Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
BM045-3-3-SMGT
INDIVIDUAL ASSIGNMENT
Student Name:
Haji Khairul Anwar bin Haji Sahari TP034085
UC3F1501IBM
Hand Out:
March 2015
Hand In:
15th May 2014
Lecturers Name:
Rohani Binti Mohamad Husain
Word Count: 3,319 words
Table of Contents
Executive Summary..........................................................................................................
1
Introduction.............................................................................................................
External Analysis.......................................................................................................
2.1
PEST Analysis....................................................................................................
2.1.1
Political factor.................................................................................................
2.1.2
Economic factor...............................................................................................
2.1.3
Social factor................................................................................................
2.1.4
Technological factor.........................................................................................
Competitive rivalry..............................................................................................
3.2
3.3
Threat of substitutes.............................................................................................
3.4
3.5
Outsourcing..................................................................................................... 11
4.2
Conclusion............................................................................................................ 16
References............................................................................................................. 17
Executive Summary
This task looks at about the 787 Dreamliner's new strategic plans which can support its
competitiveness. The initial few beginning of this task will be clarifying about the presentation of
the present circumstance of Boeing in the airline industry. There will be insights about the
external analysis which is PEST analysis furthermore Porter's Five Forces. Later towards the end
of this task, there are about the plan of action, for example, Outsourcing and Low Cost Carrier
will be clarified. The reasons of why Boeing 787 Dreamliner is successful will likewise be
delineated together with the vital cooperations.
Introduction
Boeing was established on 15th July 1916. From that point forward, it gradually began to turn
into one of the effective makers of aerial transports worldwide for both business and military.
The organization has more than 169,000 profoundly talented and creative workers in the United
States and in more than 65 nations. Concerning today, the organization creates the 737, 747, 767,
777 and 787 of planes and the Boeing Business Jet. There are new item improvement that
incorporates the 787-10 Dreamliner, the 737 MAX furthermore 777X. (Boeing, 2014)
In the 1970s, the opposition in the middle of Airbus and Boeing was extremely solid. Boeing
assembled the 787 Dreamliner air ships which were utilizing the lightweight carbon-epoxy sort
of materials. The organization needed task connected with Japanese organizations, for example,
Mitsubishi, Fuji and Kawasaki. (Goebel, 2013)
According to Mecham (2011) cited in (Zhao, 2012), in the year 2011, Boeing Company had
announced to public for its first launching of the 787 Dreamliner after 40 months of delay. The
787 Dreamliner is to be operated as an advanced and also commercial airplane. This is because
Boeing produces a very unique features of 787 the Dreamliner (Zhao, 2012).
External Analysis
2.1
PEST Analysis
This analysis is an extremely valuable apparatus with a specific end goal to observe and study
the macro environmental factors, for example, political, economic, social and technological in
airlines industry, for example, Boeing 787 Dreamline. It likewise serves to comprehend and later
give answers for any results that will be confronted by the organization to add to the business
environment. (Manktelow, 2014)
Figure 1
Source: The Boeing Company Annual Report (2009)
2.1.3
Social factor
Since Boeing Company is working around the world, they ought to have the capacity to consider
social environment components, for example, client's requests which may give affect in present
and even in future. It is pivotal for them to study what are the inclinations among their current
and potential clients.
As stated in Boeing 787 Dreamliner: The impact of safety concerns (Madslien, 2013), because of
high number of technical problems of 787 Dreamliner, it some way or another gave affect
regarding wellbeing concern among the travelers. Case in point, there were a few occurrences
happened in January 2013. One of them was the point at which All Nippon Airways (ANA)
reported that there was a break on the window on the pilot's cockpit. No issues brought about
among the aggregate of 246 (travelers and group) individuals onboard from Tokyo's Haneda
Airport to Matsuyama. The flight was cancelled. In the meantime, a Dreamliner flight going in
the middle of Haneda and the southern Miyazaki territory was postponed on account of fuel leak.
Although each one of those 787 Dreamliner planes technical failure occurrences, the vast
majority of the travelers onboard were safe. As Boeing's clients are among the suppliers, the
suppliers may not request a greater amount of the 787s because of numerous technical issues and
failures. All things considered, by one means or another those occurrences are not influencing the
suppliers to demand for the 787 Dreamliner aircrafts. This shows in The Boeing Company 2013
Annual Report, there was a conveyance of 65 787 Dreamliner to 16 clients and there was another
182 booking requests which conveyed to 1,000 of aggregate requests of the 787s.
It is one of a strategy framework which may give a bigger yet bigger drawing of the competition
in an industry and later help to create corporate strategies. The model will effectively enable a
business to outline the five important forces such as competitive rivalry, threat of new entrants,
threat of substitutes, bargaining power of suppliers and bargaining power of buyers/customers.
(Marc, 2014)
3.1
Competitive rivalry
Boeing and Airbus is one of the difficult in competing each other. Airbus A380 and Boeing 787
Dreamliner are two major rivalries in the market today (Pollak, 2006). One of the ways to
compare the competition between both Airbus and Boeing is by analysing their aircraft
deliveries.
Airbus and Boeing had combined their deliveries of their aircrafts which the summarised statistic
can be found in Figure 2 below. (Hexcel Corporation, 2012)
Figure 2
Source: Hexcel Corporation Annual Report (2012)
From the statistic as shown above indicates that both Airbus and Boeing has an increase amount
of deliveries from year 2008 to 2012. The amount of deliveries of Airbus is from 483 to 588 in
the five years duration. Meanwhile, as for Boeing, the amount of deliveries is from 375 to 601
orders. Both companies showed that they have successfully raised the number of orders and
deliveries of aircrafts.
3.2
New participants are difficult to rival particularly when one is running an industry like airlines.
On account of Boeing 787 Dreamliner, it is as of now turn into a well-known competitor among
rivals in the business. In any case, there may be a couple quantities of new comers in delivering
same items and services.
In the up and coming 2016, China plans to economically contend and be a test to Boeing and
Airbus as well (Dillow, 2010). China plans to develop its own particular aviation industry and
get billions from the creation of planes and prone to create more than 2,000 Comac C919s in the
following 20 years to enter the business sector (Liu, 2010). The new highlights of Comac C919
may influence different contenders, for example, Boeing and Airbus to make systems to face in
the following couple of years.
The primary highlights which may challenge Airbus and Boeing are, for example, the security
which Comac C919 offers outlines and improvement in light of universal common avionics
tenets and regulations which meets the standard. Comac C919 is additionally offering lower fuel
utilization contrasted with any current planes. Different highlights, for example, more extensive
lodges and seats including the propelled framework innovation to persevere through travelers'
solace and fulfillment. Every one of these highlights may enhance individuals' experience when
flying with the new airplane and may result to an extremely extraordinary rivalry later on.
(Commercial Aircraft of China, 2014)
3.3
Threat of substitutes
To name a few, other substitutes to airline are such as buses, trains and cars if it is for everyday
travelling (Khan, 2010). Nevertheless, as for international travel, the airlines industry may switch
to other competitors if lets say one is not available yet (Bodeen, 2006). Other examples of
competitors are such as Airbus and any other existing airline producers. For example given
earlier regarding Boeing when they delayed in delivery, others may run to other competitors in
market such as Airbus or Comac.
3.4
The bargaining of suppliers for Boeing is very high in the business. This happened when Boeing
put the fault on its suppliers for the postponement in conveying the 787 Dreamliner. The
postponement was happened more or less 3 years from the first date arranged. Boeing may
likewise be the person who raise the issue up as it put such a great amount of outsourcing to
outsiders. Boeing likewise conveys the first plane late in 2011 when the 787 Dreamliner did a
test in Texas and ended up with electrical fire in 2010. (Cohan, 2011)
3.5
The bargaining power of buyers/customers may be low due to quite few numbers of competitions
worldwide such as Boeing and Airbus. Since the systems of both companies are differently
functioned, buyers or customers may difficult to change from one aircraft to other ones. High
cost will be required in order to switch to other planes such as training cost. (Khan, 2014)
Below is the annual orders summary of Boeing 787 Dreamliner of year 2012 and 2013.
10
4.1
Outsourcing
It is one of numerous ways that is accepted to spare expenses in airline industry as far as
enhancing organization's performance. In an examination, it is expressed that if outsourcing is
utilized effectively, it conceivably have the opportunity to bring down the expenses which may
be valuable to the air transport organization (AHB, 2012).
To make examination between 787 Dreamliner and 747 aerial transports, the Society of
Professional Engineering Employees in Aerospace as refered to in (Hiltzilk, 2011) said that the
787 Dreamliner made their substance for the most part abroad; pretty nearly around 30 per cent.
In the mean time, the 747 just spent around 5 per cent in delivering their planes. This
demonstrates that the 787 made a greater amount of the item in remote parts.
Outsourcing has numerous advantages for an organization that uses this sort of plan of action.
One of the points of interest is to get ready tentative arrangements to build the change of the
organization. By outsourcing, Boeing 787 Dreamliner can spare cost and diminish the
advancement time. Boeing included in outsourcing both neighborhood and worldwide to
speedier the generation process and lower expense. The arrangement was to diminish the 787's
11
advancement time in the term from 6 to 4 years with expense from $10 billion to $6 billion.
(Denning, 2013)
On the other hand, outsourcing is not generally useful for the organization to endeavor others'
skill. It has downsides as well. A business may spend a greater amount of what has been
arranged. The improvement procedure might likewise postpone because of excessively relying
upon the outsiders, making it impossible to do the procedures. In 2011, "We spent a lot more
money," said the Chief of Commercial Airplanes of Boeing, Jim Albaugh (Denning, 2013). This
demonstrate that Boeing did not really diminish cost as what they arranged yet they spent more.
Outsourcing did not by any stretch of the imagination gave a positive feedback to Boeing in the
improvement of 787 Dreamliner. They ought to arrange and apply different plan of action to
enhance their performance.
4.2
low cost carrier which normally shortened as LLC likewise concentrates in expense decrease and
also controlling the opposition with other airline organizations. This sort of procedure offers low
costs to clients. (Chandrappa, 2014)
This procedure is truly useful for Boeing 787 Dreamliner to adjust and offer to clients. One case
of this is when under Qantas Group's fleet plan; they will buy 50 Boeing 787 planes for
conveyance beginning from year 2016. (Qantas, 2014)
As indicated by Qantas (2014), Boeing 787 Dreamliner offers more propelled advances, for
example, longer courses around the world, lighter fuselage, made up of different materials and
speedier flying pace in light of the sizes of the planes. This unmistakably demonstrates that
Boeing 787 has fascinating propelled highlights to offer to the clients. Here, Qantas has
arrangements to buy 50 Boeing 787s later on.
12
Concerning Boeing, this LLC plan of action has giving an exceptionally positive side on the
grounds that the techniques, for example, offering single-class items and relying upon direct
deals truly helped Boeing to diminish the unit cost up to 40 every penny. (Boeing, 2014)
In the meantime, Boeing had the capacity keep up its upper hand with other carrier organizations
with the LLC techniques (Chandrappa, 2014). Boeing said that Royal Jordanian flies to more
than 50 destinations overall and arrangements to travel to North America, Asia, Europe and
Middle East courses utilizing the Dreamliner (JT, 2014).
Also, Royal Jordanian will drive itself to a more extensive scope of both neighborhood and
global competitiveness. As Royal Jordanian is ascending, Boeing may additionally build its
image name to everywhere throughout the world if numerous airlines utilization Boeing carriers
particularly the 787 Dreamliner aircrafts.
13
By applying a few plans of action; outsourcing and low cost carrier particularly, Boeing has
effectively expand its sales with a request accomplishing more than 800 planes. The gigantic
number of requests made Boeing one of the "quick selling" airlines subsequent to July 2007.
sales were expanded up to $110 billion from 47 clients everywhere throughout the world.
(Kingsley-Jones, 2014)
Boeing's requests of 787 Dreamliner planes has come to 1,031 and right now conveyed 162
planes. Boeing needs to expand its performance and furthermore benefit to be more successful
later on. As what Boeing arranges a long time from now, the estimation of planes sold are 50% of
3,500 planes. (Ausick, 2014)
There will be another outline of the new 787-10 Dreamliner which expected in the year 2017 in
North Charleston. The organization likewise said that the generation of the 787-8 and 787-9 will
ceaselessly be created in North Charleston and Everett, Washington. Boeing observed that it is
compelling and productive to develop the 787-10 in Boeing South Carolina. This demonstrates
that Boeing expands its wings one stage closer in making another future progress. (ABC News,
2014)
At the point when Qatar initially dispatched a 787 flight to Switzerland, it shows that Boeing 787
has did an extremely amazing work. It gives Boeing the chance to be no doubt understood on
alternate sides of the world. Qatar presented new courses furthermore enhanced the experience of
the travelers when going with Qatar Airways utilizing the 787s. This demonstrates the
accomplishment of Boeing has effectively come to past its desire. (Tinseth, 2013)
14
As indicated by Czaja (2014), strategic alliances are organizations which two or more
accomplices cooperate keeping in mind the end goal to finish the aims and objectives that will be
valuable for every one of them. The associations may gather data and assets to meet their
business objectives. By one means or another, when a business utilizes strategic alliances, it is
beneficial and be more aggressive (Kotelnikov, n.d.).
There are numerous conceivable advantages for the strategic alliances in Boeing. Boeing may
pull in both the neighborhood and global business sector to work with (Ellay, 2009). Boeing has
made contracts with a level of 50 suppliers to control and keep up the outline of the planes.
Those suppliers are to make the investments, risks and designs. Every single one of them must
guarantee that the subcontractors do the obligations well. (Entryways, 2013)
From the purchasers' perspective, there will be an incredible system access while having
alliances. As indicated by Kandampully and Duddy (1999) as refered to in (Goh and Uncles,
2003), buyer will be more steadfast and there is a plausibility that they will stay to the business if
there are numerous deals offered to them.
15
Conclusion
As a conclusion to the case of Boeing Company, a Chief Executive Officer (CEO) ought to look
through systems every once in a while. On the off chance that the control of the organization is
tumbling down, a CEO ought to dependably come up with different systems for the management.
For instance, when Boeing has need control over the organization when it does the outsourcing, a
CEO ought to cut down their alliances to decrease cost or make options so that the performance
of the organization can be stable and keep up for the duration of the time. Nonetheless, if Boeing
does well, a CEO ought to continue enhancing the methodologies to be more successful in the
business. For instance, Boeing is to keep up the low cost carrier model in the event that it is
valuable to Boeing. It may build the name to be well-known internationally.
16
References
ABC News, (2014). Boeing to assemble 787-10 Dreamliner at North Charleston facility. ABC
News. [Online] Available at: http://www.abcnews4.com/story/26152280/boeing-to-assemble787-10-dreamliner-at-north-charleston-facility [Accessed 2 Oct. 2014].
AHB, (2012). Airlines and outsourcing: is it really a financial saving or an actual longer term
costly mistake? - Airline Hub Buzz | Airline news and Information. [Online] Airline Hub
Buzz | Airline news and Information. Available at: http://www.airlinehubbuzz.com/airlinesoutsourcing-really-financial-saving-actual-longer-term-costly-mistake/ [Accessed 2 Oct.
2014].
Ausick, P. (2014). Why a Boeing 787-9 Costs $250 Million. [Online] 247wallst.com. Available
at:
http://247wallst.com/aerospace-defense/2014/07/09/why-a-boeing-787-9-costs-250-
(2013).
The
Boeing
Company.
[Online]
Available
at:
http://active.boeing.com/commercial/orders/index.cfm?
content=displaystandardreport.cfm&RequestTimeout=500&optReportType=AnnOrd&page
id=m15521 [Accessed 3 Oct. 2014].
Boeing, (2014). Boeing: Airline strategies and business models. [Online] Boeing.com. Available
at:
http://www.boeing.com/boeing/commercial/cmo/airline_strategies_and_business_models.p
age [Accessed 1 Oct. 2014].
Boeing,
(2014).
Boeing:
Boeing
in
Brief.
[Online]
Boeing.com.
Available
at:
Chandrappa, T. (2014). Low cost carrier strategies to maintain competitive advantage. [Online]
Yahoo Finance. Available at: http://finance.yahoo.com/news/low-cost-carrier-strategiesmaintain-225005754.html [Accessed 4 Oct. 2014].
Cohan, P. (2011). Boeing's Dreamliner Delays: Outsourcing Goes Too Far - DailyFinance.
[Online] DailyFinance.com. Available at: http://www.dailyfinance.com/2011/01/21/boeingdreamliner-delays-outsourcing-goes-too-far/ [Accessed 1 Oct. 2014].
Commercial Aircraft of China, (2014). Project Introduction_Commercial Aircraft Corporation of
China,
Ltd..
[Online]
English.comac.cc.
Available
at:
18
The
Seattle
Times.
Available
at:
http://seattletimes.com/html/businesstechnology/2020275838_boeingoutsourcingxml.html
[Accessed 4 Oct. 2014].
Goebel, G. (2013). The Boeing 767, 777, & 787. [Online] Airvectors.net. Available at:
http://www.airvectors.net/avb767.html [Accessed 3 Oct. 2014].
Goh, K. and Uncles, M. (2003). The benefits of airline global alliances: an empirical assessment
of the perceptions of business travelers. Transportation Research Part A: Policy and
Practice, 37(6), pp.479--497.
Hexcel Corporation, (2012). Hexcel Corporation Annual Report 2012.
Hiltzilk, M. (2011). 787 Dreamliner teaches Boeing costly lesson on outsourcing. [Online] Los
Angeles Times Articles. Available at: http://articles.latimes.com/2011/feb/15/business/la-fihiltzik-20110215 [Accessed 2 Oct. 2014].
JT, (2014). RJ receives first Boeing 787 Dreamliner | The Jordan Times. [Online] Jordan Times.
Available at: http://jordantimes.com/rj-receives-first-boeing-787-dreamliner [Accessed 1
Oct. 2014].
Khan,
A.
(2014).
Boeing
Strategic
Analysis.
1st
ed.
[Ebook]
Available
at:
[Online]
1000ventures.com.
Available
at:
http://www.1000ventures.com/business_guide/strategic_alliances_main.html [Accessed 1
Oct. 2014].
19
Liu, J. (2010). hinese planes challenge Boeing and Airbus. BBC News. [Online] Available at:
http://news.bbc.co.uk/2/hi/business/8494202.stm [Accessed 1 Oct. 2014].
Madslien, J. (2013). Boeing 787 Dreamliner: The impact of safety concerns. BBC News. [Online]
Available at: http://www.bbc.com/news/business-21041265 [Accessed 1 Oct. 2014].
Manktelow, J. (2014). PEST Analysis: Identifying. [Online] Mindtools.com. Available at:
http://www.mindtools.com/pages/article/newTMC_09.htm [Accessed 1 Oct. 2014].
Marc, (2014). Porters Five Forces Model | Strategy framework. [Online] Entrepreneurialinsights.com. Available at: http://www.entrepreneurial-insights.com/porters-five-forcesmodel-strategy-framework/ [Accessed 1 Oct. 2014].
McQuerrey, L. (2014). The Disadvantages of Forming Business Alliances. [Online] Small
Business - Chron.com. Available at: http://smallbusiness.chron.com/disadvantages-formingbusiness-alliances-73390.html [Accessed 4 Oct. 2014].
Pollak,
M.
(2006).
Boeing
Versus
Airbus.
[Online]
Forbes.
Available
at:
Tinseth,
R.
(2013).
Success
stories.
[Online]
Boeingblogs.com.
Available
at:
at:
http://www.reuters.com/article/2012/12/05/uk-boeing-dreamliner-faa-
21