Based on the information provided in the case, what is the key strategic challenge/key crisis for

Muilenburg as of 2019? (10%)

The key strategic challenge for Muilenburg as of 2019 is to get Boeing out of the crisis
regarding the Boeing 737 MAX crashes. The company needs to repair its damaged reputation
in the stakeholders’ eyes, reposition the 737 MAX lines and deal with the grounding, therefore
improve its revenue, while at the same time have appropriate plans to deal with its biggest
competitor – Airbus. One of the major challenge facing Boeing is problem with production,
Boeing had a vertical integration model where they were making many components
themselves which was quite costly and time intensive, so the company needs to have a
strategy to reduce cost and increase efficiency.

1. Situational Analysis (30%)

a. Describe Boeing’s current strategy using the Diamond-E Framework (10%)
● Diamond-E analysis:
Management Preferences

Organization
Strategy
Environment

Resources

● Strategy:
● Environment: Using the Porters 5 Forces analysis and SWOT analysis in question b and c to
examine the strategy-environment linkage.
● Resources:
- Boeing was having the engineers, designers, developers to work on the changes to the
MCAS software in the 737 MAX.
- Boeing also continues to manufacture 737 MAX planes at a slower pace. The increased
production costs should be taken into consideration.
● Management Preference:
- Management at first concentrates in filling up the orders from customers and have the
737 MAX airplanes ready as soon as possible, even though this can be considered as an
act in the shareholders’ interest, management did not wait for the board of director’s
approval on the design.
- Management’s cost reduction attitude compromises on safety of another stakeholder: the
customers.
- Management strategy did not focus in pilot training, was not taking feedbacks from staffs.
- After the crisis, CEO is confident in the come back of Boeing on October 2019.
● Organization:
- Organization structure:
o The case study does not mention Boeing’s type of organizational structure.
 o But since Boeing is one of the world’s largest aerospace company, with customers across
more than 150 countries;
o and it has many different departments (R&D, product development, manufacturing,
etc.),
o a matrix organization would be most suitable for the company.
- Management processes:
o Decision-making processes seem to be pressured by competition and cost saving;
o Managements rushed the 737 MAX design to American Airlines without waiting for
design approval from its board of directors.
o No mentions of performance assessment and reward processes.
- Leadership behaviour:
o Despite the opinions from aviation experts, the leader did not acknowledge the
fundamental design flaw of 737 MAX.
o The CEO is confident in the come back of 737 MAX by October 2019.
o The leader rejected any strategy on rebranding the 737 MAX.
b. Use the Porters 5 Forces to conduct an external environment analysis of Boeing. (10%)
​Assessment ​Rationale
​Force
​(H, M, L) (Justify the assessment)
​Threat of ​Low ​- Economies of scale: Existing firms have significant investments
Entry in operations, supply chains, HR, etc., they hold more absolute
cost advantage over potential new entrants. Customers also
purchase their products in large volumes.
​- Product differentiation: Established firms have the benefit of
brand recognition (like Airbus and Boeing) and customer
loyalty.
​- Capital requirements: Capital investments required to
compete in this industry is very large.
​- Government Policy: the industry is highly regulated.
 ​Industry ​High ​- Brands are constantly trying to push the line of quality and
Rivalry innovation higher with newest technology.
​- Boeing and Airbus are the market leaders with the largest
market share.
​- Slow industry growth, high barrier to exit.
​Threat of ​Low - There are pretty few substitutes for aircrafts and the number
Substitutes of commercial plane makers is not very high.
- A few competitors who can provide matching quality like
Airbus or Bombardier.
- Due to its quality and the level of technological innovation,
Boeing is loaded with orders.
​Buyer ​Moderate ​- Customers of Boeing include several major and minor airlines
Power brands around the world; government, military and space
agencies.
​- Level of technological innovation matters and switching costs
can be high in this industry.
​Supplier ​Moderate ​- Boeing’s suppliers are well-known companies like General
Power Electric, Honeywell, etc. Most of its suppliers are large
technology firms that supply raw material and technology for
its aircrafts.
​- Boeing is also a large firm that only selects the suppliers that
can accountably supply raw material and care for all the
aspects of quality and performance as highlighted in Boeing’s
supplier guidelines.

c. Conduct a SWOT Analysis of Boeing’s 737 Max vs it’s key competitor Airbus A320 (10%)
I. Boeing 737 MAX
Internal environment
Strengths (S) Weaknesses (W)
 ● Strong market share and global presence. ● Flawed and unsafe design.
● Clean-sheet aircraft, fuel-efficient, large ● Relies heavily on outsourcing the
capacity. manufacture of the components and
● Highly innovation in technology with strong parts for its planes.
spending in R&D. ● Supply chain issues: over-outsourcing
● Consistently promising order backlog. shifts the control power to the suppliers.
● Consistently strong financial performance ● Management strategies, staffs lack of
over the years. training.
● High skilled, professional human resources
● Reputed customer base.
External environment
Opportunities (O) Threats (T)
● Form strong partnerships with potential ● Intense competition with Airbus A320.
suppliers. ● Public perception after the plane
● Increase demand for point-to-point routes. crashes.
● Exploit the innovative advantage of being ● Trade war between US-EU.
the first company in the history of airlines ● Cyber security threats.
to use the composite materials. ● Terrorist attack threats.
● Expand on space transportations. ● Organizational culture is mostly low
sociability/low solidarity due to lack of
professional management skills.
● Safety issues due to high risk of new
product development.
● Global ban on the controversial crashes.

II. Airbus A320:

Internal environment
Strengths (S) Weaknesses (W)
 ● Established brand name with establised
customer bases.
● Leading manufacturer of commercial
aircrafts.
● Focus on research and innovation.
● Manufacturing and design facilities located
globally.
● Producer of a large range of modern and
efficient airliners.
● Large market share.
● New aircraft models with higher fuel
efficiency.
External environment
Opportunities (O)
● Growing demands after the Boeing 737
MAX global ban.
● Expanding Passenger Traffic due to the
rising middle class in the emerging nations.
● Advancement in Technology.
● High costs of production and operations.
● Accumulating Backlogs: AIRBUS has been
accumulating backlogs by delivering less
number of aircraft when compared to
the orders.
● Operational inefficiencies.
● High production costs.
Threats (T)
● Intense competition with Boeing.
● Regulatory challenges for aircraft
manufacturers and airlines companies
have increased.
● Losing on important markets: Russia
and China are planning to develop their
own commercial Aircraft.

2. What additional Qualitative Analysis should be undertaken to help Boeing to recover from
the key strategic challenge (5%)
Boeing could consider to carry out a scenario planning analysis because scenario planning
recognizes the potential for the variabilities in industry analysis. Boeing could plan out what
could possibly happens if the global ban is lift; or it would not be lift for a while? How would
the company, the customers, the suppliers, and the industry react in each scenario?

3. Development and Evaluation of Alternatives based on your analysis (30%)

a. Based on the information in the case, what changes or recovery actions would you
recommend to Boeing current strategy?
- Since the revenue and profit were sharply declined, liquidity was critical. Therefore, there
should be a reorganization to build one main management team, and have them come up with
plans to cut down costs without compromising with product quality and safety.
- Demonstrate the recovery plan to the creditors and shareholders so they could understand the
vision and that we are serious with this plan, and provide any adjustments and feedbacks
where necessary.
- Set out the priority objectives for the plan. Identity areas to deal with behavioural issues from
both management and staffs.
- Management must decide whether to adopt directive or participate leadership style.
- Management should consider the advice from experts to rebranding the 737 MAX by focus
more on branding and marketing. That way the public might be more open for the come back
of Boeing in recent future.
- Pilot training is crucial.
b. How can Boeing to retain the trust of the shareholders? How can Boeing retain the trust of
all stakeholders? Consider Crisis Management strategies.
- In order retain the trust of the shareholders, Boeing needs to:
o Provides the shareholders with greater transparency of the plan, shows them that
management is serious with the plan, and firing uneffective management is necessary.
o Admit the negligence before when the attempt to maximize short-term shareholder value
at the expense of what’s good for nearly everyone but the shareholder.
o Propose the new design for 737 MAX.
- In order to retain the trust of all stakeholders, Boeing needs to:
o Management team must root out arrogance and approach stakeholders with humility and
a listening stance.
o Creates a organizational culture where worker’s concerns are given enough attention,
therefore increases employee engagement.
o Being dedicate with the adjustments to the 737 MAX to prove to regulators and the public
that the airplanes’ quality and safety are assured.
 o Keeping good relationships with the suppliers.
4. What happened as of November 2020? (20%)
a. Review the following articles and/or other sources and provide a summary 3 - 7 sentences or
points on how or if you would change your recommendations to Muilenburg? i.e. How
should Boeing deal with the competitive and regulatory challenges?
According to the provided articles, the US’s FAA has approved the new design models of 737
MAX while Canada is still going to keep them banned. If this is the case, Boeing’ strategy
should also take into consideration the requirements of Canada and other large markets (like
China, EU, Brazil, etc.) in order to save time and costs. Other sources also indicated the firing of
CEO Muilenburg, therefore the ex-leadership style was not appropriate in getting Boeing’s out
of the crisis. I would recommend Boeing reflect deeply into its management team, and make
reorganization where necessary. Moreover, with the pandemic in 2020, airlines industry would
be significantly affected, therefore Boeing should analyze the competitor’s strategy carefully
since this is almost a zero-sum game.