Strategic Management in Boeing Company - Case Study Example

Strategic Management Boeing Company Introduction Boeing Company still tops as one of the leading companies in the defense and Aerospace Corporation in the United States. Having been established over eighty years ago, the company has since grown from a simple corporation to a multinational company. Like any other commercial airline manufacturer, Boeing has faced high rate of global competitiveness that complacently draws from factors of internal, external environment. Besides, the organization has a demand in the varied number of products (Pasher & Ronen, 2011). The success of the above organization has depended on different environmental factors that lay beyond the normal influence. However, some of the greatest environmental issues that create the worst economic turbulence to the company include micro economical and political segments. Micro economical segment As described by Jones & Meixner (2005), Economical segment affects business performance as a result of changes in interest rates, monetary currency values and inflation that attributing to either national or global recession. Economically, Boeing airline manufacturers depend mostly on subsidies and incentives given by the government. As such, with a reduction in government support, the organization may be been affected by escalating costs of fuel, threats of terrorism restrictions by certain states among other factors. It has also been pointed out that, a surge in the international oil prices by 30% is likely to subject the organization into a total loss of up to $6 million annually. Political/legal segment Politics of the nation and legal requirements impose policies that affect the operations of the business and Boeing is not exceptional. In essence, zoning laws greatly determines which, regions within the international basis an organization can operate. Therefore, the above segment determines certain specific activities through which Boeing Company carries out in specific international regions while being forced to outsource the rest thus increasing the cost of productivity. The United States government and the federal aviation administration that impose restriction to the air transport industry acts as a major driving force to the organization. With China forming part of the biggest Boeing market, any slightest restriction imposed by the Chinese government is likely to cause a drastic change in the production cost price (Jones & Meixner, 2005). Forces of competition As illustrated by (Rao, Rao & Sivaramakrishna, 2008), potters five forces model of competition is based on the concept of internal and external environmental threats. In consideration to Boeing Company, the potter five forces model has greatly influenced how the organization handles threats and opportunities within its business environments. Some of the main forces to the organization include the following. Bargaining power of customers For a long period, Boeing Company has experienced the least bargaining power of customers because there are only two major competitors within the global arena. However, the switching cost of customers from one company to the other has always been very expensive. For instance, the variations in control systems and customers’ demands have been characterized by additional costs exposing employees to new organizations (Rao, Rao & Sivaramakrishna, 2008). However, the organization has developed a franchise with most of the biggest companies thus it is enhancing the defense with respect to the bargaining power of customers. Besides, it has enhanced a reduction in the cost that could have otherwise been incurred if the organization is independent. Rivalry between competitors Having accounted of up to 65% of revenue in the year 2012, the organization believes it is very important to appraise the market share and improve on its returns. However, Boeing competition to airbus has been of the greatest concerns since the organization has in the past spent more than enough in maintenance and development activities against the usual amount. In getting solution to the above problem, Boeing introduced a wide range of airline facilities with rapid deployment of the latest technology. Such technologies were mainly base in areas of operations thus strengthening the position of the company in numerous markets (Rao, Rao & Sivaramakrishna, 2008). Evaluation of the forces of competition Through Michael potter structural analysis, there is a living evidence that the organization is not only limited to technology, but it also depends on the array of broad sense of competitiveness. Despite the fact that, Boeing experiences very few direct competitors; the organization is usually faced with extreme competition and rivalry from the buyers’ point of view. In order to tackle the bargaining power of customers, the organization has embraced different kinds of business segments with a capability to attain the strongest market position. The organization has ventured into aerospace and defense market while carrying out airline export activities so as to meet the bargaining power of customers. Besides, the organization has also taken its time on issues of research and development. With strong capability in engineering, operations and technological activities, the organization has adopted owns the best technological functions on research and development concerning customer’s demands illustrates (Rao, Rao & Sivaramakrishna, 2008). In order to mitigate the rivalry between competitors, Rao, Rao & Sivaramakrishna, (2008), supports the notion the organization has adopted a lower cost of the structure than Airbus. The organization has done away with unnecessary job opportunities with an appropriate plan of the same nonproductive departments. Moreover, the company has an optimized operation into, and inventory management systems thus reducing unprecedented errors and time spend during inventory processing. In addition, Boeing has engaged the best computer aided design and computer aided manufacture capabilities to reduce time spend during development functions and achieve the best competitive designs in the market. Ultimately, the organization has established a comprehensive variety of airplanes ranging from 737 to 747, the world’s largest carriers that can serve customers in any category. External threats affecting Boeing Company The company is associated with several external threats accustomed to the military industry including destabilized economic conditions, uncertainty within the global events and competition from other rival companies notably airbus of the united space. Despite the fact that the organization receives funding from the government, a prediction that United States government cessation can lead into a definite halt in the future of the above company (Doz & Hamel, 1998). The most common external threat to Boeing Company is the current economic condition. The current global recession within the airline industry is of a huge threat to the organization. Most of the airlines supplied by Boeing Company are not stable enough to lower the cost of freight due to an upsurge in the cost of fuel (Doz & Hamel, 1998). Therefore, it leads to a reduction in passengers who are willing to take a flight for vacation while seeking for other alternative means of transport. As such, it happens that most of the airlines are not in a position to order for more planes hence translating into a loss of revenue to Boeing Company. Another possible threat to Boeing company is the competitors who seem to own a bigger share of the market capital. Some of the biggest airlines in the United States have got similar purchasing power from Boeing and airbus. Besides, companies such as Bombardier and Embraer also pose exclusive amount of threat to the organization because their presence in the competitive environment is big enough to cause serious repellant market force around such regions. Ultimately, having an intensive competitive environment has led into a reduction in the number passengers thus leading into the organizational productivity (Doz & Hamel, 1998). Boeing greatest strengths and tactic to improve sustainability One of the Boeing’s greatest strengths is having a stronger market position. The company has set up a stronger business segment that includes commercial flights and market for the military planes. With the aid of a stronger market position, the organization has gained reputation as one of the leading exporters of aircrafts in over 200 countries globally. For an organization to sustain its strongest market position there should be an improvement in the company’s supply chain system to facilitate the delivery of new aircraft models. Besides, the management should adopt appropriate strategies to overcome the backlog in the aircraft development process (Doz & Hamel, 1998). Other than the above strategy, it has been clarified that the organization is faced with the problem of dependency in contracts by the government of the United States. However, it is advised for the organization seeks for contracts from the rest of the other governments globally. The above strategy is highly recommended because sudden decline in the United States government support will lead into a halt in all the organizational operations (Doz & Hamel, 1998). Resources, capabilities, and core competencies In order to come up with an airline company and achieve the best competitive advantage then, one must consider setting up unique capabilities and core competencies. Based on different types of resources, an organization must ensure adequate physical and tangible resources so as to build as sustainable reputation that would enable it to achieve the best competitive advantage. The main resources of and capabilities of Boeing company entails both manufacturing and management technologies, aviation services and flight management and pilot training capabilities. Availability of modern and latest technologies within the company enhances aircrafts control mechanism, craft manufacturing and operation process management that ensures the customers achieve the best services from the above aero craft company. In addition, the organization is also engaged in a capital corporation that plays a vital role concerning the issues of funding and financial support where there is a need. Ultimately, the organization has also embraced training personnel that helps in equipping the flight crews with best flying and safety techniques relevant for flight operations (Doz & Hamel, 1998). As part of the organizational competencies, Boeing Company is engaged in a varied number of products that are quite vital to the latest market trends. The organization channels sufficient amount of effort to ensure that customers achieve the best services. Besides, the organization has implemented a quality management policy that enables selling of high-quality airplanes at a more affordable cost (Doz & Hamel, 1998). Organizational value chain analysis According to Doz & Hamel (1998), Boeing Company is always engaged in value-creating activities that would ensure that customers achieve the best services. With the aid of the organizational corporation, Boeing’s customers can get the best financial support to acquire airplanes and then pay for them at a later date using installments. Besides, the organization provides after sale services to customers through aviation performance program and aviation training facilities with every introduction of a new product. The organization also provides online support services to all customers at any given point in time. Conclusion Boeing Company is faced by numerous challenges that derail the company from its competitive advantage. With the support of the federal aviation body, the organization has incorporated different strategies to market the products. Using the five forces to SWOT analysis and value chain, the organization has worked extensively to achieve the best out of the market. References: Doz, Y. L., & Hamel, G. (1998). Alliance advantage: The art of creating value through partnering. Boston, Mass: Harvard Business School Press. Jones, R., & Meixner, H. (2005). Sensors, 8: Trends in Sensor Markets. Weinheim: Wiley-VCH. Pasher, E., & Ronen, T. (2011). The complete guide to knowledge management: A strategic plan to leverage your companys intellectual capital. Hoboken, N.J: John Wiley & Sons. Rao, C. A., Rao, B. P., & Sivaramakrishna, K. (2008). Strategic management and business policy: Texts and cases. New Delhi, India: Excel. References: Top of Form Pasher, E., & Ronen, T. (2011). The complete guide to knowledge management: A strategic plan to leverage your companys intellectual capital. Hoboken, N.J: John Wiley & Sons. Top of Form Jones, R., & Meixner, H. (2005). Sensors, 8: Trends in Sensor Markets. Weinheim: Wiley-VCH. Top of Form Rao, C. A., Rao, B. P., & Sivaramakrishna, K. (2008). Strategic management and business policy: Texts and cases. New Delhi, India: Excel. Top of Form Doz, Y. L., & Hamel, G. (1998). Alliance advantage: The art of creating value through partnering. Boston, Mass: Harvard Business School Press. Bottom of Form Bottom of Form Bottom of Form Read More