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Boeing Case Study

November 15, 2011
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Abstract

Boeing is one of the worlds largest aerospace firms. It manufactures airliners for commercial and

military segments. The company is based in Washington State. It just opened a new manufacturing

facility in South Carolina. Boeing is best known for the 747 jetliner. They have large contracts with

different airlines as well as the U.S. government. Over the years, Boeing has been plagued with many

labor, manufacturing, and supply problems. Their latest problems are with the 787 Dreamliner. Boeing

is outsourcing a lot more its processes. It has worked with Japanese automakers to improve its

production process. Airbus is Boeings main competition. Both compete in the same market segments.

The SWOT analysis looks at Boeings processes and strategies.

Boeing
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The Boeing Company, together with its subsidiaries is one of the worlds major aerospace firms. The

company is organized based on the products and services it offers. Boeing has five principle segments:

Commercial Airplanes,

Boeing Defense, Space, & Security (BDS) consists of three segments:

Boeing Military Aircraft (BMA)
Network & Space Systems (N&SS)
Global Services & Support (GS&S)

Boeing Capital Corporation

Engineering, Operations & Technology (EO&T): provides Boeing with technical and functional
capabilities, including information technology, research and development, test and evaluation,
technology strategy development, environmental remediation management and intellectual
property management

Shared Services Group (SSG)

The Boeing Company was established in 1916 by William Boeing. It is the largest manufacturer of

commercial jetliners and military aircraft combined. It designs, develops, manufacturers, sales and

supports commercial jetliners, military aircraft, satellites, missile defense, space flight, and launch

systems and services. It is a major service provider to NASA and operates the Space Shuttle and

International Space Station. Boeing provides products and support services to customers in 150

countries. It is one of the largest US exporters in terms of sales. Boeings large scale of operation and

market penetration gives it substantial bargaining power. Boeing is headquartered in Chicago and

employs more than 165,000 people worldwide. Boeings vision is: People working together as a global

enterprise for aerospace leadership. Boeing plans to achieve their vision by running healthy core

businesses, leveraging their strengths into new products and services, and opening new frontiers

(About us, 2011).

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To realize their vision, Boeing considers where they are today and where they would like to be

tomorrow. They emphasize detailed customer knowledge and focus that understands, anticipates and

responds to customer needs, large-scale systems integration that continually develops and advances

technical excellence, [and] a lean enterprise characterized by efficiency, supplier management, short

cycle times, high quality, and low transaction costs (About us, 2011).

Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Defense, Space

& Security. Supporting these units are Boeing Capital Corporation, a global provider of financing

solutions; the Shared Services Group, which provides a broad range of services to Boeing worldwide; and

Boeing Engineering, Operations & Technology, which helps develop, acquire, apply and protect

innovative technologies and processes (About us, 2011).

The company merged with McDonnell Douglas (competitor) in 1997. Today, the main commercial

products are the 737, 747, 767, 777, and the Boeing Business Jet. Boeings new product development

efforts are focused on the Boeing 787 Dreamliner, and the 747-8. Boeing has nearly 12,000 commercial

jetliners in service worldwide, which is about 75 percent of the world fleet. Boeings Commercial

Aviation Services provides 24/7 technical support and a full range of engineering, modification, logistics

and information services to its global customer base, which includes passenger and cargo airlines, as well

as maintenance, repair and overhaul facilities. Boeing also trains maintenance and flight crews in the

100-seat-and-above airliner market through Boeing Training & Flight Services, the world's largest and

most comprehensive provider of airline training (About us, 2011).

2010 Financial Results

Boeing recorded revenues of $64.3 billion during the financial year ended December 2010 (FY 2010).

Revenues for the year were down 6 percent from 2009 due to anticipated lower airplane deliveries and

reduced defense volumes. Net income (earnings) increased to $3.3 billion or $4.46 earnings per share

(EPS) compared with $1.3 billion or $1.87 EPS in 2009 reflecting solid performance across core
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production and services programs. Boeing captured $69 billion of new orders during the year and grew

its backlog to $321 billionfive times current annual revenues. It continued to provide strong liquidity

with operating cash flow of $3.0 billion, and cash and marketable securities of $10.5 billion (The Boeing

Company, 2011).

Boeing delivered 462 commercial airplanes, including record 737 deliveries for the second year in a

row, and won 530 net orders, increasing its backlog to 3,443 airplanes valued at $256 billion. It delivered

115 production military aircraft, two launch vehicles and four satellites, and increased backlog at

Defense, Space & Security to $65 billion, and more than twice the business units 2010 revenue. The

company delivered the 900th 777 and started assembly of the 1,000 th 767. In addition, it extended core

Defense, Space & Security programs, including contract awards for 124 F/A-18E/F Super Hornet and EA-

18G Growler aircraft for the U.S. Navy; low-rate initial production of up to 51 AH-64D Apache Block III

helicopters for the U.S. Army; and six new commercial satellite orders . It Achieved key Defense, Space &

Security milestones, including delivery of the first P-8A Poseidon for flight testing; unveiling of two

unmanned aircraftthe fighter-sized Phantom Ray and the hydrogen-powered Phantom Eyein

preparation for flight testing in 2011; first flight of the UK Mk4 Chinook rotorcraft; and winning the

coveted Collier Award for the International Space Station. The company advanced their environmental

leadership by testing biofuels on commercial and military aircraft; creating sustainable aviation biofuels

research projects around the globe; demonstrating next-generation energy smart grid technologies;

improving the global air traffic control system; and continuing to reduce the environmental footprint of

Boeing operations (The Boeing company, 2011).

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SWOT

Favorable Unfavorable

Internal Strengths: Weaknesses:

Large scale operation and strong Production/supply problems

Labor/legal proceedings
global network
Strong association with Federal Dependence on US government

Government

Robust inorganic growth

Focus on R&D

Strong order backlog

Strong financial performance

Realignment for growth and

expansion to new markets

Diversified business offerings

External Opportunities: Threats:

Increased aircraft demand Intense competition and pricing

Rising global defense spending
787 Dreamliner to gain market share
pressure
Risks concerning labor issues
Uncertain airline industry
Rising fuel costs
Change in US budgetary priorities and

contracts

Strengths

Large scale operation and strong global network

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Boeing is one of two major manufacturers, equipped to produce aircraft capable of carrying more

than 100 passengers for the worldwide commercial airline industry, and the second-largest defense

contractor in the US. Boeing is one of the leading producers of commercial aircraft and offers a broad

spectrum of commercial jetliners designed to meet passenger and cargo requirements of both the US

and non-US airlines. The company has customers in more than 150 countries around the world and is

one of the largest US exporters in terms of sales. It is the global market leader in design, development,

manufacture, sale and support of commercial jetliners, military aircraft, satellites, missile defense,

human space flight and launch systems and services. Boeings large scale of operation and market

penetration gives it substantial bargaining power (About us, 2011; Boeing SWOT, 2009).

Strong association with Federal Government

Boeing has worked with the Federal Government for over 30 years. Its Defense, Space &

Security is a $32 billion business with 64,000 employees worldwide that combines manned and

unmanned airborne capabilities, intelligence and security systems, communications architectures and

extensive large-scale integration expertise across several diverse business areas. Boeings Defense,

Space & Security strategy is to understand the enduring needs of customers and provide capability-

based solutions to meet their rapidly evolving requirements. The strategy includes understanding the art

of using current and emerging technologies to improve the capabilities of existing products and deliver

new solutions (About us, 2011; Boeing SWOT, 2009; Hill & Jones, 2009, C1-C15).

Boeings military aircraft business includes tactical and airlift aircraft, missiles, unmanned airborne

systems, and surveillance and engagement programs. FY2008, Boeings contracts with the US

government accounted for 46% of its total revenues. The company deals with numerous US government

agencies and entities, NASA, and the Department of Homeland Security. Boeings IDS (integrated

defense systems) segment provides various research, development, production, modification and
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support services to the US Department of Defense (80% of IDS 2008 revenues), NASA and other defense

customers. Boeing also engineered and deployed various products for the Army, Navy and Air Force and

tests complex and mission critical hardware and software systems used by these agencies. The company

played key roles in improving the performance, reliability, maintainability, supportability, and weapons

effectiveness. The company has received significant contracts from these customers. Most recently,

Boeing received a $48.9 million contract from the US Navy in May 2009, for development and testing of

a Distributed Targeting system for the F/A-18E/F Super Hornet strike fighter. In June 2009, Boeing

received A-10 sustainment and integration contract from the US Air Force. In the same month, the

company also received a $5.2 million US Marine Corps contract to provide a solution for recovering

disabled Mine Resistant Ambush Protected vehicles. In June 2009, Boeing received a contract from the

US Army for future combat systems. Strong relationships with major customers enable the company to

receive many new contracts and hence serve as a competitive advantage (About us, 2011; Boeing

SWOT 2009; Hill & Jones, 2009, C1-C15).

Robust inorganic growth

Boeing focuses on acquisitions as a business-level strategy to expand its business and to earn more

revenues. In FY 2009, the company acquired Vought Aircraft Industries 787 business conducted at North

Charleston, South Carolina. Voughts 787 business produces fuselage sections, including the fabrication,

assembly and systems installation, for the 787 program. The acquisition strengthens Boeings 787

program and bolsters its capability to develop and produce large composite structures (Boeing SWOT,

2010).

In FY 2009, Boeing also acquired eXMeritus, a Fairfax Virginia based company that provides hardware

and software to the federal government and law enforcement organizations, for sharing information

securely, across classified and unclassified networks and systems. The acquisition of eXMeritus

complements FY 2008 acquisitions of Digital Receiver Technology Ravenwing and Kestrel Enterprises.
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These acquisitions are part of Boeings global-level strategy to expand its presence in the cyber and

intelligence markets. The addition of exMeritus enhances Boeing capabilities developed through years

of experience on secure networks for some of the most complex systems in national security (Boeing

SWOT, 2010).

In addition, during FY 2009 Boeing acquired Alenia North Americas half of Global Aeronautica, a

South Caroling fuselage subassembly facility for Boeings 787 Dreamliner. Alenia North America is a

subsidiary of Italys Alenia Aeronautica, a Finmeccanica company. This acquisition increases productivity

for the 787 program and allows Boeing to maintain its long-term competitiveness. Therefore,

acquisitions bring complementary technologies, support geographic expansion, and leverage existing

infrastructure for Boeing (Boeing SWOT, 2010).

Strong focus on research and development

Boeings strategy also has a strong focus on R&D activities. Its 'other' business segment principally

includes the engineering, operations and technology (EO&T) activities. EO&T is an advanced research

and development organization focused on innovative technologies, improved processes and the creation

of new products. R&D expenditures involve experimentation, design, development and related test

activities for defense systems, new and derivative jet aircrafts, including both commercial and military,

advanced space and other company-sponsored product developments. The companys R&D investment

amounted to $6,506 million, $3,768 million and $3,850 million in FY 2009, FY 2008, and FY 2007

respectively. The Boeing military aircraft division continues to focus on R&D resources to leverage

customer knowledge, technical expertise and system integration of manned and unmanned systems that

provide innovative solutions to meet the warfighters enduring needs. The network and space systems

division of Boeing is investing in capabilities to enhance connectivity between existing and new

air/ground and maritime platforms; to increase communications availability, utility and bandwidth

through more robust space systems; and to leverage innovative networking and ISR (intelligence,
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surveillance, and reconnaissance) concepts. Investments were also made to develop concepts and

capabilities related to cyber and security products, as well as the development of next-generation space

and intelligence systems. Boeings global services and support (GS&S) continues to focus investment

strategies on its core businesses. Successful development of adaptable systems has allowed GS&S to

transition from Boeing platforms into the broader aviation market. Strong focus on R&D allows Boeing

to develop proprietary products, strengthen its product portfolio, and have an advantage over its

competitors (Boeing SWOT, 2010).

Strong order backlog

As of June 30, 2011, the order backlog for Boeing Commercial Airplanes totaled 3,392. Unfilled orders

broken down by aircraft type were as follows: 2,109 for the 737, 111 for the 747, 54 for the 767, 291 for

the 777, and 827 for the 787. The backlog at the end of June 2011 represents a decrease from the

backlog at the end of the previous month (May), which totaled 3,396. Both figures are decreases

compared to the company's year-end-2010 order backlog of 3,443 ("Boeing reports second-quarter,"

2011).

Strong financial performance

The Boeing Company (NYSE: BA) reported second-quarter net income of $0.9 billion, or $1.25 per

share, on revenue of $16.5 billion. Operating margin of 9.3 percent reflects higher Commercial Airplanes

volume and strong core performance across the company's businesses, partially offset by higher pension

expense. The company increased its 2011 earnings per share guidance to between $3.90 and $4.10 per

share reflecting the strong core performance. Total company 2011 revenue and cash flow guidance is

unchanged. Boeing's quarterly operating cash flow was $1.6 billion, reflecting strong operating

performance and continued investment in development programs. Cash and investments in marketable

securities totaled $8.8 billion at quarter-end, up from $7.8 billion at the beginning of the quarter. Debt
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was essentially unchanged in the quarter. Capital expenditures for 2011 have been reduced to

approximately $2.0 billion, down from approximately $2.3 billion ("Boeing reports second-quarter,"

2011).

Boeing Commercial Airplanes second-quarter revenue increased by 19 percent to $8.8 billion on

higher deliveries, improved model mix and higher services volume. Operating margin was 10.4 percent,

reflecting the higher revenue and strong operating performance, partially offset by higher R&D ("Boeing

reports second-quarter," 2011).

Boeing Defense, Space & Security's second-quarter revenue was $7.7 billion, while operating margin

was 10.4 percent. Boeing Military Aircraft (BMA) second-quarter revenue was $3.6 billion. Operating

margin was 10.6 percent, reflecting strong operating performance. Last year's results were impacted by

a charge on the Airborne Early Warning & Control program. During the quarter, India signed an

agreement for ten C-17s, which are expected to be on contract later this year, and BMA was awarded the

U.S. Navy's study contract for the Unmanned Carrier-Launched Airborne Surveillance and Strike Program

("Boeing reports second-quarter," 2011).

Network & Space Systems (N&SS) second-quarter revenue decreased to $2.1 billion, due to funding

reductions in Brigade Combat Team Modernization and lower SBInet volume. Operating margin was 9.5

percent, reflecting United Launch Alliance performance and a gain on the sale of property. Global

Services & Support (GS&S) second-quarter revenue was $2.0 billion. Operating margin was 10.9 percent,

reflecting strong performance in integrated logistics. During the quarter, GS&S was awarded

modernization and upgrade contracts from the U.S. Air Force ("Boeing reports second-quarter," 2011).

Realignment for growth and expansion to new markets

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The company focuses on realignment, which is part of a continuing effort to successfully compete in a

rapidly evolving global defense and security marketplace. From January 2010, Boeings integrated

defense systems business unit began operating under the name Boeing defense, space and security

(BDS). While BDS will retain its current operating divisions (Boeing military aircraft, network and space

systems, and global services and support), the realignment consolidates some businesses. Boeing

consolidated two businesses in network and space systems division, the combat systems business and

the command, control and communications networks business. These businesses will be unified as the

new network and tactical systems business (Boeing SWOT, 2010).

BDS operations principally involve research, development, production, modification and support of

global strike systems, global mobility systems, rotorcraft systems, airborne surveillance and

reconnaissance aircraft, network and tactical systems intelligence and security systems, missile defense

systems, and space and intelligence systems. Boeing anticipated flattening defense budgets and shifting

customer priorities for the past few years and has been taking aggressive steps to position the company

for profitable growth in a challenging economy. With the latest strategic move, the company extends its

core programs even as it enhances its capabilities designed to capture business in promising markets in

the US and around the world (Boeing SWOT, 2010).

BDS provides affordable solutions and brings value to customers through its ability to solve complex

problems utilizing expertise in large-scale systems integration, knowledge of legacy platforms, and

development of common network-enabled solutions across all customers domains. Therefore,

realignment positions Boeing for further growth in new and adjacent markets while continuing to serve

existing defense and space customers (Boeing SWOT, 2010).

Diversified business offerings

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Boeing is the largest aircraft manufacturer globally and delivers aircraft to a large number of

developed and developing countries. Its rank as defense contractor with different countries is second.

The designs of Boeings aircrafts are efficient. There is no fault in its designs. Its production system is

also very efficient. It also has the strength of product diversification. It not only manufactures

commercial aircraft but also manufacture aerospace and defense aircrafts (About us, 2011; Boeing

SWOT, 2009; Hill & Jones, 2009, C1-C15).

Boeing has been a manufacturer of commercial jetliners for more than 40 years. Boeing merged with

McDonnell Douglas in 1997 adding to its existing commercial aviation product line. Today, the main

commercial products are the 737, 747, 767 and 777 families of airplanes and the Boeing Business Jet.

New product development efforts are focused on the Boeing 787 Dreamliner, and the 747-8. The

company has nearly 12,000 commercial jetliners in service worldwide, which is roughly 75 percent of the

world fleet. Through Boeing Commercial Aviation Services, the company provides around-the-clock

technical support to help operators maintain their airplanes in peak operating condition. Commercial

Aviation Services offers a full range of world-class engineering, modification, logistics and information

services to its global customer base, which includes the world's passenger and cargo airlines, as well as

maintenance, repair and overhaul facilities. Boeing also trains maintenance and flight crews in the 100-

seat-and-above airliner market through Boeing Training & Flight Services, the world's largest and most

comprehensive provider of airline training ("Boeing: Boeing in," 2011).

Boeing Defense, Space & Security (BDS) provides end-to-end services for large-scale systems that

enhance air-, land-, sea- and space-based platforms for global military, government and commercial

customers. BDS designs, produces, modifies, and supports fighters, bombers, transports, rotorcraft,

aerial refuelers, missiles, munitions and spacecraft for military, civil and commercial use. Boeing Capital

Corporation is a global provider of financing solutions. Working closely with Commercial Airplanes and
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Defense, Space & Security, Boeing Capital Corporation arranges, structures and provides financing to

facilitate the sale and delivery of Boeing commercial and military products ("Boeing: Boeing in," 2011).

Realignment for growth and expansion to new markets

The company focuses on realignment, which is part of a continuing to successfully compete in a

rapidly evolving global defense and security marketplace. From January 2010, Boeings integrated

defense systems business unit began operating under the name Boeing defense, space and security

(BDS). While BDS will retain its current operating divisions (Boeing military aircraft, network and space

systems, and global services and support), the realignment consolidates some businesses. Boeing

consolidated two businesses in network and space systems division, the combat systems business and

the command, control and communications networks business. These businesses will be unified as the

new network and tactical systems business. Boeing anticipated flattening defense budgets and shifting

customer priorities for the past few years and has been taking aggressive steps to position the company

for profitable growth in a challenging economy. With the latest strategic move, the company extends its

core programs and enhances its capabilities designed to capture business in promising markets in the US

and around the world. BDS provides affordable solutions and brings value to customers through its

ability to solve complex problems utilizing expertise in large-scale systems integration, knowledge of

legacy platforms, and development of common network-enabled solutions across all customers

domains. Therefore, realignment positions Boeing for further growth in new and adjacent markets while

continuing to serve existing defense and space customers (Boeing SWOT, 2010).

Weaknesses

Production and supply problems

Boeing delivered its first 787 Dreamliner airplane to All Nippon Airways (ANA) in September 2011,

three years later than expected. The 787 is seen as the future of air travel as well as the future of
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Boeing. It is a sophisticated carbon-composite aircraft. However, the 787 has been plagued by problems

of delay and quality control in the companys complex global supply chain and costs more than $32

billion, over double the usual development of a new airliner. Boeing experienced problems with the

availability of the new Rolls Royce Trent 100 engine. In August 2011, during a test near the Boeing

facility in Seattle, a Rolls Royce engine blew apart and caused severe damage to the testing facility.

Consequently, the facility had to be shut down for repairs. Officials at Boeing and Rolls Royce deny that

the delays with the Rolls Royce engine are due to the explosion (Logan, 2011; Reed, 2010).

Engineers have also had difficulties trying to remedy issues with a horizontal stabilizer on the

airplane's tail made by a subcontractor in Italy. In addition, there were problems with the GEnx engine

powering some of the 787s. There were other problems with the design, supply chain and

manufacturing such as a shortage of fasteners. Boeing controls production of composites through a

closely monitored supply chain. Carbon fiber composites come from Toray Industries, which has been

rapidly ramping up capacity. Assembly of the composite components requires a large number of high-

quality, lightweight fasteners from suppliers such as Carpenter Technology, Alcoa Fastening Systems and

Allegheny Technologies (ATI). The 787 uses eight times more titanium fasteners by weight than the 737.

Demand is stronger right now for the premium fasteners used to build aircraft engines. Aircraft fastener

supplies have been negatively affected in the last three years by speculation in the supply chain. Some

distributors bet on strong demand for the Dreamliner in 2008 through 2010 and were burned when

production was postponed multiple times. As a result there was a supply overhang that made it difficult

for OEM suppliers to operate consistently. Instead of drawing primarily from its traditional pool of

aircraft engineers, mechanics and laborers in the Seattle area, Boeing uses an international team of

suppliers and engineers from the United States, Japan, Italy, Australia, France and elsewhere that

manufacturer Boeing components. The repeated Dreamliner delays result from a splintered engineering

strategy and a complex supply chain of about 50 partners (Smock, 2011).

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According to Bernstein Research, Boeing will not reach target goals for its 787 production of 10 planes

per year until 2015. Boeing lowered its outlook due to concerns over additional delays from eight 787s

down to six this year and 51 (from 61) for 2012. Boeing had planned to reach 10 planes per month by

the end of 2013 (Thomas, 2011).

Labor/legal problems

Boeing has been plagued with legal problems in the past. Its recent problems involve a new Boeing

plant in South Carolina. Boeing opened a new $750 million assembly plant in South Carolina. The

National Labor Relations Board (NLRB) is accusing Boeing of breaking the law when it violated workers

rights. The controversy is over Boeing's decision to assemble its fuel-efficient 787 Dreamliner. The NLRB

is charging Boeing with retaliating against workers in Washington State to punish them for past strikes by

building the plant in a right-to-work state where unions are not as prominent. They filed a complaint

against Boeing in April 2011. Boeing plans on keeping the original Washington state plant open and

continue to send the majority of its 787 Dreamliner business there. Boeing has added more than 2,000

jobs there since the 2009 decision to open a second production plant. Regardless, Boeing remains in the

news about government attempts to force Boeing to place the second final assembly line in Puget

Sound, Washington and close the South Carolina final assembly and delivery facility (Devaney, 2011;

Kesmodel & Trottman, 2011).

In September 2011, the NLRB stated that they obtained documents under subpoena that

demonstrates that Boeing opened its second assembly line in South Carolina to avoid labor problems,

even though Boeing officials considered the location its highest-risk option. The South Carolina plan is

known as Project Gemini. According to the NLRB, documents from 2009 reveal that Boeing knowingly

located the plant in South Carolina to help rebalance an unbalanced and uncompetitive labor

relationship. However, leaders at Boeing made a decision to place the plant there based on numerous

factors including the firms need to ensure a competitive future and insist that the decision is consistent
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with the law. Boeings objectives in the move were to improve its cost-competitiveness and regain a

reputation among customers for reliable products, deliveries, and support. Boeing plans to assemble

three of the wide-body Dreamliners a month at the South Carolina plant and seven per month in the

Washington plant by 2013 (Devaney, 2011; Kesmodel & Trottman, 2011).

Dependence on US government

According to Boeings 2010 Annual Report, the United States Department of Defense (DoD) is BDSs

primary customer, accounting for 82% of its revenues. Other significant revenues were derived from the

National Aeronautics and Space Administration (NASA) and international defense markets, civil markets

and commercial satellite markets. BDS consists of three capabilities-driven businesses: BMA (Boeing

Military Aircraft), N&SS (Network & Space Systems) and GS&S (Global Services & Support). Reliance on

these governmental poses a threat to Boeing (The Boeing Company, 2011).

Any budgetary and spending cuts affect future revenues. While Boeing is concerned about future

cuts, current defense budgets exceed $700 billion for 2010. Budgets are expected to increase in 2011.

After 2011, fiscal policy changes could drastically alter future earnings in the defense industry. To reduce

its dependence on the U.S. government, BDS has developed several diversification strategies. Expanding

its business overseas is one such strategy. Recently, the Obama administration has sought Congressional

approval for Boeing to sell $60 billion worth of F-15 jets to Saudi Arabia. Additionally, the company

recently delivered three F-15s to the Republic of Korea. (Boeing: Boeing delivers, 2010).

Boeing depends heavily on U.S. government contracts that are subject to unique risks. In 2010, 43%

of its revenues were derived from U.S. government contracts. In addition to normal business risks, these

contracts are subject to risks beyond the firms control. The funding of U.S. government programs is

subject to congressional appropriations. Many of the government programs may last several years and

are funded annually. Changes in military strategy and priorities can affect future procurement

opportunities and existing programs. Long-term government contracts and related orders are subject to
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cancellation, delay, or restructure, if appropriations for subsequent performance periods are not made.

The termination or reduction of funding can result in an adverse effect on Boeings earnings, cash flow,

and financial position. The U.S. government can modify, curtail, or terminate contracts with Boeing

without prior notice and at its convenience upon payment for work done (The Boeing Company, 2011).

In addition, Boeings contracts are subject to audits by the U.S. government agencies for incurred and

indirect costs. The company is subject to cost adjustments if any costs are found to be improperly

allocated including refunds. They are also subject to government inquiries and investigations that could

have adverse effects on their financial condition. Their government business is also subject to specific

procurement regulations and other requirements that increase Boeings performance and compliance

costs (The Boeing Company, 2011).

Opportunities

Increased demand for aircraft

Air transport throughout the world is constantly changing in response to market opportunities and

challenges. The rise of new airline business models and rapid growth of air travel in the worlds

emerging economies are stabilizing worldwide demand for airplanes. The emerging markets are driving

economic expansion, with China leading the way at 7.2% GDP growth, followed by Southwest Asia

(6.1%), Africa (4.9%), Southeast Asia (4.6%) and Asia-Pacific (4.4%). The global GDP is at 3.1% and North

America is set at 2.1%. This translates into world average air travel growth of 4.9%, of which Asia-Pacific,

including China, will experience growth in air travel of 6.9%. At a global level, the number of airplanes in

the world fleet grows at an average 3.2% each year. At the same time, passenger traffic, measured in

revenue passenger-kilometer, grows 4.9% per year and cargo traffic, measured in revenue tonne-

kilometers, grows 5.4% a year (Boeing SWOT, 2010).

According to Boeings Current Market Outlook for the period 2009-2028, the demand for new

airplanes worldwide is expected to be 29,000 over the next two decades, of which 2,100 will be regional
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jets (less than 100 seats), 19,460 will be single-isles, 6,700 will be twin-aisle, and 740 will be large. All

this translates into revenues of $3.2 trillion over a score of years, for an average of $160 billion/annum.

Boeing is well positioned both geographically and technically to service the huge aircraft market in the

future. The growing demand for aircraft represents an opportunity for Boeing to capitalize on this

market and would be able to expand its revenues and profits from this market (Boeing SWOT, 2010).

The FAA expects U.S. airlines will carry 1 billion passengers a year by 2021, two years faster than

previously forecast. In its annual report published in February 2011, the FAA expects international traffic

to grow more rapidly than domestic travel - with U.S. airlines handling 7.8 percent more international

passengers but only 3 percent more domestic passengers. This trend is expected to continue through

2031 due to faster economic growth in other parts of the world. The International Air Transport

Association also predicted 3.3 billion air travelers worldwide by 2014, up by nearly one-third from 2009,

with China being the major driver of growth (FAA sees 3.5%, 2011).

In a 2006 report, Boeing believes that the 747 range including the Airbus A380, will account for some

3% of deliveries and 10% of value between 2006 and 2025. Airbus believes that the demand for very

large aircraft will be robust, amounting to 1,648 large passenger aircraft and freighters in the 747 range

and above or 22% of the total value of aircraft delivered. Airbus believes that hubs will continue to play

an important role in airline travel especially international travel, and that very large jets will be required

to transport people between hubs. However, Boeing believes that travelers prefer nonstop service

between cities and want to avoid congested hubs. Boeing believes that the flights between city pairs will

continue to grow (Hill & Jones, 2009, pp. C1-C15).

Surge in the US defense spending

Defense spending is a long-term recession-proof industry which would not be affected by cyclical

downturns and upturns. The 2011 US budget allocates $708.2 billion to the Department of Defense

(DoD). The US Federal Budget for FY 2011 is a spending request by President Barack Obama, to fund
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defense operations from October 2010 to September 2011. The 2011 Budget for DoD provides $548.9

billion for the DoD base budget in 2011, a 3.4% increase over the 2010 enacted level. This funding

increase allows DoD to address its highest priorities, such as the Presidents commitment to reform

defense acquisition, develop a ballistic missile defense system that addresses modern threats, and

continue to provide high quality health care to wounded service members. In addition, the 2011 Budget

provides $159.3 billion for DoDs ongoing overseas contingency operations in Iraq, Afghanistan, and

Pakistan. A supplemental funding request of $330.0 billion for 2010 addresses immediate funding

requirements for these missions. Boeings primary customer is the US DoD with approximately 80% of

Boeing defense, space and securitys 2009 revenues being derived from this customer. Therefore, a

surge in the US defense spending could provide growth for the company in the short to medium term

(Boeing SWOT, 2010).

787 Dreamliner to gain market share

Boeings 787 Dreamliner offers more comfort and convenience and is 20 percent more fuel efficient

compared to other airplanes the same size. It also releases 20 percent less carbon dioxide and flies 15

percent faster due to its ultra-light carbon fiber components. The 787-8 Dreamliner will carry 210 - 250

passengers on routes of 7,650 to 8,200 nautical miles, while the 787-9 will carry 250 - 290 passengers on

routes of 8,000 to 8,500 nautical miles. In addition to bringing big-jet ranges to mid-size airplanes, the

787 provides airlines with excellent fuel efficiency, resulting in exceptional environmental performance.

It will also travel at a similar speed as today's fastest wide bodies, Mach 0.85. Airlines also have more

cargo revenue capacity. The modern systems architecture also offers increased functionality and

efficiency. Since being launched in April 2004 with a record order from All Nippon Airways (ANA), 56

customers from six continents have placed orders for 821 airplanes valued at about $145 billion, making

it the most successful twin-aisle launch of a new commercial airplane in Boeings history. The first 787

was just delivered to ANA in September 2011 as the world watched. As of 2011, Boeing has 426 orders
 21

for the Dreamliner. It predicts the market at 3,310 units over 20 years (2009-2028). Boeing estimates

the plane to have a 30 percent maintenance savings and a 10 percent better cash seat mile cost

compared to peer airlines. Boeing also estimates the 787 will connect 450 new city pairs ("Boeing:

commercial airplanes-787," 2011).

Boeing opportunities consist of a growing demand for small to mid-size airline to serve the increase in

travel through pair cities and nonstop destinations. As cities become more populated, hub cities become

more congested. Many travelers prefer to avoid hubs and travel through city pairs. Smaller cities that

offer nonstop flights are more convenient and easier to get in and out of especially for business travelers.

In addition, the Dreamliner offers airlines a more cost efficient way to fly. Airlines can reduce their

operating costs. As older fleets near retirement, demand for newer, quieter, faster, jets are heating up.

Demand has been strong for the 787 (Hill & Jones, 2009, pp. C1-C15).

Threats

Intense competition and pricing pressure

The commercial jet aircraft market and the airline industry remain extremely competitive. Boeing

faces aggressive international competitors, including Airbus, who are intent on increasing their market

share. Boeing Defense, Space and Security (BDS) business also faces strong competition in all market

segments, primarily from Lockheed Martin, Northrop Grumman, Raytheon Company and General

Dynamics. Non-US companies such as BAE Systems and European Aeronautic Defense and Space

Company (EADS), the parent of Airbus, continue to pursue a strategic presence in the US market by

strengthening their North American operations and partnering with US defense companies (Boeing

SWOT, 2010; Hill & Jones, 2009, C1-C15).

International competitors who are intent on increasing their market share, offer competitive products

and have access to most of the same customers and suppliers. Airbus has historically invested heavily to

create a range of products to compete with Boeing. Regional jet makers Embraer and Bombardier
 22

continue to develop larger and more capable airplanes. Additionally, other competitors from Russia,

China, and Japan are likely to enter the 70 to 190 seat aircraft market over the next few years. In

addition, certain of Boeings competitors have occasionally formed teams with other competitors to

address specific customer requirements. BDS expects the trend of strong competition to continue into

2012 with many international firms pursuing announced intentions of increasing their US presence.

Furthermore, market liberalization in Europe and Asia has enabled low-cost airlines to continue gaining

market share. These airlines have increased the downturn pressure on airfares. This results in continued

cost pressures for all airlines and price pressure on Boeings products. This market environment has

resulted in intense pressures on pricing and other competitive factors and Boeing expects these

pressures to continue or intensify in the coming years. Therefore, intense competition across all

business divisions of Boeing could erode the market share of the company and could also affect its profit

margins (Boeing SWOT, 2010; Hill & Jones, 2009, pp. C1-C15).

Risks concerning labor issues

Boeing faces risk concerning labor issues at its plants. Approximately 57,000 employees, which

constitute approximately 36% of the companys total workforce, are union represented as of December

31, 2009. Boeing experiences work stoppages from time to time due to worker strikes. The company

experienced a work stoppage in 2008 when a labor strike delayed commercial aircraft and certain BMA

program production. Also in May 2010, 1,700 Boeing workers who assemble giant C-17 cargo jets in

Long Beach, California were on strike for a month over pension and medical benefits. As a result, theC-

17 production line was shut down although 3,000 non-union workers were on the job. The work

stoppage was tough at a plant where workers were accustomed to rolling a new C-17 onto the tarmac

every three weeks. The strike was halted in June 2010, as Boeing offered to pay a $4,000 payout and a

3.4% over the life of the agreement. It also offered an increase in the basic pension benefit to $79 per

month for each for each year of service, from $70. Boeing may experience additional work stoppages in
 23

the future, which could adversely affect its business. The company cannot predict how stable its

relationships will be with 14 different US labor organizations and 7 different non-US labor organizations.

Union actions at suppliers can also affect the company. Work stoppages and instability in the companys

union relationships could delay the production and development of its products, which could strain

relationships with customers and cause a loss of revenues (Boeing SWOT, 2010).

Uncertain airline industry environment

Boeings main competitor is Airbus. The competition between Boeing and Airbus is fierce. Airbus can

offer large discounts because it is subsidized by European markets. Both have spent millions lobbying

politicians for various reasons from industry regulations and funding to contracts. With time and use,

airplanes age and must be refurbished or replaced. Airlines are focusing on refurbishing old aircraft

rather than new ones which can decrease the demand as well as sales of new aircraft. Boeing has an

opportunity with its Dreamliner to capture the aging airplane market. It may be more cost effective over

the long haul for airlines to replace planes due to the fuel efficiency and cost savings of the Dreamliner

(Boeing SWOT, 2010; Hill & Jones, 2009, pp. C1-C15).

In addition, there has been a decrease in air travel due to the economic state of the global economy.

Travelers do not have the money to travel. Businesses are spending less on travel. Since business travel

is directly related to corporate profits, airlines are dependent on the overall health of the business

environment. Losing those premium travelers could prove to be a huge hit to carriers corporate profits.

Indicators for business travel point to a continued slowdown for the remaining months in 2012. Stock

prices and profits are down for American, Delta, and United airlines as they struggle to keep up with

rising fuel costs and thinning demand. The airline industry will likely face a decline in profitability

heading into 2012, with total industry profits falling to $4.9 billion from $6.9 billion this year. The

decrease in passenger economy travel has been a problem for airlines over the last decade, but the

slowdown in corporate premium travel poses new risks and has the potential to cause even more
 24

damage. Passenger tickets now account for just 71% of U.S. airlines' total passenger revenue, down

about 17 percentage points from 1990, according to the Department of Transportation, and profits from

business travelers typically make up a majority of that. Although there was a significant rebound in

travel after the recession officially ended last year, there is also a shift away from travel on business and

first class seats towards economy. Before the drastic decline in the economy two years ago, premium

travel made up 9-10% of total international air travel. In the latest periods, that has fallen to about 7.5-

8% placing more pressure on airlines to cut costs. Air travel in the European and North Atlantic markets

have dropped significantly which reflects the economic conditions of this part of the world. These

regions used to be one of the strongest for air travel. On a positive note, travel to Asia continues to be

robust as those emerging markets become more attractive to foreign businesses. With the increased

economic interest in Asian markets, premium travel growth within the Far East was up for July and

August 2011. First-class travel to the Far East from the U.S. also grew modestly and showed little sign of

any slowdown. However, travel on the spacious leather seats within the U.S. dropped 13.2%, which is on

top of a 9.7% decline in July (Booton, 2012).

Rising fuel costs

Rising fuel costs are threatening airline margins. So far in 2011, the U.S. airlines have increased

airfares six times compared with four times in 2010. A strong demand could offset some of the price of

fuel. Demand began to build in 2010 as airlines kept the number of seats available for purchase

relatively low and the recession started to ease. Revenue offset the steady climb of jet-fuel prices last

year. In the early months of 2011, however, conflict in the Middle East led to jet-fuel prices increasing at

an accelerated pace compared with 2010. The volatility of fuel threatens profitability and dampens

plans airlines have to increase capacity in the next year. In fact, many airlines have had to cut system

wide capacity for 2011 by as much as 2 percent. United, American, and Delta Airlines reduced their

capacity-growth plans due to fuel prices. The industry is predicted to remain flat for the remainder of
 25

this year. Delta expects its fuel bill to be about $3 billion for 2011, a 35 percent increase over 2010.

Besides adjusting capacity, airlines may be forced to furlough and lay off employees and add ancillary

fees to tickets as fuel price increases and demand decreases. Ancillary fees include charges for checked

bags, blankets, and snacks. To combat rising fuel prices and improve cash flow, some airlines are

deferring delivery of planes and may cancel future orders (Neighbor, 2011).

Airlines are threatened by the volatility in jet fuel prices. Today, jet fuel ranges from 35 to 40 percent

of airlines operating costs. Jet fuel was at an all time high in 2008 when prices were over $4 per gallon.

Airlines are in a better position today than in 2008, however, there are fewer travelers. After 2008, the

airline industry downsized and removed a lot of capacity. Utilization rates are higher and there are not

many empty seats on planes. Reducing and maintaining capacity has meant the difference between

hardship and survival for many airlines. For Boeing and Airbus, the reduced capacity affects their bottom

line in airplane sales. However, with the continued threat of rising fuel prices, Boeing has a great

opportunity with its Dreamliner aircraft (Neighbor, 2011).

Change in US budgetary priorities and contracts

One of Boeings strength is its contracts with the government. However, heavily reliance on these

contracts also represents a threat. As war conditions change, the military requirements also change.

Boeing was awarded one of the biggest contracts in military history consisting of $35 billion to build the

next generation of air refueling tankers. These new tankers will replace 179 of the Air Forces aging

tankers which are equivalent to a flying gas station ("Boeing receives $35," 2011).

Boeing provides commercial aircraft to many foreign airlines and is one of the largest exporters in the

U.S. It is also one of the biggest defense contractors or the military and other government departments.

Boeing gets a lot of support from the U.S. Export-Import Bank due to its overseas sales volume. It is

receiving about $15 billion in loan guarantees from the bank which help finance foreign commercial

customer purchases. In 2010, Boeing received about 63% of all guarantees from the government entity.
 26

However, despite this business, Boeing as well as other defense contractors, is facing the potential for

major cuts and reductions in overall defense spending by the United States. This means that there may

be fewer tankers, transports or other products purchased from them. The contract Boeing received for

the new KC-46A refueling tanker helps offsets the end of the C-17 production for the Air Force and the

end to other programs. However, the Air Force is looking at moving a great deal of their logistic support

back to their own depots and away from commercial providers which affects Boeings bottom line

(Potter, 2011).

Personal Observations

Boeing has been building commercial airliners since 1927 with the first Boeing commercial jet airliner,

the 707, introduced in 1957. Boeing is best known for its 747 jumbo jet it introduced in 1966. Boeing

merged with McDonnell Douglas in 1997 primarily for its strong military business and has been a

dominant player in the commercial aerospace industry. However, the firm has been losing market share

to Airbus since the mid-1990s. Boeing and Airbus directly compete with each other. In 2006, Boeing

enjoyed strong sales of its 737, 777, and its newest wide-bodied super-efficient jet, the 787 Dreamliner.

Boeing started taking orders for the 787 in 2006, however, due to production delays the first aircraft was

three years late. All Nippon Airlines did not take delivery of the first plane until September 2011.

Boeings competitor, Airbus, had its own production problems with the A380 super jumbo jet (Hill &

Jones, 2009, pp. C1-C16).

Historically, airline manufacturers tried to manage the supply process through vertical integration

making many of the component parts that went into the aircraft. Their functional level strategy of

keeping production in house had many flaws. Airplanes were housed in garages where they were

assembled. When one process was complete, the plane was moved to another area for the next

process. This process was labor intensive, inefficient, and costly. However, over the past two decades,
 27

there has been a shift to contract out production components and entire subassemblies to independent

suppliers. Contracting out has caused production problems and delays. It has been difficult to

coordinate the manufacturing process with suppliers. Boeings 767, introduced along with the 757 in

1982, was the first aircraft in which the firm contracted out a significant portion of work to Japanese

manufacturers. Over the years, Boeing had numerous problems with suppliers and manufacturers

causing significant delays with its aircraft. Airbus also had outsourcing problems. Its largest A350 wide-

body aircraft that competes with Boeings 777 has been delayed for 18 months (Rothman, 2011).

By the late 1990s, Boeing was plagued by a number of production problems. In an attempt to gain

share from Airbus, Boeing cut prices. Delivering aircraft meant that Boeing had to more than double its

production schedule between 1996 and 1997. However, the company ran into some severe production

bottlenecks. The company scrambled to hire and train about 41,000 workers, recruiting many from

suppliers, a move it came to regret when many of the suppliers could not meet Boeings demands and

shipments of parts were delayed. In 1997, things got so bad that Boeing shut down its 747 and 737

production lines so that workers could catch up with out-of-sequence work and wait for back-ordered

parts to arrive. Ultimately, the company had to take a $1.6 billion charge against earnings to account for

higher costs and penalties paid to airlines for the late delivery of jets. As a result, Boeing made very little

money out of its mid-1990s order boom. The head of Boeings commercial aerospace business was

fired, and the company committed itself to a major acceleration of its attempt to overhaul its production

system, elements of which dated back half a century (Hill & Jones, 2009, pp. C1-C15).

Boeing changed its business strategy to an outsourcing manufacturing process. They looked at the

Japanese automobile manufacturing processes. Toyota, after analyzing their production and

manufacturing process and discovering numerous flaws, switched to a process known as lean

production. In contrast to conventional or mass production, lean production shortened production runs

by using a system of levers and pulleys which reduced setup times for production equipment which is a
 28

major source of fixed costs. In addition to shorter runs and quicker turnover times, the change to lean

production enabled Toyota to provide better customer responsiveness and operate more efficiently. In

the 1990s, Boeing looked at what Toyota had done. Until then, Boeings production was about

producing parts in high volumes and storing them in warehouses until they were needed. Boeing was

drowning in inventory and had the huge financial expense of housing the inventory. In addition,

expensive equipment took up a lot of space and remained idle for long periods of time. Boeing created

cross-functional teams to develop lean production processes. These moonshine teams started

developing their own equipment and machines that were essentially like moving garages and assembly

lines. Instead of moving the aircraft, they wheeled machines around the plant to work on the planes.

This cut down assembly time and manpower. This small scale and quick turnaround made it possible to

produce these parts just in time, eliminating the need to produce and store inventory. Portable

machines such as routers were built for a fraction of the cost of large fixed machines. Set-up times were

minutes instead of hours. Boeing reduced labor hours by 74% and reduced manufacturing space by 50

percent. Boeing was now able to produce smaller lots of parts economically and switch to just-in-time

inventory systems reducing waste. The moonshine teams also adopted other process improvement

methodologies including Six Sigma quality improvement processes and total quality management

systems (TQM). Boeing also moved from a static assembly line to a moving line in which the aircraft is

moved at a rate of 2 inches per minute moving past a series of stations where tools and parts arrive the

moment needed. This reduces time and work and eliminates workers from wandering around for parts

and tools. These arrive on workstations delivered to the assembly area. In addition, the moving line is

stopped when a problem occurs. These changes have had a significant effect. By 2005, assembly of the

737 went from 22 days to 11 days. Work-in-progress inventory was reduced by 55% and stored

inventory was reduced by 59 percent. By 2006, all Boeings production lines except the 747 had shifted

from static bays to moving lines. It shifted the 747 to a moving line with the production of the new 747-
 29

8 jet. Changing its functional-level and business-level strategies from large inefficient production

processes to lean production processes has enabled Boeing to reduce cost, manufacture and produce

more efficiently, and improve customer responsiveness. Although Boeing had made great

improvements in their production and manufacturing processes, they were mired with supplier

problems. Boeing outsourced more work for the 787 than any other aircraft to date. In addition, Boeing

asked it major suppliers to bear some of the development costs. Supplier problems caused major delays.

Coordinating suppliers proved to be complex, costly due to delay penalties, and time consuming. Boeing

lost orders for the 787 due to the delays and potential customers switched to Airbus (Hill & Jones, 2009,

C1-C15).

Both Boeing and Airbus have had similar problems with production and suppliers. However, they had

have had very different views for demand projections. Annual projections of future demand is based on

assumptions about future global economic growth, the resulting growth in demand for air travel, and the

financial health of the worlds airlines. In 2006, Boeings report showed that passenger traffic would

grow at 4.8% per annum over the next twenty years versus Airbuss forecast of 5.3 percent. Boeing

forecast demand for 27,210 aircraft valued at $2.6 trillion over the next twenty years. Boeing believes

that the majority of aircraft will be for regional jets (which have fewer than 100 seats) and the large 747

aircraft. According to Boeing, aircraft in the 747 and the Airbus A380 range will account for about 3% of

deliveries and 10% of the value. On the other hand, Airbus believes that demand for very large aircraft

will be robust, amounting to 22% of the total value of aircraft delivered. These differences reflect

different views of future demand. Boeing believes that airline travelers will demand more frequent

nonstop flights between city pairs, not larger aircraft. After Boeing introduced the 767, airlines

introduced more flights between city pairs in North America and Europe and more frequent departures.

In 1984, 63% of all flights across the North Atlantic were in the 747. By 2004, this declined to 13% with

smaller wide-bodied aircraft such as the 767 and 777 (Hill & Jones, 2009, pp. C1-C15).
 30

Boeing developed the wide-bodied 777 in response to Airbuss A330 and A340. The 777 was the first

jet to be designed entirely on a computer. In addition, for the first time Boeing used cross-functional

teams composed of engineering and production employees. It also brought major suppliers and

customers into the development process. As with the 767, a significant amount of work was outsourced

to foreign manufacturers, including the Japanese companies Mitsubishi, Kawasaki, and Fuji, which

supplied 20% of the 777 airframe. In total, some 60% of parts of the 777 were outsourced. Boeings

break-even point with the 777 is 200 planes. By mid-2006, they had 850 orders (Hill & Jones, 2009, pp.

C1-C15).

Although Boeing encountered a lot of problems, there is a lot that they are doing right in the area of

their lean efforts. They have continued these efforts for over a decade now and seemed to have learned

a few things along the way. Some of the problems were due to poor planning, poor execution of their

plans, and in some cases a combination of both. Good plans should consider risks and allow for

contingencies. Questions that arise are Why did things go so wrong for Boeing; did they have a good

plan or just good intentions? In addition, what was Boeings philosophy behind their approach? Exactly

what was Boeings mission? According to Miller (2008), The mission statement of the purchasing group

of any company aiming to become a world class lean manufacturer should be a variation on the theme

of: Buy the best products at the lowest price, on-time in a way that ensures long-term stability by

building strong supply base. The work of sourcing or purchasing within an organization should create

value. This means not running out of parts, being on-time with good quality, and purchasing at a low

price. In addition, purchasing activities should create profit in a real and concrete way by streamlining

the entire process and building a strong supply base. Boeing should learn from its supply chain mishaps

with the 787. Firms can take actions toward a better lean supply chain strategy. Firms should develop a

mindset of mutual trust and responsibility by building good and strong cooperative relationships as

equal partners with suppliers. Fair and reasonable commitments that both sides can live up to and fulfill
 31

are simply good business. Cut-throat supply chains that erode trust or relationships based on one-way

responsibility work for a short while, and then can fail. A firm should organize its SPTT (Supplier Parts

Tracking Team) to make sure there is a smooth start up of production and delivery from suppliers. For

example, Boeing was not paying attention to the detail and intensity when it managed to run out of

fasteners. Boeing should spend less time putting out fires and more time on a SPTT to prevent these

fires (Miller, 2008).

The next ten years will be interesting for Boeing and Airbus. The economic environment that the

world faces today is much different than in the past. War, economy, and terrorism all affect the future of

these airlines. They have some of the same problems but deal with them differently. Both companies

see growth in the industry but differ in the amounts of growth and the market segments that will

experience growth. Personally, I see airline travel growing more in the city pairs segment with smaller

aircraft and more frequent nonstop flights going from city to city. The major hubs will grow but at a

lower rate. The industry will always require bigger aircraft like the 747 and A380 for international flights.

People that travel on longer transcontinental flights prefer larger, more comfortable aircraft.

Boeing has made a lot of changes to its manufacturing strategy and supply chain strategy. The

company needs to be careful not to make the same mistakes. It needs to work on strategies that will

ensure better predictions on delivery dates. All projects have delays. However, a 3 year delay with the

787 seems unreasonable and unacceptable. In all research for this paper, I did not find information on

the project management team responsible for developing the project time schedule. Managing projects

as big as the 787, should be monitored with precision. The level to which Boeing managed the project

management team is unclear. It would be interesting to see a copy of the project management plan.
 32

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