Harvard Case - Boeing 737 Manufacturing Footprint: The Wichita Decision
"Boeing 737 Manufacturing Footprint: The Wichita Decision" Harvard business case study is written by Willy Shih, Margaret P. Pierson. It deals with the challenges in the field of General Management. The case study is 10 page(s) long and it was first published on : Oct 5, 2011
At Fern Fort University, we recommend that Boeing proceed with the expansion of its Wichita facility, leveraging its established infrastructure and workforce while simultaneously implementing a comprehensive strategy to address the challenges of cost competitiveness, talent acquisition, and operational efficiency. This strategy should prioritize innovation, automation, and a focus on employee development and engagement.
2. Background
Boeing, a global aerospace giant, faced a critical decision regarding its 737 manufacturing footprint. The company needed to increase production to meet surging demand, but the existing facilities in Renton, Washington, were nearing capacity. Two options emerged: expand the Renton facility or establish a new production line in Wichita, Kansas, where Boeing already had a significant presence.
The case study focuses on the decision-making process surrounding the Wichita expansion, examining the factors influencing the decision, the potential risks and benefits, and the strategic implications for Boeing.
The main protagonists in this case are:
- Jim Albaugh: Boeing Commercial Airplanes CEO, responsible for the final decision.
- Scott Carson: President and CEO of Boeing's Wichita operations, advocating for the expansion.
- The Boeing Board of Directors: Responsible for overseeing the company's strategic direction and approving major investments.
3. Analysis of the Case Study
To analyze Boeing's decision, we can apply a framework that considers both internal and external factors:
Internal Factors:
- Core Competencies: Boeing possesses strong engineering, manufacturing, and supply chain capabilities. The Wichita facility already had a skilled workforce and established infrastructure, providing a potential advantage for expansion.
- Organizational Culture: Boeing's culture emphasizes innovation, quality, and customer satisfaction. The Wichita facility had a history of strong performance and a collaborative work environment.
- Financial Resources: Boeing had the financial resources to invest in a new production line, but cost considerations were a significant factor in the decision.
External Factors:
- Market Demand: The global aviation market was experiencing strong growth, driving demand for Boeing's 737 aircraft.
- Competition: Boeing faced intense competition from Airbus, requiring it to maintain a competitive cost structure and production efficiency.
- Regulatory Environment: The aerospace industry is subject to stringent regulations, requiring Boeing to comply with safety and environmental standards.
Strategic Frameworks:
- SWOT Analysis: The decision to expand in Wichita aligns with Boeing's strengths (existing infrastructure, skilled workforce) and opportunities (growing market demand). However, it also presents weaknesses (potential cost challenges) and threats (competition, regulatory changes).
- Porter's Five Forces: The case highlights the intense rivalry among Boeing and its competitors, the bargaining power of buyers (airlines), and the potential for new entrants. Expanding in Wichita aimed to improve Boeing's competitive position.
- Balanced Scorecard: The decision should be evaluated based on financial, customer, internal processes, and learning and growth perspectives. The Wichita expansion should contribute to improved financial performance, customer satisfaction, and operational efficiency.
4. Recommendations
Boeing should proceed with the expansion of its Wichita facility, implementing the following strategies:
- Strategic Investment in Automation and Technology: Invest in advanced manufacturing technologies, such as robotics and automation, to enhance productivity, reduce costs, and improve quality. This will help address the challenges of labor costs and talent acquisition.
- Talent Development and Retention: Invest in training and development programs for employees to enhance their skills and prepare them for the demands of advanced manufacturing. Implement competitive compensation and benefits packages to attract and retain top talent.
- Supply Chain Optimization: Streamline the supply chain to minimize costs and improve efficiency. This may involve exploring opportunities for outsourcing and offshoring certain components while maintaining core manufacturing operations in Wichita.
- Collaboration and Partnerships: Seek strategic partnerships with local universities and technical colleges to develop a pipeline of skilled workers. Engage with the community to foster a positive image and attract talent.
- Continuous Improvement and Innovation: Embrace a culture of continuous improvement and innovation. Invest in research and development to enhance the 737 aircraft and explore new technologies.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: Expanding in Wichita leverages Boeing's existing capabilities and aligns with its mission of providing innovative and reliable aircraft.
- External Customers and Internal Clients: The expansion aims to meet the growing demand from airlines, while also providing opportunities for employees to develop their skills.
- Competitors: The expansion in Wichita is necessary to maintain Boeing's competitive position in the global aerospace market.
- Attractiveness ' Quantitative Measures: The decision should be based on a comprehensive financial analysis, including cost-benefit analysis, return on investment (ROI), and net present value (NPV).
6. Conclusion
Expanding the 737 production line in Wichita presents a strategic opportunity for Boeing to address the challenges of growing demand, cost competitiveness, and talent acquisition. By implementing a comprehensive strategy that prioritizes innovation, automation, and employee development, Boeing can solidify its position as a global leader in the aerospace industry.
7. Discussion
Other Alternatives:
- Expanding the Renton Facility: This option would have minimized disruption to existing operations but would have faced significant challenges with land availability and potential environmental regulations.
- Establishing a New Facility in a Different Location: This option would have offered more flexibility but would have required significant investment in new infrastructure and workforce development.
Risks and Key Assumptions:
- Cost Overruns: The expansion project could face cost overruns due to unexpected challenges or changes in market conditions.
- Talent Acquisition Challenges: Attracting and retaining skilled workers in Wichita could be challenging, requiring proactive talent management strategies.
- Technological Advancements: Rapid advancements in manufacturing technologies could render the Wichita facility obsolete if Boeing fails to adapt.
8. Next Steps
- Develop a Detailed Business Plan: Conduct a thorough financial analysis, including cost-benefit analysis, ROI, and NPV, to justify the investment.
- Secure Necessary Approvals: Obtain approvals from the Boeing Board of Directors and relevant regulatory agencies.
- Develop a Workforce Strategy: Implement talent acquisition and development programs to ensure a skilled workforce.
- Establish Partnerships: Form strategic partnerships with local universities, technical colleges, and community organizations.
- Monitor Progress and Adjust as Needed: Continuously monitor the project's progress, identify potential risks, and make necessary adjustments.
By implementing these recommendations and addressing the potential risks, Boeing can successfully expand its 737 production in Wichita, solidifying its position as a global leader in the aerospace industry.
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Case Description
The case examines the circumstances leading up to the Boeing Company's decision to spin-off its Wichita Division. This case is intended to be taught with two other notes: "On the Use of Capital Efficiency Metrics," HBS No. 612-034, "Modularity in Design and Manufacturing: Application to Commercial Aircraft," HBS No. 612-035.
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