Management Mistakes and Successes, Tenth Edition

Chapter 10. Boeing: Miscalculations on a Worldwide Scale

The commercial jet business had long been subject to booms and busts: major demand for new aircraft and then years of little demand. By the second half of the 1990s, demand burgeoned as never before. Boeing, the world's leading producer of commercial airplanes, seemed in the catbird seat amid the worldwide surge of orders. This was an unexpected windfall, spurred by markets greatly expanding in Asia and Latin America at the same time as domestic demand boomed, helped by deregulation and prosperity. In the midst of these good times, Boeing in 1997 incurred its first loss in 50 years.

During this same period, Airbus (Airbus Industrie), a European aerospace consortium, an underdog, began climbing toward its long-stated goal of winning 50 percent of the over-100-seat airplane market. The battle was all-out, no-holds-barred, and Boeing was vulnerable. But in this chess game of monolithic firms, Airbus stumbled with throwing all of its resources into the world's biggest passenger jet, and Boeing seemed to emerge a winner with its Dreamliner. Then outsourcing woes afflicted them both by 2008.

BOEING

Boeing's is a fabled past. The company was a major factor in the World War II war effort, and in the late 1950s led the way in producing innovative, state-of-the-art commercial aircraft. It introduced the 707, the world's first commercially viable jetliner. In the late 1960s, it almost bankrupted itself to build a jetliner twice the size ...