Skip to main content

What Boeing's fall from the industry leader teaches us about Business Strategy



Boeing 737 Max has been grounded since March, after two crashes killed 346 people. The Max is Boeing’s most important plane, with about 5,000 ordered by airlines around the world.
The FAA Re-certification flight to return the Boeing 737 MAX back to skies is  approaching soon.  In a survey 52% of fliers said they would prefer the other aircraft type if given a choice between MAX or another Aircraft type.

The Story:Chapter 1 : The Origin   

   1) Airbus announced an update on their most popular model Airbus A320 in 2010 (15% fuel efficient with larger engine). 
   2)  In a race to launch a better plane faster, Boeing resorted to upgrade its model 737 as opposed to developing a new aircraft from scratch (a decade). 


    Chapter 2: Race for Survival

   3) As Boeing 737 was lower to the ground compared to A320 Neo, there wasn't enough room under the wings to fit the larger engine and they came up with a solution in which they moved up the engine on the wing and top of the engine is above the wing. 
   4) The bigger engine changed the aerodynamics of the plane and made pitching up of the plane more likely scenario.
   5) To offset the possibility, Boeing introduced a new software (MCAS, Maneuvering Characteristics
Augmentation System). 
It was supposed to automatically push the nose down if it sensed the plain pointing up at a dangerous angle. 


Chapter 3: The Hidden Thief

6) The program was much like an intense pressure cooker. The company tried to minimize costs and contain the level of changes. This would allow them to simplify training differences (to indicate no additional training required) and get it done quickly. 
They also din't highlight the New MCAS system. 
7) Boeing said their new plane was quite similar to the previous version and pilots would only need minimal additional training. It helped Boeing to stay in the race. 
    8) Many pilots went through Only 2 hour iPad Course before entering the Cockpit for the first time and there was no mention of MCAS software. 

Chapter 4: Reluctance

    9) In 2018 several American Pilots complained the FAA about the sudden nosing down of 737 MAX. 

Chapter 5: Moment of Truth

    10) It was only after 2 plane crashes and worldwide ban on 737 max, Boeing seemed to accept the crisis and propose the software update.   

    Chapter 6: The Fall

As per a Business Insider report, In November 2019, Boeing 737 lost the title of World's Best Selling Airplane to Airbus 320.  
Although Airbus 320 family came 20 years after Boeing 737 family, the current 737 crisis and Airbus's latest addition of two extended range variants of its latest generation jet helped Airbus to outperform in Sales volume. 

Chapter 7: The Everlasting Pain 

A per a survey of 1757 fliers conducted by Barclays in May 2019 found 21% respondents said they would never fly on a MAX. Another 23% Said they plan to wait a year or more. 
52% of them said they would prefer the other aircraft if given a choice between MAX or another Aircraft type.

B2B Company Vs. B2C Company - 

Boeing's response to the who situation reflects their focus on fulfilling the Airline's needs ( Less training costs, fuel efficiency, faster order delivery) rather than the fliers' (indirect customers) needs (Safety & Transparency). 

As customers become more aware with the increasing access of information, ignoring their needs might not a profitable path anymore.  


Comments

Popular posts from this blog

What affects hotel prices in India and USA?

What affects hotel prices in India and USA? We analyzed the prices of 2559 hotels across 42 cities in India and 7 cities across USA for 8 days.  The aim was to find out the which factors affect the hotel prices in India & in USA .  How did we arrive at these results ? The data about the hotels included a total of 9 factors ( variables) -  Star Rating,  Hotel Capacity,  Weekend prices, Holiday prices, Free Wifi (Yes/No), Free Breakfast ( Yes/ No), Swimming Pool ( Yes/ No),  T ourist destination (Yes/No) , Country (India/ USA) The following result (of regression analysis with log) can be used for predicting hotel prices in India & USA. For India ( IsIndia = 1) For USA ( IsIndia = 0) Interpretation of Regression Analysis Results :  Keeping all other variables constant In US- ·         Hotels in the tourist destinations in general, charge 3.38% higher Room Rent. · ...

How popular is your favourite instant noodles brand?

How popular is your favourite instant noodles brand? Instant noodles are increasingly becoming an important part of our lives. Presence of the different flavors, changing consumer lifestyles, growing urbanization are fueling the popularity of the instant noodles across all age groups. India is now the 5th country in terms of overall consumption of the instant noodles (no of packets). The size of Indian Instant noodle market is 1.42 Bn. US dollars (according to Statistica). There are roughly 10 major instant noodles brands in India and market is wide open for any new smart product in the category.   This prompts us to think what is the popularity of different instant noodles brands and is there any difference in the perception of different noodle brands. We conducted a market research to find out brand awareness and consumer behavior.  " What is the first brand that comes into your mind when you think of instant noodles? "  Top of Mind...

Must Read Books on Life, Relationships and Business

Here are few books we recommend you to have better perspective in life, relationships & Business  1) The Alchemist - This book highlights the importance of persistence and will. The prime message is that even if you feel lost sometimes but persistence and will always sail you towards your destination.               2) Who Moved My Cheese - Life moves on so should we! The book tells an interesting story to teach us that changes are inevitable and we should develop a habit of anticipating the change. It then teaches the how to thrive in the ever changing world.                                                                                                      ...