E-Business Strategy
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Introduction
Due to the increasing needs of information technology and systems driven by the fast paced technology, businesses have become e-businesses today, integrating and capitalizing information technology in every aspect of the business.
Defining Information Technology, it is used to obtain, process, and distribute information that has been integrated in every functional area of a company. It consists of a computer network, telecommunication system, databases and computer programs used within the business (Krajewski & Ritzman, 1999). Just like any other technology, information technology is used to improve business processes, increase profitability and gain competitive advantage.
IT is composed of hardware such as the computers and peripheral devices including the printers, monitors, video recorders, servers, etc. In industries, the hardware components of IT also involves devices such as machines and other robotics which aid in the flow of information for the different departments in a company (Krajewski & Ritzman, 1999) commonly used in the production functions.
Another component of IT is the software which is used to run the hardware. Software commonly used in businesses includes operating systems, database programming, and software use in Computer Aided Designs (CAD).
Databases are also part of IT. It is where the vast amount of company data and information are stored usually information on sales and projections, human resource information, financial records and many more. Telecommunications is also a very important component of IT for it allows networking of computers and connection to other communication devices such as telephones and fax machines. Through telecommunications, Internet technology was made possible.
With the components of IT mentioned above, it can be seen that integrating IT in a company requires human resource and financial capitals to be able to sustain an effective IT system. Generally, IT offers substantial advantages such as reduced cost of information exchange; increased speed of information transfer and retrieval; increased customer involvement in and control of transactions; and greater flexibility of using the marketing mix (Liu, 2000). The internet is used in businesses for communications; market research, customer services, market penetration, product development, cost savings through process reengineering, direct marketing, advertising and product delivering (Cronin 1996, Ellsworth and Ellsworth 1996 on Liu, 2000).
With the many uses of IT in almost every industry, e-business or sometimes called e-commerce emerged. Companies use Internet technology in conducting transactions with the suppliers and customers, business partners and internally among employees. Since e-business is a common practice now to almost all companies especially the large ones, companies developed e-business strategies in order to stay competitive and take advantage of e-business.
E-business is a broad concept and describes arrangements where organizations have redesigned their business structures, processes and services to take advantage of Internet capabilities. The essential features of an e-business are that it: (1) Makes greater use of electronic devices in the processing and communicating of data, (2) Allows increased integration of databases and hardware devices (thanks largely to the 'open protocols' that govern the transfer of data between systems), and (3) Enables users to engage 'interactively' with systems and services - for instance, to purchase goods, check on orders or collaborate in virtual teams or communities (Eckersley, et al, 2003).
With today's fast changing environment, it is inevitable for businesses to get "wired." Although there are some that have remained doing their business the traditional way, majority have adopted electronic means of doing their business. There are many reasons for doing so, including getting a wider range of customers and making transactions more fast and easy for both customers and the company.
Very quickly Internet technology has forced companies to change the main thrust of their business system architectures and organizational dynamics through the use of E-business. Whereas enterprise integration was once considered the key to success, savvy companies are presently striving to achieve extended-enterprise cooperation.
The aviation or aerospace industry is no exception to the adoption of electronic business. For the purpose of this paper the definition of the aerospace industry is focused on and includes the sale of aircraft components, parts and engines, refurbishment work, and all after market services. The refurbishments and after market services are often included in company turnover because they are considered future cash flows. For this paper therefore, the Rolls-Royce engine company will be studied and their incorporation of e-business into the company. The aerospace industry's frantic race toward higher productivity and profits has triggered another feverish contest in the world of Internet-based trading exchanges.
The proliferation in recent months of business-to-business (B2B) exchanges the aviation industry is symptomatic, on the one hand, of the growing interest in Web-base market-places that link buyers and sellers directly, without the traditional middlemen. On becoming tools to achieve specific corporate are as the other hand, B2B exchanges increasingly are becoming tools to achieve specific corporate goals--such as increasing sales, improving customer service and cutting back on excess inventory (Erwin, 2000).
The aircraft industry is an important industry, making faster and easier worldwide transportation possible. The aircraft industry is basically divided into nine sectors: commercial and military fixed wing; commercial and military rotorcraft; unmanned aerial systems/vehicles (UAS/UAV); jet engines, aviation workforce; supply/industrial base issues; and air space management (TICAF, 2005).
Aside from using information technology such as the internet in marketing and customer service, a technology-driven industry such as the aircraft manufacturing industry has been utilizing IT in the manufacturing aspects. This requires the use of CAD systems, STEP or standard for exchange of product model data, effective information and data management and collaboration among the designers, engineers, suppliers and production.
Although it seems simple, adopting e-business in a company or organization is a very complicated process requiring expertise. How, for instance, can organizations make the most effective use of the data that e-enabled processes now produce on customers and their buying habits? Inside the organization, what use should be made of electronic information systems to improve internal communications? And, in both cases, what safeguards should be put in place to insure against invasions of (e-)privacy? These and many other questions are what businesses face when integrating e-business solutions into their companies and organizations.
A successful electronic business or commerce operation requires a solid business strategy as well as the implementation of business strategies and supporting technologies. The process requires a long-term commitment and continual adjustment to market conditions, strategy and product development. Today's e-commerce companies are fully integrated businesses with their operations linked seamlessly through the Web. They are subject to the basic economic laws of industry (Pickering, 2000).
This paper is basically a case study in which a company in the aviation industry is analyzed in order to determine its past failures, how it had failed with its e-business strategy, the wrong moves it had undertaken that made its e-business strategy failed and the strategies it has taken in order to improve and to stay competitive. The study presents lessons that can be learned by other companies in terms of formulating and implanting e-business effectively. The paper discusses first some insights about e-business that served as the bases in analyzing the company.
Company Profile: Boeing
Boeing is an American company and the world's leading manufacturer of aircraft from commercial jetliners to military aircraft. It began in the 1920s as a military contractor producing fighter aircraft during the war. In the 1950s, Boeing became a leader and the world's largest manufacturer of commercial aircraft with its breakthrough jet, the 707. The 707 was introduced in 1958 that made Boeing outperformed rival companies during that time in terms of technology. However, despite the technology used, the company recovered its investment only in 1964. Boeing then began producing other models such as the 727, 737 and 757 which were all patterned to the design of 707. Boeing used shared design for future models because of the constant pressure experienced by the company to move down the learning curve and reduce overall development costs (Cohen, 2000).
In 1970, Boeing introduced the 747 which was another breakthrough because it was not adopted from any Boeing designs and was first of its kind in the industry with its wide body design. The company spent so much for the 747, almost as much as the company's net worth in 1965, the year the project started (Spadaro, 1992) that it almost reached bankruptcy. However, the 747 became the most profitable aircraft and the industry's most efficient jetliner (Cohen, 2000).
At present, Boeing offers aircraft products that can accommodate 100 to 500 seats and airplane for cargo freighters. These products include the 717, 737, 747, 767, 777 and the 787 Dreamliner. The Boeing Company is currently headquartered in Chicago, Illinois, USA, employing about 153,000 people in 67 countries.
The USA's Boeing Company and the Europe's Airbus Integrated Company are the two dominating and competing commercial aircraft companies in the commercial fixed wing sector. Over the years, Boeing and Airbus produced commercial passenger aircrafts from 50 to 120-seaters to larger aircraft with 250 seats or greater. Because Boeing and Airbus dominated the industry, the United States and Europe has been where the industry is concentrated.
Under the commercial fixed wing sector are the regional jets whose main players are the Embraer of Brazil and the Bombardia of Canada. Typically, size and range define these aircrafts. Regional jets are characterized by their smaller size which made them capable of operating profitably in city pairs that might mot support a standard single aisle commercial jet (TICAF, 2005).
As part of its efforts to extend the benefits of e-business to its airline customers, Boeing launched a new Web site in 2000, myboeingfleet.com, as a single source of online maintenance, engineering and flight operations data. The new portal uses personalized e-business technology from BroadVision, Inc. (Nasdaq: BVSN), which allows content to be customized for each user (PR Newswire, 2000).
Boeing has been an industry leader in online services for many years, and myboeingfleet.com is a natural evolution of earlier Boeing e-business activities. In 1995, the company introduced Boeing On-Line Delivery (BOLD) as a client/server-based online system that gave airlines and maintenance providers direct access to technical drawings, service bulletins, maintenance manuals and other vital maintenance data. Currently, 14,000 users at 93 companies access BOLD. In 1996, Boeing launched the PART Page as the industry's first Web site for ordering and tracking spare parts shipments. The PART Page is used by 250 airlines and 675 other companies.
In early 1999, Boeing launched Flight Technical Services On-Line to provide flight operations data to airlines via the Web. Since then, more than 2,000 airline personnel have accessed the site to make more than 81,000 requests for information. Also in 1999, the company announced it would begin migrating the content of Boeing On-Line Delivery to the new Web-based system called Web BOLD. More than 2,000 airline personnel have accounts on the system, and the site averaged more than 8,000 Web "hits" per day in April 2000 alone.
Company Profile: Rolls-Royce
Rolls-Royce is a global company providing power for land, sea and air. It employs some 39,000 people in more than 30 countries, including over 24,000 in the UK, 5,000 in the rest of the Europe and over 8,000 in North America. The company has a balanced business portfolio with leading positions in civil aerospace, defense aerospace, marine and energy markets. With annual sales of around 6 billion pounds sterling (US$9 billion) and a forward order book of nearly 17 billion pounds sterling (US$25.5 billion), its technology is applied over a wide range of products that generate high-value services throughout their operational lives.
Rolls-Royce engines power commercial aircraft in every segment of the market. It has customers using both fixed and rotary wing aircraft in over 150 countries, including more than 500 airlines, 4,000 corporate and utility operators and 160 armed forces. Rolls-Royce is also a global leader in marine propulsion, engineering and hydrodynamic expertise, with a broad product range and full systems integration capability. More than 2,000 commercial marine customers and over 50 navies use Rolls-Royce propulsion systems and products in 20,000 ships. Navies alone operate 1,000 gas turbines (PR Newswire, 2002).
In the energy markets, the company has supplied more than 5,000 units to customers in nearly 120 countries and is investing in new products and capabilities for the oil and gas industry and for distributed electricity generation. The company has some 53,000 gas turbines in service worldwide and has pioneered gas turbine technology for aerospace, electricity generation and marine propulsion. It is involved in major future programs in these fields, including the world-leading Trent aero engine family, WR-21 marine engine, leading-edge water jet propulsion systems, and combat engines for Eurofighter Typhoon and the F-35 Joint Strike Fighter (PR Newswire, 2002).
Context
E-business is maturing. Where once it seemed enough to put an "e" in front of a product or a company name or to append a ".com" to just about anything, now it is recognized that e-business success requires something more. At the most fundamental level, successful e-businesses recognize that e-business is a business issue.
Business strategies lead to e-business strategies. Once an e-business strategy has been developed, business practices and supporting technology must be defined and implemented. And e-business requires a long-term commitment to a perpetual process of market awareness, product and strategy development, implementation, and execution (Pickering, 2000).
Not too many years ago, this very British company, Rolls-Royce, was fading from industry view. It was weak, accustomed to government hand-outs, and had few products flying on few aircraft. Prospects were bleak and the competitors were juggernauts backed by huge corporations. Rolls-Royce, set adrift from the resources of the UK national treasury, was left to its own devices; a dismal fate loomed (Donoghue, 1999).
Civil aero-engine manufacturers like Rolls-Royce have borne more than their fair share of the impact of terrorist attacks on the commercial aerospace business, more notably the September 11 attack on the World Trade Center in New York. With its policy of having an engine in every market category, Rolls-Royce felt the reverberations more than most during the September 11 attack.
In 2001, Mike Terrett, managing director -- airlines for Rolls-Royce, confirmed the company's prediction that there would be a 30% reduction in Rolls' civil aero-engine deliveries for the next year as a result of the seismic shift in business over the past two months following the September 11 terrorist attacks. With the airlines cutting capacity in the weeks after the attacks, Rolls was also quick to announce job-losses as the crisis flowed down the supply-chain. Five thousand jobs, 17% of Rolls' 28,000-strong workforce, will be shed from its UK, German and US operations. Despite the gravity of the situation, Terrett and his colleagues are adamant that it is a short-term setback. The Airbus A340-500/600 program and the Trent 500 engine orders that ride on it are "a good proxy", Terrett says, for the company's overall civil business base. For the most part, he points out, customers are deferring orders, not canceling them (Cook, 2001).
The aero-engine giant has been something of an information-free zone since two Boeing jets ploughed into the World Trade Center's twin towers on 11 September and plunged the civil aerospace industry into renewed crisis. Almost immediately, air travel nosedived and the global airline industry was hit with a slew of bankruptcy warnings - and in the case of Swissair, collapse.
In terms of the future, Rolls is working on engine studies for Boeing's Sonic Cruiser, but is hamstrung by commercial constraints on what it can say publicly. "If there's an aircraft out there, we want to be on it," Terrett says. While extensive preliminary design has been carried out, what the resultant engine finally looks like will depend heavily on the "specifics", as Terrett calls them, ultimately called for by Boeing -- "and those haven't been settled yet," he adds (Cook, 2001).
Before the attacks on America, Rolls-Royce could reasonably claim to be relatively immune to any downturn in the civil aerospace market. In part that was due to a broad spread of businesses across the defence, marine and energy sectors. But it was also because of the perceived strength of its after-market business. Planes most likely to be retired first in any slowdown are older ones such as the early 727 and 737 Boeing jets powered by Pratt & Whitney engines. Indeed, the average age of Rolls-Royce engines is eight years compared to 18 years for Pratt & Whitney.
In the aftermarket, the company's competitive advantage comes from its unique knowledge of product attributes and proprietary technology. This, coupled with investment in the global repair and overhaul network and enhanced services capability, enables Rolls-Royce to offer long-term support packages that add significant value to customers. As a result of this focused strategy, aftermarket revenues for the group have increased by two and a half times since 1995. Currently more than 40 per cent of all Rolls-Royce revenues come from aftermarket sales and associated services.
While major partnerships are not being sought on the manufacturing side of Rolls-Royce, collaborations are being pursued aggressively in its booming repair, maintenance and overhaul operations, a business that is estimated to capture a higher percentage of Rolls' products than Pratt or even GE can claim for their engines despite those companies' aggressive expansion in the field. Using partnerships that include American Airlines, Singapore Airlines and Cathay Pacific, Rolls has tripled its repair and overhaul business in four years to hit the $1 billion level, says Ian Lloyd, managing director-repair and overhaul (Donoghue, 1999).
In the aggregate, Rolls-Royce gets a bit knocked down in the harsh view from London's financial center for failing to meet the analysts' high expectations for operating margins and cash retention and its long-term liabilities of repaying British government loans. But in the marketplace, in the view of an aviation world that knows what must be done to satisfy customer demands and compete in an intense environment, the company seems to be doing what it must to remain a major industry force now and for decades to come (Donoghue, 1999).
Although Rolls-Royce has its share of ups and downs, it was able to succeed in today's fast-changing environment. In 2000, Rolls-Royce launched the first trial its new e-business portal, known as aeromanager, which gives airlines instant internet access to a wide range of engine aftermarket services. aeromanager is an interactive web-based service providing tailor-made fleet management solutions to the aviation industry. The launch of the trial continues the implementation of e-business and information service by Rolls-Royce to support its customers. Airlines will have 24-hour access to the extensive portfolio of Rolls-Royce Total Care services, providing them with enhanced flexibility and a fast efficient transaction process.
Among the features available through aeromanager is enginedatacenter.com, a customized internet gateway to the suite of engine information services provided by Data Systems & Solutions, providing operators with precise real-time analysis on the status of their fleets. Enginedatacenter.com will become the preferred means by which the aeromanager portal designer Data Systems & Solutions will deliver services to Rolls-Royce and its customers. Nine hundred engines in service with 25 airlines are currently under management with Data Systems & Solutions.
In addition, engine leasing is available through aeromanager and customers will be able to obtain information on repair and overhaul slots online and check their progress through the workshop. Surplus inventory information will be accessed by the touch of a button and airlines can also benefit from a central library of technical publications and service bulletins on aero engine products, as well as up-to-date technical papers and an online industry news service (PR Newswire, 2000).
It would be tempting to suggest that e-Business is just about technological change, but there are greater difficulties in implementing the intellectual, cultural and structural shifts necessary to succeed in a much more interactive business environment. Firms set up specifically to operate through the Internet (the so-called 'dotcoms') are ideally placed to recruit staff and deal with customers in the most effective way, although many are struggling with current economic conditions.
Established firms like Rolls-Royce, however, may have a whole history of embedded working practices and customer relationships that require significant change if e-Business is to be implemented successfully. Becoming an e-Business is an enormous undertaking requiring a diverse range of skills. In the e-Business world, companies must anticipate the need for transformation and be ready to reexamine their organizations to the core.
As e-Business tools are encouraging the dissemination of information, reducing (and in some cases eliminating) the need for 'privileged points of contacts or gatekeepers in organizations', they are also contributing to the move away from centralized, hierarchical approaches and transforming traditional relationships within and between organizations. Firms that are embracing the Internet in this way have become known as 'clicks and mortar' organizations. The term represents the combination of 'old' and 'new' business practices and is derived from the expression 'bricks and mortar' that symbolizes a wholly physical presence (Eckersley, et al, 2003).
Very quickly Internet technology has forced companies to change the main thrust of their business system architectures and organizational dynamics. Whereas enterprise integration was once considered the key to success, savvy companies are presently striving to achieve extended-enterprise cooperation. And, as Web-based technologies continue to proliferate and take hold, links between members of an extended enterprise will become even tighter, requiring business models based on collaboration rather than cooperation (Duray & Vering, 2001).
The movement from integration to cooperation to collaboration is reflected in the evolution of the various empowering technologies that successful companies have embraced. Enterprise resource planning (ERP) technologies integrate all of the information within a single enterprise. Supply chain management (SCM) technologies, enhanced by Internet-based communications, foster cooperation. Workplaces enable companies to collaborate in "value webs" that provide better products and services to their customers along the product value chain and, ultimately, to consumers (Duray & Vering, 2001).
By closely linking each entity's business processes with the participants in those processes, workplaces and multi-party business hubs (marketplaces/exchanges) make greater collaboration possible. Today, the development of marketplaces accessed via workplaces is aimed at collaboration among communities of enterprises, their business partners, and all interested parties throughout their organizations (Duray & Vering, 2001).
E-business can therefore be simply defined as the integration or use of Internet, related technologies, and concepts to the business systems, processes, organizations, supply chains and the market. Basically, e-business improved communication across every channel of business, as in this case the business of aviation.
Aside from its popularity, companies have learned to adopt e-business because of the many advantages and benefits it can provide. According to Garrett & Parrot (2005), there are ten key trends that drive e-business which can be divided into four categories: customer, service, technology, and execution. Under the customer category, the drivers of e-business are (1) the need for speed; (2) desire for self-service; and (3) the need for best value. Under service, the drivers of e-business are: (1) desire for increased process visibility; and (2) the need for seamless customer service. Under technology, the drivers are (1) the focus on integrated enterprise architecture; (2) desire for wireless web applications; and (3) the need for convergence of infrastructure. Under execution there are two drivers: (1) the focus on partnering and outsourcing and (2) the desire for virtual distribution.
These drivers are the most common motivators why companies have been integrating e-business in their companies. It is the focus of most studies to look on how companies use e-business for improved customer service, marketing and internal communications. IT has become common that companies have integrated with the suppliers and customers using e-business. However, some companies have neglected the integration of e-business in the creation of their products, thus although these companies are leading, there is always a threat from the competitors who knows how to use e-business strategies and technology within their research and development, and production operations like the case of Boeing Company and Rolls-Royce.
The original e-business applications were generally customer-facing: brochureware, Web store fronts, online customer service, etc. The momentum from these early applications still colors industry's attitude toward e-business. When asked to rank potential e-business benefits, respondents gave much more weight to customer-facing possibilities than they did to supplier-facing and employee-facing options (Pickering, 2000).
The highest-ranked benefit is as a new channel for existing business; second is to improve customer service; third is to enable a new line of business. Efficiency-enhancing benefits--improving cycle time, reducing operating costs, and reducing cost of sales, for example--were judged to be far less promising (Pickering, 2000).
Business is the driver, but technology is still important to e-business, of course. E-business success requires business excellence and technical excellence. The fact that the degree of excellence will be judged in the court of (Internet) public opinion puts that much more pressure on IT to deliver a superior technical product. E-business applications must be stable, reliable, secure, fast, extensible, and usable, at a minimum. Those that aren't will be judged harshly. Using the right technology and using it well is the only way to deliver market-pleasing e-business applications.
To support its company's e-business efforts, IT must collaborate with the business side of the house. This collaboration should occur at various levels--from strategic planning through implementation and execution. Collaboration should also occur in various ways--reporting structures, joint development teams, and so on.
Porter Analysis
Rivalry
As noted in the first part of the paper, rivalry in the aircraft manufacturing industry is almost only between Boeing and Airbus. The very small number of firms in the industry is due to the capital intensiveness of the industry as well as the low level of product differentiation. Boeing and Airbus are always on the look on how they can have the version of each other's model using different technology. Rivalry between Boeing and Airbus is also intensified by the fact that each company came from different countries, Boeing form the USA and Airbus from France as a French-German consortium.
Boeing is a leader in the aviation industry for over 40 years now, from its military aircraft during the World War II to its commercial jets (Esty et al, 2001) with a series of acquisitions and mergers of companies such as McDonnell Douglas and Hughes Electronics. As a pioneer, it has maintained its leading position in the industry. On the other hand, Airbus which started in 1970 as a consortium of aerospace companies of different companies from Europe emerged as the major competitor of Boeing. In 1988, Airbus controlled 16% of the market that became 37% in 1996 (Dempsey & Gesell, 1997). By 2004, Airbus rocketed to 50% of the market (Reuters, 2004).
Airbus' success is primarily due to its being innovative-driven compared to Boeing's being consumer driven. Airbus' advantage over Boeing is its effective use of technology. All of its planes employ "fly-by-wire" technology, an electronically managed flight control system which uses computers to make aircraft easier to handle and was first introduced on Airbus A320 in 1988. Airbus also has introduced some of the industry's firsts such as the A300, the first twin-engine, twin aisle commercial aircraft which was also the first aircraft to be equipped with Cat IIIA autoland, a system allowing aircraft to land very poor visibility conditions; the first twin-aisle aircraft that can be piloted by a two-man crew; the first advanced CRT cockpit displays, the first commercial airliner to feature drag-reducing wingtip devices; and the A380 introduced in 2000, the largest and first four-aisle, full twin-deck aircraft (Airbus, 2006).
New Entrants
The commercial aircraft industry is known to be extremely capital intensive, aside form the technology, man power and supporting industries it requires, thus new entrants will think more than twice in entering the commercial aircraft industry. Even Mac Donnell Douglas, a major player in the industry in the early 1980s was acquired by Boeing in 1997, while Lockheed allied with Martin Marietta Corporation and formed Lockheed Martin which concentrated on military aircraft. The reason why aircraft manufacturer failed was the huge cost of product development (Cohen, 2000) that primarily includes technology and human skills. Japan and Russia have been planning to enter the market, with Japan having sophisticated industrial infrastructure and firms such as Mitsubishi while Russia already has its own national aircraft industry although it still needs further development to be able to compete with Boeing and Airbus.
Threats of Substitute Products/Services
So far, any substitute products with the same capabilities of commercial airplanes such as speed and uninterrupted trip have not emerged yet. However, the development of bullet trains that can travel as far as 400 miles at a faster speed can be a threat to the industry.
Moreover, since the industry is very dependent on airline passenger traffic, advancement in technology and telecommunication such as the internet technology, broadband services, video conferencing and wireless communication that reduces frequent business and job-related travels are also a threat to the industry.
Bargaining Power of Buyers
The primary buyers in the aircraft industry are the airlines, governments and some large companies which have considerable power in the industry. Large companies do not always needs airplanes as well as governments. As competition among airlines and passenger traffic increased, that is the time when new models of the aircraft manufacturers will get noticed. However, when airlines opted to cut operating costs and investments, they will not need another aircraft until they have to replace old airplanes.
The Bargaining Power of Suppliers
Aircraft engine manufacturers are the most significant suppliers in the industry. The three most dominating aircraft engine manufacturers and suppliers are the General Electric (GE), Pratt & Whitney, and Rolls Royce. These suppliers have significant power over the aircraft manufacturers since an airplane's most significant feature is its engine. However, this power is now balanced by the partnership between the aircraft manufacturer and the engine manufacturer especially today that closed collaboration with the design and production of aircrafts are becoming the trends.
Regulating bodies also have considerable power over the creation of aircrafts since they disapprove or disapprove the design of planes.
Problem Statement
Due to the knowledge of Airbus in executing technology such as computer and electronics, Airbus emerged as a threat to Boeing. In fact, Boeing 777 materialized in order to meet Airbus competition with its 300-seat wide-body models, the two-engine A330 and the four-engine A340 (Cohen, 2000). The A330 and A340, which were developed at the same time, were the first aircrafts to be designed entirely by Computer Aided Design (CAD) while Boeing started using CAD only with its 777 model. This implies that Airbus has become the leader in cost and technology despite of Boeing being so much ahead of Airbus in terms of experience in the industry. Although Airbus was almost two decades behind Boeing, they have set technological standards and trends in the industry and distinguished itself from Boeing by incorporating the most advanced technologies into its planes (Cohen, 2000).
Boeing was also seen to have slow product development cycles, higher development costs and quality problems. During the development of the 777, engineers needed to rework and realign all overlapping parts of the 777 that did not fit together (Cohen, 2000), consuming time, costs and energy in the part of Boeing. They later used Catia (Computer aided three dimensional, interactive application) to solve that problem.
Conclusion and Recommendation
The aerospace/aviation industry has remained strong in difficult periods when there were large defence cutbacks and civil airline cancellations. However, it has been the technical excellence and market positioning that has allowed companies like Rolls-Royce to widen the capacity of sales, through associations and relationships with traditional rivals and gained entry into new global markets. This is not easily accomplished and the success of Rolls-Royce in this field is largely dues to its adoptation of an e-business strategy.
Currently, Boeing has learned how to address problems using e-business strategy. So far, the company struggles with its leading position because of the threat from Airbus. There is always a possibility that Boeing will lose its position over Airbus especially when Airbus has come up with other technology-driven products.
It recommended then that companies like Boeing and Rolls-Royce should always be on the look and on how to use, maximize and formulate e-business strategies that will give the company a definite advantage. With this technology driven world, companies should better awareness on what technology can provide.
With the many uses applications of IT today, companies have turned into e-businesses. However, there are some companies that perceived e-business to be limited for marketing and internal communication. With this, the paper emphasizes the use of e-business strategy in the design and product development. It shows that a successful company can b threatened and outperformed by emerging companies who know how to take advantage of the technology such as IT and the internet.
