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Boeing has been a pioneer in the utilization of strategic alliances with the Japanese in the design and production of aircraft. This strategy has been driven by the escalating costs of airframe and engine design and manufacture, and the significant competition of Airbus as well as domestic competitors in the global aircraft market. Boeing's alliances with Japan have worked well with several families of aircraft and appear to have produced a loyal customer; however, there have been sharp criticisms of Boeing for the closeness of its association with Japan. These criticisms have largely been aimed at the danger posed by unintentional and unavoidable transfer of aerospace technology. This paper examines the history of Boeing's Japanese coalitions, the benefits, and the dangers posed by Boeing's continued aerospace partnership with one of America's largest economic foes.

At the dawn of the twenty-first century, Boeing and Airbus, the leading manufacturers of large aircraft, were locked in a battle for market share that drove down prices for their new planes. At about the same time, the two industry heavyweights began developing new aircraft families to address the future market needs they each projected.

Aircraft take many years to develop, so by the time the new planes made their inaugural flights, significant changes had occurred in the global environment. First, emerging economies in the Asia-Pacific region and elsewhere were growing rapidly, spawning immediate and long-term demand for more aircraft. At the same time, changes to the market for air travel had created opportunities for new products. These opportunities had not gone unnoticed by potential new entrants, which were positioning themselves to compete against the market leaders.

In October 2007, the Airbus superjumbo A380 made its first flight. The A380 carried more passengers than any other plane in history and had been touted as a solution to increased congestion at global mega-hub airports. Four years later the Boeing 787, a smaller long-range aircraft, was launched to service secondary cities in a point-to-point network.

The case provides students with an opportunity to analyze the profit potential of the global aircraft manufacturing industry in 2002 and in 2011. Students can also identify the actions of participants that weakened or intensified the pressure on profits within the industry.

Audio format (.mp3 file) available with purchase of PDF. Contact cases@kellogg.northwestern.edu for access.

This paper aims to address the questions of different outsourcing strategies between Airbus and Boeing and point out the theoretical limits of the resource-based view (RBV) approach that must be broadened with a finance perspective. Owing to the complexity of systems, the aircraft industry is nowadays structured around a well-organised value chain of product development and manufacturing. However, according to the RBV, capabilities attached to some systems and components are strategic resources and must be kept in house to maintain competitive advantage. In commercial aircraft avionics, critical systems such as flight controls fall directly under this rule, due to substantial risks of passenger safety they deal with.

This study is based on two comparative studies concerning the A330/340 and A350 programmes at Airbus and their equivalents at Boeing, the B777 and the B787. The data are both primary (financial and patent data) and secondary (semi-structured interviews and documentation.

The main result highlights the limits of the RBV model to understand why Airbus has chosen to re-internalise the development and production of flight control systems contrary to Boeing. For both, cost reduction is the main objective of outsourcing, but European firms are more careful with critical resources. The financialisation of aircraft manufacturers’ strategies is another explanatory factor relevant to understand why Boeing outsources strategic resources such as flight controls.

The authors demonstrate the potential of multiplication of research methods to address a question. Second, they try to bring together different theories in a preliminary effort, which gives them some promising stuffy perspective for future works.

By addressing both the RBV and the financialisation perspectives, the authors provide an interesting view of the COmplex Products and Systems (CoPS) challenges.

The findings of this research must provide key of interpretation for business managers, which may consider the two faces, knowledge management and financial, to explain corporate performance.

Several originalities are relevant in this work. From a methodological point of view, the authors offer a comparison between the two main players of commercial aircraft manufacturing, an oligopolistic industry. Second, the data they choose to rely on are both qualitative and quantitative to strengthen the results. Third, at a micro level, this study is original in its approach of linking outsourcing to financialisation.

Boeing and Airbus are contemplating entry into very-large-aircraft (VLA) markets. Both firms are convinced the market cannot support two players due to the extremely high R&D costs and the limited (and highly uncertain) state of demand. The key strategic issue is the uncertainty surrounding Boeing's development cost: to what extent would Boeing's experience with the 747 help it reduce the R&D cost of a new VLA prototype? The main point is that Boeing's strategic moves signal its private information, and that this eliminates any first-mover advantage Boeing might have had in this market.

To introduce some of the strategic issues arising in natural monopoly industries in which the winner takes all, and focus on the issues of credible preemption and signaling.

Boeing Company has been the world's leading producer of large commercial airplanes for several decades. However, in the late 1990s, Europe‐based Airbus Industrie competed with Boeing aggressively and captured almost fifty percent of the over‐100‐seat airplane market. This paper examines the battle between Boeing and Airbus, including a concise report on Airbus' launch of its A380 superjumbo project. The paper also contains the authors' recommendations to Boeing and the U.S. government.

This is an impression of the Paris Salon de l'Aeronautique drawn from visits during the first three days: a more detailed report on the exhibits and the flying displays, together with “An Engineer's Impression of the Paris Air Show” will appear in our next issue.

The traditional value chain has changed under the influence of globalisation, lean thinking and the value leverage towards suppliers in the supply chain. The leverage of value by the focal original equipment manufacturer (OEM)‐company to the supply chain has caused the focal OEM‐company to transform into a large‐scale system integrator (LSSI). The LSSI was defined according to the Petrick's definition. Indicators that measure the value‐leverage by these LSSI companies have not been found in literature. The purpose of this paper is to describe indicators that measure value‐leverage and illustrates that LSSI companies in the aerospace industry have a value‐leverage capability, using these indicators.

The authors' main research question is: “How to measure value‐leverage by LSSIs in the aerospace industry?”. As value‐leverage indicators have not been studied before, a literature study was carried out to develop a set of indicators which were tested in a quantitative analysis, using secondary data from 41 aerospace companies. Second, the value‐leverage indicators were applied to the aircraft LSSIs. The industry samples consisted of the global companies in the aircraft OEM industry and the relevant financial and company data were collected from the companies' public financial data, spanning a time frame of 14 years (1996 to 2009). A case study was performed on large‐scale aircraft system integrators, as a sample of the aerospace OEM industry, to demonstrate the effects of value‐leverage by aircraft LSSI companies.

With the new indicators, this research shows value leverage of aerospace OEMs and aircraft LSSIs as a sub group of the sample. The related indicators showed a change in leverage over time, indicating the leverage capability of aerospace OEMs. More in‐depth analysis on aircraft LSSI companies showed that aircraft LSSI with high correlation on the value‐leverage variables are more in value balance compared with aircraft LSSI companies scoring lower on the variables.

This research has been limited to the aerospace OEMs. Data from secondary (public) sources were used, such as financial reports over a period of 14 years. Further research is necessary to develop indicators for other sectors of industries, such as automotive, medical instruments and construction, as well as to further improve the understanding of the outcomes of this study.

The new indicators measure value‐leverage of aerospace OEMs in general and aircraft LSSI companies. These companies could be compared on their capability of value‐leverage. Management of these firms can use the indicators to further improve their capability of value‐leverage on the supply chain regarding co‐development and co‐production of aircraft and related systems.

It is useful for the executive management of aircraft LSSIs to balance the value leverage of their companies regarding R&D, customer demand and supply chain based production.

The paper identifies indicators that measure the capability of the aerospace OEMs to leverage value on supply chains. The found indicators form a preliminary model, which contributes to the usage of theories on lean manufacturing, supply chain management, value networks and open innovation.

This short case study deals with the analysis of the airborne refueling tanker contract placed by the U.S. Department of Defense to the U.S. group Boeing. The data used in this case is all drawn from secondary sources, and the story told chronologically. Initially, the scene is set with a discussion of the types of relationship, planned and de facto, that emerge when companies do business with each other, and an analysis of the situations when different emphasis is placed upon specific benefits and costs of the relationship. Discussion continues around the concept that relationship benefits are perceived as more important for the continuation of a relationship than relationship costs – when relationship value, direct switching costs, and sunk costs exist, the search for a new partner is reduced.

The question of why Boeing was favored by the U.S Department of Defense over competing Airbus Industries stands in the center of this analysis. The analysis explains how existing business relations and their binding effects, as well as resulting advantages and disadvantages, influence subsequent behavior.

Airplane technology is undergoing several exciting developments, particularly in avionics, material composites, and design tool capabilities, and, though there are many studies conducted on subsets of airplane technology, market, and economic parameters, few exist in forecasting new commercial aircraft model introduction. In fact, existing research indicates the difficulty in quantitatively forecasting commercial airplanes due in part to the complexity and quantity of exogenous factors which feed into commercial airplane introduction decisions. This paper seeks to address this gap.

The analysis is based on a literature review, supplemented by a collection of secondary data. The study then focuses on applying three technology forecasting techniques: multiple regression; linear regression; and the Pearl growth curve.

The results provide a valid model for multiple regression and linear regression on range and composite material percentage for use in commercial airplane forecasting. However, growth curve analysis, comparatively, appears to provide the most intriguing and flexible forecast outlook in alignment with industry dynamics.

Research implications include a caution for forecasters in support of the difficulty of commercial aircraft forecasting due in part to the quantity of exogenous factors, particularly compared with a related industry, military aircraft. Future work could include: utilizing other forecasting techniques that allow for greater numbers of forecast factors, additional future models, additional range aircraft and/or analyzing the impact that competing transportation modes in mid‐range aircraft could have on long‐range aircraft introduction.

The study provides value in extending a previous descriptive paper on airplane parameters. Additionally, it appears to be one of the first quantitative examples supporting previous research indicating the complexity of forecasting airplane new product introduction, but it overcomes some of this complexity by providing a valid model for forecasting with range and composite material percentage as inputs.