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The Boeing Company

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Guillermo Rodriguez Fernandez

on 2 December 2013

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Transcript of The Boeing Company

Competitive Rivalry

4 main competitors: Boeing, Airbus, Lockhead Martin, Northrop Grummn Corporation

Boeing recieves the most orders for new aircrafts

Airbus (A380) is the biggest competition in the commercial segment

Lockhead Martin is the biggest competitor in the defense segment

Supplier Power


Mainly Boeing and Airbus -> no competion between suppliers

Engine suppliers have the biggest influence

Threat of new entry

Threat is low

High fixed costs

Government regulations

High entry barriers

Long wait before profitabilty is achieved

Threat of Substitution

Threat is low

Higer for national than international

Fast bullet trains are the main subsitutes

Buyer Power


Price competition

Buyer‘s are mainly airlines and leasing companies

High demand for the Dreamliner but Boeing keeps controlling the price and production

The Company
Porter´s Five Forces
SWOT Analysis
Industrial Market
Future Prospects of Boeing
Styles - Management
Kurt Lewin - Styles of management

Robert Tannenbaum
Warren H. Schmidt
Styles - Management
Boeing & Democratic Style
Open-minded relationship
Participative leaders
Styles - Management
• Charts the course
• Sets high expectations
• Inspires others
• Finds a way
• Lives the Boeing values
• Delivers results

The Company
Boeing is a
United State

Designs, manufactures and sells
aircraft, rockets and satellites

Boeing provides leasing and product support services
The company
Booms and Busts
Boeing nearly went
The demand for aircraft has never been higher
Boeing´s commercial aircraft segment contributed
% of total revenues
Boeing took the first
in over 50 years
McDonell corp & Boeing merged
The commercial aircraft segment was expected to grow by 4.9% per year over the next 20 years
The Company
Booms and Busts
Airbus (founded in 1970 Beitish Aerospace, DaimlerChrysler Aerospace, France´s Aerospatiale, Spain´s Casa) satisfied the customer´s needs
United Airlines chose Airbus over Boeing
In 2002 a chinese airline ordered 10 Boeing 747
9/11 changed everything
By 2002 two main carrier went bankrupt
No new orders
Already ordered aircraft were not wanted
Boeing´s jet production decreased
The Company
Internal Factors
Production and delivery dates were unrealistic
Huge layoff in the 1990‘s
Early retirement plan had been taken by twice as many people as expected
Supply shortage
Boeing was fine tuing on every single order
109 shades of the colour white
Increase in cost and production time
The Company
Internal Factors
For both Boeing and Airbus, price was the only factor for getting orders

60% market share
Boeing was willing to do anything to keep the 60%

The Company
External Factors
Intensified regulations

Airbus had better production facilities & was better positioned to compete on price

Airbus had played high stakes on a superjumbo sucesss

The Asian market experienced financial difficulties

The Company
Financial situation
The Company
Current situation
Market of middle and long-range aircrafts
Duopolistic market

The Company
Current situation
The Company
Current situation
The Company
Current prestige project
The Company
Costumers of Boeing
Commercial airlines
Middle-range planes
Long-range planes
Business jets
Department of defense
Troop carrier / freighter
Strike jets
Government’s squadron
Air Force One

The Company
Duopolistic Market
Varity of customers but only two suppliers
Rarely in reality
Reasons for a creation of duopoly are high market entry barriers
Development of an aircrafts costs a lot of money approx. 10 billion EUR
A project will not be supported, if the company is not established
It’s questionable if there is enough demand of long-range planes
Types of duopoly
Quantity competition
Price competition

The Company
Price War in a Duopolistic Market
From strong competitiveness towards survival threatened price war
Theoretically strategies
Interact with the competitor
Agree on a price
Divide the market
Merge themselves into one unit and form a monopoly
Attack the competitor
Create a ruinous price competition and become a monopolist

The Company
Future Prospects of Boeing
Commercial aircraft production
Focus on research and development in new materials
Mixed materials artificial like carbon fiber composite
Small long-range planes
Boeing considers that consumers want frequent nonstop flights
Opposite to Airbus: A380 is the future of air traffic
Rise by Chinese airlines
Next 20 years Chinese airlines need 5580 aircrafts
Defense aircraft production
US-Air Force Tanker and Long Range Strike Bomber

The Company
Alternative business
Financing aircraft sales
Providing high-speed Internet access
Managing air-traffic problems
Long term Prospects
Sonic Cruiser
Top speed much higher 1250 km/h
Reducing fuel consumption
Reducing noise

Future Prospects of Boeing
B2B Market
Supplier and customers are companies
long time relationship
brand loyalty is much higher than in B2C

often high value item
longer time for purchasing decision
excellent customer service
300 field service representatives in almost 60 countries
access to all resources of Boeing
Finance department of buyer evaluates and considers the options
direct purchase
operating lease

How to get to Boeing
via homepage
via intermediaries
Mistakes - Management
Layoff and early retirement of skilled and exprerienced workforce
90‘s serious resession

Mid 1990 a increase of demand.
Because of the lack of skilled workforce not able to satisfy the demand of aircrafts
Had to hire 32,000 new workers
Time was to short to train them quickly enough to meet the deadlines.

Should have kept the workforce through a crisis to manage the increased demand

Mistakes - Management
Lower the costs and accelerating development
Boeing signed a contract with carefully selected suppliers.
Suppliers forwarded the orders to smaller companies

Components weren‘t in expected quality, and they didn‘t fit together
Additionally the distance and language problems hampered the solution

Changing contract
Try one supplier first if successful, continue outsourcing
Hire professional interpreter

Mistakes - Management
When Boeing started to take Airbus seriously it was too late
Boeing and Airbus didn‘t have that many of a unique product to sell
Price was the only factor of getting orders

Price slashed 20 % off list
Boeing didn‘t have the low-cost advantage over airbus

Should have changed its mindset and took Airbus seriously
Boeing should have changed its production system
Concentrate on innovation to get unique products

Mistakes - Management
Mistake is connected to the huge layoff
Two options to handle a boom
Only accept the number of orders which you can handle
Accept all orders but make sure that can be handled

Boeing chose the 2nd way
It didn‘t consider its capablitities and weren‘t able to hold the deadline

Not able to build all ordered aircrafts
Lose good image (reliability)
Had to pay fine to airlines

Only accept the number of orders which you can handle
Accept all orders but buy reliable services

Mistakes - Management
400 not linked computer systems
Design system was paper dependent and not flexible
Too much finetuning on every single plane (109 shades of the color white)

Changes by customers were really hard to handle
Changes were expensive
High inventory
Make sure to get provide all options
Longer assambly time

Reduce the computer system at a minimum and link them
Change paper dependent systems in digital systems to change it more quickly
Reduce the finetuning

Mistakes - Management
- More importance to mergers and acquisitions in late 1990s.
- Boeing was in serious trouble.

Is it CEO´s fault?

- External factors
- Internal factors
- Layoffs in the mid 1990s
- Early retirement plan
- Price war took place
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