Case 11 - Boeing - Case Study from Strategic Management PDF

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Case 11: Boeing Commercial Aircraf Boeing commercial airplane is the commercial aircraf division of the world’s largest aerospace company. Their major competitor for many years now has been the European company, Airbus. For decades, these two rivals have been competing against one another for market share, research and development funds and trying to come up with innovative ideas to set their aircrafs apart from the other. Both companies have different management styles, Airbus’s management has a culture of partnership among the employees, managers, suppliers, and customers, with a two-way flow of views and ideas sharing responsibilities and exchanging ideas among all levels for best results. Boeing has a more open and honest culture where employees are required to voice opinions to help resolve issues, while Managers listen to their concerns and ideas without retaliation. Team leadership skills at every level are developed in the pursuit of being world class leaders in every aspect of their business. In the next few paragraphs’, I will discuss some strategic issues, challenges and problems that have arisen over the years for Boeing. A major challenge that Boeing encountered were problems with production, Boeing had a vertical integration model where they were making many components themselves which was quite costly and time intensive. Boeing adopted a ‘Lean production’ concept, originally used by Toyota whereby they had consultants and their own employees working on solutions to modify equipment and processes to reduce waste. They were successful in making new smaller machines eliminating the need to produce and store inventory and switched from a static assembly line to a moving line saving time, money and creating efficiency. This was a step in the right direction for Boeing as being able to save on their costs and improve their efficiency they were able to show bigger profit margins and full fill orders in a more timely manner giving them the leg up on their main competitor, Airbus.

Porter’s Five Forces Model is an older strategy execution framework built around the forces that impact the profitability of an industry or a market. This model identifies the five competitive forces that have the ability to mold every industry and market to help managers analyze their particular industry. The five forces it examines are: The threat of entry , the threat of substitute products or services, bargaining power of customers, bargaining power of suppliers and the competitive rivalry among existing firms. Boeing has experienced pressure from customers at times, such as Southwest Airlines, to produce more innovative efficient aircrafs like that of their competitor, Airbus, or they would lose that customer to their competitor. There has been a push-pull relationship between Boeing and Airbus where each company has been forced to respond to innovations being done by the other and the amount of pressure on each of these companies has determined the path for their future developments. Another issue along these lines is the Research and Development subsidies each company was receiving from their government or banks allowing them to further ideas and create new innovative products. I believe the resolve of this issue between them was the correct path by going to the EU and putting limitations on both companies to give them a more even standing to compete. With this said Boeing can look at other strategies to be implemented to help them save on costs and to have more money to allow for research and development of their aircrafs and company. Figure 1: Porters Five Forces Model

The true task of any manager is to analyze competitive forces in the industry environment and to identify opportunity and threats. This is ofen done through a SWOT analysis, where you identify your Strengths, Weaknesses, Opportunities, and Threats. When Boeing started outsourcing on an unprecedented scale they experienced some major problems. One of the issues they experienced was that the outsourcing was not being managed efficiently between Boeing and their suppliers and the lack of ongoing communication between them resulted in delays. A SWOT analyses should be done afer the fact for this process as this will help Boeing management identify what the strengths and weaknesses were of this endeavor and what opportunities can be seen to strengthen this process and relationship with their suppliers to make it more efficient and smooth in the future. For example maybe having a small team that solely is dedicated to the company supplier relationship and making sure communications are kept up on daily, perhaps having better technologies in place to quickly address any issues or concerns before they cause costly delays in production. Boeing was also dependent on single suppliers for key components and this resulted in problems caused by bottlenecks holding up production. Boeing would be better served to start up relationships with other suppliers for their key components so that they can have a back up plan if there are problems at a certain supplier, or perhaps have more than one supplier at a time making these parts. Figure 2: SWOT Analysis

In any industry the risk of entry by potential competitors is a concern, the aircraf business is not easy to enter and Boeing has been fortunate to not have many competitors, however there are a few more that have entered the market from Canada and China and these are growing threats that Boeing will need to meet with fresh innovative ideas in order to gain market share and keep their competitive advantage. Strategic planning models are important in being successful as they help your company grow, tackle challenges by setting measurable goals that align with your company mission and vision and can help you keep or gain a competitive advantage in your Industry. This case showed some strategic changes that worked for Boeing, such as the implementation of ‘Lean Production’ and outsourcing, which did come with some hiccups but overall was successful. As the macroenvironment changes, along with customer needs and wants a company has to be flexible and constantly review their strategic management strategies in order to make sure they are meeting the demands and gaining market share by keeping up with their competitors.

References Boeing . (n.d.). Retrieved from Wikipedia : https://en.wikipedia.org/wiki/Boeing Hill, S. J. (2018). Strategic Management An Integrated Approach. Cengage Learning. Smith, R. (2019, August). 16 Strategic Planning Models . Retrieved from www.clearpointstrategy.com: https://www.clearpointstrategy.com/strategic-planning-models/ Wikipedia. (n.d.). Retrieved from Airbus: https://en.wikipedia.org/wiki/Airbus...