Boeing 747x

Abstract

In 1997, the Boeing Commercial Aircraft Group had to make a decision regarding the production of the 747X airplane, a project involving more than 1,000 employees. By continuing to develop new aircraft, Boeing would protect its innovative culture while maintaining a good relationship with its employees and global team--but this particular development was considered risky because it required an immense supply of resources. Boeing's biggest competitor was threatening to enter the market with a plane larger than Boeing's existing 747, meaning that Boeing would face competition in an area of the market where it had, up to that point, a virtual monopoly. Should Boeing merely continue production of the very successful 747, or should the company design a larger derivative—-the 747X?

Excerpt

UVA-E-0231

Rev. Jan. 16, 2013

Boeing 747X

In January 1997, John Hayhurst, the vice president and program manager for the 747-500X/600X at Boeing Commercial Aircraft Group, had to make a very important recommendation. For the past year, preliminary program development efforts had been underway to determine the feasibility of a 747X airplane, and more than 1,000 employees were committed to the project. Hayhurst had to present this project to the Office of the President, which would either approve or terminate it.

Betting the Company on New Aircraft Designs

Founded in 1916, in the American spirit of innovation, invention, and risk-taking, Boeing had long identified itself as a creator of airplanes. The company did not simply design planes, or just build and mass-produce them: Boeing had always maintained that its success, especially in the cutthroat defense industry, was the direct result of its ability to put together the right team. Boeing employees and management felt that the key to the company's success, and unified relationship with suppliers, was its heritage and culture. By continuing to develop new aircraft, Boeing would protect its innovative culture while maintaining an emotional relationship between its employees, the global team, and their work. Although the continued development of new aircraft would generate enthusiasm and pride between Boeing and its global team, this development was considered risky because it required an immense supply of resources.

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Keywords: aircraft justification, competitive analysis, competitive factors, cost analysis, new-market entry, new-product development