Boeing's Corporate Governance Crisis
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Case Code: CGOX003 Case Length: 09 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization: Boeing Industry: Aerospace Countries: Global Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
About Boeing
The Boeing Company (Boeing) was the world's largest aerospace company. Boeing had two major segments: Commercial Airplanes and Integrated Defense Systems...
Corporate History
Bill Boeing, who had already made his fortune in Washington real estate, built his first airplane in 1916 with naval officer Conrad Westervelt. His Seattle company, Pacific Aero Products, changed its name to Boeing Airplane Company the next year. During WWI, Boeing built training planes for the US Navy and began the first international airmail service (between Seattle and Victoria, British Columbia)...
The Pentagon Scandal
Boeing had been aggressive in the defense market, to counter sagging sales of its commercial airliners (particularly the 767s) due primarily to competition from Airbus. During the late 1990s, Boeing had turned increasingly toward government contracts to make up for its declining position in the commercial market. In a major move in this direction, it acquired defense contractor McDonnell Douglas in 1997. Government contracts made up approximately half of the company's revenue. It was in February 2001, that Boeing initially proposed to provide the US Air Force with reengineered 767s to be used as refueling tankers...
The Road Ahead
As the Pentagon issue attracted wide publicity in the media, Condit realized the need for urgent action. By firing his CFO, Condit hoped to deflect mounting criticism in Washington over the methods Boeing had used to win lucrative defense contracts. But some analysts felt Condit had conveniently got rid of a key rival, who had always been viewed as a potential successor. Unfortunately for Condit, things continued to worsen. The Board held several meetings during November 2003, where the Sears matter and the company's relationship with the Pentagon were discussed. Platt announced, "Phil said to us, 'If you think it would be useful for me to step aside, I would be willing to do that. That was not an offer we jumped at. But over the course of many board meetings we decided to take him up on it."...
Exhibits
Exhibit I: Financial Highlights
Exhibit II: Geographic Operations
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