Boeing 787 Dreamliner

Boeings History Five Forces S.W.O.T Boeing vs. Airbus Market Analysis Introduction to the 787 Dreamliner Advantages of the 787 787s Value Chain 7-Late-7- Issues with Delays Boeings Reaction: Supplier Buyouts Moving Forward: Future Options

Embraer Bombardier

Potential Entrants

Sukhoi CHINA

50+ Firms worldwide supplying components

Suppliers

Industry Rivalry

Buyers

847 Orders from airlines, leasing companies, governments, and private buyers

Substitutes

Airbus A350-XWB

Brief Flashback Major players of the 70s and 80s

Boeing Lockheed Aircraft Corporation McDonnell Douglas Corporation Airbus Industrie

 1967 : Airbus begins with a Memorandum of Understanding between French, West German, and British Governments 1970: Airbus Industrie officially created. Spain joins consortium in 71 1974: Airbus A300 makes first commercial flight from Paris to London with Air France 1981: Airbuss position as a major industry competitor was secured with the introduction of the A320 1991: Airbuss first operating profit achieved, work started on superjumbo jet, the future A380 1993: Long range A340 enters service with Air France and Lufthansa 1998: Airbus controls 52% market share 2000: Airbus consortium comes under umbrella of newly formed European Aeronautic Defence and Space Company (EADS), Airbus officially launches A380 2003: Overtakes Boeing in number of finished aircraft deliveries for the first time 2005: A380-worlds largest passenger plane revealed 2007: After overcoming delays due to technical issues, the A380 enters service with Singapore Airlines 2010: Composite component testing started for the A350-XWB-the future 787 competitor

Advantages Resources and talent from multiple countries. Cross-crew qualification ability on Airbus aircraft Prevents intra-European rivalries Governmental funding

Disadvantages Labor costs 787 competitor A350-XWB will not service until 2013 not counting delays and it will be more expensive than the 787 Challenges with A380 sales

Narrow-body Single-aisle passenger planes Short-range aircraft (up to 6,000 km) Typically carry between 100 to 200 passengers The leading aircraft in this category are the Boeing 737 and the Airbus A320

Wide-body Double-aisle passenger planes Long-range aircraft (up to 14,000 km) Typically carry between 200 to 450 passengers. A380 can carry almost 1000 passengers depending on configuration Leading aircraft in this category - Boeing 747, 777, 787, and the Airbus A330, A340, and the A380

Airbus

Introduced fly-by-wire technology with the A320 Airbus family commonality between models A pilot trained to operate one aircraft can operate any of the others with minimal additional training. Advanced technology used in A380 being applied to new A380-XWB

Boeing

Invented Jumbo category with 747 787 is the first to use composites for most of its structure Transfers knowledge gained in defense business into its commercial products

1600 1400 1200 1000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Airbus Boeing

Year 2006

Airbus 790

Boeing 1044

2007
2008 2009 2010

1341
777 271 328

1413
662 142 392

600

500

400

300

Airbus Boeing

200

100

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year 2006 2007 2008 2009 2010

Airbus 434 453 483 498 380

Boeing 398 441 375 481 346

Increase in global population World will continue to be increasingly interconnected Passengers of the future Cost conscious More environmentally aware Ease of travel (Increased travel) Boeing will target Pointto-Point long distance travel

Best selling new airplane in history (847 orders) First ever composite aircraft Globalized production process Electric architecture First ever dual assembly lines (Everett, WA & Charleston, SC) Focus on passenger comfort 20% better fuel consumption than current in-service aircraft 30% savings in maintenance costs

Wide use of composite materials

Globalized Production

Component

Suppliers

BOEING

Airlines

More Conservative Initial Timeline Improvement of Logistics Supplier Relationship Changes Consolidation of Supply Chain

Pros
Limit Financial Penalties & Negative Press

Reasons Conservative Timeline is Unnecessary

Buyers Order in Advance Signaling Advantages Buyer Switching Costs Incumbency of Buyers, Loyalty

50 Suppliers, 28 Outside of United States

Exostar Supply Chain Management Software

Learning Economies Will Lead to Future Advantages

Penalties Where is Power, with the Supplier or Boeing?

Supplier
Outsourced Production Relinquishes Power Switching Costs

Boeing
Flexibility of Replacement Components, i.e. Engines.

Relationships Must be Improved

Pros
Control Processes & Timelines Internally

Cons
Reverses Their Intent for Global Participation Slows Innovation Unable to Capitalize on Countries Competitive Advantages

Globalization Requires Continual Improvement Learning Advantages Require Stumbles Dreamliner Will Be Considered a Success