Case Study: Boeing 787: the Dreamliner
Memorandum
Throughout the history of commercial aircraft business, Boeing had been recognized as the industry leader over decades, yet until Airbus takes over the title in 2006. In hope to regain its leading position in the industry, Boeing has initiated a new product strategy in 2004, named the Dreamliner, or the 787, to capture the forecasted increasing demand for a midsized wide-body jetliner. Market Positioning The 787 is positioned as the first midsized commercial airplane with long-range capability, which could offer non-stop service over long distance and greater flexibility for airlines to fill up the seats. Travelers’ preference to fly directly to their destination is the main believe of 787’s expected success. The launch of the 787 is likely to succeed in the market as it fills the gap between smaller airliners with limited range and large jetliners with long distance ability. It may transform the traditional hub-and-spoke network for long distance travelling by cutting down the transfer flight to the final destination. Another simple reason for the potential success of the 787 is that, if not seen as profitable, Airbus would not be interested in launching a direct competing model, the A350. Development Process The development process of the 787 is considered as revolutionary compared to all Boeing’s previous product developments. Historically, Boeing’s engineers designed and prepared hundreds of pages of details for each part and then demanded that their strategic partners build the parts to the exactly specification. However, Boeing has asked its international suppliers to fund and run their own R&D for the first time in its history. This aims to achieve costs reduction and higher efficiency, but it may pose potential integration problems as over 70% of the 787’s parts are designed and manufactured globally by different partners using different technologies and standards. Potential Pitfalls As demand for aircraft increases, especially from
Throughout the history of commercial aircraft business, Boeing had been recognized as the industry leader over decades, yet until Airbus takes over the title in 2006. In hope to regain its leading position in the industry, Boeing has initiated a new product strategy in 2004, named the Dreamliner, or the 787, to capture the forecasted increasing demand for a midsized wide-body jetliner. Market Positioning The 787 is positioned as the first midsized commercial airplane with long-range capability, which could offer non-stop service over long distance and greater flexibility for airlines to fill up the seats. Travelers’ preference to fly directly to their destination is the main believe of 787’s expected success. The launch of the 787 is likely to succeed in the market as it fills the gap between smaller airliners with limited range and large jetliners with long distance ability. It may transform the traditional hub-and-spoke network for long distance travelling by cutting down the transfer flight to the final destination. Another simple reason for the potential success of the 787 is that, if not seen as profitable, Airbus would not be interested in launching a direct competing model, the A350. Development Process The development process of the 787 is considered as revolutionary compared to all Boeing’s previous product developments. Historically, Boeing’s engineers designed and prepared hundreds of pages of details for each part and then demanded that their strategic partners build the parts to the exactly specification. However, Boeing has asked its international suppliers to fund and run their own R&D for the first time in its history. This aims to achieve costs reduction and higher efficiency, but it may pose potential integration problems as over 70% of the 787’s parts are designed and manufactured globally by different partners using different technologies and standards. Potential Pitfalls As demand for aircraft increases, especially from