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Case Study on Boeing - Essay Example

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The current aircraft industry consists of a duopoly that includes Boeing Corporation and Airbus. Both organizations provide the majority of aircraft that are used in the airline industry worldwide. Boeing has chosen to focus its strategy on the 'point to point' market…
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Download file to see previous pages 1. Boeing Corporation's forwarding looking market strategy is based on assumptions about the air travel market and the equipment (aircraft) needed for continued growth. Boeing's projections assume that the current fleet of aircraft will need to be upgraded and retained or replaced. The current fleet consists of 17,330 aircraft. By 2025 the fleet will have an estimated 35,970 aircraft consisting of 27,210 new or replacement aircraft, and 8,760 retained aircraft. Future growth and the need for replacement aircraft will drive the aircraft industry's competitive market (Showronski, p1). Boeing will need to be able to provide new aircraft that are both efficient and economical. Boeing's new large aircraft segment is marketing both one and two aisle airplanes with the focus on the new 747-8 Intercontinental and 747-8 Freighter aircraft. This is in contrast with Boeings 'point to point' strategy that focuses on smaller aircraft that serve the purpose of moving people and cargo from one point to another rather than to a central location where cargo and passengers would deplane and board a smaller plane to reach their destination (hub and spoke strategy). Boeing's successful market entry of their 747-8 Freighter and 747-8 Intercontinental aircraft prove that Boeing can compete in the larger aircraft market. Boeing's first customer was Lufthansa who ordered 20 of Boeing's 747-8 Intercontinentals (Showronski, p1).
Boeing's success, using the 'point to point' method of getting passengers to their destinations, is based upon the idea that passengers prefer the shorter travel times that 'point to point' service offers. Boeing offers the airline industry aircraft that are best suited to 'point to point' travel. These aircraft are typically larger than those used in the in the typical 'point to point' market.
Boeing's current strategy includes gaining a large portion of the projected 2.6 trillion in airplane investment opportunities over the next twenty years (Showronski, p1). Boeing's leadership believes that by entering the large airplane sales and service market they are positioning themselves to be leaders in the industry by providing an aircraft that will best meet the needs of customers. Boeing's current strategy also includes continued sales and service of five other sizes of aircraft to serve the 'point to point' market. It is hoped that carriers will continue to choose Boeing aircraft as aircraft of choice for their business. Boeing's five sizes of aircraft are designed to meet all aspects of the 'point to point' market with carriers that have 200 seats up to carriers that seat 467 passengers. Currently Boeing is the only one in its industry with an airplane that can carry more than 450 passengers at a time (Point-to-Point, 2006). The 747-8 is used primarily by carriers that offer long range high density routes (Point-to-Point, 2006). The 747-8 is designed to be a replacement for older 747's that will be phased out of service during the next twenty years (Point-to-Point, 2006).
With Boeing's entry into the large carrier market came requests for an airplane that was environmentally friendlier than its previous airplanes. The 747-8 was created with environmentally friendly features. The 747-8 uses less fuel and "produces lower carbon dioxide emissions" (Point-to-Point, p2). Also, the 747-8 makes 30% less noise on take-offs (Point-to-Point). Because Boeing ...Download file to see next pagesRead More
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