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Case Analysis : Boeing 767

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Case Summary
The Boeing 767: From Concept to Production (A)
By: Runit Marda (115)

The case deals about the issue faced by Dean Thorton, Vice president – General Manager of the Boeing 767 program. The company had lobbied for Federal Aviation Administration (FAA) for permission to build wide body aircraft with two-person cockpits (rather than 3). Now, being granted the permission, the issue was that already 30 of the aircrafts were into various stages of production. Now, how should Thorton handle this situation? What are the options that he has? The decision had to be taken fast as the delivery dates were fast approaching.
Commercial aircraft manufacturings posed various complexities as there were over 3.1 million parts to be connected by wiring over 85 miles. In 1981, three companies dominated the market: Boeing, McDonnell Douglas and Airbus. Launching a new plane was a daunting task as the manufacturing required $1.5-2 billion (which was considered to put the whole companies’ net worth on the line!!). But, any successful product was expected to lead to heavy profits and tie up the market segment for at least 15-20 years. Buyers, comprising mainly of the top 50 airliners, negotiated on price, after sales parts and service, design modifications etc. to make the task even tougher.
In 1981, Boeing was the industry leader in terms of sales, having net sales of $9.2 Billion ($5.1 Billion of the aircraft manufacturing division). Boeing partnered with subcontractors on a risk-sharing basis for manufacturing parts and subassemblies, while the final assemble was done by Boeing. It later also started to offer varieties in the design, drawing on the same basic structure but just some carefully selected variations. These were built on the same assemble line, resolving the complexities. With its expertise in global marketing, technological leadership, production skills and…...

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