CASE 2- How Boeing Lost its Bearings: Boeing & McDonnell Douglas Merger

Late in the summer of 1997, two of the most critical players in global aviation became a single tremendous titan. Boeing, one of the USs largest and most important companies, acquired its longtime plane manufacturer rival, McDonnell Douglas. The resulting giant took Boeings name. More unexpectedly, it took its culture and strategy from McDonnell Douglas.

Boeing had always been less a business and more an association of engineers devoted to building amazing flying machines. Employees enjoyed watertight contracts, thanks to an assertive, family-like union, and an attitude to aviation that put design and quality above all else. In the process, it produced some of the worlds greatest planes. Boeings philosophy, was to pursue brilliant ideas whatever the expenses, without sacrificing the quality. In a clash of corporate cultures, where Boeings engineers and McDonnell Douglass financially controlling executives went head-to-head, the smaller company (McDonnel Douglas) won out. The result was a move away from expensive, ground-breaking engineering and toward a more cut-throat culture, devoted to keeping costs down and favoring upgrading older models at the expense of wholesale innovation.

Inside the company, there were rumblings of dissatisfaction. A formerly cozy atmosphere, in which engineers ran the show and executives aged out of the company gracefully, was suddenly cut-throat. In 1998, the year after the merger, employees were warned they needed to quit behaving like a family and become more like a team. If you dont perform, you dont stay on the team. Many employees struggled to adjust or resented the change of culture, where investors took priority over passengers. The passion for great planes was replaced with a passion for affordability. The fatal fault line was the McDonnell Douglas takeover, Although Boeing was supposed to take over McDonnell Douglas, it ended up the other way around.. McDonnell Douglas bought Boeing with Boeings money, went the joke around Seattle.

Q.3. As an expert HR consultant you are asked by Boeing to identify the major problems and suggest ways as to how to solve the problems and/or what could have been done differently at the beginning to avoid this problem altogether. (5)