ISCOM471 - Product Selection
ISCOM471 - Product Selection
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Date Created: 11/09/15
Running head: PRODUCT SELECTION 1 Product Selection Angie Killion Michael Farrar William Schiferl ISCOM 471 September 2, 2013 Paul Yakob University of Phoenix PRODUCT SELECTION 2 Product Selection The Boeing Company is in the business of helping customers get people and products from one place to the next. Most if not all of those customers are either the ultrarich or a part of the ultrarich corporations. Through strategic thinking and planning Boeing has seen an untapped potential customer base of millionaires who want to travel in luxury, but the luxury that they can afford. Through this paper the reader is going to see supply chain needs, the pros and cons of each product, decision making, and baseline analysis of the small airplane and civilian helicopter the Boeing Company is going to roll into production to not capture, but give an untapped potential customer something to spend their money on. Why rent when one can own. Supply Change Needs The Boeing Company is already a leader in the aerospace and commercial jetliner production. Through this leadership and almost a hundred years in the business Boeing has found out what works and what does not work in reference to the supply chain. Boeing has over one hundred and fifty thousand employees with a large number of those employees being a part of the supply chain (Boeing, 2013). With the new products Boeing is going to produce there are a lot of similarities to existing products already produced at Boeing Company. With such an abundance of supply chain knowledge and expertise the Boeing Company needs to continue to innovate and trust what has worked for the Boeing Company for all of these years. The supply chain will continue to create, innovate, and engineer the finest parts and products that have made Boeing Company the World leader in its chosen industry. The entire product put into Boeing aircraft and products go through strict requirements, whether made by Boeing or a Boeing supplier. Boeing is not making products for a Xbox gaming station for kids. When a Boeing PRODUCT SELECTION 3 product does not work properly there can be the potential for catastrophic injury or death of many if not all involved. Boeings’ demands on its self as well as the supply chain are all a part of Boeings’ success. Pros and Cons The economy plane and civilian helicopter each have their own pros and cons that will affect Boeing. The economy plane will offer Boeing the opportunity to enter a new market of small aircraft that can potentially bring them new customers. The economy plane customer might also become a larger, jetliner customer in the future; the small plan could capture the customer and keep them thinking about Boeing when they decide to upgrade. The civilian helicopter would offer a new opportunity to sell nonmilitary helicopters to the public. However, unless a large, luxury helicopter model is also made the customer has no helicopter option to upgrade to. Price Although Boeing currently makes both aircraft and helicopter, the companies focus for several years has been aircraft. The technology used in commercial airplanes is not the same that would be used in the economy plane, but the engineering techniques would be similar. This continued knowledge of airplanes could help cut costs when it comes to creating an economy plane and offer more value to the customer. The civilian helicopter will be too small to base it off of any of Boeing current models, and would need to start from scratch on the new product. This issue could make the civilian helicopter more expensive than its competitors in manufacturing due to higher engineering costs. Sales Opportunities PRODUCT SELECTION 4 Sales opportunities for the economy plane and civilian helicopter reflect the customer base of each product. According to General Aviation Manufacturers Association (GAMA) Report, 2,133 airplanes were sold in 2012, while only 1,044 helicopters were sold ("GAMA", n.d). These numbers show that the market for airplanes is twice as large as the market for helicopters leaving more opportunities for sales in the airplane market. Another added benefit is offering customers who would have bought a helicopter a value priced, economy plane instead. It should also be noted that helicopter sales in 2012 were up 21% over 2011 while airplane sales were down 0.9%; this trend shows a possible rising opportunity to sell helicopters. DecisionMaking Criteria Economy plane In recent years, Boeing has concentrated its efforts in providing the very best jetliners and military aircraft to its customer base. Although the bulk of Boeings resources are spent in the commercial airplanes and military aircraft groups, the company is missing a potential market in building smaller aircraft. The smaller, economy focused, airplane would focus on the average millionaire as its primary customer. Although some wealthy million or billionaires would choose to step up to one of Boeings larger, more luxurious models, the Boeing economy plane could fill the gap between the small Cessna plane and the larger Boeing planes. The economy plane could potentially help Boeing capture more of the total market that has been buying from their competitors. Civilian Helicopter PRODUCT SELECTION 5 Boeing currently manufactures helicopters in their Defense, Space, and Security division for military use. The helicopters Boeing produces includes the Chinook, Sea Knight, and the Apache; although civilians can purchase “stripped” models of certain helicopters, Boeing does not manufacture a model with the civilian in mind. To capture the civilian market, Boeing could introduce a civilian based helicopter for sale to the public. The company already has extensive knowledge on how to engineer a longlasting product and has built relationships with their suppliers to create their current models. If Boeing were to bring their engineering knowledge and supplier relations into a civilian focused plane they could capture the civilian helicopter market. Baseline Data Important to the Design The baseline data will be a part of the strategic plan the company puts forth about both of the new products. Both of these products are being engineered and designed for the wealthy, but these products are not for the billionaires of the world, but rather the millionaires of the world. The cost has to be within the millionaires reach. The upkeep of the planes and helicopters also has to be reasonable. Many times the customer can afford the products, but the customer cannot afford the upkeep or maintenance required to keep the aircraft safe and in good working order. There cannot be safety shortcuts taken with the design of these products. How Boeing is going to create cost reduction is through reduce the size and speed of the aircraft without losing anything within the safety of the aircraft. Additionally the options offered for both aircraft are going to be not as large as many of the other aircraft that this customer base cannot afford to buy, and maintain. Our new aircraft are going to look good, because these aircraft represent Boeing, but are going to be made to a standard that is within the reach of the customer. An easy breakdown of what is important for these aircraft is safety, maintainability, cost, appearance. PRODUCT SELECTION 6 As Boeing moves forward as leader in the aerospace industry, the addition of new products is inevitable. By offering the average millionaire a chance to purchase their own Boeing product the company has the opportunity to see growth in their small aircraft sales as well as future sales of larger models. Boeing already has the necessary resources at their fingertips to see this growth opportunity; all that is needed now is to move forward with their new project. PRODUCT SELECTION 7 Reference Boeing Company website http://www.boeing.com/boeing/companyoffices/aboutus/index.page? GAMA. (n.d). Retrieved from http://gama.aero/mediacenter/pressreleases/content/gama releases2012yearendreportandfocusesopportunitiesand
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