Posting ID: 87396

Business, Marketing Other Boeing's Product Development Stumble Hi, Lets take a closer look at each of these questions, which you can then draw on for your final copy (assuming this is part of an essay assignment). I have also included links for further research. 1. Analyze and discuss Boeing's overall product development strategy. 2. What key marketing research process component is missing from this story? 3. Fast forward through 2006 and assume the global economy is growing again. Does this new design make sense in this scenario? 4. Aside from Airbus, who else is competing for this high-speed jet liner? 5. How might Boeing spread some of the risks inherent in such a major product development venture?

Bid Credits: 4

Deadline: July 3, 2006, 7:09 pm EDT

1. Analyze and discuss Boeing's overall product development strategy. New product development efforts are focused on the Boeing 787 Dreamliner, a super-efficient airplane that is expected to be in service in 2008. Mike Bair leads the team developing the Boeing 787, a super-efficient, new midsized commercial airplane. In this role he is responsible for all aspects of the airplane program, which will bring new possibilities for safe, efficient, and economical point-to-point travel for the worlds airlines and passengers. Some 70% of production work on the 787 has been farmed out to contractors worldwide. Even minor glitches could delay the launch (Source: http://www.boeing.com/companyoffices/aboutus/brief.html). Thus, in all probability, the aerospace organization will need to increase its budget only moderately, if at all. The planning involved an international team with all levels of Boeing employees as well.

Marketplace insight is at the core of 787-product development. "Our strategy has been to design and build an airplane that will take passengers where they want to go, when they want to go, without intermediate stops; do it efficiently while providing the utmost comfort to passengers; and make it simple and cost-effective for airlines to operate," Bentrott says. Rather than seek economies through scale, the 787 will deliver economy through technological innovation, making the most of newly designed, fuel-efficient twin engines and lightweight composite materials (faster). The 787 offers a very different take on the flying experience, too, focusing on comfort rather than perks that could be eliminated by airlines: more standing headroom, larger windows and bathrooms, and higher humidity--all features that will benefit passengers regardless of seat configuration. (Source: http://www.forbes.com/home/columnists/2006/05/23/unsolicited-advice-advertising-cx_meb_0524boeing.html) For example, according to Boeing, the 787 is the result of over a decade of focus groups and scientific studies to gain a better understanding of passenger comfort and how the design of airplane interiors can make flying a more pleasant experience. If Airbus made comparable efforts, we are hard-pressed to find the evidence. (See http://www.forbes.com/home/columnists/2006/05/23/unsolicited-advice-advertising-cx_meb_0524boeing.html for more detail). Specifically, Boeing must keep the 787 Dreamliner project on schedule. This inherently requires the organization to keep more than twenty suppliers on schedule. Certification and delivery is scheduled for 2008 (Bhatia, 2005). Boeing has demonstrated not only its use of existing technology; it has developed technology through this project. The aircraft uses a conventional airframe configuration with many of the systems in the plane being progressions of existing technology but, the systems have not been used to this scale before (Wikipedia, 2005). The plane will have

an entirely new electric-based architecture (Wikipedia, 2005) with every subsystem being revised to work with the new architecture (Wikipedia, 2005). It also has a central computer instead of hundreds of separate boxes keeping track of things (Wikipedia, 2005). Also see http://www.boeing.com/worldwide.html. Other Elements of the 787-product development strategy: Employee and customer involvement is one of Boeings great strengths. For example, a chief goal of the Boeing design philosophy is to build airplanes that can be flown safely while offering operational efficiency. An essential part of this philosophy is continuous improvement in designs and flight crew training and procedures. This includes the product development strategy. Integral to this effort is an ongoing attempt to better address human performance concerns as they relate to design, usability, maintainability, and reliability. By continuously studying the interface between human performance and commercial airplanes, Boeing continues to help operators apply the latest human factors knowledge for increased flight safety. (Source: http://www.boeing.com/commercial/aeromagazine/aero_08/human_textonly.html). Another example of customer involvement is that potential customers are involved in defining top-level design requirements, part of the product development strategy. Its redesigned lightweight plane will still trail Boeing's Dreamliner by years: Plastics. They really are the future. More precisely, the carbon-fiber-reinforced plastics known as composites are reshaping the rivalry between Airbus and Boeing Co. (BA), and the European planemaker has a lot of catching up to do. With oil prices soaring, airlines are flocking to Boeing's new 787 Dreamliner, which promises to burn 20% less fuel than conventional planes. The 787 is made mostly of composites, which weigh half as much as aluminum, but are stronger so that wings and other parts can be made slimmer and more aerodynamic. Airbus is countering with the A350, a planned aircraft with one-third less composite content than the 787. But most carriers are snubbing it. Small wonder, then, that Airbus Chief Executive Gustav Humbert confirmed at the Berlin Air Show on May 17 that the company will unveil a revamped design for the A350 by July. "The game is not over," he said. (Source: http://www.businessweek.com/magazine/content/06_22/b3986071.htm?chan=innovation_innovation+ %2B+design_the+making+of...) Knowing the Competition Seems like it should be a cinch for Airbus to up its composite content in a new A350. The company has been building composite parts since the 1980s. The expected $10 billion price shouldn't be a problem, either. Airbus has already overtaken Boeing as the world's top jetmaker. Its parent, European Aeronautic Defence and Space Co. (EADS), on May 16 reported first-quarter profits up 26%, to $665 million, on sales up 30%, to $11.7 billion. But Boeing has a big head start. True, Airbus had been a pacesetter when it introduced composites on tail stabilizers. But Boeing has since leaped ahead with its work on military contracts such as the B-2 bomber and its use of composites on civilian jets such as the 777. Airbus' much smaller composites program lags Boeing's on almost every front, from design to manufacturing to multiyear supply deals for carbon fiber. "All Airbus' engineers and all their factories are working in aluminum," says Andrew Walker, a former top Airbus engineer who now teaches in the materials program at the University of Manchester. To close the gap with Boeing, Airbus will pour $580 million into research over the next few years. "Their lead will not be for long," says Airbus' Humbert. But Airbus can't get an allcomposite plane into service before 2012, four years after the 787. Even then, most industry experts say it's unlikely the Airbus plane would be significantly better than the 787. "It's four years too late with a me-too airplane," crows Randy Baseler, Boeing's vice-president for marketing. Airbus has plenty of talented engineers, but they're stretched thin. They're wrapping up work on the A380 megaplane, set to enter service at the end of this year, while also developing a new military-transport plane and an air- refueling tanker aircraft. Overall, Airbus spent $2.1 billion on research and development last year, only slightly below 2003, when A380 spending peaked. (Source: http://www.businessweek.com/magazine/content/06_22/b3986071.htm?chan=innovation_innovation+ %2B+design_the+making+of...) STUMBLING BLOCKS The upshot: while Airbus gets up to speed on composites, Boeing will take an early lead, with 6 or 7 of its 787 Dreamliners rolling out of the factory each month at a list price of $120 million a pop. That gives Boeing plenty of time and money to launch its next plane, most likely an all-composite makeover of the 737. Such a plane would take direct aim at Airbus' bestseller, the A320, throwing the European company on the defensive once again. Boeing could still stumble. Some 70% of production work on the 787 has been farmed out to contractors worldwide. Even minor glitches could delay the launch. Airbus also knows airlines will keep steering orders its way to prevent Boeing from gaining market dominance. "They don't want to be subject to higher prices," says George Hamlin, the head of Hamlin Transportation Consulting in Fairfax, Va. The Europeans say they're up to the challenge. "Airbus has a history of successfully managing a steep ramp-up," Humbert says. Indeed, for most of Airbus' 36-year history, its newer aircraft designs and more modern factories gave it an edge over its older U.S. rival. But now, Boeing looks set to invade that comfort zone. (Source: http://www.businessweek.com/magazine/content/06_22/b3986071.htm? chan=innovation_innovation+%2B+design_the+making+of...)

Headlines to consider: A stumble in 787 development, June 9, 2006 Seattle Times: Boeing's vital 787 jet program has suffered a setback in development of the pioneering manufacturing process used to build the carbon-fiber-reinforced plastic air-frame. Boeing will build larger version of B787 following Gulf demand, June 8, 2006 Gulf News: Boeing has decided to manufacture a large version of the B787 or Dreamliner following demand from Emirates and other Gulf carriers, a top official of the US aerospace giant said. On a Wing and a Prayer at Boeing, June 7, 2006 Business Week: As crucial deadlines loom, BusinessWeek has learned that Boeing's engineers are wrestling with several significant technical and production problems that could threaten the scheduled 2008 delivery of the jetliner. Airbus faces tough mid-market choice, June 1, 2006 Aerospace America: Contributor Richard Aboulafia provides an analysis of Airbus dilemma with its A350 product offering. (Source: http://www.leeham.net/RunScript.asp? page=&Article_ID=61&AR=AR&ap=NewsArticleDetail.asp&p=ASP\~Pg0.asp)

2. What key marketing research process component is missing from this story? Ronis (2005) argues that Boeing has been complacent in researching markets (e.g., China, etc.) and perhaps a public relations campaign is missing. The aerospace organization needs to launch a strong and aggressive public relations campaign that includes the ethics protocol they are working on at this time. That will ease any negative attitudes towards Boeing. However, others argue that Boeing has indeed researched its marketplace. For example one author argues this: Boeing versus Airbus is one of the most hard-fought, closely watched marketing battles out there. It's also one of the most fascinating. Not long ago, it appeared as if Airbus had gained the upper hand. If Boeing succeeds in winning this battle --and it appears to be well on its way--it will amount to one of the great reversals of business fortunes. It will also serve as proof of the wisdom of understanding the marketplace well enough to lead, rather than follow. (Source: http://www.forbes.com/home/columnists/2006/05/23/unsolicited-advice-advertisingcx_meb_0524boeing.html) This innovation must continue. For example, until the US airline industry stabilizes, Boeing might need to be highly innovative and focus on Asia and then Europe for its greatest sales of 787 Dreamliners. It does not need to wait for full recovery within the United States, because airlines operating under bankruptcy protection may be in a better position to purchase the 787 than before declaring Chapter 11, jettisoning their pension funds and securing wage concessions from various unions. The airline industry throughout the world holds pockets that are growing, highly profitable and willing to buy, such as is the case in Asia. Getting the 787 Dreamliner on the market before Airbus gets their A380 on the market will result in financial growth and thus, profitability (Wikipedia, 2005). To reclaim position in the industry as the #1 maker of commercial airliners, Boeing must research the foreign markets and make deals to sell its product. If Boeing gets the 787 Dreamliner on the market before Airbus gets its A380 on the market, Boeing must take a step towards reclaiming the #1 position for making commercial airliners. However, they need to focus on market segmentation in foreign markets. This is in addition to forging ahead with its public relations campaign. Government involvement might also be needed and beneficial. For example, since Boeing is a core component of the countrys industrial base and thus tied inextricably to its national security, Boeing could use this position when lobbying legislators to adopt an industrial policy that favors and promotes American industries across the world. It would likely be worth the expense and the effort in the long term. In fact, it would be possible as well as beneficial for Boeing to form a partnership with other American aerospace leaders to get such a policy through the U.S. Congress (Ronis, 2005, from http://www.diig-csis.org/news/article.asp?ARTICLE_ID=17&). For example, Ronis warned that foreign competition also is threatening U.S. aerospace giant Boeing, whose commercial aircraft sales have slipped behind those of European plane-maker Airbus in recent years. Boeing provides dozens of goods and services to the U.S. military, from satellite launches and cruise missiles to C-17 cargo planes and Navy F/A-18 fighters. It is a "national asset," she said. Ronis blames Boeing, in part, for its slide. The U.S. company grew complacent while its rival remained innovative, she said. But she also faults the U.S. government for Boeing's predicament. Ronis (2005) continued: "We're not managing anything; we're letting the market dictate the national security strategy. That's not the right thing to do," she said. "It's not just Republicans; it was the Democrats, too. The whole approach is 'free market above all.' But when it comes to the national security of the United States, we can't permit market forces to run the national defense." (Source: http://www.diig-csis.org/news/article.asp?ARTICLE_ID=17&)

3. Fast forward through 2006 and assume the global economy is growing again. Does this new design make sense in this scenario? Perhaps, since it is smaller and will not hold as many passengers (450 passenger). However, the economical plane will be beneficial in all types of economy and it seems that customers will continue to prefer quicker flights, with less stops. However, time will tell, because profit-wise, more customers might be better in the long term. What do you think? 4. Aside from Airbus, who else is competing for this high-speed jet liner? Airbus is the prime competitor for this high-speed jet liner. However, for Boeings other competitors, click on he following links:

Northrop Grumman Lockheed Martin

There are 23 competitors for Boeing; see more.

(Source: http://www.hoovers.com/boeing/--ID__10221--/free-co-factsheet.xhtml) 5. How might Boeing spread some of the risks inherent in such a major product development venture? In all probability, the aerospace organization will need to increase its budget only moderately, if at all. The planning involved an international team with all levels of Boeing employees. Even so, Boeing needs to secure pre-approved credit lines in the event they do exceed the budget. Having these loans in place will eliminate any delays related to budget, which is part of an effective risk management plan in such a major product development venture. Indeed, around 70% of production work on the 787 has been farmed out to contractors worldwide, which spreads the risk, but also increases the potential for glitches and delays (Source: http://www.boeing.com/companyoffices/aboutus/brief.html). Can you think of other ways to spread the risk? Or, is it more about managing the risk effectively?

FINAL COMMENTS I HOPE THIS HELPS AND TAKE CARE.

Some of the References Bhatia, Dr. K.G. (2005, April 18). The Roles of Fidelity and Cycle Time in Design. Retrieved July 2, 2006, from Boeing http://www.google.com/search? q=cache:IH4hupCyskYJ:www.aiaa.org/pdf/industry/presentations/sdm05bhatia.pdf+Boeing+%2B %22787%22++risk+analysis&hl=en&ie=UTF-8 Tooling & Production. (2005, December). Boeing eyes China as long-term mega-market. Tooling & Production 71(12), 9(1). Wikipedia. (2005). Boeing 787. Retrieved July 2, 2006, from http://en.wikipedia.org/wiki/Talk:Boeing_787