Professional Documents
Culture Documents
BM045-3.5-3-SMGT
STUDENT NAME
SANDIREX SANDRASERAM
TP NUMBER
TP032507
INTAKE CODE
UC3F1501HRM
ASSIGNMENT TITLE
INDIVIDUAL ASSIGNMENT
LECTURER NAME
DATE DUE
Executive Summary
In this assignment, various analysis will be conducted on 787 Dreamliner. The assignment
will begin with the introduction of 787 Dreamliners manufacturer, the Boeing. Later, PEST
analysis together with opportunity and threats towards the competitive environment of 787
Dreamliner will be explained. Then the business model of the airplane and its benefits and
drawbacks will be examined. 787 Dreamliners strategic alliances will then be identified and
the pros and cons of such alliances will be explained. Lastly, suggestion and recommendation
on different strategy which Boeing can use for their 787 Dreamliner.
Contents
1.0 INTRODUCTION................................................................................................................1
1.1 Company Background......................................................................................................1
1.2 Business Units..................................................................................................................2
1.2.1 Boeing Commercial Airplanes..................................................................................2
1.2.2 Boeing Defence, Space and Security........................................................................3
2.0 Analysis................................................................................................................................4
2.1 PEST Analysis..................................................................................................................4
2.1.1 Political Factor..........................................................................................................4
2.1.2 Economic Factor.......................................................................................................5
2.1.3 Social Factor..............................................................................................................5
2.1.4 Technological Factor.................................................................................................5
2.2 Opportunity and Threats Analysis....................................................................................6
2.2.1 Opportunity...............................................................................................................6
2.2.2 Threats.......................................................................................................................6
3.0 787 Dreamliner Business Model..........................................................................................6
3.1 Differentiation Strategy Business Model.........................................................................6
3.2 Advantage and Disadvantages of Differentiation Strategy..............................................7
4.1 787 Dreamliner Strategic Alliances.....................................................................................9
4.2 Pros and Cons of 787 Dreamliner Strategic Alliances...................................................10
5.1 Recommendation on 787 Dreamliner Strategy..................................................................11
6.0 Conclusion..........................................................................................................................11
Reference..................................................................................................................................12
1.0 INTRODUCTION
1.1 Company Background
than 160,000 employees in United States and 65 other countries around the globe. The
company is organised into two different business units namely Boeing Commercial Airplanes
and Boeing Defence, Space & Security.
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2.0 Analysis
2.1 PEST Analysis
PEST analysis refers to the political, economic, social and technology factors of an external
environment. In other words, it is an analytical tool to examine the impact of these factor
towards an organisation (Omran and Khorshid, 2014). PEST analysis shown in figure 2.1 can
be used to identify the external factor and its impact towards Boeing.
Political Factor
General Agreement on Tariff and
Trade
Diplomatic relationship between
countries
Social Factor
Public perception
Economy Factor
Economy downturn
Fuel price
Technological Factor
New technology available
diplomatic relationship allows business to be conducted between the two countries. The
Hainan Airlines, Chinas fourth largest carrier has planned to order 30 787 Dreamliner from
Boeing which the transaction estimated to be US$257 million for each airplane (Jiang, 2015).
On the contrary, bad relationship between United States and other countries will reduce
potential market for Boeing.
2.1.2 Economic Factor
Economic factor refers to the inflations, exchange rates or economy situation that affect an
organisation (Boddy, 2010). This factor will have an influence on the Boeings operational
cost.
Economy situation will have an impact on the demand for 787 Dreamliner. Economic
downturn will force airliners to close routes and cut spending (Goyal and Negi, 2014). As a
result, the demand for 787 Dreamliner decline and many airliners postponed the delivery of
the airplanes.
Fuel price also a factor that can impact the competitiveness of 787 Dreamliner. With the
volatile fuel prices, many airplane buyer are looking for airplane that have lower fuel
consumption rate. The design of the 787s nacelle lower the drag during flight thus reduces
fuel usage. According to Boeing (2015), the 787 Dreamliner consume 20% less fuel than
other similar airplanes. This allows 787 to have competitive advantage over other competing
companies.
2.1.3 Social Factor
Social factor refers to the cultural and demographic impact towards the organisations
(Johnson, Scholes and Whittington, 2007). Since the two incidents happened to Malaysia
Airlines, public began to have fear and doubts towards long distance air transportation (CBC
News, 2014). Many airlines have begun to see the consequences of these incident especially
on their international flights. This will have an influence towards the competitiveness of 787
Dreamliner as the airplane are mainly used for long distance flight.
2.1.4 Technological Factor
This factor refers to the innovations and technological advancement that can influence the
competitiveness of an organisations (Friend and Zehle, 2004). Technological factor is the
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most important factor to Boeings 787 Dreamliner as technology advancement can cause it to
be obsolete.
One of the selling point for 787 Dreamliner is the lower costs to operate due to the
technological advancement. According to Boeing (2015), the 787 Dreamliner reduces
operating cost by 15% while it cost 30% less to maintain the airplane. Plus with the lower
fuel consumption rate, the technology within the airplane allows more airliners to operate the
airplane at lower cost. Newer technology allows 787 to take advantage of the use of
composites and removal of pneumatic systems thus increases the airplane reliability and
maintainability (Hale, 2008).
Opportunity
Low-cost carrier market
Fuel price and airlines operation
Threats
Chinas entry into aerospace market
cost
Figure 2.2: opportunity and threat analysis on 787 Dreamliner.
2.2.1 Opportunity
The low-cost carrier market has been on upward trajectory. These market provides
opportunity for bigger demand for 787 Dreamliner due to its fuel efficiency and lower
operating cost.
Increasing fuel price and airlines operations cost has pushed up the demand for more efficient
airplanes. This will further push the demand for 787 Dreamliner for longer term.
2.2.2 Threats
Chinas plan to develop a home grown aerospace industry and the introduction of C919
airplane will provide new challenges for Boeing. Chinas efficient use of resources will
introduce a new threat of quality airplane at much lower price. This will eat into the already
competitive market thus further reduces Boeings market share (Liu, 2010).
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shades that are available in other airplanes. Instead, the airplane have dimmable windows in
which passenger can adjust the amount of light coming through their windows with a touch
of a button.
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Figure 4.1: Major parts suppliers for Boeing 787 Dreamliner. (Source:
http://787updates.newairplane.com/Boeing787Updates/media/Boeing787Updates/Aviation
%20Experts/supplier-graphic-large_1.jpg)
Strategic alliance refers to the agreement between two or more independent companies to
focus resources on beneficial objectives (Owen and Yawson, 2015). To produce 787
Dreamliner, Boeing has developed strategic alliance with many companies around the world.
These companies supplies high quality airplane parts according to the specification required
by Boeing. Through strategic alliance, a company can improve their competitiveness and also
share the risks and cost of developing major projects (Genc, Alayoglu and Lyigun, 2012).
As shown in figure 4.1, there are many parts in 787 Dreamliner manufactured by different
companies around the world. The tail fin, aft fuselage and body fairing landing gear doors are
manufactured by Boeing themselves but through different divisions United States, Australia
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and Canada. The forward fuselage from Spirit and Nacelles from Goodrich are manufactured
in United States. The state of the art engine for 787 Dreamliner are manufactured through the
co-operation between General Electrics from United States and Rolls Royce from United
Kingdom.
In Japan, the centre wing box and the airplanes wing and manufactured by Fuji and
Mitsubishi respectively. The Kawasaki also from Japan, are in-charge of manufacturing 3
components such as the fixed trailing edge, the main landing gear wheel well and the mid
forward fuselage. The KAL-ASD company is involved in manufacturing the wing tips and
another part of aft fuselage in their assemble plant in Busan, Korea.
Latecoere from France are in-charge of manufacturing the passenger entry doors while Saab
from Sweden manufactured the cargo access doors. The largest single part in 787 Dreamliner,
the centre fuselage, are manufactured by a company called Alenia from Italy. The company
also supplies horizontal stabiliser for Boeing.
delays and also delayed the handover of the first two 787 Dreamliner to the customer
(Johnsson and Schangenstein, 2015).
6.0 Conclusion
As a conclusion, the external environments plays a role that can impact the operations and
competitiveness of Boeings 787 Dreamliner. Most of the external factors are events which is
beyond Boeings control. The strategic alliances between Boeing and their global partner is
what makes the 787 Dreamliner efficient and unique. The business model currently adopted
for 787 Dreamliner is sufficient but there is room for improvement.
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