CASE STUDY PRESENTATION

Manisha YadavBBA V

BOEING’S PRODUCT DEVELOPMENT STUMBLE

SONIC CRUISER

Executive Summary…

The case set up in 2003 is about BOEING, the world pioneer and leader in aerospace industry and their just one product stumble that cost them to run 2nd for the 1st time in a two horse race. They wanted to develop a high speed jet liner called SONIC CRUISER which could carry 225 passengers at close to the speed of sound and was referred to as “the next great flying machine”. But the product couldn’t become reality because:

Cont…

It was a wrong plane at the wrong time, and It demanded too many changes in the conventional air

traveling, repair and maintenance. Though initially it seemed lucrative to some airliners,

but then 9/11 happened and changed everything. The aviation industry underwent a big economic low, and was in search of cheap and economical products.

Besides, Boeing itself was confused whether to go for super efficient plane or the sonic cruiser.

Cont…

Even after 4-5 rounds of meetings with the customers, boeing was still not able to make its decision. Airbus, which was following every step and move of boeing grabbed every opportunity to make a mock of boeing’s sonic cruiser. At last boeing decided to cancel the project saying that they will come up with the project later as it requires more detailed and refined research.

Chronology of Boeing company

Founder: William E. Boeing ( 1881-1956) March 19, 1910: Mr. Boeing bought a shipyard in

Seattle which later on became his first airplane factory. May 9, 1917: the Boeing Airplane Company got its

name. World War II: B17 and B29 Bombers. 1958: Boeing 707, the first civillian passenger plane.

Chronology of the company (cont.)

1969: Boeing 747 Jumbo Jet. Recent Acquisitions: 1996: Rockwell International 1997: McDonnell Douglas 2000: Hughes Aircraft 1,80,000 Employees currently. 2001: company headquarter moved from Seattle to

Chicago.

Boeing’s Business Lines

Aerospace, Defense and Communication Industries Fighter Jets, Helicopters Missiles Satellites, GPS Flight Instruments

Commercial Airline Industry Boeing 707, 737, 747, 757, 767, 777 Airplane maintenance and flight training.

Competitors…

In commercial plane category: Airbus Industries (leader in this segment since

2003). Norhtrop Grumman Raytheon Company De Havilland

In aerospace & defense category: Lockheed Martin (leader in this category).

Other challenges…

Airline mergers and bankruptcies. The effect of september 11. Declining company image. Industry challenges: Substitute products & services. Lack of communication in the company’s organisation. Employees’ morale going down due to the failure of

747x , Joint Strike Fighter and most recent being the Sonic Cruiser.

Missed out component of Marketing Research…

Didn’t take into consideration the consumers’ aspect, confined research to their own customers.

Forgot to consider the prevailing industry trends. Lack of cost effectiveness. Gambling with the design. Blind eye on new market entrants. Should have paid more attention on the timing of their

events.

Does the design of Sonic Cruiser makes sense in 2011, when the world economy is growing nicely….?

NO…

Though it can prove to be good to people for whom time is more important than money but, the question is….

How much % of total air passengers belong to business class? And will common people actually pay for reaching just one

hour earlier? Availability of substitutes. Besides this, Its unique design requires an entire change in the

conventional air traveling, right from rewriting their schedules to overhauling their maintenance & service procedures, which would only add to its already high cost.

The new design is still under a scanner for its cost effectiveness.

Risk assessment and sharing

Very high risk involved in product development ventures like Sonic Cruiser.

Most widely used method of risk sharing in such projects is Outsourcing.

Should use more of the internet technology for its purchasing operations thus saving 20-27%.

Should focus on: Paperless design models & Process improvement programs like Moonshine shop- an

innovation to improve efficiency. Can join Exostar- global net marketplace for defense

industry.

THANK YOU…