Boeing is among the leading aircraft manufactures and has been producing planes since 1916. However, by 2008, the company was hit by loss of market share brought about by several factors. Some of these reasons include delays in delivering ordered planes, problems with the planes that were delivered and compensation for these delays thus increasing the costs of production (Chauhan " Das, 2017). This resulted in Boeing king losses and lost market share to its competitor, Airbus. Notably, during this crisis, Boeing decided to lay off experienced staff to cut costs. However, this lay-off coincided with an upsurge in orders, forcing Boeing to outsource staff who were not equally qualified.
These staff made expensive mistakes costing the company a lot of money to rectify. Nonetheless, to reduce the cost of inventory, the company had also reduced the number of suppliers (Crandall, Crandall, " Chen, 2014). However, the company continued to accept orders which it could not meet due to delays caused by lack of parts. Additionally, Boeing had a complicated production system that comprised of 400 computers systems that were not linked. Before the crisis, the company relied heavily on a design arrangement that was labor intensive and was very expensive to manage (Hartley, 2011). During the crisis, the company brought in a program worth $1 billion to modernize production but it was too late to salvage the situation.
Markedly, Boeing’s goals were ambitious forcing the company to produce various models of planes at the same time. Coupled with the decision to use new, untested technology and new material, the company faced production delays which resulted in loss of clients to its competitors. Lastly, to reduce the famine-feast airline cycle, Boeing acquired McDonnell Douglas and Rockwell International's defense business. The former proved to be unprofitable, and Boeing was forced to write it down, thus incurring losses. Resultantly, Boeing made massive losses due to costly management mistakes and overambitious plans.
References
Chauhan, R. S., " Das, R. (2017). Entrepreneurship Education for an Entrepreneurial Society. In Entrepreneurship: Concepts, Methodologies, Tools, and Applications (pp. 1425-1455). IGI Global.
Crandall, R. E., Crandall, W., " Chen, C. C. (2014). Principles of supply chain management. Boca Raton: CRC Press
Hartley, R. F. (2011). Management mistakes and successes. Hoboken, NJ: Wiley.
