Boeing Commercial Aircraft_Team Tiger

8/17/2019 Boeing Commercial Aircraft_Team Tiger

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BOEING COMMERCIAL AIRCRAFT :COMEBACK ?

Presented by

Team TIGER


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CONTENTS• Industry scenario

• Product portfolio

• Decision points• Financials


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INDUSTRY SCENARIO• Volatile Airline industry

• Duopoly

• Highly capital intensive

• Risk v/s gain


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PRODUCT PORTFOLIOBoeing 737Produced1968–presentNumber built7,251 as of

July 2012Unit cost737-100: US$-32million

Boeing 747

Boeing 777Produced1993–presentNumber built1,030 as of

July 2012Unit cost777-200ER:US$258.8 million

Boeing 787 ,

BBJProduced1998–presentNumber built159 - As ofJuly 28, 2010 (IncludingUnit cost US$ -47–310million as of 2009

Produced1968–presentNumber built1,435 as ofApril 2012Unit cost747-100:US$24 million (1967)

Boeing 767Produced1981–presentNumber built1,030 as ofJuly 2012Unit cost767-200ER:US$160.2 million

Number built 31Program cost US$32 billion(Boeing's expenditure)Unit cost 787: US$206.8 million (2012


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PRODUCT PORTFOLIO

• Both companies compete against each other at every product level

Airbus A320

Airbus A330

Airbus A350

Airbus A380

Boeing 737Boeing 767 & 777

Boeing 787Dreamliner & 777

Boeing 747


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PRODUCT DEVELOPMENT COST

Category Airbus Development

Cost

Boeing Development

cost

Single AisleFamily Model

A-319 757

A-320 $2.5 bn 737- 200

- . .

A-318 757-300

Wide BodiedAircraft Model

A-350 $15 Bn 767,747

A-330 $3.5 bn 777 $ 5 Bn

A-340 $ 3.5 bn

Super Jet A-380 $15 Bn 787 $ 8 Bn


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PROBLEMS FACED BY BOEING Uncertainty of world’s target market.

Concerns about Boeings corporate leadership.

Lack of proper and ethical Management during the rein of Philip M

Condit. Boeing sluggish response to competition to airbus

Late delivery being a concern as most of the manufacturing units.


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DECISION POINTSStrategic Decision Value addition and Business outcome

Investments in narrow bodied757 and wide bodied 767.

Investments made from the positive cash flowsattained through breakeven of their earlier

models.

Subcontracting in case ofBoeing 777( 60% of the work)

Resulted in reduction of developmental costs.

Douglas defense and space side of aerospace

Movement of corporate headquarter from Seattle toChicago.

signal to the investment community that Boeingwas far more than commercial business

Decision to produce new lowcost, right sized aircrafts

Resulting in increase in profit due to demandfor nonstop point to point flights.

launch of 787 aircraft stiff competition to Airbus A350 and A380aircrafts.


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DECISION POINTSStrategic Decision Value addition and Business outcome

Adoption of Lean Productionand Six Sigma quality

improvement process.

Better Management of warehouses in terms ofinventory, space and time as well as capital,

ultimately improving the value chain.

Introduction of movingassembly lines.

Reaching of timeliness concepts by tools beingdelivered directly on the shop floor instead offetching it.

Government subsidies Boeing got subsidies from NASA to developtechnology which had helped them indeveloping their commercial jet aircraft.


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“The essence of strategy lies in creating tomorrow’scompetitive advantages faster than competitors

mimic the ones ou osses toda ”

Gary Hamel and C.K. Prahalad


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WHAT SHOULD BOEING DO NOW…?• Continuing Lean production technology and outsourcing -

reduce op. cost.

• Innovation in jet engines and use of composites – betterop efficiency.

• Target low cost carriers - Point to Point

•

India – to mitigate threat of airbus.


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FINANCIALS - BOEINGAnnual publications 2007 2008 2009 2010 2011 2012 2013 2014

Turn over 66387 60925 68281 64306 68735 81698 85109 92731

Operating profit (EBITDA) 7315 6547 3762 6753 7504 81228916 9836

Operating income (EBIT) 5830 4836 2096 5026 5844 6311 7166 8068

Net income 4058 2684 1312 3307 4018 3900 4301 4973

Earnings Per Share (EPS) 5.28 3.69 1.84 4.45 5.34 5.11 5.61 6.62

All values are in $ Millions.


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LEARNINGS… TO APPLY AT WORK• Implementing marketing strategy process for in-house

product development of warships.

• Implementing ABC technique in costing for Bids &proposals.

• Using Project management tool to monitor & managemulti ro ect activities in better wa .

Boeing Commercial Aircraft_Team Tiger

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