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Strategic Management

Intake: UC3F1410IBM

Module Name & Code: BM045-3-3-SMGT

Lecturer Name: ROHANI BINTI MOHAMAD HUSAIN

Hand in Date: 17/12/2014

Name: NOMOZBOEV SIROJIDDIN

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Strategic Management TP035325

Table of Contents
Executive Summary ........................................................................................................................ 4

Introduction ..................................................................................................................................... 5

History......................................................................................................................................... 5

Present ......................................................................................................................................... 6

Vision and Strategies .................................................................................................................. 6

Boeing – 787 Dreamliner ............................................................................................................ 6

Competitive Environment for 787 Dreamliner: External Analysis ................................................ 7

PEST Analysis ............................................................................................................................ 7

Political-Legal Analysis .......................................................................................................... 8

Economic Environment .......................................................................................................... 9

Technological Environment .................................................................................................. 10

Social Environment ............................................................................................................... 11

SWOT Analysis of 787 Dreamliner .......................................................................................... 12

Strengths ............................................................................................................................... 12

Weaknesses ........................................................................................................................... 13

Porter`s Five Forces .................................................................................................................. 14

Bargaining Power of Buyers ................................................................................................. 14

Bargaining Power of Suppliers ............................................................................................. 15

Threat of New Entrants ......................................................................................................... 15

Threat of Substitutes ............................................................................................................. 16

Competitive Rivalry .............................................................................................................. 16

Generalization of Porter`s Five Force ................................................................................... 17

Internal Analysis ........................................................................................................................... 18

Boeing Value-chain Analysis ................................................................................................... 18

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Business Model ............................................................................................................................. 20

New Product Development ....................................................................................................... 20

Fuel Efficiency ...................................................................................................................... 20

Design Development ............................................................................................................. 20

Chain-Supply Chain Management Development ..................................................................... 21

Outsourcing ........................................................................................................................... 21

Supply Chain ......................................................................................................................... 22

Business Model Benefits........................................................................................................... 24

Drawbacks of Model ................................................................................................................. 24

Unemployment and Lost in Employee Power ...................................................................... 24

Risk of outsourcing ............................................................................................................... 24

Technological risks ............................................................................................................... 24

Strategic Alliances ................................................................................................................ 25

Recommendations ......................................................................................................................... 26

Conclusion .................................................................................................................................... 27

References ..................................................................................................................................... 28

Appendixes ................................................................................................................................... 33

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Executive Summary
It can be obviously seen from the context of global competitive economy that the Boeing is
playing an indispensible role in aircraft manufacturing industry. There is no room for doubt that
the Boeing is considered as a most comprehensive and successful airline manufacturer. Recently,
the Boeing is operating in more than 65countries and providing aircrafts to around 150 countries
globally. Total revenue of the Boeing was over $86 billion in 2013(Boeing, 2014).

Boeing has been successful in past decades with its various aircrafts. 787 Dreamliner is
considered as one of the latest and more advanced airplane of the Boeing. Moreover, 787
Dreamliner aircraft is built with advanced technologies of the world class and provides a number
of extra facilities and improvements to the industry.

In turn, this paper learns about the company profile and background of 787 Dreamliner.
Followed by External Analysis including PEST, SWOT and Porter`s Five Force analysis, and
internal analysis such as Value Chain Analysis.

Moreover, this paper analyzes Business Model of the 787 Dreamliner. The Business Model
includes New Product Development and Supply Chain Management Development. However,
Business Model benefits and drawbacks also will be analyzed in deep details.

It also includes analysis of Strategic Alliances of the Boeing and there will be recommendation
for the Boeing in order to increase its operations.

(3674 words excluding Executive summary, Table o Contents, References, figures and boxes)

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Introduction
This research is based on the evaluation of strategic plans of Boeing – 787 Dreamliner. Firstly,
the information about Boeing Company will be given in the following paragraphs:

Figure 1: The Boeing Company Logo.

Source: Center for Process Analysis & Control (CPAC, 2014).

History
According to Bebbington (2009), the Boeing Company was
established by William Boeing in Washington State in May, 1916
(see Figure 2). The company was named as Boeing Airplane
Company in 1917 and the first customer of the company was the
government of the New Zealand. As long as time goes on, the Boeing
Airline Company became the best leading producer of commercial
and military planes in the world. On the way of being the best aircraft company, the Boeing has
taken a number of strategic mergers and acquisitions. Recently, there
Figure 2: William Boeing.
are significantly huge pioneer companies which are operating as being
Source: Boeing.com
the part of the Boeing including McDonnell Douglas, Jeppesen, North

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American Aviation and Rockwell International.

Present

Currently, the Boeing is considered as the most successful and leading company of the world in
the Airline production Industry. The principal activities of the Boeing includes designing,
assembling and supporting the commercial planes, defense systems and satellites, launching
vehicles, giving financial remedies to consumer needs and developing comprehensive
technologies for the future demand of the clients (Boeing, 2014).

The Boeing Company is operating as providing product and support to the clients in
approximately 150 countries around the world. Moreover, there are near to 170.000 workers of
the company in the USA and over 65 countries. They are operating in production, service and
partnerships with other companies. In fact, the Total revenue of the organization in 2013 was
more than 86 billion dollars (Boeing, 2014).

Vision and Strategies

The principal vision of the company is “People working together as a global enterprise for
aerospace industry leadership” (Bebbington, 2009). The Boeing is also having highly skilled
team to control the company (see Appendix A) .In turn, it is operating as including following
main strategies including:

Lead with Innovation


Operate as One Boeing
Deliver Customer Value
Fuel Growth though technology, and
Leverage global strength

Boeing – 787 Dreamliner

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Venables (2013) discloses in his article that Boeing – 787 Dreamliner aircraft is designed in high
standards of the world class in the purpose of providing high quality and up-to-date service to the
passangers.

Boeing`s passenger aircrafts are designed to establish world class standards in order to provide
efficient and adequate service to customers throughout the world. The aircraft is built with new
discovered technologies in order to provide increasing efficiency and improved travel experience
(see Figure 3 for 787 Dreamliner plane).

Figure 3: The Boeing 787 Dreamliner. Source: newairplane.com, 2014.

However, the competitive environment for the 787 Dreamliner will be discussed in details in
following chapters:

Competitive Environment for 787 Dreamliner: External


Analysis
It can be obviously seen from the context of the airline production industry that competition
among manufacturers are extremely intensive. In this competitive market, the Boeing is
competing mainly with its principal rival, Airbus which is considered another leading company.
Therefore, analyzing its resources and strategic strategies are considered as very indispensible
for the Boeing for being competitive in the industry. Therefore, I will fulfill the needs of the
research, if we do deep analysis of PEST, SWOT and Porter`s Five Forces:

PEST Analysis

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Political-Legal Analysis
Sight into Politics in Global scale
As long as the Boeing is operating in international market as cooperating with a number of
companies in different countries, it will be important to analyze the legal and political
environment of the company in global level.
Chanda (2013) says that there is no room for doubt that the government rules and policies in
different countries have a significant influence on the need for passenger planes. In turn, the
legal rules of the European and US governments are favoring to increase the demand for up-to-
date planes and engines in the coming years.
Global Political Interventions
The sales of airplanes are influenced highly by the political interventions of the countries. The
customers who are spending a considerable amount of money on aircrafts are used to consider
the political environment because of their government interference. China is the clear example
for this. China is considered the largest and leading market for the Boing aircrafts including 787
Dreamliner. The reason is that China was able to get significant political benefits with USA due
to their high purchases for Boeing planes from USA (Chanda, 2013).
Rankin (2014) wrote in her article in Guardian journal that the Boeing was disadvantaged from
the sanctions which Russia retaliate for West to block sale of metals which are used in airline
manufacturing industry. The Boeing was used to get one of third its titanium from Russia.
However, this political conflict affected hugely and the Boeing is forced to find another supplier
within short period which cost a lot and slowed down the production.
Laws and Regulations
First of all, Ibsen (2009) indicates that business among huge commercial airlines and producers
have been free of tariffs according to the General Agreement on Tariffs and Trade since 1979. It
gave huge opportunities to the Boeing while they are dealing in international trades.
Recently, the airplane producers including the Boeing are internationally regulated by the
Agreement on Subsidies and Countervailing Measures, WTO which is agreed in 1994. This
agreement regulates general international activities. However, the taxation method of the
countries differs from one to another. For example, the taxation system of EU against Air Bus is
more favor compared with the taxation system of USA taxation system to Boeing.

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Economic Environment
Effect of Financial Crisis to Boeing:
In fact, the Boeing was influenced financially during the world financial crisis. Therefore, it is
commonly believed that crisis in economy has a considerable side effects to the Boeing.
According to Wallaco (2008), there is no doubt that global economy impacts airplane producer,
customers, air carriers and aircraft financiers. Therefore, a number of orders were cancelled due
to the global financial crisis. Moreover, 27,000 machinists of the Boeing ware on strike due to
closing down of the manufacturing company during the Financial Crisis in Washington State.
Increase in Fuel Price:
Moreover, the price of the fuel was increasing during the financial crisis. The price of the Jet
Fuel reached to the peak of 20$ for per barrel in USA. In turn, it brought the Boeing into difficult
issues. In turn, increasing oil price led to huge decrease in number of passengers, flights and
demand for new aircrafts (see the Figure 4 for the increasing price trend of Jet fuel and oil).

Figure 4: Increasing trends in Jet Fuel and Oil price during the crisis time.
Source: Boeingcapital.com
Passenger traffic
The Air traffic and Passenger traffic is increasing beyond our expectations. It is very important to
keep the pace of growth of the Boeing Company, as long as the air traffic keeps on growing
globally. It is evaluated that the modernized air traffic management system of the Boeing can
possibly increase the efficiency of aircrafts till 12%, decrease fuel usage and improves time-
efficiency for passengers and plans operators (Boeing.com, 2014).

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Economic advantage of 787 Dreamliner


According to Deckstein (2011), the number of seats range from 242 to 323 in 787 Dreamliner.
He also mentions that newly built plane 787-10 is able to occupy 323 passangers which is
economical advantage for airlines. Moreover, 787 Dreamliner aircrafs saves more fuel compared
with others. In other words, the aircrafts uses up to 30 percent less jet fuel.

Technological Environment
787 Dreamliner
Barter (2013) says that 787 Dreamliner is considered as one the latest aircrafts which is
developed with new advanced technologies. It contains three types of planes including 787-8,
787-9,787-10 which differs in design, details and feature from one to another. 787 Dreamliner is
built in form which almost 50% more capacity and more passengers space in contrast with
normal sized aircrafts. 787 Dreamliner is built in high advanced technology which enables it to
fly in long range distances in the speed the same like the fastest planes in the world.
The engine of the 787 Dreamliner is increased significantly compared with older version planes.
The engines are built and added very huge contribution in capacity by General Electric and
Rolls-Royce.
Another technological advantage of the Dreamliner is it can decrease 20-30 % fuel emissions. It
is one of the best achievements reached in this airplane compared with other airplanes.
Moreover, there was a significant development in process of building the 787. Namely, during
production one fuselage part decreased 1,500 aluminum sheets and between 40,000 to 50,000
fasteners (Boeing, 2014).
However, there are several problems of 787 including failure of engine, issue in fuselage section,
some from hydraulic failure and battery reliability issues.

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Social Environment
Social Environment is considered very indispensible to the Boeing as long as the organization is
operating in global level. Some of the important actions taken by the Boeing in Social scale are
implementing mutual relationships with its supplier all over the world and applying Corporate
Culture in the workplaces.
Corporate Culture
Josh (2014b) wrote, a huge number of employees of the Boeing have educated in high level of
Institutions, gained an international perspective and skilled. The business activities of the Boeing
are state-of-the-art, competitive, quick and well-managed. Vision, mission and principal
objectives of the Boeing are highly shared and understood in its business environment.
Moreover, culture perspectives are perceived, understood and shared globally in each level of
management in Boeing organizations.
Corporate Citizenship:
Boeing is engaged in social responsibilities deeply and it considers taking care of the needs of all
stakeholders is one of the most important tasks of the company. The Boeing is not only engaged
in profit making activities with its production, it also has been conducting a huge number of
community engagements in terms of environment, education, military and others. The Boeing
Community has been organized and it spends more than half its investments to the education.
Moreover, the Community Fund is used to spent huge amount of money on people who are in
need (Boeing, 2014).
Contribution of the Boeing to the world was $176 million in 2013. It includes $33 million to
health, $27.4 million for Boeing`s Employees Community Fund and $6.4 million for military and
veteran`s programs.

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SWOT Analysis of 787 Dreamliner

 The 787 is comprehensive high in term design innovation, technology,


Strengths performance and market preference compared with other competitors.
 Development in process of production: a fuselage part decreased 1,500
aluminum sheets and between 40,000 to 50,000 fasteners (Boeing, 2014)
 Up to 50% more cargo space and carriage in the 787 Dreamliner
compared with other airplanes (Jones, 2014).
 Environmentally friendly. Normally, uses around less 20% fuel in
contrast to typical aircrafts in industry (Boeing, 2014).
 The 787 applies a unique supply chain method which saves time and
decrease development cost (McMullin et al., 2008).
 Cheaper prices. The cost of B787 Dreamliner is approximately $211m
while the selling price of A380 “Super Jumbo” costs roughly $414m per
unit (Lee, 2014).
 In addition, 787-800 (per nautical mile is $24.53) saves more fuel in
contrast to Airbus`s A380-800 (per nautical mile is $59.72) (Lee, 2014).
 Competitive advantage in Design and Assembling inside the cabin:
better seat facilities, wider windows, LED Lighting and fresher air (See
following picture for design of 787) (Boeing, 2014).

Figure 5: The 787 premium cabins are extremely well-designed


Source: backpackerlee.wordpress.com

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 The 787 occupies less people (around 440) compared with its main
Weaknesses competitor A380 (up to 853 passengers) (Lee, 2014).
 There were a huge number of orders for the 787. However, aircrafts
deliveries are delaying always. Moreover, the first delivery delayed
around 40 months and the result is a cancelation of 7% orders (see the
following picture for orders and deliveries of 787) (Guide.sacbee.com,
2014).

Figure 6: List of B787 orders in blue and deliveries in green


Source: backpackerlee.wordpress.com

 It has some technical problems including smoke caused by engine fuel


leaking, issues with brake system and battery heating reliability issues
(Guide.sacbee.com, 2014)

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Porter`s Five Forces

Fung (2013) mentions that while doing a research regarding to the external analysis of the
Boeing, it is very important to consider the Porter`s Five Force in order to determine the level of
competition in the industry (see the following Figure 7 to Porter`s Five Force model).

Figure 7: Porter`s Five Forces Source: (Kar, 2014)

Bargaining Power of Buyers


As long as there are principal two airplane manufacturers in the market, Boeing and Airbus, the
bargaining power of buyers is considered as. The principal reason for is that the switching cost
one supplier to another is very high due to high cost of airplanes and time to deal with new
supplier for the airline companies. Moreover, there is a inability to backward integratin by the
customers.

Lee (2014) pointed out that the 787 Dreamliner provides a number of advantages which other
airplanes are not really able to offer including cheaper price, less fuel consumption, less
pollutant, long distance and time flying and others. These main characteristics keep the
uniqueness of the 787 compared with its main competitor Airbus.

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Bargaining Power of Suppliers


According to the Cohan, P. (2011) the bargaining power of suppliers is considered as high in
terms of market of Boeing. The principal reason is the Boeing had a considerable number of
delays for the orders by airlines. It led to lose relationship and control to its suppliers. Moreover,
the Boeing has delayed a lot of times due to issues in its supply chain management. Moreover, as
long as the Boeing has huge number of orders and increasing production capacity, the power of
suppliers will possible increase more.

Slack (2012) and Fuller (2013) says the same facts that the company has a huge number of
supplier providing different parts of the world (see Appendix B). Moreover, each part of the
aircraft is delivered from different countries as well (see following figure 8 to know who
provides parts).

Figure 8: 787 Dreamliner: Where parts come from Source: ebnonline.com, 2013

Threat of New Entrants


The threat of new entrances to the aircraft manufacturing industry is low due to demand for
resources and extremely high costs. Moreover, it is very challenging to the new entrants to enter
to the industry, become famous and to enter to the profit. New commercial airplane
manufacturers need to spend billions of dollars in order to begin their operations and it even

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takes very long years in order to be in break-even point. However, there is an emergence of the
new international rival in commercial aircraft industry. Most probably, as long as government of
China approved the project, Boeing may encounter new competitor from China in the future
(MacPherson, 2009).

Threat of Substitutes
It can be said that threat of substitutes is middle because of high passenger traffic rate and
different kinds of alternative transports.

Wilhelm (2014) mentions that there are a plenty of alternatives of the airlines including cars,
busses trains, ships and others in our recent competitive life. Moreover, countries are building
long tracks for trains which connect different countries and the trains are becoming faster and
cheaper in recent days. These alternative transports are gaining huge part of short range
traveling. When it comes to international traveling, some of the airlines began to prefer Airbus
compared to Boeing because of a huge number of delays happened in past few months.

Competitive Rivalry
According to Wilhelm (2014), Competitive Rivalry is considered high in airplane production
industry. As long as main revenue came from commercial airplane production for Boeing, the
company needs to be compatible and keep its price of shares high in the market than its main
competitor Airbus

In the market, main competitor of the Boeing is the Airbus. In terms of 787 Dreamliner, it
competes mainly with A380 and A350. Therefore, in the following figures, competition of 787
against A380 and A350 will be shown (Wilhelm, 2014):

Aircrafts Cost Size Range Orders Deliveries


787 Dreamliner $290m 300-330 Up to 12,964km 1012 103
passangers
Airbus A380 $403.9m 525 passengers Up to 15,700km 259 119
Above factors are related to the 787 Dreamliner and Airbus A380. However, overview orders
and deliveries of Boeing 787 Dreamliner and Airbus A380 will be shown by year.

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Figure 9: An overview of Boeing 787 and Airbus A350 orders and deliveries by year

Source: Statista.com

Generalization of Porter`s Five Force


After analysis done for Boeing, following is the overall importance and evaluation of Porter`s
Five Force in scale:

Force Importance Scale


The Threat of New Entrance Low 1 out of 5
The Threat of Substitutes Middle 3 out of 5
Bargaining Power of suppliers High 5 out of 5
Bargaining Power of Customers Low 1 out of 5
Competitive Rivalry among competitors High 4 out of 5

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Internal Analysis
Boeing Value-chain Analysis

Primary Activities
Inbound Operations Outbound Marketing and Post Sale
Logistics Logistics Sales Services
Managing the Comprehensive Advance Advance 24 hours
Stock via Global System of Aviation Aviation technical support
Airline Security Performance Performance services
Inventory Network Program Program

Increased and Online Direct to airline Delivery of


strong Supplier information marketing needed details or
relationships access via strategies parts of airplanes
MyBoeingFleet
Advanced Web Portal Outsourcing Boeing Capital
training on Corporation
computer via helps supply
Alteon Aviation chain
Training System management

Support Activates
Firm Infrastructure Human Resource Technology Procurement
Management Development
Great Management Maintaining well Operating in latest Problems with
Structure organized workplace computer based suppliers due to delays
globally technologies for orders

Operating over 70 Corporate Culture Inventing usage of Miscommunication


countries other types of
materials instead of
aluminum

Culture Adaptation Using latest


technology to
decrease fuel
consumption

High quality
designing and
assembling

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According to Horng and Bozdogan, (2007), value chain analysis of Boeing includes the primary
and secondary activities of the airline manufacturer that results to empower Boeing`s competitive
advantage. Moreover it applied to point which resources are utilized highly in the Boeing. In
turn, Boeing is used to form a number of value-creating plans in order to fulfill the needs of its
clients. For instance, opportunities are provided to the clients of Boeing in order to help
financing issues by Boeing Capital Corporation. Moreover, Boeing provides non-stop customer
support service globally in order to add value to their company. This 24 hours customer support
service mainly focuses on technical help to the clients and there is a delivery of the parts of the
aircraft, if it is required by customers.

Alteon Aviation Training system is considered as one of the value added services offered to the
clients in company. In this system, all consumers or users of Boeing are able to get computer-
based training regarding to all details of aircrafts. The Boeing also has a MyBoeingFleet web
portal which provides extra comfort to the clients to remote their product maintenance from
distance (Lucintel.com, 2014).

Additionally, Boeing has designed a system of the Global Airline Inventory Network in order to
aid clients to develop supply chain management regarding to monitoring their expansive
inventories (Boeing, 2014)

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Business Model
There has been always competition between Boeing and Airbus and the step taken to build the
787 Dreamliner by Boeing was one of strategies while the Airbus getting more orders.
Launching the 787 and implementing excellent business models in right time and right place
gave some competitive advantage to the Boeing. However, Business Model of the Boeing for
787 Dreamliner will be analyzed as following:

New Product Development

Developing and updating products for the Boeing is considered very important in order to
compete in the industry. If there is no product development, there will not be growth in the
business. For example, Airbus has received more orders in 2003 compared with Boeing because
of its more developed airplanes till Boeing launched the 787 Dreamliner. Following, we will
analyze some of the product developments of the Boeing:

Fuel Efficiency
Lee (2014) pointed out that fuel prices are continuing to increase in the market. Moreover, most
of the plans should do transition in order to reach to one destination due to far distance problem
in terms of fuel. However, Boeing was able to find solution to this issue by applying
technological developments in Dreamliner 787. The consequence is the 787 is able to save
around 20% more than other normal airplanes

In addition, Boeing 787-800 Dreamliner normally uses approximately $24.53 for per nautical
mile in contrast to Airbus`s A380-800 spends $59.72 for the same distance (Lee, 2014).

Design Development
McMullin et al., (2008) emphasizes that there was an huge development in engine of the
Dreamliner and it added great value to this new generation on airplane. Moreover, Boeing was
able to introduce new composite material instead of using aluminum for its wing and fuselage
with its up-to-date technologies. In turn, this new material is lighter compared to aluminum and
it enables the aircraft to fly longer time and far destinations as providing extra facilities for the
Dreamliner including humidity control on the cabin. Following Figure shows some of extra
improvements in design of Dreamliner:

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Figure 10: Improvements in Design of 787 Source: Aspire Aviation, 2013

Chain-Supply Chain Management Development


In the following paragraphs, some of the developments in Supply Chain Management will be
discussed:

Outsourcing
As Jones, (2005) mentioned in his article, strategic implementation of outsourcing strategy made
it possible to reduce the expanses, improve and develop capacity and sanitized high quality in the
operations of the Boeing.

Outsourcing is considered as one of the principal strategies of Boeing in production and it


reduced costs and expanses of the company.

Traditionally, In outsourcing strategy was around 35-50% for the manufacturing the airplanes in
Boeing. However, there are a considerable an increase in outsourcing by 70% ready parts of

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Boeing 787 Dreamliners is outsourced by different companies. In fact, the Boeing has a
considerable number of orders by airlines. In turn, outsourcing makes the process of
development of aircrafts faster. Therefore, if the Boeing is managed its outsourcing strategy well,
it may decrease the cost of development of 787 by more $4 billion (Steve, 2014).

Supply Chain
Song et al., (2014) wrote in their article that Boeing was used to rely on traditional method of
supply chain in past decades. Therefore, supply contracts were with fixed cost for the parts with
penalties for delays. The risk was taken by the Boeing itself.

However, when it came to 787 Dreamliner, the Boeing moved into more sophisticated Supply
chain (see the Figure 11 for new Supply Chain for 787).

Figure 11 Redlined Supply Chain for Dreamliner Source: (Airwaysnews.com, 2014)

The redesigned supply chain system of the Dreamliner integrated to tier system. According to
new system, the elements of airplane produced and assembled in Tier 3 Supplier are outsourced
to Tier 2 supplier. In turn, the parts are completed and perfected by Tier 2 Supplier before

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sending to Tier 1 Pre-integration. Lastly, Tier 1 Supplier brings part of plane to the Boeing
Washington (Bhaskara, 2013).

However, in order to be more understandable, comparison of previous supply chain strategy and
redesigned onewill be evaluated in terms of components of Boeing 737 and 787 as following:

Component 737 Program 787 Program


Sourcing Strategy Outsource 35-50% Outsourced 70%
Supplier Relationship Contract based traditional Strategic Partners with Tier 1
suppler relationship suppliers
Supplier Responsibilities Manufactured parts and details Manufactured parts and details
of Boeing of Boeing
Number of Suppliers Thousands Around 50 tier 1 strategic
partners
Supply Contracts Fixed price contracts Risk sharing contracts
(including delay penalty)
Assembly operations 1 month to complete the final Three day completion of
assembly assembly

Following is the main suppliers of the 787 Dreaamlier:

Figure 12 Suppliers of 787 Dreamliner Source: (Airwaysnews.com, 2014)

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Business Model Benefits

There are a considerable number of benefits of the Business Models of the 787 Dreamliner. It
includes cost reduction due to savings in development of plan, faster operation due to 3 days
assembly of final details, shared risk in production, time efficient, easy and comprehensive
supply chain management, better relationship with suppliers and the issue of deliveries may
possibly be faster.

Drawbacks of Model

Unemployment and Lost in Employee Power


According to Jones (2014), as long as the Boeing promoted Outsourcing for the 787 from around
35-50% to 70%. There may probably be a number of job reductions in the company due to the
decrease in inner production in the company related to the parts of planes. In turn, the company
also may lose experienced and highly skilled employees in the company.

Risk of outsourcing
Elahi, Sheikhzadeh and Lamba (2014) points out that promoted outsourcing strategy have not
given expected results and the project is delaying for 3 years. In other words, the Boeing
spending much more money on the project than it is expected budget and the results from
outsourcing is not working well as well.

Technological risks
For several years since the Dreamliner launched, there are still several technological problems to
be solved. According to Barter, S. (2013), during evaluation 787, fan shaft on engine has not
worked properly in South Carolina. There was heating and fire resulted from lithium ion battery
during flight in Japan Airlines (Guide.sacbee.com, 2014). Moreover, there was trunnion failure
in main landing gear wing of Dreamliner (Barter, S. 2013).

There were a huge number of cases related to the failure or problems of 787. In most of the
cases, it is reasoned as outsourcing was problem due to not high quality plan parts by suppliers
(Guide.sacbee.com, 2014).

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Strategic Alliances
(Elmuti, 2001) says that Strategic Alliance is an agreement between firms to do business in the
same way as targeting the similar proposes and objectives. In turn, Boeing has worked closely in
strategic alliance with a number of companies from different countries including China, USA,
Canada, Japan, Australia, South Korea and other European countries.

Most of the decision are made by Boeing is closely related with decisions of its strategic
alliances and being in the same line with other gigantic companies is used to bring competitive
advantage to the Boeing (The Economist, 2013).

For example, Boeing signed to contract with Mitsubishi Electric Corporation (MELCO) to work
together in terms of air traffic management, multimedia, navigation and communications
services. In turn, this corporation between two gigantic companies brought a number of
developments to 787 Dreamliner as well (Spaceflightnow.com, 2014).

Swedberg (2010) provides another example is that Boeing initiated a strategic alliance with
Fujitsu. These two companies united together with mutual objective to develop an advanced
system to maintenance plane operations. The system consists of hardware, middleware, software
and integration needed by airlines to track aircraft components. It increased services in 787
Dreamliner as well.

The Boeing is getting a huge amount of advantages including high qualified technical employees
from other IT related companies, the risks of the plane parts are also shared with alliances,
delivery of the parts are faster than previous strategies and other benefits (The Economist, 2013).

However, strategic alliance has few disadvantages as well. As it is discussed in the supply chain
management part, the miscommunication among other strategic alliances of the Boeing is
bringing some drawbacks to the company. For instance, misunderstanding among suppliers of
tier1, tier 2 and tier 3 caused some issues in the company.

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Recommendations
It can be said without any hesitation that the Boeing and its aircraft 787 Dreamliner has been
reaching a number of achievement throughout the decades. Moreover, the Boeing had received a
huge number o orders for 787 Dreamliner as well.

However, there are some issues which need to be solved by the Boeing in terms of supply chain
management, technological development and other issues of the 787 Dreamliner. Therefore,
some recommendations will be given in the following paragraphs:

It is highly recommended that the Boeing should concern about Supply chain Management and
develop it. First of all, it is recommended to analyze which parts of the operation are failing to
complete the aircraft to the delivery for airlines. Weak parts should be found out and determine
which supplier is lacking to deliver parts. After finding out which supplier is delaying the
process of airplane completion, that principal companies should be taken over by Boeing or
Boeing should open its own production line for that specific part in order to make it faster.

Additionally, Boeing should open a new “team” to monitor the supply chain management and
suppliers of the company. That “team” should be in touch with top management of the Boeing
and report the operation of suppliers and supply chain. The reports should be given time by time
and the performance of the Supply chain should be analyzed according to its target orders and
deliveries.

Moreover, Boeing was facing some technological problems in terms of development lithium
battery, fuel leaking, engine heat and some other problems of 787. In this issue, Boeing should
create a team of best expertise of their fields and let modify and fix its design. In this area,
technological development is very necessary. Therefore, building strategic alliances with
popular IT and technological companies will be a good ideas as well.

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Conclusion
In general, it can be concluded that Boeing has been successful in through years with its different
aircrafts. Dreamliner 787 is latest aircrafts of the Boeing where efficiency meets with the higher
expectations. 787 Dreamliner has unique features which cannot be finding in other aircrafts in
this industry. Moreover, 787 Dreamliner aircraft is developed with the aid of high technologies
of the world. Additionally, it provides a number of extra facilities and improvements to the
customers.

As it is providing a great amount of facilities and opportunities to the customers, it has received a
plenty of orders from customers. It is advanced and developed features include the following:

787 is fuel efficient and it is able to save 20-30% more fuel compared with other normal aircrafts
in the industry. This is one of the main competitive advantages of the Boeing.

Moreover, the new and improved supply chain management of Boeing is the one of the reasons
to success in the industry. However, there are still some drawbacks of the system to be solved by
the Boeing.

In order to solve them Boeing needs to send the expertise to the manufacturing plants of
alliances. And there should be changes in its management structure.

As it becoming the leading airplane in the world, Dreamliner have a great future as it has a huge
number of orders. In other words, Dreamliner is on the way to reach to its dreams.

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Appendixes

Appendix A: Company Leadership Management Group: Board of Directors of the Boeing


Company.

Source: Boeing.com

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Appendix B:

Appendix B: Boeing Suppliers. Infographic: Exporting the Boeing 787 Dreamliner

Source: The White House, 2012

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