The Boeing Company as the World's Largest Aerospace Business - Case Study Example

Running Head: THE BOEING COMPANY The Boeing Company Date The Boeing Company The Boeing Company is a global an international company that is based in the United States. The company has faced numerous problems throughout its forty-year existence and now with the merger with McDonnell Douglas boasts 70 years of manufacturing airplanes. In the last 20 years the company has had to reevaluate its approach in order to define a long-term strategy. With this long-term strategy have come layoffs and a series of different change management issues which have cost the company expertise by others deciding to leave at a time of upheaval. With the economic downturn of 2008 and 2009, the company faced cancellations along with manufacturing difficulties that caused delays on production. The human resource perspective, the company has had to work with change management in order to survive the last decade. Even though they began the changes in the mid-1990s, the economic instability of the first decade of the 21st century caused a great deal of upheaval that cost the company in terms of employee relations as well as expertise. The following paper examines him the human relations problems that come with change management as Boeing has experienced them during times of change. Background As a leading manufacturer for commercial jetliners, defense, space, and security systems, the Boeing Company is the worlds largest aerospace business. Part of their strategy is to exploit the concept of exports and this has led to them having private and governmental contracts in 150 countries. Boeing supports military and commercial aircraft, weapons, defense systems, satellites, launch systems, communication systems, and performance-based logistics. As a result of the specialized nature of their products they also provide training for those who purchase them. The company is continually expanding the number of products in their line to meet the needs of customers and has become a leader in innovation. The company has more than hundred and 68,000 people employed and they operate out of 65 different countries. Over 140,000 of the employees have college degrees and many of those are at the graduate level with over 35,000 employees holding either a masters or doctorate (Boeing 2014). There are two different business units that make up Boeing. The company operates as Boeing Commercial Airplanes and as Boeing Defense, Space and Security. Boeing Capital Corporation is a finance company through which these two basic divisions operate. Boeing Engineering, Operations and Technology, as well as a number of other subsidiaries, provide services to the primary business units . The company merged with McDonnell Douglas in 1997. This provided them a stronger foundation on which to become the premier provider for commercial jetliners. Boeing had held their position as a manufacturer of commercial jetliners for 40 years, but McDonnell Douglas added an additional 30 years so that they now can claim heritage of over 70 years’ experience in building aircraft. The company has 12,000 jets that are operating commercially throughout the world and it is their airplanes that make up 75% of the world’s fleet. Because they have established themselves as a global military manufacturer, they have been supported both through government grants and through their own governmental contracts for aeronautical military application innovation. The defense division creates systems that perform on air, land, sea, and space platforms. They have also been central in working with NASA on the international space station and with the defense agencies ground-based midcourse Defense system (Boeing, 2014). There are a number of different issues that Boeing faces the near future. One of those issues is the stability of the world economy. The fact that they are a global company has supported continued economic stability within the company because of the diversity of nations to which the company sells. As an example, the Emiratess airline which is owned by the government of Dubai has partnered with Boeing in order to create ultimate luxury airliners for their consumers. These airliners include private cabins and showers. They also include business services for travelers who wish to have their business dealings uninterrupted during flight. In addition, the company has lobbied for tax incentives in order to be convinced to bring their companies to different locations. As an example, state of Washington in the United States allowed a massive package of tax deductions as well as other incentives to be given to Boeing so that the assembly line 4 787 streamliners would be put into the city of Everett (Gates, 2013). Politics plays a big part in the nature of the Boeing Company and their success. As a contractor for defense and space programs, the political environment is also very important for Boeing. It is essential that they encourage governments to maintain and increase defense spending because otherwise the company will suffer. Wars are good for Boeing because this means that military applications are needed. At the same time, it is important for Boeing that the United States maintain good relations with other nations so that Boeing can operate in partnership with the rest of the world. Boeing cannot provide defense for a nation that is at war with United States. Corporate Structure The Boeing corporate structure is complex, formal structure which is based on the complexity that comes from the planning, design, engineering, testing, and production processes. The organizational structure is so refined that when building the 787 dream liner they had a contract with 40 suppliers out of 135 different locations throughout the world. Without having a formal structure and a strong bureaucracy which kept everything aligned the company would not have been able to be effective in getting their innovations off the ground (Robbins & Judge, 2013). The type of structure that Boeing has is considered a functional structure. Companies that use this type of structure typically have a global business with either a narrow product line or one that is highly integrated. There are many advantages to this particular structure which includes the promotion of economies of scale. It enables an organization to acquire skill intensive equipment and focus on streamlining their production process. This also promotes skill development as well as the development of expertise in the employees. There is a well-defined career ladder which exposes employees to a range of activities that they can climb using their functional expertise. This type of structure creates collaboration and efficiency as well as quality in the product (Gaspar, Arreola-Risa, Bierman, Hise, & Kolari, 2013). The following is a chart of the organizational structure of the company: Description of Problem The Boeing Company went through a series of changes, many of which included a change management problem between the mid-1990s and 2006. The company redesigned the way in which they made their airplanes and re-fashioned the company with a new long-term strategy in terms of global passenger jet markets. The company had revitalized with the development of the 787, but because of the economic crisis in 2009 there were a number of canceled orders not to mention a number of production delays which tarnished the reputation of this new plane. One of the difficult things that they had more than anything else was managing change. Many of the people chose to leave Boeing and others retired which meant that a great deal of their expertise was disappearing. Managing change was the ultimate problem that Boeing was facing in terms of human resources at this time (Greenburg, 2010). The problem of managing change was addressed by a former senior executive at Boeing who have joined the company in 1978 discuss the changes that were happening at that point when they were improving quality management. This executive said that “The company faced the usual obstacles, but it also faced a more unusual one: business was great! We were the number one commercial airplane manufacturer in the world and orders are pouring in. Companies we visited to educate ourselves toll is we simply werent desperate enough to make it work” (Gates, 2010, p. 45). In the 1990s when the changes started to take place there were also successful. However, much of the leadership which included Carl Schronz, Phil Condit, Allan Mullally, Ron Woodard, and Harry Stonecihper believes that Boeing would soon face decline. The problem that they believed existed was the traditional methods that they had used were no longer going to work in the 21st century and a new kind of company needed to emerge (Greenberg, 2010). Hypothesis Statement: Because of the changes that have occurred in the Boeing Company, the loss of expertise that has come as a result will impact the level to which innovation can occur and decrease the impact that Boeing has on the industry. Analysis Strengths. A SWOT analysis can provide an understanding of the position of Boeing and the reasons that change was accepted by management but possibly resisted by employees. One of the greatest strengths of the company was that it was diverse enough that it could exploit a wide variety of economic and social needs within the world. If the economy with is good they could sell their airplanes that the economy turned bad it would most likely instigate a need for defense building. A bad economy almost always creates outbreaks of war and conflict. As well, the current military situation is based on aeronautical solutions as the use of drones and unmanned flying apparatus provide Boeing with opportunities for innovation. Weaknesses. One of the biggest weaknesses that Boeing has is that it is dependent on the political climate. The political climate is reflected within the economy and although a poor economy will lead to conflicts and good economy will lead to sales of airplanes, this balance is something that is difficult to maintain in an ever-increasing interdependent world economy. Certain changes in the world could render Boeing obsolete very easily. As well, innovations that outdistance Boeing in terms of energy or flight innovation could leave them behind. Opportunities. The biggest opportunity that Boeing has is based on retaining expertise and innovating so that they can create solutions before their competitors provide answers to aeronautical problems. They have a good balance between how to mitigate the good economy at a poor economy to the way in which they have approached their product line, but continuing to innovate is theirs strongest opportunity in the world so that they never faced the problem of becoming obsolete. Threats. This is the company is that innovation that significantly changes the industry will leave them behind. One of their biggest competitors is Airbus. Airbus is also providing airlines with their crafts, although there product is not currently is luxurious or with the capability of being as large as Boeing airplanes. The Emirates airline out of Dubai is also purchasing planes from Airbus which means that there is direct competition with the same customers for Boeing (Elgendy & Yassine, 2014). Overall Analysis. Although the company has a very strong position in the global market there are always going to be threat to their existence within the structure. Intriguing the 21st century, the company realized that it needed to change some of its practices and streamline the way in which they manufacture their products. Although they already had a formal, functional corporate structure, they needed to change their strategies so that they could become sustainable in the long term. Just like all technology, they face the threat of becoming obsolete and in order to mitigate that threat they need to retain their expertise and innovate so they are always at the cutting-edge of what is next. Recommendations Kaufman, Oakley-Browne, and Watkins (2003) discuss the problem of change in terms of resistance under the problem of “what if”scenarios. They define resistance as “the emotional response of people when faced with new paradigms ( new ways of doing and thinking)” (Kaufman, Oakley-Browne, and Watkins, 2003, p. 101). One of the ways in which to create change is to have people participate in creating the methodology. Change is a frightening experience for people because they are afraid that they will either become obsolete or that their expertise will not be as relevant as it once was before the change occurred. The company that is based on a functional system they not necessarily have the tools with which to utilize their people for the purpose of change because their use through top-down management style. What Boeing needed to do in order to retain their people and keep the knowledge that they had already acquired over years of experience was to make sure that these people believe that the jobs remain relevant and that their expertise was needed. Inclusion is the best way to do this because then people can define the terms under which change is implemented even if they cannot define the change itself (Cummings & Worley, 2010). With the company should focus on in order to eliminate the loss of their expertise is finding ways in which to empower those with knowledge that they need so that those employees feel like they are integral to the process of change. Change management means managing emotions of people. People want to feel needed within their employment position. Intrinsic factors of motivation are always more important than any other method of trying to motivate people into staying with the group. Because of their functional structure the formal nature of the corporate structure could cause them to be too rigid in the way in which they are implementing change. It is essential that the company focus on change management and in creating incentives for those with needed expertise to stay so that the company can continue to be successful. In order to fulfill the intrinsic needs of employees and lower turnover of employees with long held expertise, the company should do the following: 1. Empower employees to participate in the designing of change so that they do not feel they have become obsolete. 2. Utilize employees so that implementation of change is a participatory process rather than one that happens to them. If the process happens with them they are more likely to accept change. 3. Inspire innovation by providing the means of exploration to those with the expertise to create. In the process of change, the development of other projects that utilizes the existing expertise will provide motivation for staying with the company. 4. Lowering a bit of the functional structure so that participation is possible will provide employees with a sense that they are part of the process. This means rather than maintaining the top-down relationship situation that exists within a formal structure, the company should utilize its employees in a less formal environment during the process of change so that their voices can be heard and their abilities can be utilized. Through the development of these for recommendations, the company will more than likely lower the level of turnover where employees of expertise are concerned because they will be involved in the process and they will feel valued. Summary The Boeing Company has a new business for 40 years on its own and added 30 years with the acquisition of McDonnell Douglas. This means that there is a long history of expertise that the company has had as a resource in order to maintain a position in the aeronautical industry. Despite the success they experience for multiple decades, the company realized that they were going to need to face the 21st century with the new perspective if they were going to maintain longevity. This had an impact on employee relations and as a result the company lost some of the employees who held the expertise that helped them to maintain their position for so many years. In the process of change management the company needs to help employees by providing them with intrinsic motivations. One of the strongest motivators is allowing them to participate in the process of change, creating a methodology that not only suits the company’s needs, but suits the needs of employees as they learn to navigate within the new system. Without motivation to accommodate the change, employees will not feel the need to stay and they will take their expertise elsewhere. Through developing intrinsic motivation the company can expect to retain the expertise that they have an inspire them to higher levels of innovation. What I Learned What I learned from doing this project was that although change is necessary in a company, it is not always easy because there will be resistance. Human resources is more than just the allocation of human beings into positions. Human resources requires the use of emotional intelligence in order to help people to manage their position within a company. Boeing is a company which has a long history, but that is not going to guarantee sustainability. They are dependent on innovation so therefore they are also dependent on the expertise which exists in their workforce. Expertise exists on a number of different levels. Someone who works in a manufacturing plant develops a certain level of expertise just like someone who has studied and become gotten a degree in engineering. The efforts that they have put into their expertise may be different, but the value of what they have learned will continue to be a part of how the company operates effectively. Creating intrinsic motivation is the best way in which to keep people in their positions and lower turnover. Change is always going to create higher level of turnover for a time, but the hope is that those with the expertise needed to continue will not be a part of that turnover. The development of this paper has helped to give it deeper understanding to me about relationships within a company and how they are important. Intrinsic motivation comes from feeling valued and a person only feels valued if the relationships that they have created within the company reflect that experience. For the Boeing Company, expertise is essential so therefore the recommendations for change management are also critical. References Boeing (2014). Retrieved from http://www.boeing.com/boeing/companyoffices/abo utus/brief.page Cummings, T. & Worley, C. (2010). Organization development and change. Mason, OH: Cengage Learning. Elgendy, K., & Yassine, W. (2014). Sustainable transportation in the middle east. Retrieved April 28, 2014, from Carboun: Middle East Sustainable Cities: http://www.carboun.com/energy/road-to-doha-sustainable-transportation-in-the-middle- east/ Gaspar, J, Arreola-Risa, A., Bierman, L., Hise, R., & Kolari, J. (2013). Introduction to global business: understanding the international environment. Mason,OH: Cengage Learning. Gates, D. (1 October 2013). Boeing’s economic impact on state estimated at $70B. The Seatle Times. Retrieved from http://seattletimes.com/html/businesstechnology/ 2021941258_boeingeconomyxml.html Greenberg, E. S. (2010). Turbulence: Boeing and the state of American workers and managers. New Haven, CN.: Yale University Press. Kaufman, R., Oakley-Browne, H., & Watkins, R. (2003). Strategic Planning For Success. New Jersey: John Wiley & Sons. Paton, R. A., & McCalman, J. (2008). Change Management: A Guide to Effective Implementation. London: Sage Publications. Robbins, S. P. & Judge, T. A. (2013). Organizational behavior. New York: Prentice Hall. 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