Jaque QianUtkarsh SahuMark SzaboAnna Zhang....

Jaque Qian Utkarsh Sahu Mark Szabo Anna Zhang

Analysis Recommendations Financials Implementation Conclusion

The 787 Dreamliner is expected to revitalise Boeing

Visionary Design

Unparalleled Passenger Experience

Environmentally Progressive

Exceptional Value for Airlines

Media Hype


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Boeing (BA)

The delivery of the 787 has been plagued with issues

First 787 orders

First delays

Further delays due to supplier issues

Third delay

First order cancellation

Final delay to date

First successful test flight

We have identified two sets of recommendations

Key Recommendations

Short-term supply chain solutions

Ensuring long-term competitive advantage


These recommendations will reduce supply chain problems when the 787 is in production in the short term

Injecting Expertise Extend GoldCare

1 2


Pioneering an outsourcing strategy to produce the 787

Research & Development

Parts Production Part Assembly Final

AssemblySales &

Marketing


Parts Production Part Assembly Final

AssemblySales &

Marketing

30%

70%

Boeing – in-house functions

Partner – outsourced functions


Boeing faces challenges in its own supply chain


Parts Production Assembly Final

AssemblySales &

Marketing

IssuesDiscontent labor force due to low job security

RisksFurther strikes

IssuesProduct does not meet promised specifications

RisksCustomers may cancel further orders

Boeing supply chain


The outsourced supply chain also faces numerous challenges

Issues

Limited R&D and production expertise

Insufficient regulatory knowledge

Risks

Manufactured parts do not meet regulatory or Boeing specifications

Incomplete or unsafe parts manufactured

Parts Production Part Assembly


Partner supply chain

Title slide for RECO 1 HERE?Injecting Expertise


This recommendation identifies the underperforming suppliers who are most likely to threaten the 787 production schedule

Use Boeing knowledge and experience pre-emptively as a tool to prevent any further delays.

Boeing should utilize its production expertise to provide technical support to at-risk suppliers and partners to prevent further delays of production process

Identify and target strategic partners most likely to dishonour their obligations using fixed criteria


These recommendations alleviate the problems plaguing the supply chain in a timely manner

Parts Production and assemblyKey issues and risks

Inadequate expertise Limited regulatory experience

Risk of parts not meeting specifications

Risk of Low quality products

Sharing of expertise ensures suppliers are not at a disadvantage during production

Ready access to Boeing experts will ensure issues are prevented or quickly resolved

Presence of Boeing personnel will prevent low quality or non-compliant goods from being shipped


This recommendation makes good financial sense

Cost savings arising from preventing a one-

month delay

$165 million

Upfront investment required

$50 million

Ongoing yearly costs

$18 million p/a

0 1 2 3 4 5 6 7 8 9

-300

-100

100

300

500

700

900

NPV

Delays avoided (months)

Breakeven point: 1 month

$

Extend GoldCare


Airlines pay an agreedupon per-flight-hour price

Performs all maintenance and parts support, as well as track

airplane conditions and configurations

Boeing absorbs the risk and complexity of airplane maintenance

Boeing leads and integrates a global team of partners

This recommendation extends the GoldCare program to allow airlines to outsource plane maintenance to Boeing


The new incentive provides airlines the opportunity toreduce non-core overhead costs

Focus on core competencies

Simplifies aircraft ownership

Reliable maintenance and monitoring


This initiative will convince customers that Boeing will deliver a quality product without further delays

Confidence in planes

- Breakdown and maintenance

costs transferred to Boeing- Instills belief that Boeing guarantees performance

Emphasize quality to customers

Aligns Boeings long term interests

- Provides customers with security that Boeing is willing to sustain involvement in plane performance even after sale.


This recommendation makes good financial sense

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

-200

0

200

400

600

800

1000

100% Discount50% Discount

Cost of providing discount is 141.2m

per 30 planes

Breakeven points 6/3 cancellations for 100/50% discounts

We have identified two sets of recommendations

Key Recommendations




From the 787 experience, Boeing has developed core competencies which can be leveraged to gain competitive cost advantages

Global Supply Chain1

• Economies of scale• Reduced risk of R&D investment• Collaborative innovation• Lean enterprise

Technical, design and assembly expertise2

• Composite materials innovation• Designing fuel efficient aircrafts• Rapid 3 day ‘snap’ assembly process

CORE COMPETENCIES:


The 787 process caused much delay and sparked concern regarding the choice of supply partners

http://www.qatarairways.com/


Problems were caused by insufficient criteria for partner selection

Reasons for leak of IP to potential competitors

• Lack of communication and monitoring• Overestimation of supplier’s capacity• Suppliers were in need of managerial and regulatory expertise• Incentives were insufficient to ensure timely delivery

• Suppliers have long term objectives to enter the production market• IP rights traded to gain shared R&D investments to decrease overall costs

Reasons for the delay

LESSONS LEARNT:


Two recommendations to minimize delays and mitigate the risk of aiding potential competitors

Effective Partner Selection Selective Outsourcing


Choose partners with:• A high level of managerial expertise• Regulatory insight• Adequately resourced to fund R&D• A high level of logistics experience

Boeing needs to reassess its partner selection criteria and work closely with partners to prevent future delays

Avoid partners who are:• Short term goal oriented• Unskilled with production and delivery• Eager to extract IP from collaboration


Two recommendations to minimize delays and mitigate the risk of aiding potential competitors

Effective Partner Selection Selective Outsourcing


Boeing needs to strategically decide what can be outsourced to maintain their competitive design and IP advantage

Implement rigorous self assessment

•Keep core components in-house•Outsource as much non-essential parts as possible•Invest in in-house design capabilities•Monitor wing component manufacturers

Strategic placement of orders

•Rank components by IP sensitivity•Rank partners according to competition risk•Rank partners according to competition risk


Boeing will be relatively better placed in the market than competitors once it capitalizes on supply chain efficiencies

Efficient integrated network IP risk mitigation+

COMPETITIVE ADVANTAGE

Low Cost=

Innovation Production


Boeing will be relatively better placed in the market than Airbus once it capitalizes on supply chain efficiencies

Boeing

Partners absorbs non-recurring costs and risks of R&D

Outsourced the entire wing design and manufacturingto external suppliers (75%)

Long unparalleled dominance in Japanese market & strong

presence in China

Airbus

Workshare arrangements

Increased outsourcing but kept core technologies in house (50%)

Relative newcomer to Japan & China

Relative advantages are sufficient given the nature of the market


Aviation First is a joint industry research partnership with airlines to give Boeing first access to upcoming industry changes

Boeing develop aircraft and services catering to needs

Partnership with core customers who are the airlines

Shared research to identify future needs and demand in industry

Extension of research and development focusing on gauging industry demand


To innovate Boeing needs to have first access to important market information in order to produce aircrafts ahead of competitors

Assemble team research with key airline customers

Boeing keeps an internal database of findings

Research commercial air travel with a broader scope using our combined expertise

Researchers collaborate with internal engineers and designers to create the next aircraft or service

Manufacture and produce aircraft or service according to future market needs and demands


Aviation First gives Boeing first access to information on industry trends and changing customer needs to develop innovate accordingly

More intimate learning and understanding of our customers’ needs

Accuracy in design specification to meet needs

First in the industry to innovate and engineer the aircraft or service

Predetermined customers with needs for new aircraft or service

Key benefits

Information ahead of competitors

Innovate and produce ahead of

competitors

Aviation First


Aviation First

Collaborative market research

with our key customers

First access to valuable industry

projections

Boeing has can be proactive in

meeting future market needs

ahead of competitors


Recommended a set of solutions for the short term


Injecting Expertise Enhance GoldCare


Recommended a set of solutions for the longer term


Leveraging core competencies for

competitive advantages

Aviation First

Thank you!

Presentation

1 Revitalize Boeing 18 Future Competitive Advantage

2 Delivery of 787 plagued 19 What is Aviation First?

3 Pioneering outsourcing strategy 20 How is Aviation First implemented?

4 Challenges in Boeings Supply Chain 21 What are the benefits of Aviation First

5 Challenges in Boeings Partners Supply Chain 22 Supplementary Slides

6 What is the Injecting Expertise recommendation? 23 851 airplanes sold to over 56 customers

7 Benefits of IE Strategy 24 Condensed SWOT analysis

8 Financial Analysis: IE 25 Boeing’s core competencies for Injecting Expertise

9 What is the GoldCare recommendation? 26 Supply chain strategy 1 - Implementation details

10 Value proposition to Airlines 27 Supply chain strategy 1 - At-risk identification criteria

11 How GoldCare assures quality product? 28 Outsourcing in the future has many benefits

12 Financial Analysis: GoldCare 29 Supply chain strategy 1 – Financials 1

13 Core Competencies 30 Supply chain strategy 1 – Financials 2

14 Delays have sparked question over choice of partners 31 Union strategy – Financials 1

15 Lessons Learnt from 787 fiasco 32 Union strategy – Financials 2

16 Future Partner selection criteria 33 Justification for Q1 key issues and risks

17 Selective Outsourcing 34 Alternative recommendations considered for Q1

851 airplanes sold to over 56 customers

Cancellations of over 90 aircrafts up to Dec 2009

Global coverage of delays have negatively affected our stakeholders

Condensed SWOT analysis

Strengths

- Fexible engine types *differentiation - World first of composite materials - Everett: 20-year tax break for aerospace

companies - Greater economies- Greater market potential than airbus

Weaknesses

- Reputation damage for delays- Managing partners’ responsibilities - Ability to completely defend IP- Testing revealed discrepancy between

projected specs and actual - No transparency of competitor knowledge

and plans- Trial and error: testing uncovers new probs- Overlap of new costs to design wingbox

(should have been partners job)

Threats

- exposing our competitive advantage: IP etc- Degree of outsourcing (35% now vs 30% industry)- IP lose and future competitor at Wichita- Partners today become competitors tomorrow - Kawaski aerospace unit and Japan- China foray into industry: cheaper costs, govt funding - Airbus: govt funding, design, future retaliation aircraft-industry questions Boe’s commitment to commercial aircraft- Increase variable costs in airline industry- further delay from partners- contractors with no industry experience- Press: industry reviews

Opportunities

- Entire world’s eyes on 787- Success of 787 makes Boeing market leader - Marketable benefits: PR - Alternative sized 787 model: small, or big- Boeing trying to cater to smaller size to fit

comp pricing industry

Boeing’s core competencies for Injecting Expertise

- Human interface personal

- Overcome certain communication barriers

- Reduce intermediate communication delays

-Vought example experience, proven

- Global business competency

- Experienced pool of Boeing staff

Benefit Experience

Supply chain strategy 1 - Implementation details

Identify at risk companies Identify key risks at partner company

Deploy Boeing staff with relevant skills or experience

On-site improvements and improving processes

Ongoing feedback with Boeing for resources and skills

On-time progress monitoring and updates with Boeing HQ

Reflect on progress and additional assistance if needed

HQ decision making for further assistance for high risk partners

Production to specifics with onsite reviews Future relationships maintained

Supply chain strategy 1 - At-risk identification criteria

Strategic importance

Date of completion

Supplier track record

Aeronautical production expertise

Firm selection criteria

Level of completion

Boeing skills required

Outsourcing in the future has many benefits

• Outsourcing to specialised companies allow economies of scale• Shared R&D reduces risk of investment• Allows for more collaborative innovation• Lean enterprise allow effective distribution of asset

- Established partners - Experience in collaborative problem solving- Global partner portfolio- Learning experience from partners

Boeing

Supply chain strategy 1 – Financials 1

Estimation period (years) 3Cost of delay penalty per month per plane 0.5 (Exhibit 2)

Number of planes affected by delay 90 (Initial rate, 30 per year - first 3 years)

Plane orders cancelled due to delays per month 2(Cancellations: 93, Delays: 24 months = 3.875 per month)

Value of each plane order 175 (Range between 150 and 200m)Profit margin on each plane 35 Assumes 20% contribution marginWacc 7% See WACC assumptions slide

Estimated set-up costs 50

Initial investment: Includes labour to set up programme, developing communication systems and channels, clearing legal details of arrangement with supplier.

Technical assistance costsNumber of suppliers identified 20Number of technicians redeployed 10 (Jayco testing - 5)Average length of stay (years) 0.6

Opportunity cost of redeployment (salary) m 0.1http://www.payscale.com/research/US/Employer=Boeing_Company,_The/Salary

Travel expenses 6.0

Total cost of technical assistance per year 18

Supply chain strategy 1 – Financials 2

Delay prevented (Months)

Penalty cost

Periods to pay penalty

Lost orders

Value of lost orders

Period to lost orders

PV of loss due to delay

PV of costs NPV

0 0 1.50 0 0 1.5 0.00 97.24 -97.24

1 45 1.58 2 70 1.5 103.67 97.24 6.44

2 90 1.67 4 140 1.5 206.89 97.24 109.65

3 135 1.75 6 210 1.5 309.66 97.24 212.42

4 180 1.83 8 280 1.5 411.98 97.24 314.74

5 225 1.92 10 350 1.5 513.86 97.24 416.62

6 270 2.00 12 420 1.5 615.30 97.24 518.06

7 315 2.08 14 490 1.5 716.30 97.24 619.06

8 360 2.17 16 560 1.5 816.87 97.24 719.63

9 405 2.25 18 630 1.5 917.01 97.24 819.77

Union strategy – Financials 1

Strike cost per day 100 From case

Net strike cost per day 10 Assuming profit margin of 10%

Average union wage (m) 0.07 (Case: 65,000, correcting for inflation)

Number of protected jobs 10000

Latest union agreement protected 5100 jobs -http://www.defenseindustrydaily.com/Boeing-Strike-Poised-to-Disrupt-Deliveries-05061

Estimation period (years) 5

http://www.defenseindustrydaily.com/Boeing-Strike-Poised-to-Disrupt-Deliveries-05061%C2%A0



Union strategy – Financials 2

Planned workforce reduction

Total strike days avoided 1% 2% 5% 10% 15% 20% 30% 50% 100%

0 -2.96 -5.91 -14.78 -29.55 -44.33 -59.11 -88.66 -147.77 -295.531 5.49 2.53 -6.33 -21.11 -35.89 -50.66 -80.22 -139.32 -287.092 13.93 10.98 2.11 -12.67 -27.44 -42.22 -71.77 -130.88 -278.653 22.38 19.42 10.55 -4.22 -19.00 -33.78 -63.33 -122.44 -270.204 30.82 27.86 19.00 4.22 -10.55 -25.33 -54.89 -113.99 -261.765 39.26 36.31 27.44 12.67 -2.11 -16.89 -46.44 -105.55 -253.326 47.71 44.75 35.89 21.11 6.33 -8.44 -38.00 -97.10 -244.877 56.15 53.20 44.33 29.55 14.78 0.00 -29.55 -88.66 -236.438 64.60 61.64 52.77 38.00 23.22 8.44 -21.11 -80.22 -227.989 73.04 70.08 61.22 46.44 31.66 16.89 -12.67 -71.77 -219.54

10 81.48 78.53 69.66 54.89 40.11 25.33 -4.22 -63.33 -211.1011 89.93 86.97 78.11 63.33 48.55 33.78 4.22 -54.89 -202.6512 98.37 95.42 86.55 71.77 57.00 42.22 12.67 -46.44 -194.2113 106.81 103.86 94.99 80.22 65.44 50.66 21.11 -38.00 -185.7614 115.26 112.30 103.44 88.66 73.88 59.11 29.55 -29.55 -177.3215 123.70 120.75 111.88 97.10 82.33 67.55 38.00 -21.11 -168.8816 132.15 129.19 120.32 105.55 90.77 75.99 46.44 -12.67 -160.4317 140.59 137.63 128.77 113.99 99.22 84.44 54.89 -4.22 -151.9918 149.03 146.08 137.21 122.44 107.66 92.88 63.33 4.22 -143.5519 157.48 154.52 145.66 130.88 116.10 101.33 71.77 12.67 -135.1020 165.92 162.97 154.10 139.32 124.55 109.77 80.22 21.11 -126.66

Justification for Q1 key issues and risks

Labour force strikes Machinist strikes 2005http://www.businessweek.com/magazine/content/05_39/b3952115.htmMachinist strikes in 2008http://seattletimes.nwsource.com/html/boeingaerospace/2008212140_boeing29.html

Cancelled orders 93 orders cancelled to datehttp://www.airliners.net/aviation-forums/general_aviation/read.main/4460211/

Quality concerns http://seattletimes.nwsource.com/html/boeingaerospace/2003889663_boeing180.html

Partners – lack of technical expertise

http://seattletimes.nwsource.com/html/boeingaerospace/2004470059_charleston11.html

Incomplete parts manufactured

http://www.reinforcedplastics.com/view/4282/boeings-787-trials-tribulations-and-restoring-the-dream/

http://www.businessweek.com/magazine/content/05_39/b3952115.htm

http://seattletimes.nwsource.com/html/boeingaerospace/2008212140_boeing29.html


http://www.airliners.net/aviation-forums/general_aviation/read.main/4460211/









Alternative recommendations considered for Q1

Cross-shareholdings Too long to implement, too long before results would be seen

Contract renegotiation

Long timeframe to implement, costly, many suppliers are not due for renewal.

Discharge suppliers who cause delays

Solution is Ex-post – Reliance on supplier for patented part design.

What is GoldCare?

A system of tools

Airplane Health Management

Monitors the health of an airplane in flight and relays that information to airline personnel on the ground

Maintenance Performance

ToolboxServes as a single location for operator maintenance and repair data.

Electronic Flight BagDigitally stores all documentation and forms, including paper log books that pilots typically carry onto airplanes

Maintenance & Engineering

ManagementAllows dynamic planning and re-planning of maintenance tasks to optimize efficiency and keep airplanes in the air

• Uses existing network of employees as well as partnerships with other support providing functions.

• Boeings attempt to capitalize on the attractive $60 billion commercial aviation service industry

Enhance GoldCare: Focus on core competencies

Simplified Operations

• Customers have a single provider – the GoldCare team – with extensive capabilities for managing and planning maintenance, material and information

Maintenances is a non-core cost for airlines

• Additional personnel costs• Time spent on plane maintenance schedule by management.• Allows management to focus attention to more critical areas

Source: Bickers. C., “Good as GoldCare”

Enhance GoldCare: Simplifies aircraft ownership

Source: “GoldCare Enhances 787 Lifecycle Value”, http://www.boeingcapital.com/p2p/archive/09.2006/r1v5y2006_11.htm

Traditional costs of maintenance can be unpredictable, though the GoldCare program these costs can be made predictable for airlines. Thus the costs involved with ownership of planes are

reduced.

Enhance GoldCare: Reliable maintenance and monitoring

Minimize Risk

• GoldCare is provided at an agreed cost per flight hour, with guarantees for schedule-reliability and parts-availability service levels

Boeing knows 787 planes and its part suppliers well

• GoldCare’s ability to monitor the airplane closely means its asset value may be better preserved over its life cycle.

• Boeing’s team has the tacit knowledge to solve complex problems efficiently given there are the manufacturer.Source: Bickers. C., “Good as GoldCare”

Why is the threat of strikes no longer an issue in the short term?

Job security was the central reason why unions are protesting. They believed that payroll benefits were no good if they themselves were not on the payroll.

This sense of loss in job security came from dispersion in Boeing’s supply chain globally in the production of the 787 airplane.

After 58 days of protesting Boeing renegotiated a 4 year agreement that allowed for wage increases as well as:1. Expanding job protection for 5100 people. 2. Restriction on vendor delivery locations, except for 787 (legality)3. Workers gain expanded subcontracting review, including the ability to compete for work that moves from one Boeing facility to another.

Source: http://www.defenseindustrydaily.com/Boeing-Strike-Poised-to-Disrupt-Deliveries-05061 (2/11/2008 )

What if the risk of strikes develops in the short term?

If strike action is taken once again in the short run with regard to job security, literature suggests that it will be with the unhappiness of 787 “global supply chain” production method.

Our recommendation is to construct a opportunity cost vs. flexibility lost analysis that determines the level of assembly we maybe able to bring in house i.e. we will have to concede part of our global supply chain functionality.

Ultimately, the argument boils down to the sustained losses Boeing can sustain if production is stopped at its final assembly plant in Washington State.

Source: International Association of Machinists and Aerospace Workers http://www.iam751.org/2008Proposal/newfront.htm

Low risk given litigious

nature of 787 agreement

that already exists

Will everyone get the Gold Care package?

Further details in financial calculation First 30 planes in the first year of production

History of minimal delay

Negotiation Attitudes

Boeing needs to reassess its partner selection criteria and work closely with partners to prevent delays for future projects

Efficiencies in production that achieve economies of scale

Production Expertise

Reliability

Flexible & open with long term horizons

Willingness to work consultatively

Financial history and standing

Cooperation

Available Capital

Boeing needs to strategically decide what can be outsourced to maintain their competitive design and IP advantage

Identify key designs

Retrain design and technological experts

Retain production facilities

Strategic analysis

Expertise

Production

Reduce supply chain by outsourcing non-key componentsOutsource

Improve logistics design and costLogistics

Market Analysis

Airplane Production Market

• Competitive advantage based on low costs and high innovation

• Industry trend towards outsourcing and Boeing focusing on ‘Snap’ assembly

• Suppliers are developing into long term partners for ‘system integration’

Outsourcing Supplier Market

• Trend towards greater specialization

• Continued consolidation of suppliers

• Stronger financial backbone to make the necessary investments to enhance core capabilities

Reduced IP rights

‘Partners’ participating in R&D innovation

Lower costs and risks

Identify and preserve strategic IPIdentify ‘low risk’ market leadersLeverage negotiations

Production at lower costsAbility to innovate new productsOpens new markets at lower risk

Risk MitigationMarket Leader

TRADE OFF

Literature shows lean supply chain management practicesrepresent critical source of sustained competitive advantage

• Early integration into design and development

• Knowledge-sharing and fostering supplier-based innovation

• Synchronized flow throughout the network

• Transparency through open communications

• Long-term, trust-based, mutually-beneficial relationships

• Continuous supplier development & process improvement

Supply chain efficiency goals

Room for Improvement

How Boeing competes with industry players in the global aviation production market

Airbus

Bombardier Aerospace

China and Japan (Kawasaki)

DescriptionCompetitor Basis of Competition

EADS Consortium

Smaller Canadian Manufacturer

Potential Entrants

Cost and innovation (Time to Market)

Brand, scale and networking

Brand and Strategic IP Protection

Focusing on core competencies will allow Boeing to compete effectively despite transfer of IP knowledge

ChinaChina has successfully built a 105-seat regional commercial jet, the ARJ-21. The first passenger jet to be developed and manufactured in China. The ARJ-21 is about 15% cheaper than comparable Western airplanes and has an additional cost advantage- Chinese carriers that purchase it don't have to pay the 23% tax levied on foreign planes.

They already build advanced military fighter planes and are aggressively investing in its space programs, which continue to be a source of important innovations for commercial airplanes.

Brazil (Embraer)They already make airplane in the 100-120 seat category.Third largest manufacturer of planes after Boeing and airbus

Canada (Bombardier): More of a threat because they compete with Embraer and have the technological know-how as well. United Airlines has invited them to compete against the 737/A320 replacement programs when it gets launched.However, the CSeries remains below the 15% to 20% low-end 737 market

Boeing can renegotiate contract terms to minimizedelay and mitigate risk of strategic knowledge transfer

Delay penaltiesIncentives to meet deadlines

and work consultatively

RelationshipEnter into long term contracts

Exclusivity clausesMitigates direct competition for duration of partnership

Restraint of trade clausesPrevents direct competition after partnership concludes

Contract Specifications

Timeline for Implementation

Long Term

Evaluation

Short Term

Strategy

2010 2012 2014 2016 2018 2020

1

2

Align interests and build LT relationships

Renegotiate with suppliers

2022

Re-evaluate Partner Criteria

There will be a concurrent implementation of the strategies

Assign personnel to monitor Partners (PLM)

Deploy Boeing engineers to suppliers

GoldCare Discount

Innovate

Launch next Boeing commercial plane

Assign personnel to monitor Partners (PLM)

Analysis of airlines and relative to 787 offerings

• less stopovers => reduced taxing costs • less chance of delays (fines)• less fuel use – world first. Innovation will increase

current 15% saving, or potentially launch into alternative fuel sources

• increased cargo capacity – revenue source

Benefits afforded by 787 to Airlines can reduce costs:

787 value to Airlines

• Airlines face fiercer price competition from increase competitors in the market

• Strong growth air travel particularly in the economy sector

• Reduced scope for competitive advantage in traditional airline markets

• Cost structure vital to survival offer new ways for them to reduce costs

• Differentiation in the economy airline industry better travel experience

Rapid changes in global demand and supply for air travel

places mounting pressure for airlines to

economize

Current competitive advantages arising from 787 experience

Competitive advantage arising from 787

Outsourcing expertise

Management of partners

Established network

Logistic and communication

Intimate lessons from outsourcing processes and partner selection

Customer loyalty

Innovation leader

Dominate medium-craft long haul market

Proven benefits of 787 create loyalty and leadership position

First mover advantages

Reasons for having first access to market information

Increasing competition from companies globally

Decreased life span of tacit knowledge in industry

First mover advantage crucial to secure first airline orders

Exclusive and/or first access to industry projection and insights is first needed even before innovation can occur

Further to markets for leveraging 787 competitive advantages

1 2 3 4 5 6 7 8 9

Pas

seng

ers

Range, 1,000 nmi

747-8

747-400ER747-400

777-300ER

777-200LR

777-200

777-300

100

0

200

300

400

500

600

737-900ER

737-600737-700

737-900

Three-class

787-8

767-200ER

767-300

767-400ER

737 Business Jet

Two-class

787-3

737-800787-9

Boeing could leverage 787 core competencies to create smaller or larger planes depending on market developments

References

Reference URL

Tim Optiz, Director of Production and Support Systems, Boeing Commercial Airplanes (March 2007)

http://glscs.texterity.com/glscs/200703/?pg=38&pm=2

Lockheed Martin revealed after the cessation of production for its L1011 http://www.airliners.net/aviation-forums/general_aviation/read.main/342184/

COE Newsnet - September 2002, issue 6 “Design Integration Across a Global Enterprise” by Jim D. Green http://essayinfo.com/sample/essay/1120/2/

Boeing Frontiers, “Helping shape markets of tomorrow”, November 2002, volume 1, issue 7 http://essayinfo.com/sample/essay/1120/2/

Massachusetts Institute of Technology Bozdogan 04/18/07 -http://18.116.0.58/index.php?

option=com_docman&task=doc_download&gid=1478&Itemid=776

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