Boeing 737 MAX: Dethroned by Competitive Rivalry

Description

In March 2019, Boeing’s 737 MAX aircraft were grounded worldwide. This was a consequence of two deadly plane crashes within five months in late 2018 and early 2019. In both the crashes, the flawed design of the aircraft led to an erroneous reading of the onboard sensors. This, in turn, activated the stall prevention software of the aircraft, which kept pushing the nose of the aircraft down. Boeing was alleged to have hastily developed the 737 MAX aircraft in response to the Airbus A320neo.In August 2019, Dennis Muilenburg, CEO of Boeing, was hopeful that services of 737 MAX could resume within a couple of months. How should Muilenburg deal with the crisis? To what extent should he worry about the increasing competitive rivalry with Airbus?

Learning Objective

This case is intended for undergraduate- and graduate-level courses in business strategy, strategic marketing, and business ethics courses.The case deals with competitive dynamics and competitive rivalry, in a duopoly industry. The case also discusses ethical issues that may evolve due to the intense competitive rivalry and encourages students to formulate a recovery strategy for a firm after a crisis. After completing the case and assignment questions, students will be able to: ·Critically analyze the impact of brand crisis on competitors. ·Understand the strategic and ethical implications of competitive rivalry from a game theory perspective. ·Examine the crisis recovery strategies that a firm needs to follow. ·Understand the adverse impact of a crisis on stakeholders and key issues in managing the them post-crisis.

Keywords

aviation industry competitive ethics competitive rivalry Crisis management Game theory