The problems that the company faced are:13 The causes of problems are:13 Action planning:13 Alternative strategy:14 PEST ENVIRONMENT:14 Politics, Legislation:15 Economy, Business Environment:15 Socio-Cultural and demographic forces:15 Technology:16 Competitive forces:16 Physical and natural forces:16 CONCLUSION:18 RECOMMENDATION:19 REFERENCES:20 INTRODCTION: Nowadays, business is vitally affected by the economic, social, legal, technological and political factors. These factors collectively form business environment.
Business environment is the total of all external forces, which affect the organization and operations of business. The environment of an organization has got internal, operational and general lives managers must be aware of these three environmental levels and their relationship and importance. Therefore, I will talk about Boeing Company as an example. Boeing Company is American Company. It was founded in 1916. Boeing consider as the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems.
The company design and make rotorcrafts, electronics, defense systems, missiles, satellites, launch vehicles and information and communication system. The biggest competitors of this company Airbus Company. Airbus is one of the world's leading aircraft manufacturers and it consistently captures approximately half or more of all orders. In the coming lines, I will talk about the following points which are the background of Boeing Company, mission, vision and its objective SOWT analysis, competitor analysis, action planning, strategies, and the effect of the PEST environment forces on that company.
BACKGROUND OF BOEING COMPANY: Boeing consider as the world's largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. A top American exporter, the company supports airlines and American. and allied government customers in more than ninety countries. The Boeing products and tailored services include commercials and military aircrafts, satellites, weapons, electronics and defense systems, launch systems, advanced information and communication systems, and erformance-based logistics and training. Boeing Company has a long tradition of aerospace leadership and innovation. Company continues to expand its product line and services to meet emerging customer needs. Its broad range of capabilities includes creating new and more efficient members of its commercial airplane family; integrating military platforms, defense systems and the warfighter through network-enabled solutions, creating advanced technology solutions and arranging innovative customer-financing options.
With corporate offices in Chicago, the company employs more than 159,000 people across the United States and in 70 countries. This represents one of the most diverse, talented and innovative workforces anywhere. More than 123,000 employees hold college degrees, including nearly 32,000 advanced degrees and in virtually every business and technical field from approximately 2,700 colleges and universities worldwide. Our enterprise leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers worldwide.
Boeing is classified into two business units: Boeing Commercial Airplanes and Boeing Defense, Space and Security. Supporting this units are Boeing Capital Corporation, a global provider of financing solutions; the Shared Services Group, which provides a broad range of services to the company worldwide; and Boeing Engineering, Operations & Technology, which helps develop, acquire, apply and protect innovative technologies and processes. Mission: The mission of the company is to maximize the number of services and opportunities while establishing Boeing’s leadership in NMA activities.
Functions that control Boeing are business development and strategy, communications, engineering, operations and technology, finance/shared services group/Boeing capital corporation, human resources administration, international, law and offices of internal governance and public policy. So Boeing Company has many values work to achieve it. First, Leadership is the world class leader in every aspect of our business and in developing our team leadership skills at every level, in our management performance; in the way it design and build support our products and in our financial results.
Secondly, Integrity is always takes the high road by practicing the highest ethical standards and by honoring our commitments. It takes personal responsibility for our actions and treats everyone fairly and with trust and respect: Third, the Quality of striving for continuous improvement. So that it take rank among the world’s premier industrial firms in customer; employee and community satisfaction. Finally, Customer satisfactions are essential to our success. Vision: It seeks redressing from the other for unfair government subsidies in the development of new airplanes.
Also, it is important for people to work as a global enterprise for aerospace leadership “People Working Together as One Global Company for Aerospace Leadership. Also, it works hard to develop the education for her employees. Objective: 1. Improve Performance: • Sponsor outstanding dinner meetings and special events. • Exploit multi-media member communications. • Provide effective NMA metrics and reporting. • Address direct support of Boeing’s business goals. 1. Spearhead Expansion • Team with current chapters. • Maintain and increase membership. 2. Implement Training Provide regular development seminar • Apply NMA training tools and courses. 3. Support education and community • Award high school scholarships. • Speech Contest. • Hold Explore Engineering Programs. • Support volunteer activities. 4. Ensure Recognition • Acknowledge Boeing leaders. • Reward chapter contributors. COMPETITOR ANALYSIS: Airbus is an aircraft manufacturing subsidiary of EADS, a European aerospace company. Based in Blanca, France, near Toulouse and with significant activity across Europe, the company produces around half of the world's jet airliners.
Airbus Industry began as a consortium of European aviation firms to compete with American companies such as Boeing. Airbus Industries were formally established on 18 December 1970. It had been formed by a government initiative between France, Germany and the UK that originated in 1967. In the commercial airline business Boeing operates in a duopoly with Airbus. Airbus has been the largest producer of large commercial jetliners for many years, but Boeing has been gaining ground since recent problems at Airbus, especially the 2005-6 massive production delay for the A380.
The delay gave Boeing a large advantage in the market for wide body aircrafts which include Boeing's successful 747, 777, and 787 models. Although the Boeing has pushed back the first flight and delivery of the 787, the Airbus 380 delays have been far more substantial. Still, even with Airbus' problems, the race is far from over and competition remains intense between the two companies. In February 2007, the U. S. Air Force awarded a controversial $35 billion air refueling tanker contract to rival Northrop Grumman (NOG) that was widely expected to go to Boeing.
During March of 2007, Boeing had filed a formal appeal against the deal with the Government Accountability Office. In June of 2008, the GAO sustained Boeing's appeal against the Air Force and effectively reopened the contract for bidding. As of August, Boeing is currently requesting an extension past the October 1st deadline in order to alter its design to meet the government's new specifications. Airbus employs around 52,000 people at sixteen sites in four European Union countries: Germany, France, the United Kingdom and Spain. In this table I will show you some statistic about Boeing and Airbus Industrie: Company |1994 Sales in $m |1994 Earnings in $m |Market Share % | |Boeing |16,851 |1,022 |62 | |Airbus Industrie |8,000 |N/A |24 | |Company |Gross orders |Cancellations |Net orders | |Boeing |120 |46 |74 | |Airbus Industrie |125 |54 |71 |
SWOT: SWOT Analysis of Boeing Company is defined as a framework used extensively for an assessment of the internal as well as external business environment as a part of the strategic or corporate planning process. The framework is including the firm's strengths & weaknesses as part of internal environment assessment and opportunities & threats as part of the external environment assessment that aids strategic decision making which may include macroeconomic matters, technological change, legislation, and socio-cultural Changes, as well as changes in the marketplace or competitive position. Strengths |Weaknesses | |Workforces and planning |Loss | |Innovation |Lack of technological innovations | |Management system |Threats of Substitute Products or Services | |Leadership |Competition of trains | |Knowledge |Affect of technology development | |Highly Skilled Managers | | |Provide global customer support | | |Outsourcing | | |High quality of products | |good services | | |Threats |Opportunities | |Competitor |Market developments | |Trade Barriers |Competitors' vulnerabilities | |Deregulation of Airlines |Industry or lifestyle trends | |Threats of Substitute Products or Services |Technology development and innovation Global influences | |threat of the Airbus |Information and research | |Lack of planning |New aircraft to gain market share | | |Increase demand for point to point routes | Strengths: 1- Workforces and planning: Boing has trimmed its workforce to the minimum and it has plans to further cut 7000 jobs and has completed family of planes from the small 737 to the world's largest carrier the 747 which allows it to serve any airline in any category. 2- Innovations: boing has innovated in many areas and has a very strong technological position it is well established. 3- Management system: It has improved its inventory management systems. 4- Leadership: It still has a leadership position in the industry. 5- Highly Skilled Manager The operation of the company will run smoothly.
The performance of the company will improve and would lead the company to be successful. 6- Provide global customer support it would serve the customers better and it would be very convenient to those customers in other countries to ask for help. This would help the company to gain a better image due to the provided services to help the customers. 7- Outsourcing: It can save time for the company to manufacture or assembly its products. 8- High quality of products: Emphasizing the product quality to ensure that the durability of the company is lasting for long period of time. 9- Provide Good services. . Weaknesses: 1. Loss: balance sheet and income statement point to some weaknesses.
R spending of $1,661 million, around 8% of sales is rather low for this industry. Its long term debt is also increasing and its overall return on common equity is around 8. 9%, below the average industry rate which is 13. 1%. This, associated with its declining defense revenues, may restrict its access to additional capital in times of crisis. 2. Threats of Substitute Products or Services: for example people don’t use planes to travel they will use train and other way. 3. Competition of trains: Customers run away from aircraft to trains because of its services. Threats Implications: 1. Competitor: The competitor might overcome them and the threat is increasing the competitor’s market share. 2.
Trade Barriers: They may encounter difficulties in the regulation regarding aircraft imposed by the country to which they export their products to. 3. Deregulation of Airlines: The regulation of the company for its customers would compromise in order to gain favor of the customers. 4. Threat of the Airbus because Airbus is the big competitor for Boeing Company. 5. Lack of planning. Opportunities: New aircraft to gain market share: with the impressive show of Airbus A380 recently, Boeing also plans to release its powerful weapon in the competition with Airbus. The new version Boeing 787 which inherits the most advanced technologies and advantages of the previous models is hoped to be a big hit to the airline industries.
At the moment, Boeing has received a number of orders for Boeing 787- Dream liner and this opportunity actually shows that Boeing still insists on its successful business strategy to build longer-range, more capable, smaller aircraft that could go point-to-point and therefore, serve city pairs directly rather than having to hook them up through a hub. The new 787 is the proof that Boeing does not lag behind the competition. THE STRATEGY: The problems that the company faced are: 1. Unwinnable competition, which is wasteful. 2. Design and engineering problem. 3. Poor cost control. The causes of problems are: 1. Poor engineering expertise. 2. Poor marketing research. 3. Using wrong strategies. Action planning: 1. Merge to companies 2. Get good engineer (work with university). 3. Get good marketers. 4. Do comprehensive. 5. Marketing research. 6. Restructure. 7. Use cooperative strategies. 8. Improve design and R. 9. Make the right aircraft. 10. Cost leadership.
There are many problems that come from the using of wrong strategies, poor engineering expertise and poor marketing research. The basic problems are unwinnable competition which is wasteful, design and engineering problem and poor cost control. Boeing Company uses poor engineering and poor design that actually will affect the nature of the working of company. Boeing Company is unwinnable competition because their competitors have high quality management and good services better than them so, customers prefer to deal with their competitors. It has also problem with marketing research. However, good marketing research can help company to know strength and weakness of their competitors and to know how to improve their works and to be able to face new technologies.
Boeing Company has poor cost control that will lead to lose their money and the profit will be low. There are many actions that the company should follow to overcome any problems such as get good engineers who graduated from university and have high qualification and experience. Boeing Company has to restructure its strategies and use cooperative strategy. Also, if it merges with companies, get good marketers, do comprehensive, marketing research, improve design and R and make the right aircraft, it will achieve competitive advantage and maximize the profit. Alternative strategy: Cost leadership, it focuses in decreasing the cost and price.
It is a good strategy for the company, if it follows this strategy, it will be more successful and it will reduce its economic costs. Also, this strategy will help company to develop and grow very fast. PEST ENVIRONMENT: Political, Economic and financial, Social, physical and natural, competitive, demographic, Technological forces (PEST) analysis is concerned with the environmental effects on a business. The term PEST stands for the Political, Economic and financial, Social, physical and natural, competitive, demographic, Technological issues that could affect the strategic development of a business. New I will explain the forces that effect Boeing Company in Us: Politics, Legislation: Political forces refer to country's political system.
The ability to support or disrupt business operations of domestic & international firms that mean Influence of politics & political interests. Also, Governmental topics, taxation issues, environmental controls and dependencies, subsidies and quotas regulations, employment and labor laws, consumer legislations and regulations, competition issues, health & safety concerns and issues. Economy, Business Environment: The economic environment refers to differences between countries economic systems in the country which the organization operates. Therefore, when we talk about condition of economic system I mean the economic growth, inflation and unemployment.
As we know, the economic crisis affects all the businesses around the world. Boeing Company effected by this crisis so what happened in the economy will have a big effect on the company. Despite Boeing's 2008 revenue has declined to 8. 25% and that because of the economic crisis. In particular, revenue in the Commercial Airline division fell by 15. 34%, as a strike by the International Association of Machinists in 2008 resulted in 104 fewer airplane deliveries than planned. Furthermore, net income fell 34% and contractual backlog expanded to a record level of $279 billion. Net income declined by 22. 1% over the first half of fiscal year 2009. Socio-Cultural and demographic forces:
The social dimension or environment of a nation determines the value system of the society which affects the functioning of the business and Refer to way shared beliefs, values & attitudes affect employee & consumer behavior & management of foreign subsidiaries. And demographic forces refer to the characteristics of population, e. g. size, growth, spending power. Socio-Cultural has changed when the country get developed. The changing maybe in education, public opinion social mobility, and attitudes so the socio-culture can affects the business: ? Population growth rate and age profile. ? Population health, education and social mobility, and attitudes toward those. ? Population employment patterns, job market freedom and attitudes to work. Press attitudes, public opinion, social attitudes and social taboos. ? Lifestyle choices and attitudes to those. Technology: Refers to technology-induced changes that have altered the way firms undertake & coordinate their international activities. Transportation and communication technologies – firms able to outsource R and back office processing. Technology is used in many of life fields. First, we use technology in the process of manufacturing and that through buying effective and modern machines and equipment. Second, we also use it in design techniques and in management of our company through using computers and other tools of technology.
Third, technology provides us with some ways in marketing and advertising via TV, Internet and others tools. Technology influences the company in terms of investment in technology, consistent application of technology and the effects of technology on markets. Emergent technologies have a big Impact on company. It can speed up the work in the company so it can apply all the orders. Also, the internet has its own impacts which are reducing communications costs and increasing remote working. (Reference: http://en. wikipedia. org/wiki/Boeing) Competitive forces: A competitive force refers to the pressures imposed by other firms in competing industries.
Boeing company faced strong competitive from Airbus Company because these two company work in same field. These two companies compete in price, service and product. Physical and natural forces: Physical and natural forces refer to environmental pressures and risks that influence international business strategy. These forces divided to two types. First, natural risks arise from environmental disasters (e. g. earthquakes). Second, Manufactured risks are environmental risks created by human intervention – pollution, threat to eco-systems, climate change, genetic modification, and terrorism. This factor can effect in Boeing company very clear. CONCLUSION: In conclusion, I am going to summarize the points that I have talked about in my report.
First, background of Boeing Company which is a major aerospace and Defense Corporation, founded by William E. Boeing in Washington its international headquarters has been in Chicago since 2001 and its mission, vision and objectives. Second, I have analyzed their competitor which is Airbus and it is the biggest its competitor. Airbus is one of the world's leading aircraft manufacturers and it consistently captures approximately half or more of all orders for airliners with more than 100 seats. Third, I analyzed its internal and external environment factors which are referred to SWOT. Fourth, I have talked about the strategy which includes problems, causes and action plan of the company.
Boeing Company has to restructure its strategies and use cooperative strategy instead. I recommend Boeing Company to merge with companies, get good marketers, do comprehensive, marketing research, improve design and R&D and make the right Aircraft; it will achieve competitive advantage and maximize the profit. Finally, I have talked about the term PEST which stands for the Political, Economic, Social, and Technological issues that could affect the strategic development of a business. RECOMMENDATION: In fact, Boeing Company is a popular company in the world, but there are several forces and challenge which face it and make it in a bad situation. So I explained them in my assignment.
Therefore, I recommend this company to develop their abilities such as employee’s skills, investment, competitive advantage, consumer relationship management and advertising. In my opinions, I think Boeing Company can develop their employee’s skills through training. Also, I should invest in rich countries which pay more money to increase the profitability to company. A good idea to the company creating new and develop aircraft to unique it from other companies. Finally, I think if Boeing Company does good advertising that enough for it to monopoly aircraft manufactured over the world. REFERENCES: http://www. boeing. com/companyoffices/aboutus/brief. html http://manonamission. blogspot. com/2005/08/boeings-ba-mission-statement. html : http://www. boeing. com/news/speeches/1998/980121. htm http://www. boeing. om/companyoffices/aboutus/community/focus_objectives. html - http://www. soe. ucsc. edu/classes/ism158/Winter03/boeing. htm - http://en. wikipedia. org/wiki/Airbus http://www. writework. com/essay/boeing-s-strength-weakness-threats-oppotunities-and-its-im : http://www. soe. ucsc. edu/classes/ism158/Winter03/boeing. htm http://en. wikipedia. org/wiki/Airbus http://www. companiesandmarkets. com/Summary-Company-Profile/boeing-company,-the-swot-analysis-145568. asp http://www. wikinvest. com/stock/Boeing_Company_(BA)) http://en. wikipedia. org/wiki/Boeing Books: (Principles of Marketing) Thirteenth Edition, Philip Kotler and Gary Armstrong. Books: (Management 9e ) John R. Schermerhorn, JR.