The Purpose of Boeings Extensive Alliances - Research Paper Example

? Boeing’s Alliances with Foreign Partners Boeing’s Alliances with Foreign Partners Introduction Alliances have become a reality of changing business world, because of the most powerful and dynamic force, which is globalization. The time of strict national and cultural boundaries seems like a dream. Nowadays, local markets are developing at an exponential rate, therefore growing into saturated ones in virtually no time. This, in turn, is giving birth to a novel challenge for the organizations, which is called the quest of internationalization. Operating in a local economy is one thing, but doing so in foreign market is a different game. Because of the divergence in cultures of the two economies, the same job is performed differently in various cultural and national settings. However, the art to survive in a new market setting is designated as adaptability. Ultimately, the need to change compels an organization to alliance with local firms because they have the cultural awareness about a particular market environment. On the other hand, firms go into partnerships to acquire a novel technology as well. International airline companies, such as Boeing, are doing business in the international setting when in other industries this practice was considered as an impractical one. Therefore, these organizations are well aware of the strategic importance of an alliance, especially in a foreign market. It is imperative to modify the organizational structure and culture according to the situation of a market in which the organization is operating. An important reason for an alliance is to outsource a practice, which an organization cannot perform adequately well or economically. Various organizations outsource the hiring function in a foreign market to a local consultancy because of its lack of knowledge about the educational standards prevailing in the alien market (Elmuti & Kathawala, 2001). The purpose of Boeing’s extensive alliances is based on developing a next generation technology by partnering with various firms, thus pooling resources to expedite the developmental process. An alliance could be defined as a strategic decision of two or more firms under which they have to collaborate their resources to achieve some common objectives or goals. Main reasons of this kind of decision are the need to understand a foreign market culture or advancement in the technological capabilities of an organization. Similarly, organization commits to an alliance to gain a condition called synergy (Pyke & Johnson, 2002) which allows different organizations to benefit from various capabilities and resources of each other, and attain a common goal (Gomes-Casseres, 2003). Organizations develop strategic alliances to forego the extra value chain costs; therefore, they hire other firms to do these tasks. For instance, Boeing fabricated a contract with Tata companies in India to produce engines for their aircrafts, and this decision was taken to reduce the cost of production, because Indian rupee is significantly low in comparison with the US currency. Boeing, therefore, managed to gain a large scale cost advantage by this decision. Boeing established collaboration with Ford in terms of nanotechnology. Moreover, Boeing and Airbus are working to develop an aircraft with aerodynamics, which would be able to make it efficient in terms of fuel consumption, with its modified structure (Micheal, 2002). Boeing is busy in the joint struggle with Lockheed Co. to develop an advanced rocket, designed to explore the secrets of space (Beighley, 2007). Boeing is also trying to develop aerospace technology through working together with Japanese firms; however, the main hindrance on the way to success for this venture is the divergence between the cultures of the people working on this project (McGuire, 2007). Japanese are holding the key influence during the execution of this venture because of their technological knowledge; therefore, the Americans have to cope with the way Japanese work. It is important to note that Japanese are workaholics and they do not share information voluntarily, while Americans are exact the opposite. In this condition, this project would fail if one of them does not go against their nature and attempt to cope with the difficult situation. The alliances should benefit both of the organizations, because business world is all about watching out for the interest (Shah & Swaminathan, 2004). The partners who are selected should have compatible goals, so that they could help each other in their struggle towards attaining the common objectives. In the light of this statement, it is recommended for Boeing to sensibly select its partners, at the same time, excessive alliances could result in loss of direction for the prime organizational setup of Boeing. The organization under study is committed to make virtual training for pilots a worthwhile experience by integrating the latest three dimensional technologies (Mchale, 2010). For this purpose, Boeing is able to develop a closely managed collaborative effort with newly formed Japanese firm. On the other hand, Siemens and Boeing are working for the betterment of aero-security network to control the attacks like 9/11 (Siemens and Boeing Strategic Alliance, 2012). In the light of the aforementioned facts, Boeing possesses the largest amount of strategic contracts with its foreign and domestic partners (Aerospace and Defense Contractors, 2012). The partnerships, however, pose as a threat to Boeing’s individualistic image and organizational goals. The company is dealing with different companies, originated in different cultural and geographic regions, holding dissimilar views and work styles; Boeing has a high risk of disagreements with the partnering companies over the procedures, policies, work environment, leadership styles and even on the treatment of strategic issues. Boeing is adaptable to change and have a good record of partnerships, yet, it requires a closer attention to uphold and sustain its individual corporate image. Recommendations for Boeing regarding Alliance Management Boeing is the active part of various contracts mentioned above, major of those are technological development projects with different Japanese firms. The major obstacle in the way of successful implementation of these ventures is stemming from cultural divergence between the two nations. As Japanese have the advantage in terms of a greater and better understanding of nanotechnology and other related concepts, therefore Americans have to show some flexibility in their behavior towards the unknown, because Japanese will not share the entire details of the project. As a result, it would cause some plights for US employees, but they should remain calm, because Japanese are also famous for their reliability and commitment towards their work. Japanese population is highly committed to work and work related commitments. They are hardworking, goal oriented and determined. Boeing needs to have patience and understand the struggles of Japanese employees as they, mostly, achieve their targets by any means. The Boeing top management should arrange cultural trainings for their employees to make them aware of the cultural differences that prevail. The awareness about other cultures, their norms, habits, traits and weaknesses would help Boeing’s employees to become readily willing to cope with the difficulties while their expatriation. Conclusion This paper was focused on analyzing the needs of an organization, which compel it to commit towards an alliance. The major causes are identified as cost reduction, outsourcing and technical development. In the case of Boeing, the majority of the ventures are designed to produce a technological development within the organization. At the same time, it is becoming difficult for Boeing to maintain its own identity while managing a number of projects scattered across various industries. Alliances should be developed in such a way that they should benefit both of the parties involved. On the other hand, the compatibility of the goals is also important. The major hindering factor is culture, which possess the power to demolish a well planned project. However, the Japanese and American cultures are divergent in nature from each other; consequently, it is recommended for both the parties to respect each other’s opinion and demonstrate flexibility in order to keep the projects going. Cultural training for Americans is also required, because of their need to culturally understand Japanese; these trainings will prepare them to cope with the difficulties during their expatriation. References Aerospace and Defense Contractors. (2012). Oronge Couniy Business Joumal, 32(26), p. 76. Beighley, D. (2007, July 2). Half of the Boeing Workers Pass on Colorado Move. Orange County Business Journal, 30(27), 3. Elmuti, D., & Kathawala, Y. (2001). An Overview of Strategic Alliances. Management Decision, 39(3), 205-217. Gomes-Casseres, B. (2003). Constellation strategy: Managing alliance groups. Ivey Business Journal, 67(5), 1-6. McGuire, S. (2007). The United States, Japan and the Aerospace Industry: From Capture to Competitor? The Pacific Review, 20(3), 329–350. Mchale, J. (2010, Jan 4). Boeing to upgrade CV-22 Trainer with virtual-reality enhancements. Military and Aerospace, pp. 21-22. Micheal, G. (2002). Part I: Widebodies — Boeing’s Lead and the Airbus Challenge. Bernstain Research, 43-67. Retrieved from http://bus545-boeing.wikispaces.com/file/view/Boeing+and+Airbus-+Next-Generation+Products.pdf Pyke, D., & Johnson, M. (2002). Sourcing Strategy and Supplier Relationships: Alliances vs. eProcurement. The Practice of Supply Chain Management, 1-24. Shah, R., & Swaminathan, V. (2004). Factors Influencing Partner Selection in Strategic Alliances. Strategic Management Journal, 29(5), 471–494. Siemens and Boeing Strategic Alliance. (2012, Apr 5). Military Technoiogy, p. 94. 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