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Agenda
The Boeing Company
Background/Five Forces Analysis

Boeing in the 1990s

The e-Enabled Advantage
Analysis
Recommendations

BoeingThrough theYears

J uly 15: The

Boeing
Airplane
Company is
named

J uly 28:
World War
I Begins

1914

1916

J une15:
Boeing
took B&W
Seaplane
for first
flight

1917

J uly 15:
Boeing enters
commercial
aviation with
the Boeing 707

1939

Sept 1:
World
War II
Begins

1954

May 17:
Delivery of
the first
Boeing 777
to United
Airlines

Dec 1:
Airbus
enters the
market

1968

April 29:
Thornton T
Wilson became
President forced
to cut workforce
from 105,000 to
38,000

1970

1982

Feb 19:
The
Boeing
757
makes its
first
flight

1995

J une17:
Boeing unveils
their new
strategy eEnabled at the
Paris
International
Air Show

Airbus
outsold
Boeing for
the first
time

1996

Dec 15:
Boeing
mergers
with longtime rival
McDonnell
Douglas

1999

2001

Sept 11:
Terrorist
Attacks on
the United
States

2003

2004

J an 14:
Connexion
by Boeing
begins
commercial
service on
Lufthansa
Airlines

Background
Founded in 1916, Boeings first customer
was the government of New Zealand
George Conrad Westervelt and William
Boeing built planes as a hobby
The first plane, named the B&W Seaplane
was used for pilot and airmail
Boeing became the largest aircraft
manufacturer
in the US during WWI
and WWII

Background
In 1954, Boeing successfully entered
commercial aviation with the Boeing 707
Unfortunately, 1968 brought crisis to the
aviation industry and the company was
forced to lay off 60,000 employees
In the 1970s Boeing regained profit by
releasing several new 7-series models and
becoming an industry leader

Brand Evolution

Porters Five Forces for the Airline

Industry
Threat of
Entry

Low The company has

the power to negotiate
the price of supplies
due to global
economies of scale.

Suppliers

Low New entrants need to invest

tremendously as a substantial amount of
money is needed for the production of
commercial airplanes.

Buyers
Low For many years Boeing has
been one of the leading aviation
manufacturers in the worldwide
commercial airline industry.

Rivalry
High - The commercial airplane
marketplace is a duopoly
market, largely Airbus and
Boeing, resulting in low profit
margins in the airline industry.

Substitutes
High The passenger airplane can be
substituted with a train, a ship, a car, a
helicopter or a private jet.

Case Questions
1. As case background, discuss the
challenges and opportunities that
Boeing faced in the late 1990s.
2. What steps did Boeing take in its journey
to build its e-Enabled Advantage?
3. Is the e-Enabled advantage a
sustainable advantage and, if so, for
how long?
4. What recommendations do you have for
Scott Carson, leader of the companys eEnabled Advantage initiatives?

Boeing in the 1990s

Boeing enjoyed great success through the
1980s
Virtually unrivaled
Boeing > McDonnell Douglas & Airbus
Broke its own sales record six years in a row
Challenges arose for Boeing in the 1990s
Gulf War
Economic downturn
Boeings production: inefficient model caused
orders to plunge
Earnings shrank by nearly half
9,300 of 126,000 employees were laid off

Challenges & Opportunities

Boeing released the 777 in 1995
United Airlines flew the first 777
Onboard local area network (OLAN)
Onboard server
Boeing spent years advertising these
new systems
The airlines did not know what to do
with all the data
Boeing did not have a good answer
The technology was ahead of its time

Challenges & Opportunities

Phil M. Condit: CEO from 1996-2003
Boeing will not be able to survive on
selling airplanes alone
Transformation
Agile
Geographically diverse
Broadly based company
Less dependent on the highly cyclical
commercial jetliner market

Challenges

Opportunities

1997: Boeing experienced a

production delay which resulted
in a lost of $178 million and a
reported 90% profit drop Q1 1998

August 1996: Boeing became

one of the worlds strongest
aerospace

1999: Airbus outsold Boeing for

the first time

Mid-1990s Boeing dominated

commercial aviation and signed
military and space contracts
1998: Production reform
adopted simpler procedures for
configuring aircraft to customer
specifications, scheduling and
ordering parts, and managing
inventory

Competition from Airbus

# of orders
(1999)

355

476

# of deliveries
(2003)

281

305

Vision 2016
An integrated aerospace company and a
global enterprise, designing, producing,
and supporting commercial airplanes,
defense systems, and cival space
systems.
Run a healthy core business
Leverage strengths into new products
and new services
Open new frontiers

1. Maintenance performance
toolbox
2. Airplane health management
(AHM)
3. Electronic Flight Bag (EFB)
4. Electronic Log Book
5. My Boeing Fleet
6. Connexion by Boeing
7. Solutions Consulting

Steps to e-Enabled
1. Problem with differentiation from
Airbus
2. Management strategy formulation
3. Communication of new changes
across the company
4. Strategies communicated to
individuals business units
5. Intelligent acquisitions
6. CAS (Commercial Airlines Services)
7. OLAN (Online Local Area Network)

Analysis of the e-Enabled

Advantage
Will serve as a sustainable advantage
Strategic positioning
Innovation ability
Provides stakeholders with resources to
reduce costs
By increasing operational efficiencies,
Boeing can develop a virtuous cycle

IT Utilization
IT will serve as the main driver of
Boeings sustainable advantage
Employ highly competent IT leaders
Institute a lean, yet agile infrastructure
Embed IT into existing products/newly
launched services
Will drive revenue growth
Creates high switching costs

Sustainable Advantage
Provides information-enabled products
and services
Information is easily customized
Drives asset efficiency, cost savings, and
revenue growth
Unpredictable lifespan
As long as Boeing maintains innovation
capabilities and leads technology
growth

Recommendations
1. Boeing must implement the consultative
selling approach and provide services that
move toward a partnership relationship
with customers. This involves altering the
business plan to fit the demands of the
environment.
2. Boeing needs to emphasize the
importance of communicating the value
of e-Enabling to their customers.
3. Boeing must utilize large scale system
integration to equip all products with the
IT capabilities associated with e-Enabling.

Its going to happen, and the mindset is, if

Boeing doesnt do it first, someone else will.
Right now, its sort of like a very pre-emptive
chess game. The e-Enabled environment is going
to happen, and the question is, are we going to
be following or leading?

Any Questions?