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Case Write-Up

In 2003, the Boeing Company announced that it plans to create and sell a new jet. The new jet’s name is 7E7 and it subsequently called the “Dreamliner”. Compare to the other airplanes, 7E7 have some significant advantages such as composite material, low fuel consumption, and short production chain. Furthermore, Michael Bair, the leader of the 7E7 project, claimed that the 7E7 project was running good and if the board agrees with the 7E7 project, the new jet would start flying in 2008. The new jet will help the Boeing Company to compete with Airbus. However, in 2003, the market for aircrafts was already experienced a serious contraction because of the United States started to war against Iraq, the September 11 attacks, and SARS. In that stage, people are feared to do international travel. As a result, it seems like an inappropriate time to design a new jet. Moreover, in order to make the 7E7 be significant, the 7E7 project needs vast research and development expenditure. However, revenues from commercial jet in Boeing were decreased about $6 billion. Besides, in that stage, Airbus also designed some new jets and in the airplane market, Airbus has more market shares than Boeing. In that period, any mistake at Boeing may make Boeing lose the whole market of the airplane. Due to the unsuccessful jet Boeing made before, the board of Boeing became very cautious about developing a new jet. Therefore, Michael Bair is trying to convince the board of Boeing to accept the new jet project.

1. Why is Boeing contemplating the launch of the 7E7 project? Is this a good time to do so?

The reason that Boeing contemplating the launch of the 7E7 project is Airbus had become the leader of the commercial airplane market in early 2003. Moreover, after the “Sonic Cruiser”, Boeing hasn’t designed any new airplane. Therefore, if Boeing cannot design a new jet as soon as possible, Airbus will control the whole market of the airplane. It is a good time for Boeing to do...