Strategic analysis of

Boeing company

Santhosh M 19MBA0011
Prithiviraj G 19MBA0094
Sunail Hussain 19MBA0050
Vignesh R 19MBA0104
NithinBhargav 19MBA0029
Vaishnavi 19MBA0031
BOEING
BOEING was founded by William Boeing on July 15, 1916 in
Seattle, Washington.
The Boeing Company is an American multinational corporation
that designs, manufactures, and sells airplanes, rotorcraft,
satellites, and missiles worldwide.
The company also provides leasing and product support
services. Boeing is among the largest global aircraft
manufacturers; it is the fifth largest defense contractor in the
world based on 2017 revenue, and is one of the largest
exporter in the United States by dollar value.
 Mission and Vision Statement
of Boeing

Mission: Connect, Protect, Explore and Inspire the World through

Aerospace Innovation

Vison: Best in Aerospace and Enduring Global Industrial Champion

Boeing’s business can be segmented
into:

• Commercial industry
• Defense industry
 VRIO
• V- Value
• R- Rarity
• I- Inimitable
• O- Organization

Value: value by Boeing is produced through its operations both for its customers as well as itself. It has
valuable resources, like in formof:
• Finance
• Human resource
• Marketing expertise
• Operations management

To customers: in terms of quality product, as per their needs customizations, reducing operational costs
etc.

To Itself: Boeing adds value to itself by its operations in order to cater the changing needs of
customers, implementing state of the art tech to its operations and thereby increasing sales and
increasing the value of the firm
Rarity: Boeing doesn’t hold any resource for production that is
rare in nature, most of the resources come from various
suppliers.

Unimitable: Boeing works in many product areas and caters the

need of various industry. Though things like technology, finance
can be replicated, itisthe things like
• Extensive Years of Experience
• Brand Image
• Skilled Human resource
Thatcan’t be replicated byothers.

Organization: Boeing makes use of new management systems

in handling the global operations in order to syncro with the
customers demands, does outsourcing for components and
maintains high value connections
 SWOT Analysis
Strength
• Strong Market share Position(A strong market position helps Boeing
achieve economies of scale and improves company’s brand image)

• Growth in Revenue & Global presence(recorded growth in its revenue and

operating income consistently from the last 4 years)

• Strong Research and Development (strong focus on R&D activities, primarily in its
engineering, operations and technology (EOT) activities. Focusing on innovation)

• A focus on expanding the product line and sustainable Supply Chain Innovation

• High experience in aviation and aerospace industry.

• Highly skilled workforce through successful training and learning program.

 Weakness
• One major weakness of Boeing is that the company has been failing to meet
deadlines in delivering commercial aircrafts to its customers.

• In the past, many deliveries have been delayed either due to lack of
engineering services or delays from suppliers.

• Recent crashes of the Boeing 737 max, can be considered as a weak end in
production, if the investigations turn towards Boeing for negligence, then
Boeing will face strong action from both government as well as the Customers
at large.
 Opportunities
• Increasing demand for commercial aero planes( strong long term-
market outlook)

• Growing aerospace and defence market (CAGR of 3% 2015-18)

• Form Strong Partnerships

• Increased opportunities in space and security markets (demand

for satellites and weapon systems).

• Support or favour from trump administration over others, can be seen as

an opportunity for the company to make something useful out of it.
 Threats
• Intense competition and political unrest

• Uncertain operations in aviation and airline industry

• Boeing Corporate Culture and risk of trade unions strike(36% representation)

• Safety Issues

• China and Russia trying to enter the commercial aviation market to challenge
Boeing and Airbus.

• Cyber Security Issue

• Risks related to conducting business in other countries

• Risks of business disruption

Porter Five (5) Forces forBoeing
Commercial market.
Threats of New Entrants
❑ Threat of New entrants is very low
❑New entrants will have tough time to survive in industry due to high entry barriers in
form of heavy investment, high operational costs, brand factor, supply chain and need
for skilled HumanResources.
❑ R&Da mustto survive, and requires more investment.
❑ Thoughemerging companies from China and Russiaare trying to enter the industry.
❑New entrants in commercial aircraft industry can bring innovation, new aircraft
concepts and can put pressure on Boeing through lower pricing strategy, and providing
new value propositions to the customers by means of reducing operational cost,
customizations etc.
Bargaining Power of Suppliers
• Suppliers in dominant position can decrease the margins The Boeing Company can
earn in the market.

• Key Boeing suppliers include:

1. Spirit Aero Systems (aero structures),

2. Precision Castparts Corp. (aero structures),
3. Triumph Group (aero structures),
4. Pratt &Whitney (aircraft engines),
5. UTC Aerospace Systems (components &parts),
6. Honeywell (components & parts),
7. Rockwell Collins (components &parts),
8. General Electric Co. (aircraft engines),
9. Rolls-Royce (aircraft engines).
10.Mitsubishi aircraft corp. (Aircraft Structures)
11.Allegheny Technologies.( Titanium Supply) etc.
• Powerful suppliers in Industrial Goods sector use their negotiating power to extract higher
prices from the firms in Aerospace/Defense Products & Services field. The overall impact of
higher supplier bargaining power is that it lowers the overall profitability of
Aerospace/Defense Products & Services.

• Any Problems with the supplier, can mean delay in production and delivery, and this might
lead to even bad reputation in aviation sector .
Bargaining Power of Buyers

List of Boeing customers for commercial aircrafts include:

• United Airlines
• American Airlines
• Delta
• International Lease Finance Corp
• Southwest
• GECAS
• Ryanair
• Japan Air Lines
• Nippon Airways
• Eastern Airlines
• British Airways
• Lufthansa
• Emirates
• Qatar Airways
• Air India
• Jet Airways etc.
• Buyers are often a demanding lot, in terms of customisations and
new designs to reduce operational costs.

• Since, bulk orders are made buyers usually intend to get some
discounts.

• Not being able to reach an agreement or deal with buyer may

mean the buyer can switch to some other company eg. Airbus. This
can be costly to the company’s operations
Level of competitive rivalry in the industry:
The level of competitive rivalry in the industry is high. It is because every brand is trying to push
line of quality and innovation higher.

The major players include Boeing, Airbus, Bombardier and Embraer. Boeing and Airbus are
market leaders with the largest market share.

The other brands too are pushing the line of quality and innovation. The only factor that
slightly moderates the intensity of competitive rivalry is the quality and image of Boeing. Its
technology and financial strength also make it highly competitive. These factors lend it
competitive strength but yet the overall level of competition is high.
Porter Five (5)Forces for Boeing’s
Defence Market.
Threats of New Entrants

❑ Threat of New entrants is very very low much lower than commercial
❑High entry barriers in form of heavy investment, high operational costs, brand factor,
supply chain and need for skilled Human Resources.
❑R&D a must to survive, and requires more investment as defence requires latest
inventory of weapons in active condition.
Bargaining Power of Suppliers
• Suppliers in dominant position can decrease the margins The Boeing Company can
earn in the market.

• Key Boeing suppliers include:

1. TIMETTitanium Metals Corporation (Titanium)

2. GE Aviation (Mechanical Systems LA)
3. Pratt &Whitney (aircraft engines),
4. Crane Aerospace &Electronics, PowerSolutions
5. Honeywell (components & parts),
6. BAE Systems PlatformSolutions
7. General Electric Co. (aircraft engines),
Level of competitive rivalry in the industry:
The level of competitive rivalry in the industry is high. It is because every brand is trying to push
line of quality and innovation higher.

Themajor players include:

• Lockheed Martin (US)

• BAE Systems (UK)...
• Raytheon (US) ...
• Northrop Grumman (US)General Dynamics (US)
• General Dynamics (U.S)

The other brands too are pushing the line of quality and innovation. The only factor that
slightly moderates the intensity of competitive rivalry is the quality and image of Boeing. Its
technology and financial strength also make it highly competitive. These factors lend it
competitive strength but yet the overall level of competition is very high.
Threats of Substitute

The threat of substitutes before Boeing is vey low in this case as close to no substitute
for this market is available.
Suppliers to Boeing
Suppliers of Boeing are all over the world spread, as Boeing has mostly outsourced, major
components production for their passenger as well as defence related aircrafts.

Problems with the above can be listedbelow:

• The components produced from outsourced companies, are basically not matching
the quality standards, and because of this, we have incidents like with Boeing
Dreamliner aircrafts, related tobattery issues etc.

• As most of the work is outsourced, Boeing is only engaged in final assembling stage,
which is the least profitable stage out of all, in production of aircrafts

• Outsourcing extensively, has made Boeing feel the heat of Risk, and high cost in
operations, while the outsourcing companies to Boeing, enjoy the security in op

• In Defense we can learn a lesson from Lockheed’s costly F35 fighter jet program, as
because of outsourcing, the cost of the fighter planes has gone to increase multifold,
and made critics question the program. Boeing can take a lesson from this.
The Gantt chart

YEAR 1 YEAR 2 YEAR 3 ACTING

STAGE ACTIVITIES
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 PARTIES
Internal / external marketing Marketing
research department
Corporate
Planning Formulation of strategy
executives
Resource allocation Finance department
Operations
Process design
department
Coordination departmental Functional
Implementation strategies managers
Internal / external Functional
communication departments
Continuous researchand Marketing and HR
feedback depart.
Evaluation
Functional
Reviewing control systems
departments
 Balanced Scorecard
FINANCIAL PERSPECTIVE
GOALS MEASURES
Improving o Y/E financial statements
financial o Liquidity and profitability
performance ratios
o Share price
Shareholder value
o Dividend price
INTERNAL PERSPECTIVE
GOALS MEASURES
Continuous
o Balanced scorecard approach
improvement
o Increase in sales
Customer oriented
o Positive feedback
o Relationship with suppliers
Supplier’s oriented o Effective control over
suppliers
CUSTOMER’S PERSPECTIVE
GOALS MEASURES
Product’s quality and
o Customer’s feedback
customer service
oIncreased number of
On time delivery customers
o Advance orders
SUPPLIER’S PERSPECTIVE
GOALS MEASURES
Improving supply o Implementing Enterprise
chain management Resource Planning (ERP)
Timely deliveries o Customer satisfaction
o Implementing improved
Supply Change Information
Long-term supplier
System using People,
relationships
Processes, and Technology
strategy
 Value Chain analysis of Boeing

Firm Infrastructure
o Well organised hierarchy
o Managing operations in over 70 countries
Human Resource Management
SUPPORT ACTIVITIES

o Managing its human resources successful in attracting best

workforce from all around the world
Technology Development
o Implementation of latest computer-based technology
o Utilizing composite material instead of aluminium
Procurement
o In the past, Boeing was able to influence its suppliers
o Currently facing difficulties in managing supply chain
o Lack of communication
 PRIMARY ACTIVITIES
Inbound Operations Outbound Marketing Post Sale
Logistics Logistics and Sales Service
o Stock control o Increased o Advance o Advance o After sale
through security Aviation Aviation service
Global system Performance Performanc program
Airline o MyBoeing Program e Program ‘Advance
Inventory Fleet Web Aviation
Network Portal to Performanc
o On-going access info e Program’
Supplier’s online
relationships
o Quality
computer-
based training
through
Alteon
Aviation
Training
System
Future Strategy Boeing should take
up.
As South Asia, led by India, continues to show impressive growth, passenger growth is
expected to continue, to show its strength. India’s population of 1.3 billion and its dynamic
economy growing their middle class will drive India- domiciled airlines to expand. The
propensity to travel and restaurant growth will be an opportunity.

• Insouth Asian context , Boeing should think of expanding its base, into Indian Market, by
setting up manufacturing plant, for ease providing commercial and defence related
products, as the western markets will soon be saturated.

• Integrating supply chains so that low-volume defense and space buys can be bundled with
high-volume commercial orders.
• The company as the past CEO stress on service should be the focus. Therefore
next five to 10years a growing trend in providing customers with more services
on existing aircraft rather than directly selling more new hardware or airframes
should be an objective.

• Stress on inducting new technology, in both commercial and defence product

creation.

• Inducting full scale Data Analytics, to bring in accuracy and cut down cost in
operations. By acquiring competent companies.

• Incommercial segment, since future hyperloop could be a threat to business, the

company should start working on the supersonic variants of flight, which could
give steady competition to substitutes at competitive pricing.

• Acquisitions of companies with motive that they might add future value to the
company as whole, the company should avoid acquiring company’s which
don’t add value to company core operations.

• Defence industry is a tough, therefore the company needs to be in direct

engagement with the military, and design products, that satisfies the same.

• The company should expand its space explorationprograms.

• Embraer’s costs in Brazil are one third of what an engineer costs for Boeing in the U.S.

• Strategic alliance with, rising Supersonic jet development company’s like Aireon.

• FAA , making changes in aviation rules related to supersonic flights, can be seen as an open
opportunity.

• Boeing Should Focus on Narrow body aircraft market, as airbus has been dominating so far in this area.

• Strategic alliance between Boeing and Embraer, will be beneficial in countering,Airbus deal with
Bombardier to enter smaller aircrafts market, like reginal jets etc.