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Airbus vs. Boeing

Case Analysis (Planning and Decision Making) for Boeing/Airbus case - Example for STMG191 (First-year management paper)

William Shields

on 28 May 2013

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Transcript of Airbus vs. Boeing

Airbus Vs. Boeing Case Analysis:
Planning and Decision Making Assembly Boeing Dreamliner Airbus A380 Design Design Logistics Assembly Logistics Administration Team Cases for Presentations BIC -
HRM Week Starting
13th May Week Starting
20th May 1. Introduction (Paragraph Format - 100-200 words)
Purpose of report and introduction of following sections.
Outline the company studied and industry the company is in.
Outline the overall concept and correctly define the concept.
2. Situational Analysis (Bullet Points - 400-600 words)
Environmental analysis (STEPP):
2 trends and impact on industry for each heading.
Organizational Analysis (SWOT):
3 items for each heading appropriately described
3. Concept Discussion (Paragraph Format - 1000-1200 words)
Choose TWO appropriate concepts from relevant chapter/s:
Describe the concept
Apply the concept
Limitations of the concept

Quality mark. This relates to the overall effort/quality as well as spelling and grammar, and APA referencing. Team Case Analysis Structure Each of the presenting groups makes a presentation of up to 30 minutes duration followed by 5 minutes of questions from the class based on their case analysis report.

The week’s case is to be used as a means of creating discussion around the management concepts related to that week’s topics.

ONE member of your group must electronically submit your team’s PowerPoint slides (or other 'slides', in .pdf for Prezi, for example) on the Monday of your allocated case week. Case Presentations Timeline Airbus-Boeing 250 seater – 15700 km range
ultralight new material
Point to point concept

2004 First orders
Nov 2011 First Dreamliner delivered 1993 Airbus Solution Boeing Solution Airbus & Boeing look for solutions to deal with increasing congestion at airports and uncomfortable sitting arrangements causing problems for long-distance 550-800 seats – 14800 km range
Hub and spoke concept

2000 First orders
Oct 2007 First Airbus A380 delivered THE CONCEPT: spacious, comfort & some economy THE CONCEPT: Comfort, Fuel Economy, & Flexibility Tutorial 6
STMG191 Team case analysis and presentation requirements
Airbus-Boeing Case
Background, STEPP, SWOT, Concepts
Next week The above case illustrates concepts relevant to Planning and Decision Making. (In the report you would define Planning)

Two competitors – Airbus and Boeing – when faced the same problems and opportunities - generated different solutions, the:
Airbus A380 Superjumbo
Boeing 787 Dreamliner
Both projects, from design to completion were highly complex: requiring new designs, new materials and new ways of producing and assembling parts.
As a result many things did not go to plan resulting in long delivery delays, and grounding of aircraft in service. A380 has 3 levels:
Two passenger decks, with a cargo hold at the bottom. Spaciousness, comfort ...so as to arrive at destination refreshed Travellers can sleep and work on long journeys “Le Shopping” There are facilities to eat
and be entertained in comfort ... then shipped by sea, river, and highway for final assembly in Toulouse. The logistics of building an aircraft requiring millions of parts and complex technology and which is produced in several countries are a huge challenge. Tail fin is made in Germany and brought up to Toulouse by air in the holds of an aircraft named “Beluga” because of its bulbous body. It is then put on purpose built boat to be taken to France Each wing is transported to the sea by ferry A new factory was built in Wales to accommodate the 46-metre-long wings. A 380’s aircraft wing is taller than a 9-storey building Wings are made in North Wales, UK. Sections of the fuselage are built at a factory on France's Atlantic coast... Forward planning is necessary in every aspect of
manufacture, transport and assembly The wing is loaded on a barge. The pilings of a historic bridge have had to be reinforced to guard against collisions with barges carrying pieces of the megaplane to Bordeaux, France. A380 parts are transferred from
Bordeaux to Toulouse via custom-made trucks. More forward planning: the road from Bordeau to Toulouse had to be straightened and widened. The highway, is closed to traffic several nights a month so the convoys can pass Sixteen Football Fields could fit inside the A380 assembly plant in Toulouse Preassembled aircraft parts arrive in Toulouse where final assembly takes place. Airbus expects to build four A380s per month after production ramps up – initially they had planned for between 5 to 6 planes per month. A380 Final assembly Adding the engines Ready to fly? Finished A380s are flown to another Airbus facility in Hamburg, Germany, for painting and interior outfitting. Materials e.g. Fuel a flight from LA to Japan costs US$12000 less than on comparable models. Many parts made of a new composite material:
& other major components
Thus, the plane will burn 20% less fuel. Room for the legs in first class! Passenger
Research Emotional components of the
Flight Experience 10 Years To optimise the Cabin Features Room for the legs in economy class too...
Maybe... New materials
and the Problems they create Kawasaki, Mitsubishi and Fuji are building 35% of the plane, including:
the wings and center wing box,
the main landing-gear wheel well, and
the section of fuselage immediately forward of the wings. International Aspects Wings manufactured at Mitsubishi Heavy Industries in Japan are airlifted to the U.S. to be joined to the fuselage. Wings will fly Europe is the home of Boeing's arch-rival Airbus—but a big chunk of the 787 comes from Europe:
the horizontal stabilizers of the aircraft's tail, and
the centre fuselage
are constructed at an Alenia Aeronautica factories in Italy Italian Craftsmanship To airlift the oversized pieces of the plane from Japan and other distant places, Boeing developed a stretched version of the familiar 747 jumbo jet, with a bulbous fuselage providing extra room for cargo.

These 747s are modified at a factory in Taiwan. Specially Developed Carriers Workers in North Charleston, S.C., complete a section of the 787's rear fuselage which will be fitted together with fuselage sections flown to Charleston from Japan and Italy aboard the Dreamlifter cargo plane.

The entire fuselage is then flown to Everett for final assembly. American Assembly After deciding to rely on outsourced contractors for every component of the plane, Boeing encountered delay after delay for meeting milestones during production.

The 787 was scheduled to enter commercial service in mid-2008. This was delayed by 3 years. Greater than the sum of its parts, but... Finite oil reserves being depleted
Increasing climate changed possibly caused by human activities
Increasing numbers of overweight/obese people Environments for Managerial Decision Making and Problem solving SWOT A380 firm net orders and deliveries – Target was 1300 in 20 years i.e 5.4/month, but later changed it to 4 per month.
Total 380-800 orders 262
Total 380-800 deliveries 101 Airbus/Boeing orders and deliveries To plan = to decide what to accomplish and how to do it Planning as a
Management Function Which one/s of these objectives did Airbus or Boeing NOT fully achieve?

* Profitability
* Market share
* Human talent
* Financial health
* Cost efficiency
* Innovation
* Sustainability & Social responsibility
* Product/Service quality Planning Objectives
Evaluation of results Short-range = 1 year or less
Intermediate-range plans = 1-2 years
Long-range = 3 or more years

Give examples of types of plans illustrated in the case as practiced by Airbus, Boeing, Airlines, Airports Types of Plans in
Organisations FORECASTING
Techniques and processes Certain environment
Risk environment
Uncertain environment

Question: In what environments do Airbus, Boeing, Airlines, Airports operate? Decision conditions -
Environments Classical Model
Behavioural Model
Judgemental Heuristics Model Decision Making Models - Solution Choice Identify some of the limitations which decision makers might have experienced at Airbus or Boeing, and how that could have affected their outcomes

What about the airlines’ decision to purchase Airbus aircraft? Limitations in Decision Making Tutorial 7 and Beyond First presentation next week (BIC and Control/Organising) – web-submit case analysis and presentation slides by Monday
Fair allocation of tasks for Report and Presentation
Written case analysis should appear as a single, coherent document
Practice presentation(s)!!!!!
All teams please read and be familiar with the case – have questions ready for the presenting team(s) On MyWeb! Check MyWeb:
'Case Presentations' & 'Hints for a good presentation'
For more info. Airbus A380 Delays and incidents
Delivery delays caused by faults with wiring systems, wing ruptures, landing gear issues
Lighting striking facilities and damaging computers.
Environmental protests

Catastrophic engine failure of Quantas plane.
Hairline cracks in wings

Boeing 787 Dreamliner Delays and incidents
Delays generally caused by suppliers not delivering on time.

Delamination issues with the wings
Lithium batteries problems. Not going according to plan!!! 2001-2007 2009-2013 2010-2011 Components made from:
Multiple layers of tape -> Soaked in polymers -> Molded into parts -> baked in ovens (autoclaves) Air bubbles can render the parts useless, since it makes the material weak/brittle Composites/Plastics have lower conductivity of electricity or heat - when compared with metals.

Boeing had to create an entirely new approach for this new factor The huge components travel on barges from the companies' factories to Nagoya Airport and are then flown to the U.S. Final assembly: Besides the components flown in from Japan, Italy, and South Carolina, the forward part of the fuselage comes from Spirit AeroSystems in Wichita, Kansas. STEPP Factors
and Trends Socio-Cultural Technological Economic Political Physical/Environmental Increasing numbers of air travellers, for leisure, work, or visiting family.
More people travelling long haul
Demographic changes towards older populations wanting greater leg-room and comfort.
Change in shopping habits e.g. in ordering online from overseas greater demand for air freight deliveries. Developments of new materials technology.
Improvements in VoIP enabling business and family meetings be conducted face to face – free. Slow and unsteady emergence out of 2008 global recession resulting in lower demand for non-essential air travel.
US$ and Euro fluctuations.
Raising cost of aviation fuel. Globalization: Increasing “globalized” employment.
Increasing volumes of international deliveries of air cargo. Airbus Experience and expertise in building planes.
Financial strength - support by EU governments. Rivalries within the consortium.
An enormous amount of co-ordination required between companies with different computer systems, different languages, etc. S W O Existing airline fleets ageing and needing replacement.
Demand for comfortable flying conditions growing.
Airlines looking for lower operating costs. O Competitors such as Boeing.
Recession, terrorist threats, potential epidemics. T Boeing Dreamliner firm net orders and deliveries – Target was 10/month Internal & External Analysis Planning Decision Making Define your Objectives - SMART
Determine where you stand in relation to your objectives
Develop premises regarding future conditions
Analyse and choose among action alternatives
Implement the plan and Evaluate the results
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