CASE STUDY: BOEING 737 MAX

Thi Thu Huyen Bui

MGMT 1020
Fall 2020
Strategic Analysis (in class work):
1. Porter 5 Forces:
Power of Buyers:
• Customers of Boeing : Ryanair Hoildings Inc, Southwest Airlines corp, Turkish airline, American Airlines, China Eastern Airlines Corp LTD,
AIR LEASE CORP etc .
• Their customers from all the world, not just specific in any regions
• The buyers’ demand is a lot. They want to buy with best offers with paying minimum price as possible and the increasing capacity of seats
also maintain the safety requirements

Power of Suppliers:
• Many suppliers about 12,000 suppliers , a large number of European suppliers, 30 from France alone
• Suppliers to Boeing : Spirit AeroSystems ( the biggest suppliers), Triumph Group, Whitney, Collins Aerospace etc
• To be supplier of Boeing company, it requires many paper work and licenses such as NADCAP,AS9100 Rev D, ISO 9001, J-STD, DPD etc
Barriers to Entry:

• Requires high training in human resources ( engineers, pilots )

• Require high technology level : 0 defects for everything , control strictly safety conditions, engines, designs,
• Must invest in building distribution centers, productions and logistics
• Require high capital for this actions to balance between the price, designs and the safety

Substitutes:

• For the long trips, the demand of the airplanes is still high, no alternatives , other substitutes such as trains, buses, boat is less impact

• For short distance trip, the passengers prefer motors, cars, trains due to their conveniences and reasonable tickets
Strategic Analysis (30%):

What are Key Success Factors in this industry? (10%)

Safety requirements
Seat capacity
Fuel consuming
Route
Training program for both employees( pilots, staffs in case dangerous
circumstances etc) and testing program for airplane before it flies
Strategic Analysis (30%):

Do an External analysis – Competitive Analysis (10%)

SWOT analysis :
Strong :
• Reputation and strong financial conditions :
• company is the biggest competitor of Boeing , with the revenue i was $35
billions from Chinese market, Guillaume partner
• After Boeing’s disasters in 2018, 2019, Airbus’ order increased dramatically
with 5962 planes , 5814 from A320neo aircraft . Their production of
A320neo increased to 60% per month from middle of 2019 and to 63 % per
month in 2021
• Strong alibility to research and develop their products with high skilled
human resources
Weaknesses
• lack of defense and space segment
• Sluggish demand for helicopters
• Can not adapt quickly with huge immediately accelerate
demands after the Boeing’s cashes
Opportunities and Threats
Opportunities Threats

• Growth in developed • Cyber attack risks

countries • Motivations for new
• Archive the global market “green” products
• Demand of Unmanned
Aerial Systems ( UAS)
Strategic Analysis (30%):
Do an Internal Analysis (10%):
VRIO
Value :
The company is one of the global leaders in airplane with increasing
revenues from 2015 to 2018. After 2 continuous cashes , their
revenue dropped down deeply to -2 million dollars in quarter 2,
2019 but it was the increase in their revenue in 2019.
The company creates million jobs( about 161,400 employees in
2015) for both general labour and high skilled workers
They had close relationship and contracts with Chinese companies ,
US, Europe corporations in terms of commercial aircraft contracts
Rare
There are not many airplane companies in the world
Plane is not new products but the company is working
every day to give the customers with the best products in
terms of price and quality
Immitability
• Hard to imitate the products because it requires a strict
process from design to test and to operation
• Another reasons for copying is hard is because the costs
for technology, human resource etc is all high
Organization
• The distribution network is operating extremely well with
the close relationship to the customers
• After 2 crashes, they are confident to stand up in front of
their mistakes and seeking for the solution and also the
marketing strategies for their loss so it can be seen that
their manger and executives have strong commitment and
support to the company
Problem Definition (10%):
Their problem now is all from 2 aircraft 737 Max crashes, they lost
their contracts with big customers, affect to their reputation,
revenue etc
Development of Alternatives (10%):
1. What is the current Boeing strategy? Please begin by
listing goals, product mix and core competencies. Then
state the strategy in a few sentences.
Current Boeing strategies :
Fixing the technical fault and training pilots : 2 crashes
were all because of the MCAS of company and lack of
training for new model .
And branding their Max to gain its reputation and
company’s reputation
Recover their financial loss and back to the market as a
leader player
What is ONE alternative strategy? Please list goals, product mix and core
competencies. Then elaborate by describing the strategic plan’s outline (in a few
sentences).
One alternative strategy : cooperate with logistics company , government to delivery
products
Reasons:
• Covid 19 : Limited passengers and number of the flight so the demand for
purchasing aircrafts is small, some countries locks down until further notice , only
commercial trade is operating
• Gain their reputation and their contract by what they do in real ( if no crashes or
accidents for delivery, so their products are good) ,they can get trust back from
customers as they all see what the company do, how safe their airplanes are.
• Take advantages of their available products and human resources
Strategic plan
• Connect to the big corporations because they have close and long term relationship
with many reputable global company and offer them new service ( such as provide
them free pilots, free delivery for some routes etcs)
• Using their helicopters for short route if it is needed
 Evaluation of Alternatives (40%):
Evaluate current strategy : fixing technical issues and branding ”MAX” strategy
Alternative What is Is it Gaps to close Risks with
Required? available? choosing this
strategy
Environment Linkage none none none • none
Strategy Linkage • knowledge • yes • Require all the effort • Risk is low as they have
sharing of every people in talent and skilled
• Improve the company engineer with many year
customers • Testing upgraded experience to find and
service system solve the problem
• Improve revenue • They have close
and brand equity relationship with their
customers
Resource Linkage • Engineers • Yes • Designing newest • Medium:
• Pilots system on computer • Their marketing in the
• Marketing and robots article did not do as much
department • Training sections as activities to support to
• High more people, company overcome, they
consultant for doing can hire the stronger
their marketing marketing teams
• Risk can come if no pilots
are willing to test the 737
MAX
Organizational • R&D department • Yes • All agreement and • Medium
Capabilities Linkage • Require network strong commitment • Can seen from the article
distribution for from to to bottom the executives are trying
testing people in the to help the company
• Strict company recover by investing for
commitment and the flaw and technical
financial support improvement also
 ONE ALTERNATIVE:
COROPERATING WITH LOGISTICS COMPANIES

Alternative What is Is it Gaps to close Risks with

Required? available? choosing this
strategy
Environment Linkage Green products Yes Take advantages of • Low
Less fuel their company
strengths in the effort
to reduce C02 and
green house effects
Strategy Linkage • Agreement with • No • Contracts • These companies have
logistics • New payment their own logistics
companies computer system network and their
• Offer them new demand is too small
service
Resource Linkage • Supply chain • Yes • Hiring more supply • Low
department chain and logistics • Strategies can be don
• Marketing consultants with skilled employees
department • Developing new and consultants
marketing strategies
Organizational • Agreements and • No • Conflicts and some • High
Capabilities Linkage adapt quickly misunderstandings • All the department need
between in the first beginning to operate well for this
departments solution can get the
because the highest effectiveness
Quantitative • medium high • Yes • Financial • Medium
Considerations financial consultants and • Take advantages of
requirements consider budget for existing products and
Final Thoughts:
• I think they should use my alternative in this time. They can make profit during this
crisis, their operation and employee can get paid and the company do not need to face
with the high risk of bankruptcy due to lack capital
• They also expand their net work to the logistics companies, in the future, they probably
can step in supply chain industry which always has high demand and high earnings
• They can save much money as they do not waste their employees and their current
products