Harvard Case - Boeing 737 Max 8 - A Stalled Communication Take-Off?
"Boeing 737 Max 8 - A Stalled Communication Take-Off?" Harvard business case study is written by Deepti Ganapathy, Jacqueline Gomes. It deals with the challenges in the field of Strategy. The case study is 15 page(s) long and it was first published on : Dec 9, 2021
At Fern Fort University, we recommend a comprehensive strategy for Boeing to rebuild trust and restore its reputation following the 737 MAX crisis. This strategy involves a multi-pronged approach encompassing enhanced communication, operational excellence, technological innovation, and a renewed commitment to ethical leadership and corporate social responsibility.
2. Background
The Boeing 737 MAX crisis unfolded in 2018 and 2019 following two fatal crashes attributed to a malfunctioning flight control system, the Maneuvering Characteristics Augmentation System (MCAS). The crisis resulted in a global grounding of the aircraft, significant financial losses for Boeing, and a severe blow to its reputation. The case study focuses on the communication breakdown between Boeing, the Federal Aviation Administration (FAA), and the public, highlighting the company's failure to effectively address concerns and manage the crisis.
The main protagonists in this case study are:
- Boeing: The aerospace giant responsible for designing, manufacturing, and selling the 737 MAX.
- The Federal Aviation Administration (FAA): The regulatory body responsible for certifying the safety of aircraft in the United States.
- The public: Passengers, airlines, and the general public who were impacted by the crisis.
3. Analysis of the Case Study
This case study provides a prime example of how a lack of transparency and effective communication can lead to a devastating crisis. We can analyze the situation using a combination of frameworks:
1. Porter's Five Forces:
- Threat of New Entrants: The aerospace industry has high barriers to entry due to significant capital investment and complex regulatory requirements. However, the crisis created an opportunity for competitors like Airbus to gain market share.
- Bargaining Power of Buyers: Airlines, as the primary buyers of aircraft, hold significant bargaining power due to their large volume purchases. The crisis gave them leverage to negotiate lower prices and favorable terms.
- Bargaining Power of Suppliers: Boeing relies on a complex supply chain with numerous suppliers. The crisis could have potentially disrupted supply chains and impacted supplier relationships.
- Threat of Substitutes: While there are no direct substitutes for commercial aircraft, the crisis highlighted the potential for airlines to explore alternative transportation options, such as high-speed rail.
- Competitive Rivalry: The aerospace industry is characterized by intense rivalry between Boeing and Airbus. The crisis further intensified competition as both companies sought to regain market share.
2. SWOT Analysis:
- Strengths: Boeing possesses strong brand recognition, a vast global network, and significant financial resources.
- Weaknesses: The crisis exposed weaknesses in Boeing's communication strategy, safety protocols, and internal culture.
- Opportunities: The crisis presents an opportunity for Boeing to rebuild trust, enhance its safety culture, and invest in new technologies to regain its leadership position.
- Threats: The crisis could lead to long-term reputational damage, decreased market share, and increased regulatory scrutiny.
3. Communication Breakdown:
The case study highlights several communication failures:
- Lack of Transparency: Boeing initially downplayed the severity of the MCAS issue and failed to provide timely and accurate information to the public.
- Delayed Response: Boeing's response to the crisis was perceived as slow and inadequate.
- Conflicting Messages: Different stakeholders within Boeing communicated inconsistent messages, further confusing the public.
- Lack of Empathy: Boeing's communication lacked empathy and understanding for the victims of the crashes and their families.
4. Recommendations
Boeing needs to implement a comprehensive strategy to rebuild trust and restore its reputation. This strategy should include:
1. Enhanced Communication and Transparency:
- Establish a dedicated communication team: This team should be responsible for coordinating all communication efforts and ensuring consistent messaging across all channels.
- Proactive communication: Boeing should proactively communicate with stakeholders, including airlines, passengers, regulators, and the public, providing regular updates on the investigation, corrective actions, and progress made.
- Open and honest dialogue: Boeing should engage in open and honest dialogue with stakeholders, addressing concerns and questions directly.
- Empathy and compassion: Boeing should demonstrate empathy and compassion for the victims of the crashes and their families.
2. Operational Excellence and Safety Culture:
- Thorough investigation and corrective action: Boeing should conduct a comprehensive investigation into the MCAS issue and implement corrective actions to ensure the safety of its aircraft.
- Enhanced safety protocols: Boeing should strengthen its safety protocols and procedures, including pilot training, maintenance, and quality control.
- Independent safety audits: Boeing should conduct regular independent safety audits to ensure compliance with industry standards and best practices.
- Focus on continuous improvement: Boeing should establish a culture of continuous improvement, actively seeking feedback and implementing changes to enhance safety and reliability.
3. Technological Innovation and Sustainability:
- Investment in advanced technologies: Boeing should invest in advanced technologies, such as AI and machine learning, to enhance aircraft safety, efficiency, and sustainability.
- Development of innovative solutions: Boeing should focus on developing innovative solutions to address emerging challenges in the aerospace industry, such as reducing emissions and improving fuel efficiency.
- Commitment to environmental sustainability: Boeing should demonstrate a commitment to environmental sustainability by reducing its carbon footprint and promoting sustainable practices throughout its operations.
4. Ethical Leadership and Corporate Social Responsibility:
- Strong ethical leadership: Boeing should appoint ethical leaders who prioritize safety, transparency, and accountability.
- Corporate social responsibility initiatives: Boeing should implement corporate social responsibility initiatives that demonstrate its commitment to ethical business practices and community engagement.
- Investment in employee development: Boeing should invest in employee development programs that promote ethical decision-making and a culture of safety.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations are aligned with Boeing's core competencies in aerospace engineering, manufacturing, and innovation. They also support the company's mission to provide safe and reliable transportation solutions.
- External customers and internal clients: The recommendations address the needs of external customers, including airlines and passengers, as well as internal clients, such as employees and stakeholders.
- Competitors: The recommendations aim to help Boeing regain its competitive advantage by addressing the weaknesses exposed by the crisis and investing in future growth areas.
- Attractiveness ' quantitative measures if applicable: The recommendations are expected to improve Boeing's financial performance by restoring its reputation, increasing sales, and reducing costs associated with the crisis.
- Assumptions: The recommendations assume that Boeing is committed to making the necessary changes to rebuild trust and restore its reputation. They also assume that the company has the resources and expertise to implement the recommended strategies.
6. Conclusion
The Boeing 737 MAX crisis serves as a stark reminder of the importance of communication, transparency, and ethical leadership in business. By implementing the recommended strategies, Boeing can rebuild trust, restore its reputation, and regain its position as a leader in the aerospace industry.
7. Discussion
Other alternatives not selected include:
- Ignoring the crisis: This option would have been disastrous, leading to further reputational damage and potential legal action.
- Minimizing the crisis: This option would have been ineffective and would have eroded trust further.
- Focusing solely on technical solutions: While technical solutions are important, they are not sufficient to address the crisis. A holistic approach is necessary.
Risks and Key Assumptions:
- Risk: The recommendations may not be sufficient to fully restore Boeing's reputation.
- Assumption: Boeing is committed to implementing the recommendations and making the necessary changes.
8. Next Steps
Boeing should implement the recommended strategies in a phased approach, with clear milestones and timelines. The following steps are essential:
- Phase 1: Immediate communication and transparency measures to address the crisis and rebuild trust.
- Phase 2: Implementation of operational excellence and safety culture improvements.
- Phase 3: Investment in technological innovation and sustainability initiatives.
- Phase 4: Embedding ethical leadership and corporate social responsibility throughout the organization.
By taking these steps, Boeing can overcome the 737 MAX crisis and emerge as a stronger and more resilient company.
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Case Description
This case focuses on a key business decision taken by The Boeing Company to counter competition from its rival Airbus - in a duopoly market. The pressure to stay relevant, be competitive and bag a large market pie in the burgeoning aviation sector, led Boeing to make a series of untimely decisions that resulted in two plane crashes, followed by an exposé of several safety and regulatory practices and processes. The case presents Boeing's flagship 737 MAX 8 aircraft; throws light on the popularity of the model; provides an overview of the aviation market; and the context surrounding the two crashes that occurred when the 737 MAX aircraft were released; and the ensuing communication debacle that followed.
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