CASE 1-4

BOEING’S e-ENABLED
ADVANTAGE
Andri Rianawati
RA6077599
Company Background
 In 1916, William Boeing founded an aircraft manufacturing company.
 Between WW I and WW II, Boeing be one of the largest aircraft manufactures in the US by
supplying the military
 In 1954, Boeing entry into commercial aviation
 In 1968, Apollo project of the 1960s was drawing to a close, Super Sonic Transport was funded
 aviation industry was in a downturn, employee layoffs
 In 1970s, Boeing entered a period of prosperity, & attempted to diversify.
 By the 1980s, virtually unrivaled in commercial aviation , has more than a half of market share
and has Boeing’s versatile 7-series that others difficult to compete with.
 The second half of the 1980s and the early 1990s, Boeing grow rapidly
 By 1992 Boeing become leading companies which 150.000 people and earning $1.55 billion.
Mature Market

■ In 1990s had new challenge, 1994 Boeing’s “annus horribilis” earning shrank up to
$856 million and slashed 9.300 employee.  The company need a new strategy to
revitalize its mature market.

■ Airbus, entered market in 1970, made its profit in 1991 and operate by government
subsidies to develop new aircraft

■ The new era of unpredicted price competition will begin, to avoid the disaster Boeing
must cut cost and do things differently.  Could Boeing’s leader save company
before disaster?
New Leadership, New Vision
■ In 1996, Shrontz retired and replaced by Phil Condit.
■ He face the stiff competition & cyclical nature  Condit will not to roll out the new aircraft
during his tenure.
■ Condit launched the company’s transformation into new vision that “ in 2016 Boeing become
an integrated aerospace company and a global enterprise, designing, producing and
supporting commercial airplanes, defense systems, and defense and civil space systems”
■ Boeing vision 2016 centered on three strategic initiatives:
Run a healthy core business,
leverage strengths into new products and new services
open new frontiers
Three Strategic Initiatives
Run a Healthy Core

■ In 1996 Condit acquired aerospace and defense business, making Boeing one of
the world’s strongest aerospace company
■ Boeing announced plans to merge with McDonnell Douglas Corporation
■ In 1997, Production delays caused Boeing loss about $178 million and report 90%
drop in profits for the first quarter of 1998.
■ The problem of production delay is lacked the parts and labor, that is effect of
Shrontz decision “cost cutting but ramping up production of new jets”.
■ By 1998, Boeing Commercial Airplanes was on the road to recovery by implementing
“principles and practices of lean manufacturing to eliminate waste and greater
efficiency” and simpler operating procedure.
Three Strategic Initiatives
Leverage Strengths
■ In 2000, Boeing purchased of print and electronic flight information service and acquired Hughes Electronics
Corporation’s space and communications businesses, its to maximize shareholder value
■ Condit and Mulally make a new business unit called “ Commercial Aviation Services CAS” that contain all the
existing support-related offerings.
■ With the creation of CAS and with four additional acquisitions (subsidiaries) CAS announced new service offering
that focus on airplane maintenance, flight operation solutions and cabin/passenger services. Ex.
MyBoeingFleet.com
■ In 2000, CAS spun out into “Connexion by Boeing” that provide inflight broadband internet service to passenger,
the business success in the early but downturn in Sept 2001 by the market change.
■ In the spring of 2004, Connexion by Boeing™ began commercial service on Lufthansa Airlines and branched out to
offer to maritime industry.
■ In 2000 launched Boeing’s Air Traffic Management Service that spun out from CAS.
■ In Sept 2001, part of reorganization corporate, Condit relocated Boeing corporate from Seattle to Chicago.
■ By 2005, a Boeing-led industry team had launched an Internet-like system that linked the air traffic control systems
of the U.S. FAA. providing shared situational awareness, real-time information, and integrated network operations.
■ Future plans involved expanding the network internationally and adding new customers, including passenger and
cargo airlines, business jet operators, and corporations.
■ It soon became clear that the "biggest challenges and risks we face are cultural and organizational-not technical”.
Three Strategic Initiatives
Open New Frontiers
■ Boeing has to move in the new frontier of services first, or someone else will do it.
■ In 2001 terrorist attacks, airlines’ business model must be transform.
■ In 2002 the top 10 U.S Airlines posted staggering operating losses of $12.3 billion.
■ In June 2003, Boeing unveiled e-Enable Advantage, whereby all data and information systems
relating to airplane maintenance, flight operations, and passenger needs would be seamlessly
interconnected to effectively bring the airplane into the airline's network during flight
■ The e-Enabled Advantage would "help airlines cut costs, improve dispatch reliability, reduce delays
and cancellations, improve passenger service, enhance aviation security, and provide real-time
situational awareness for both flight crew and airline operations centers
■ e –Enable Advantage is the strategy to reach the vision, Boeing has to figure out what kind of
partnerships, standards and technologies.
■ In early 2004, Boeing launched a concerted effort to develop a strategy for how it should support
and generate value from the e-Enabled environment
■ For Boeing, which had always been based on a product model, the shift into services and solutions
is a big mindset change
 e-Enabled Environment
■ e-Enable environment can reduce cost and give long-term value planning.
■ Boeing thought that the airplane as the factory, unfortunately factory was unplugged when
flying and e-Enable environment was plugged in.
■ An early implementation of the e-Enabled environment for some airplanes was an onboard
server called the Core Network, a component of Connexion by Boeing, the high-speed data
communications service to the airlines, crew and passenger.
■ E-Enable environment is the most effective in improving the efficiency of maintenance
operation, improve reliability 0.5% and reduce cost by $100 per hour.
■ In 2002, CAS developed Airplane Health Management, an in-flight airplane monitoring
system that would help airlines reduce flight-schedule interruptions and maintenance
scheduled
■ In 2002, Boeing estimated saving cost from operating expanses for about $23 billion to $44
billion per year.
A New Customer Engagement Model

■ Boeing has a challenge to service the customer :

1. Get customer that think of it as a service provider
2. Convince customer that e-Enable environment would yield value to their
businesses.
3. separate the value created by its airline services from the value created by the
airplanes themselves
■ To that end, Boeing launched a '''consultative'' sales approach and created
complementary proprietary software.
 Competition
■ Boeing as a aviation service company has to compete with Oracle, IBM, and Aecenture,
Garmin International and aero exchange International also customers who e-Enable
themselves.
■ Boeing offer comprehensive package and integrated solution.
■ Boeing also had to develop a plan to retrofit existing Boeing planes with e-Enabling
capabilities.
■ Boeing's e-Enabled Advantage strategy faced fierce competition from Airbus
■ The Commercial Aviation Services group had ongoing debates on whether and how
much to discount some of the e-Enabling services to seed the market for Boeing's
solutions and to define the standards going forward
Review
 In June 2003, Boeing has a new strategy is take advantage of an “e-
Enable” operating environment in which every aspect of an airline’s
and its suppliers’ and partners’ operating would be integrated through
information technology.  more efficient and creating preference
 In 2004, Boeing reached maturity (with net income of $1.87 billion and
increasing difficulty in differentiating between Airbus and Boeing plane)
 Boeing’s position in the market began to change with e-Enable
Advantage
 Airline industry was reeling from simultaneous blows, including terrorist
attacks, rising fuel prices, consolidation, cost pressure, and increasing
competitive intensity
 In 2004 analyzing of the effect of new strategy
 Question
■ How would the new strategy fit into each business unit?
■ How could they create an integrated message that would help get every-
both inside and outside Boeing on board and would the initiative help
transform the company and the industry?
■ What steps did Boeing take in its journey to build its e-Enabled
Advantage? Is this a sustainable advantage and, if so, for how long?
■ What recommendations do you have for Scott Carson, leader of the
company's e-Enabled Advantage initiatives and newly named CEO of
Boeing Commercial Airplane Company?