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Case Study

How Boeing lost altitude

By Goutam Challagalla and Patrick Reinmoeller

29 pages

June 2024

Reference: IMD-7-2588

The case study examines recent aviation safety concerns at Boeing, focusing on manufacturing issues, leadership decisions and regulatory oversight. It traces Boeing’s trajectory since the McDonnell Douglas merger in 1997, highlighting the changes in the engineering culture and outsourcing strategy that affected the production quality of the 787 Dreamliner and the 737 MAX aircraft. The case also explores how leadership decisions prioritized cost-cutting over quality, leading to inconsistencies and delays. Then the case discusses the 737 MAX, which was grounded after two major crashes in 2018 and 2019. Investigations by the Federal Aviation Administration (FAA), the Department of Justice and a Senate Committee found defects in the MCAS flight control system and flaws in the safety certification. The case study explores the leadership actions of CEOs McNerney, Muilenburg and Calhoun, who decisively shaped the nature of the company, and invites participants to take the perspective of the board of directors in class discussions.

Learning Objective

What is the role of a company’s board in shaping and overseeing its strategy and operations?
Understand the tradeoffs involved in strategic decision making and their long-term implications for a company.
How should a company, guided by C-suite executives, effectively respond to a crisis while managing myriad stakeholders?
How do you manage a star board to enhance a company’s performance and strategic direction?
How can a company align engineering and technical expertise with profitability to avoid conflicts?

Keywords

Board, Corporate Governance, Leadership, Strategy, Boeing 737, Aviation Safety, Outsourcing, Aerospace, Change, Change Management, Board of Directors, Decision Making, Organizational Culture

Settings

United States of America
Boeing, Travel and Leisure, Airlines and Aviation
1996-2024

Type

Published Sources

Available Languages

English

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Teaching note

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