retaining any exclusivity rights.

Case Study _Boeing’s e-Enabled Advantage_ The Boeing Company is a major aerospace and defense corporation, founded by William E. Boeing in Seattle, Washington. Its international headquarters has been in Chicago, Illinois since 2001. Boeing is the largest global aircraft manufacturer by revenue, orders and deliveries and the second largest aerospace and defense contractor in the world. Boeing is the largest exporter by value in the United States. Boeing acquired this efficient aerospace technology through companies like Rockwell and McDonnell Douglas.

They thus increased the number of contracts in the defense aircraft industry and now stood a better chance in the market. Boeing had to eliminate wastage and step up efficiency to cut unnecessary costs. So the procedures of parts ordering and scheduling were reshuffled. Additional proficient inventory management was necessary. The manufacturing process experienced a major change and there was less production delays than before which not only helped in keeping an efficient flow when it came to their supply chain but also helped in better customer service which of course helped them hold on to crucial market share.

Gaining market share of course hugely elevated their problems of losing customers or market share to Airbus (who in order to turn away customers from Boeing had initially adopted the strategy to lower prices of their products). Of course the customers were airline companies. Boeing’s success depended directly on the success of those airline companies. The e-enabling architecture of the system has four underlying components: The Connexion by Boeing broadband data and Internet services system. Bibliography

By 1998, the market share was equally divided between the two and by 2002 the scales were firmly tilted in Airbus’s favor. A Bear Sterns report in August 1999 went on to claim that though “earlier customers were cautious about supporting Airbus, it has become acceptable and even stylish to laud Airbus and chastise Boeing”. Boeing on its part, tried to wrest back its eroding customer base by offering discounts up to 25%. Though this helped it get a lot of orders, it was not able to meet the deliveries due to short supply of raw materials and problems in its workforce. This led to a loss of conviction eroding and the customers returning to Airbus. This was another major blow to Boeing.

In 1998, Airbus announced to the world that it was planning to build a super Jumbo jet A-380 to compete against Boeing’s 747. The investments for this venture were so huge, that advisers and Boeing questioned the wisdom of such a decision. Airbus expects the global air traffic to increase by 5% every year for the next 20 years and hence felt there was a need for large aircrafts. Its argument was that considering the increased air traffic, there would be a higher demand for larger planes which could transport more number of persons, thus being fuel efficient, cheaper and environment friendly. Its Jumbo jet would accommodate 555 persons, almost 140 persons more than Boeing’s 747. Airbus received positive signals from various airlines as well as freight transport companies who also felt that the bigger planes would be more economical.

In consultation with almost 60 airports worldwide, Airbus came up with innovative designs to help in effortless takeoff and landing, efficient space utilization and passenger comfort. They also claimed that due to the modern technologies being used, their planes would be 25% cheaper on the operating costs, which further aroused interest in their A-380.

In the past, Airbus had couple of issues with raising finances for its projects. Being a multi-partner consortium, there were always problems related to one partner trying to make his position stronger, rather than trying to strengthen the alliance. In the late 80s, the US Government lodged a petition against Airbus at The General Agreement on Tariffs and Trades. It alleged that Airbus was being given an unfair advantage by the consortium partners, by means of financial assistance with no repayment terms and conditions. Airbus denied these allegations vehemently. However, the European governments had to sign a deal with the US Government, which put an upper limit on the financial assistance that they could lend to Airbus and that Airbus would have to repay the loan amount within 17 years.

Being registered under the French laws, Airbus did not need to publish its financial details. Due to the absence of this important data, a lot of countries were not willing to finance it, since they were not sure of the returns on their investments. To take on Boeing better, Airbus decided to improve its organization structure, on corporate lines. Airbus was incorporated in 2001 under French law as a simplified joint stock company or S.A.S. (Société par Actions Simplifiée). With the planned launch of the A-380 in October 2007, Airbus plans to take its competition with Boeing to a whole new level.