Boing 737 Manufacturing Footprint: The Wichita Decision - Assignment Example

This industry started with a vertically integrated airframe-manufacturing model with Boeing as the major commercial aircraft manufacturer. Airbus later joined the industry 20 years later also adopting the same platform and derivatives strategy.

In as much as the industry was highly vertically integrated, these companies still sourced distinctive components from specialists such as Pratt and Whitney. However, in the early 1990s, many commercial aircraft manufacturers including Douglas Aircraft, McDonnell Aircraft, and Boeing switched to horizontal integration through mergers. The major drivers of this shift were a technology that progressively became more specialized, costs of production using vertical integration became uncompetitive, and the dire need for management efficiency.

On the other hand, factors such as lower costs due to increased economies of scale and increased market power made Airbus maintain vertical integration. Horizontal industry structure seems to be a benefit since it helped resuscitate Boeing which had stagnated after many years of vertical integration structure. It helped it install a lean system and clean up the production of the 737.