to control costs, mounting assembly line problems and delayed materials orders. These put Boeing at a disadvantage against Airbus, which had developed lean-production systems, and forced Boeing to drastically cut prices to protect market share. In the process, Boeing gave up its technological leadership and any competitive advantage it had created.Boeings turnaround strategy was based on;1)Reorganization of Boeings two major product groups. All products and services were grouped into separate, autonomous divisions with carefully drawn boundaries and responsible for their own financial performance. This reorganization is effective in eliminating bureaucratic costs associated with managing resource-sharing across many business units. 2)Replacement of the executive responsible for running the companys commercial airplane division3)Introduction of radical cost-cutting measures: such as downsizing, introducing a new computerized system to reduce inventory costs, building a flexible, integrated production-management system that would link its separate computer system, and reducing the number of special features it introduced into a variety of aircraft models.4)Hiring of a new chief financial officer from outside the company: Her plan consisted of obtaining more accurate cost data and providing it to line managers in a timely manner, determining the risks of undertaking large projects in a more methodical way, discontinue unprofitable projects, and to increase Boeings reliance on the outsourcing of aircraft components, systems and equipment. This turnaround plan addressed many important issues but had two main problems. First of all, the decision to lay off 30-50 thousand workers and replace their output by subcontracting did not improve profit margins in the commercial aircraft group. Margins remained at a dismal 1-3%, compared to a steady 8% in the defense aircraft group. This could be to higher costs of compone...
