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737 Programs and Renton Wash. Site – A Strategic Analysis
Presented By: Group 4 Sajjad Gul, Precious K. Horvidalla, Lowell John J. Fetizanan, Marj, Christopher Presented to: Dr. Tabassam Raza Policy Management - MBA
the Shared Services Group. which includes the world's passenger and cargo airlines.000 people across the United States and in 70 countries. Boeing has a long tradition of aerospace leadership and innovation. The company has nearly 12.000 commercial jetliners in service worldwide. which provides a broad range of services to Boeing worldwide. A top U. apply and protect innovative technologies and processes. 747. around-the-clock technical support to help operators maintain their airplanes in peak operating condition. creating advanced technology solutions. the main commercial products are the 737. Boeing employs more than 159. advanced information and communication systems. Through Boeing Commercial Aviation Services. Our enterprise also leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers worldwide. repair and overhaul facilities. satellites. The company continues to expand its product line and services to meet emerging customer needs. Space & Security. Today. the world's largest and most comprehensive provider of airline training. gives the combined company a 70-year heritage of leadership in commercial aviation. talented and innovative workforces anywhere.Boeing is the world's largest aerospace company and leading manufacturer of commercial jetliners and defense. This represents one of the most diverse. weapons. the company provides unsurpassed. Supporting these units are Boeing Capital Corporation. as well as maintenance. With corporate offices in Chicago. Boeing Defense. 767 and 777 families of airplanes and the Boeing Business Jet. More than 123.in virtually every business and technical field from approximately 2. the company supports airlines and U. Commercial Aviation Services offers a full range of world-class engineering. more efficient members of its commercial airplane family. . sea.000 advanced degrees -. Its broad range of capabilities includes creating new. logistics and information services to its global customer base. integrating military platforms. land-. and arranging innovative customer-financing options. exporter. launch systems. and allied government customers in more than 90 countries. and Boeing Engineering. joined with the lineage of Douglas airplanes. which helps develop.and space-based platforms for global military.000 employees hold college degrees -including nearly 32. With the merger of Boeing and McDonnell Douglas in 1997. Space & Security (BDS) provides end-to-end services for large-scale systems that enhance air-. Boeing products and tailored services include commercial and military aircraft. space and security systems. modification.700 colleges and universities worldwide. and the 747-8. defense systems and the war fighter through network-enabled solutions. a global provider of financing solutions. New product development efforts are focused on the Boeing 787 Dreamliner. electronic and defense systems. Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Defense. Boeing also trains maintenance and flight crews in the 100-seat-and-above airliner market through Boeing Training & Flight Services.S. acquire. Boeing Commercial Airplanes has been the premier manufacturer of commercial jetliners for more than 40 years. and performance-based logistics and training.S. Operations & Technology. which is roughly 75 percent of the world fleet. Boeing's leadership in commercial jets.
recruitment. low-cost technical services in information technology.government and commercial customers. the Missile Defense Agency's Ground-Based Midcourse Defense program. and the expertise of a seasoned group of financial professionals. government as a system integrator on several programs of national significance -.S. Shared Services Group delivers greater value. BDS is developing enhanced capabilities through network-enabled solutions. disaster preparedness. Working closely with Commercial Airplanes and Defense. In addition to designing. Space & Security. detailed knowledge of Boeing customers and equipment. Shared Services Group allows business units to focus on profitable growth by providing the infrastructure services required to run their global operations. communications and intelligence. surveillance and reconnaissance technologies. develop and retain a world-class technical and functional work force. competitively protected and environmentally progressive. conservation programs. Engineering Operation & Technology enhances Boeing's growth and productivity by driving technical and functional excellence across the enterprise. producing. Boeing Capital Corporation arranges. munitions and spacecraft for military. creative services. research and technology. transports. The Vision The Boeing Vision is: People working together as a global enterprise for aerospace leadership. security. It also offers comprehensive travel services to Boeing employees and manages the sale and acquisition of all leased and owned property for Boeing. and strives to attract. virtual workplace. a critical component of the Secure Border Initiative managed by the Department of Homeland Security . employee benefits and services. The organization pays particular attention to ensuring the success of development programs. By integrating services.NASA's space shuttle and International Space Station programs. Its primary objectives are to support the company's business units by delivering high-quality. staffing. modifying and supporting fighters. Boeing Capital Corporation combines Boeing's financial strength and global reach.7 billion. leverages buying power and simplifies access to services for all of Boeing. integrated enterprise strategies that ensure technology is ready when needed. site operations. With a year-end 2009 portfolio of approximately $5. business continuity and the purchase of all non-production goods and services. operations and supplier management support that ensures program success. and highly disciplined and efficient engineering. reclamation. BDS also supports the U. including facilities services. creates "lean" processes and operations. civil and commercial use. aerial refuelers. The group provides a broad range of services worldwide. missiles. construction. rotorcraft. wellness programs. Boeing Capital Corporation is a global provider of financing solutions. fire protection. transportation. structures and provides financing to facilitate the sale and delivery of Boeing commercial and military aircraft. satellites and launch vehicles. How will we get there? • Run healthy core businesses . bombers. the Army's Brigade Combat Team Modernization program and SBInet. and test and evaluation.
but also serve as guideposts to help them become the company they would like to be. Office of Internal Governance. Business Development and Strategy. Michael Luttig Dennis A. Executive Council – The Boeing Company James F. aspiration and imagination. DensonLow Senior Vice President. When you consider their many accomplishments -. Bell Executive Vice President. their culture mirrors the heritage of aviation itself. Hill President. Government Operations. The Boeing Company Shephard W. The Boeing Company Timothy Keating Senior Vice President. Boeing is a company of amazing people working in one of the most exciting industries in the world. built on a foundation of innovation. Downey Senior Vice President Communications. Boeing International Senior Vice President. The Boeing Company Corporate President and Chief Financial Officer. Space & Security . The Boeing Company J.• • Leverage our strengths into new products and services Open new frontiers Culture and Values Boeing is committed to a set of core values that not only define who they are. they are constantly re-examining their capabilities and processes to ensure that their company is as strong and vital as their heritage. Commercial Airplanes James A. Albaugh Executive Vice President. In fact. Muilenburg Executive Vice President.from designing and building the earliest biplanes to creating and supporting today's supersonic aircraft and spacecraft -. The Boeing Company Executive Vice President.you might think they would be content with how far they’ve gone. General Counsel. The Boeing Company President and Chief Executive Officer. The Boeing Company Wanda K. Boeing Defense. But a company of their size and scope doesn't succeed by resting on its laurels. The Boeing Company President and Chief Executive Officer. The Boeing Company Thomas J.
And the aftershocks are still being felt. and get people to connect in ways that will help us better communicate. where Boeing has built the 707. In recent years. and Steelcase/BarclayDean. instead of being scattered around the nearly 300-acre campus.8 earthquake that struck the Seattle area in February 2001 rattled peoples' nerves—and shook the status quo at Boeing's Renton. Turner Construction. build or support.Richard Stephens Senior Vice President. more than 2. we realized that if we could do that. We want to change the way we work together. Corvi said the Renton team has reduced the amount of square footage to support airplane production by more than 40 percent. and had them up and running. we could certainly move everyone out into the factory and make the most out of that space. Before employees could begin their move. The initiative not only represents a more efficient use of assets such as land and inventory. 727. Boeing recruited three partners to help: NBBJ. Indeed.. a lot of work needed to be done. Engineering. is the birthplace of the jet age.250 employees into new work spaces in and adjacent to the site. Others will move into soon-to-be-refurbished buildings nearby. "We couldn't reoccupy it. now 737/757 programs vice president and general manager for Boeing Commercial Airplanes. Seattle's heralded baseball stadium. located at the south end of Lake Washington. the architectural firm that designed Safeco Field. Lean manufacturing principles and a moving 737 production line have improved productivity." Commercial Airplanes' Renton site. "Move to the Lake is an opportunity for us to do things differently. so literally over a weekend we moved 1. The Boeing Company Chief Technology Officer. operate more efficiently and become even more competitive. which in turn has cut the need for inventory and freed up floor space throughout the cavernous Final Assembly buildings. one of the largest construction firms in the United States." The first groups made the move in January. to create a linkage between builders and designers. That earthquake gave then site leaders Carolyn Corvi and Pat Shanahan the impetus to act on an idea they'd been kicking around for some time—a vision of a streamlined production system where product designers and support employees work side-by-side with product builders. finance. . 737 and 757 in record numbers. By the end of 2004." Corvi said. Afterward. "This isn't intended to be just a facilities move. Corvi and Shanahan decided to convert unused factory space into office space to bring the people who really need to be near the airplanes as close as possible to the products they design. The Boeing Company Senior Vice President.500 employees from engineering. Tracy Analyzing the Situation and Problems The magnitude 6. Human Resources and Administration. Operations & Technology John J. site. Wash. an office furniture firm that provides product solutions that promote employees' working-together relationships." said Corvi. "The earthquake pretty much destroyed our 10-85 building. but it creates a new way to work. Thus a project dubbed "Move to the Lake" was born. program management and other groups will be relocated from remote buildings into the Final Assembly buildings.
as well as leading-edge technologies such as Voice over Internet protocol and wireless areas. The Move to the Lake team also is using the latest technologies in workspace design to ensure employees have the tools they need to accomplish their jobs. etc. so employees in the offices can see the product at all times. the engineers found that being close to the airplanes "made it much easier for them to get together with mechanics to discuss issues affecting quality. communication. its people and products." SWOT Analysis of Boeing Boeing Strengths • • • • • The Boeing Company is the largest aerospace firm in the world The Company has been the world’s leading manufacturer of commercial aircraft for the last 20 years The Company is the largest contractor for NASA The Company has two strong main business units namely. The forthcoming end of 757 production combined with the sight of wrecking crews demolishing unoccupied buildings on the site and have spurred speculation—inside the company and outside—about Boeing's future in Renton. After overcoming some initial apprehension. The team then recruited 35 engineers to participate in a 12-week Move to the Lake pilot project that required them to leave their offices to make a temporary home in a work space in Final Assembly. "With more than 900 737s in backlog and excellent sales prospects. "knowledge cafés" and open meeting zones. For example. One of the first things Turner Construction did—with dramatic results—was install dozens of windows along the east wall of the building." Garvin said. and a focus on customers and the end product— airplanes. Mercer Island and the Seattle city skyline.—by the color of the walls. the facility design incorporates areas for collaboration. Another key design element intended to enhance the employee experience is something many take for granted: windows. Boeing also is taking advantage of its waterfront location to create an employee dining center with walls of windows. NBBJ proposed a vibrant color palette for the building interiors. and we continue improving our productivity. and plenty of room for spontaneous collaboration. technologically advanced and set up to foster a culture of collaboration. The design developed by architects at NBBJ called for office areas separated from factory space by a translucent wall with windows. Corvi has heard the speculation but emphasizes the fact that the Move to the Lake project currently is Boeing's largest capital improvement project in the Puget Sound region. "We wanted to intentionally design it to be flexible. Boeing will eventually sell the older buildings it vacates." In 2002. "Move to the Lake represents a significant commitment to the Renton site. arrival zone. In fact." she said. we plan to build 737s in Renton as long as the world wants them. which will showcase impressive views of Lake Washington."We knew going in that we wanted to create something totally unique to Boeing." Garvin said. program manager for the Move to the Lake project." said Mark Garvin. The pilot team identified a number of key issues that helped improve the design of office work spaces in a factory environment. restrooms. Work spaces were designed with equality and openness in mind: no hard-walled office areas for anyone. The Commercial Aircraft and Integrated Defense Systems The Company is responsive and innovative when it comes to technology and systems development and in fact has two new flagship innovations to wit: . "The changes we're making to typical work spaces will improve everyone's ability to do his or her job. Boeing and its partners conducted studies on how employees work and interact. installation and assembly. This helps create a work place that embodies the qualities desired for people to bring to their work: flexibility. As Renton consolidates its operations. visitors as well as employees at Renton can identify what type of space they're in—conference room. mobile. efficiency and agility. innovation. as the plan called for groups who need to work together to be seated near each other. a stark contrast to the drab interior paint dating back several decades.
Air Traffic Management. Increased demand for passenger non-stop travel between cities Threats for Boeing • • • Decline in orders of commercial airlines due to increase in security and safety concerns High Production Cost Competitors: AirBus or (EADS) European Aeronotic Defense and Space Co. the Company’s high debt-to-asset ratio and high operational expenses puts the company at a risk and susceptible to financial collapse. Boeing Weaknesses • • • The Company production backlog have average about $78 Billion over the past (5) years. Opportunities • • • • The Company’s innovations. The Company through its Boeing Capital Company (BBC) offers financing arrangement by leasing and extending loans to commercial and military customers. which means if the company would be able to convince and capture future market. The airline passenger business and air cargo business is expected to double over the next 20 years hence. it has the opportunity to double its revenue. launch and satellite. the Major competitor for Boeing Integrated Defense System . The Depletion of Worldwide supplies and inventory of aircraft. • • The Company is a major player in the field of Military aircraft and missiles and is leading in the development of Integrated Defense Systems The Space and Communication segment or business unit which is engaged in the development of integrated battleship. that is a dynamic breakthrough in consumer and commercial airline service that is beginning to provide air travellers an unparalleled array of high speed data communication services via spacebased networks. for Commercial Airlines. missiles and other aerospace products as a consequence of the war “Enduring Freedom” will increase the market demand for the Company’s products. missile defense. The Company Organizational Structure is too stiff and is restrictive with respect to function and responsibility distribution Based on the Company’s financial information. and Lockheed Martin. human space flight and exploration. that will replace the current ground program. • • Connexion by Boeing. The Company’s ability to streamline its aircraft production operation has significantly reduced its production time and ultimately reduced its production cost and expenses. and homeland security is the company’s new and fast growing venture. particularly Connexions and Air Traffic management provide a competitive edge over existing competitors.
rocket launchers. the major competitor of Boeing IDS. also produces military aircraft. Integrated Defense Systems There was an increase in Contractual back-log of orders for four consecutive years Lockheed Martin. Space and Communications Boeing Capital Corporation-Capital Financing Increased in contractual back-log of orders High interest rates could possibly make the segment having a low profit. Boeing should produce IDS equipment that is of high quality and competitive price to be able to cope with its competitors. Since Air Traffic Management (ATM) system is relatively inexpensive. Boeing should hire additional staff that is competent to produce the quota of equipment assigned to per staff.SWOT Analysis / Segment based Business Units/Segment Commercial Aircraft Issues Identified based on SWOT Analysis There was a decreasing demand on commercial aircraft Recommendations Boeing should pursue its plan to address the increasing demand for passenger nonstop travel between cities. and other space equipment. Increase workforce production to expedite Boeing should factor-in a competitive rate on their capital financing to engage more customers which . To expedite the production. the company should implement this to increase revenue and be able to compete with other aerospace players.
and has it waiting for them to buy.9b 2000 $89. The strategic partnership with both of these two organizations allowed Boeing to become the world’s largest space and Communications Company. in that way the retain value is expensive to imitate. and The United States Air Force. The main source of Boeing’s competitive advantages is its core competencies. and allows them to build stronger relationships with their customers. Repeated effort to meet the customer demands and needs (Core competenciesBoeing. Boeing also has `operational strength internally. as it notifies the customers that Boeing will design aircrafts according to their needs.com) Boeing commits to understanding and responding to what its customers would like in an aircraft. as they are beginning to research with their suppliers to integrate and design better aircrafts. Boeing has a strong set of competitive advantages at which it uses to market share and the airline industry. as we will analyze Boeing’s unique competitive advantages in the airline industry Core Competencies are unique. they are able to design and build better aircrafts. A.com). Unique contracts and agreements with both NASA. Internal Analysis of Boeing Boeing has many strong competitive advantages. With some of their research and development being done outside the company. which allow them to better manage and sustain their competitive advantage in the market. and designing and implementing specific needs or demands.consequently profitable make the segment Comparative Production Analysis Backlog of orders Undelivered jetcraft units Expected jet transport deliveries Orders 2003 $63. This builds a strong competitive advantage. One of Boeing’s unique business structures is to design the product according to customer wants. with its unique knowledge of wing technology and new lightweight composites being one of its stronger manufacturing core competencies.9b 178 2002 1083 381 2001 $75. Ability to implement large-scale implementation systems (Core competenciesBoeing. Boeings extensive research and development is a strong core competency. Boeing has begun to build stronger bonds with its suppliers. and internal resources that help define its core value. and cannot be substituted. These two . as well as helped it become a large leader in the aircraft manufacturing market. which help develop Boeing’s resources into strong competitive advantages in the airline manufacturing industry.8b 1598 489 Analysis: As shown in the above table. there was a reduction in backlogs of production delays by rapidly ramping-up the production process which resulted to decreasing the number of undelivered jetcraft units.
This pioneering technology development helps ensure Boeing stay a leader in the industry.partnerships allow for Boeing to grow into the aerospace industry. For main commercial product such as aircraft. This would allow the company to produce better aircrafts more efficiently with fewer costs than the competition. 757.000 commercial jetliners in service worldwide. and St. Louis. One aspect of the airline industry that is highly regarded is market share. the culmination of both Boeings core competencies and operational strengths allow it to build upon different competitive advantages in the airline industry. One of the main reasons Boeing has most of the airline manufacturing industry market share is due to its long history of excellence in designing aircrafts for over 90 years Boeings strong name and brand allows for a strong hold on the airline manufacturing industry. Worldwide. Competitive Advantages Boeing has a long list of competitive advantages that it uses to gain an advantage over its competitors. employees in more than 60countries and operations in 26 states. Wichita. Thanks to its strong R& D. In defense projects Boeing works closely with Northrop Grumman in programs such as the joint common missile program. Boeing enjoys the ownership of a brand with good and far reaching awareness on a global scale. Boeing is also a 50-50 partner with Lockheed Martin in the United Space alliance. Boeing also works with many other organizations such as NASA in close relationships. giving Boeing a strong competitive advantage over its competition. Southern California. which is roughly 75% of the world fleet. which strengthen the company’s position in other markets. One of Boeings largest competitive advantages include its unique research and development departments which are able to design and implement better aircrafts without incurring large amounts of costs. As one can see.000 people with major operations in Washington State. One of Boeings greatest competitive advantages is its unique strategy to work more with both its customers and suppliers. Its product line is continuing to expand. creating new versions of its family of commercial airplanes. which Boeing has consistently had an advantage of. 767. Strong relationships with business partners Boeing enjoys many strong alliances with many other globally powerful companies. and 777 families of jetliners and the Boeing. which has now become a duopoly between Boeing and Airbus. 737. Total research and . 747. To remain competitive. The company has more than 14. Boeing has 717. and allow Boeing to have a wider range of products for a wider range of customers. Boeing has been on winning side in the head-to-head competition with Airbus so far. Boeing and its subsidiaries employ close to 188. Missouri. Strong global network The company has strong international operations with customers in around 145 countries. Kansas. mainly Airbus. Broad product line that covers most major market niches / R&D development Boeing Company offers a wide range of product lines. Boeing must invest in developing the latest technologies. to design and build the best aircrafts on the market.
this is related to the booming market of low-cost airline. Recently. value-added maintenance. B.website. this is suitable with the strategy of Boeing as mentioned in the previous parts. engineering and operational data are provided for customer. No industry was hit harder than airline industry after the 11th Sept. Low cost airlines in Europe and Asia Airbus. At the moment. Extremely Competitive Rivalry between Existing Players. and provide ready access to parts and training using the web and ED-ROM technologies.Integrated Defense systems Increase pressure to reduce price of products Strategic Plan Frame Work .25% and 3. as the managers are able to allow the company to run smoothly. The company expects research and development expenses to be between 3. However. Boeing and Airbus as well have to suffer big losses in revenues from 2001.com. Airbus A380 is still unsure about its future because most of the big airline companies at the moment are not gaining profit. MyBoeingfleet. Good Customer Service Regional World centers provide proactive. Boeing has received a number of orders for Boeing 787- Increase demand for point to point routes. Boeing is able to implement a strong management force with its unique and strong culture (Core competencies. All the low-cost airline companies use point to point routes in order to reduce the costs substantially.development expense in 2003 was $1.com).commercial jet. Boeing also plans to release its powerful weapon in the competition with Airbus. External Analysis of Boeing Slowdown in the commercial jet market.75% of revenue in 2004 and between 3. Information on parts. maintenance. The demand for international tourism and delivery is increasing. Strong economies of scale Boeing Capital Corporation (BCC) Connexxion by Boeing Operations Boeings operational strengths include its unique level of management. with the impressive show of Airbus A380 recently.7 billion. New aircraft to gain market share.0% in 2005 as spending increases on the 7E7 program. The new version Boeing 787 which inherits the most advanced technologies and advantages of the previous models is hoped to be a big hit to the airline industries.5% and 4. parts and training. Fortunately.focus on A380 to get market share of super jumbo liners Lockhed Martin. there are some good signals recently for both of the companies with the increase of order number. it still does not reach the level before the terrorism event.Boeing.
safer & environmental friendly (fuelefficient) commercial and cargo airlines Strategy Strengthen Management Core Competencies Innovate Security and Safety Systems and Protocols Activity Restructure the Organizational and create additional department such as Public Policy & Safety Standards Compliance Departments Develop and produce systems that will ensure passenger safety such as early detection device. anti-hijacking device and protocols. etc.Goals To provide a more secure. Improve customer relation and information Outsource Technology Information and Skills Aggressive customer based security and safety campaign and advocacy Conduct Safety Trainings and programs To take advantage of the increased demand for Integrated Defense System Aggressive Strategy as to development and production of Military and defense products Develop responsive and innovative aircrafts and military missiles Competitive pricing and low production of Military and war supplies Conduct Research as to the needs and demands of Military related activities Conduct of Trainings and Programs To go one step ahead in innovating future aerospace and military products Strengthen Management Core Competencies Employment of maverick scientists and researchers Develop new products appropriate to future supplies and resources Focus on Research & Development of new and innovative concepts and (frontiers) products Outsource Technology Information and Skills Finance education of employees Fund experiments and researches Increase Networking of knowledge .
produce and market its Integrated Defense System product lines. the worldwide declaration of war against terrorism paved way to a massive opportunity for Boeing to develop. Fortunately. . help cushioned the prejudicial consequences of such tragic event to the company. Withstanding the raising temporary concerns on passenger safety by sceptics that brought about the reduction of Commercial Airlines Production demands.To decrease backlogs and reduce production cost Streamlining of production operation Development of machines and systems which will reduce production time Outsourcing labour and assembly of materials and parts Outsourcing Conduct of Trainings and educational programs Analysis and Conclusion The Forc vbmjbgymh ntuitous event such as the terrorist attack which triggered “War Enduring Freedom” definitely has strong impact on the airline industry. Boeing Company’s diversified business. being engaged in the development and production of Commercial Aircraft and Integrated Defense Systems.
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