Boeing Airbus - the Models of Value Chain Analysis - Research Paper Example

Strategic Management class- On Airbus firm and Boeing firm Introduction Airlines industry is the fastest growing industry of the world. USA is experiencing huge development in its airlines industry. There are many companies present in this country which are into the business of manufacturing aircrafts. Boeing and Airbus are two famous companies of USA which are involved in manufacturing different types of aircrafts. Boeing is a multinational company of America which manufactures designs and sells different types of airplanes, rocket, rotorcraft and satellites. This company is the largest manufacturer of aircraft in the world. Airbus is a part of Airbus Group. The company manufactures different types of aircrafts. In this case study a detailed discussion of these two companies is given. The country is experiencing a very competitive market in airlines manufacturing industry. So both Boeing and Airbus Company have established different values which help them to get various competitive advantages. The value chain model of these two companies facilitates them to analyze different segments of their business for maintaining and improving its position in the competitive market. The companies have designed and implemented its strategies in such a way that they experience a huge growth and development. But the companies also face some weaknesses in its business process which act as barriers in their growth. To overcome those weaknesses and barriers some suggestions are given in this case study which will help these companies to improve their business process. Value Chain Analysis The model of value chain analysis focuses on the primary and secondary activities of a company which contribute a lot in development of competitive advantages and strengths. With the help of this model the company analyzes its different values and according to that it utilizes its resources effectively in the best possible way. Boeing Company The various organizational activities of Boeing are designed for satisfying its customers by creating valuable products and services. These activities are described in details: Firm Infrastructure: The Company has a large infrastructure where it operates its different types of business activities. Boeing has its head office in Chicago. The infrastructure of the company is designed in such a way which supports its three major business divisions like manufacturing of commercial aircraft, providing lending and asset based leasing service and manufacturing defense and aerospace products etc. There are many departments within the organization where different types of works related to manufacturing of company’s products are done (Boeing). Human resources Management: The Company provides high quality of training and development programs to its employees for developing innovative types of products and services. Boeing designs and implements various programs which contribute a lot in career development of its employees. The organization provides huge support to its employees for their career development. Through various programs Boeing provides information to its employees to fulfill their career goals and objectives. The organization makes different efforts to retain and attract talented employees. Technological Development: Various types of advanced technologies are used by this firm. Boeing uses aluminum instead of composite material in its products with the help of its advanced technologies. For acquiring customers and enhancing customer benefit the company introduced advanced technologies to renovate its supply chain process. The company introduced a project management technique where it shared risk with its partners with the help of technology. Boeing has an online platform where it provides different information to its customers. Procurement: Boeing procures different raw materials from various sources at a right price. Suppliers play an important role in this company. Boeing procures its suppliers from different parts of the world. Each unit of this company determines its requirements and along with that it outsources different things which are essential for business. The firm also procures technology and its large number of employees from all over the world. Inbound Logistic: The inbound logistic system of Boeing helped the company to reduce its manufacturing time of different products. It also decreased inventory and labor cost of the company. The firm follows several steps for maintaining its inbound logistic system effectively. Operations: The operational activities of Boeing are divided into three segments. The two operational segments of this company are involved in manufacturing of commercial, space and defense aircrafts. The third segment deals with Capital Corporation which provides benefit to its customers for purchasing commercial aircrafts. Outbound logistics: For improving the outbound logistic system of Boeing, the company provides support to its customers to track and manage their costly inventories. The company has introduced Advanced Aviation Performance Program to improve its outbound logistic system by providing its customers all time service and support. Marketing and Sales: Boeing builds strong relationship with its target customers for selling its products. Relationship is the key thing which enhances the marketing and sales activities of this company. Boeing has its own sales team which understands its customers and their needs (Bowonder 24). The company launches different sales and marketing campaigns to communicate with its customers. Service: Boeing manufactures and repairs different types of aircrafts and their parts. The company provides best technical support to its customers related to its products. The firm also provides training to its customers to learn about its new products (Brandenburger and Barry 260). Airbus Company Firm infrastructure: The Company has used many advanced infrastructural facilities to make its business process easier. The organization has different departments and based on that the infrastructure of the company has been designed. There is a strong communication system within the different departments of this company (Airbus). The company has six offices in USA. HRM: The Company recruits high performing individuals to deliver quality products and services. The company has different types of rules and regulations which help its employees to exchange their expertise and ideas with each other. The HRM policies of Airbus encourage its diverse workforce to innovate new ideas and products (Casadesus and Joan 200). Technological development: The Company implements advanced technologies for reducing the fuel consumption and using other energy resources for their products. The technological development of Airbus has facilitated the company to reduce CO2 emissions (Calandreau). Airbus implemented fly-by-wire controls by using advanced technologies which provide many benefits to its flights. Procurement: The firm procures different types of products related to its aircrafts manufacturing process. Airbus procures different raw materials and aircrafts parts from various parts of the world. Different technical and support systems are also purchased from various places by this company. Inbound Logistic: Airbus uses high technology for managing its inbound logistic system. This logistic system of the company is divided into many departments, starting from planning and purchasing of raw materials to manufacturing the products. Strong communication exists between these departments. Operations: Airbus is into the operation of manufacturing different types of passenger aircrafts, corporate jets and freighter aircrafts. The company’s operational activities are also involved in developing different ways to reduce fuel consumptions. Airbus operations deal with protecting environment from damages. Outbound logistics: Suppliers plays a vital role in the outbound logistic system of Airbus. The company has implemented many modern technologies and processes to manage its logistic system. Airbus has implemented RIFD technology to enhance its outbound logistic system by analyzing its logistic problems. Marketing and Sales: Airbus has different teams for marketing and selling its products. The company organizes different programs for launching and selling its different products. Airbus provides a lot of information in its online site regarding its different types of products. Service: Airbus provides a strong service to its customers for purchasing the best aircraft and maintaining it for a long time. The company gives trainings and corporate advices to its corporate jet customers for using the aircraft efficiently. Strengths and Weaknesses analysis Boeing Company Strengths Weaknesses Boeing has quality workforce The company has enhanced its inventory management system. Boeing uses many advanced and strong technologies. It has large number of aircrafts. The firm has identified its challenges and problems. Boeing has small number of employees. The revenue and the profit of this company are declining. Its support services related to financing and leasing operations are weak. Boeing was late in implementing some important technologies. Airbus Company Strengths Weaknesses Airbus has skilled workforce The company is experiencing high revenue and profit Its business growth rate is high It has large distribution and sales network. Airbus has reduced its labor cost. Airbus incurs huge investment in its research and development programs. Its business units are small. Airbus is facing problems with its aircrafts engines. Tax structure of Airbus is complex. Suggestions for Boeing Company Strategies Presently Boeing is facing problems with its supply chain information system. The problem results in the delay of delivering its aircraft models. Therefore the company needs to focus more on its supply chain management system to solve this problem. The company should put maximum efforts to choose its right suppliers and to make effective communication with them. Boeing needs to improve its different communication levels in its different departments so that the aircrafts manufacturing processes become less time consuming. The organization also needs to focus on developing and improving its strategies related to less fuel consumption. Establishment of effective strategies in this field will provide competitive advantage to the firm. Boeing can improve its efficiency level in delivering its service for satisfying its customers. There is a gap between the company’s strategies and vision. So the firm needs to fill this gap by establishing new strategies which will help the company to work according to its vision. Restructure Boeing needs to change its outdated technologies and implement new technologies in its business process. This restructure will help the company to use different skills and competencies of its employees at the maximum level. Implementing advanced technologies will facilitate Boeing to improve its supply chain process. The company needs to enhance its current ERP system for handling problems with its different suppliers. Different functional levels of this business are required to change for improving the business operations. The company can involve its staffs for developing and implementing different business strategies. Boeing can develop its structure in such a way which will help the company to combine old technologies with new ones. The firm also needs to develop its research and development department for launching innovative products. Boeing can also use service blue print to design its different manufacturing and business processes. Acquisitions Boeing can acquire some of its supplier companies for getting good quality of raw materials without putting much effort. This process will help the company to lower many of its costs related to suppliers and purchasing of products. The company can also acquire small aircraft manufacturing companies for expanding its business. Corporate governance Boeing can focus more on its corporate governance system for protecting environment from different damages which are caused by aircrafts. It can implement different technologies and processes to reduce carbon emission. The directors, chairman and top level managers can take responsibilities in developing different communities and policies which will play an active role in protecting environment. Leadership style Boeing follows traditional leadership style which is not so much effective in controlling and handling different organizations functions and processes. The company needs to implement participative leadership style which will help the organization to innovate new business ideas for improving its products and services. By implementing participative leadership style Boeing can increase the contribution of its skilled employees. Leaders need to encourage the employees to analyze different problems in the business process and help them to deal with those problems. Suggestions for Airbus Company Strategies Airbus has faced many problems for its aircrafts engine. So it needs to focus more on its strategies for using advanced technologies in manufacturing the engines. The company can implement different policies and strategies for communicating more with its customers. This will help the company to understand customer requirements in more details. By this way the company can develop different types of aircrafts which will satisfy customer requirements. Airbus can also take feedback from its customers. This will facilitate the company to build strong connections with its customers and establish a good position in the competitive market. This can provide competitive advantages to Airbus. Restructure The organizational structure of Airbus is very rigid. The company follows semi autocratic management style. Therefore the managers and the leaders of this organization have strong control on employees. In many cases the employees face difficulties in producing their opinions and ideas for improving the business process. Airbus needs to change this old rigid organizational structure for providing different facilities to its employees and helping them to take part in the decision making process of the company. Airbus is also facing problems with its labors. So the company requires establishing its organizational structure in such a way where labor will feel that they are important to company. This will help the company to utilize its employees in a most effective way and increase their commitment and dedication toward Airbus. The firm can design its organizational structure in such a way which will help it to develop stable approaches in improving business condition. Corporate governance Presently Airbus is focusing on reducing CO2 emission from its aircrafts for protecting the environment. But the company also needs to focus on reducing noise pollution which is caused by its aircrafts. The managers and top level directors of Airbus should take necessary steps for reducing this type of pollution for protecting the society. Acquisitions Airbus is expanding its business at a fast rate. The expansion of this business can become faster by doing mergers or acquisitions with different players of this industry. This will boost the company to enhance its business operational activities and its customer base. Effective merger or acquisition will facilitate the company to generate more revenue and profit. Conclusion This case study deals with two aircraft manufacturing companies Boeing and Airbus. Both of these companies hold strong positions in the market by producing different types of aircrafts. These companies provide various types of values to its customers and the businesses associated with them. With the help of these values Boeing and Airbus are able to get many competitive advantages. A detailed analysis of value chain model is done in the respect of Boeing and Airbus. Both of these companies have many strengths and weaknesses. Strengths provide different types of opportunities to these companies but their weaknesses slow down their growth. Therefore the companies need to overcome their weaknesses to hold their position in the competitive market. Works Cited Airbus. People and Organization. 2015, Web. 30 March. 2015 < http://www.airbus.com/company/americas/people-organization/> Boeing. About Us. 2015, Web. 30 March. 2015. < http://www.boeing.com/boeing/> Bowonder, Dambal., et al. "Innovation strategies for creating competitive advantage. Research-technology management 53.3 (2010), pp. 19-32. Brandenburger, Adam ., and Barry. Nalebuff. "Use game theory to shape strategy. Strategy: Critical Perspectives on Business and Management 4(1). (2004), pp. 260. Calandreau, Paul-Antoine. Airbus Executive Overview. Web. 30 March. 2015. < http://www.iata.org/whatwedo/workgroups/Documents/Paperless%20Supply%20Chain/Airbus-Value-Chain-Visibility.pdf> Casadesus-Masanell, Ramon, and Joan Enric Ricart. From strategy to business models and onto tactics. Long range planning 43(2). (2010), pp. 195-215. Read More