Task

Phase 1 - Selecting a Global Company, Problem Identification and Diagnosis  

Introduction

In 1916, William E. Boeing founded Boeing, one of the world’s largest manufacturers of commercial jet transports, military aircraft, space vehicles, and missiles (Knoll-Csete and Kárász, 2021). In this way, it became a player in the aerospace industry through expanding its activities beyond manufacturing aircrafts.

Besides, Boeing is a major player in the aerospace industry where it produces commercial jetliners such as the 737, 747, 767, 777, and the 787 Dreamliner as well as military hardware including the F-15 Eagle, F/A-18 Hornet, and the Apache helic (Amir and Weiss, 2024). The company is also widely involved in space exploration as the prime contractor for the International Space Station for NASA while developing launch vehicles and satellites (Boeing, 2024).

To date, Boeing is recognized as a leading aerospace producer and one of the leading global defense contractors, which demonstrates the importance of company to the aerospace market.

The Boeing 737 MAX crisis, a great crisis for Boeing, started with the FAA’s certification of the aircraft in March 2017 and the entry into service in commercial service (Herkert et al., 2020). The crisis unfolded with two fatal crashes: First, one involving a Lion Air flight in October 2018, and the other, an Ethiopian Airlines flight in March 2019. These disasters resulted in the worldwide grounding of the 737 MAX fleet, which triggered numerous inquiries and exposed problems associated with the aircraft’s design and software, especially the Maneuvering Characteristics Augmentation System (MCAS) (Boeing, 2023).

Boeing had to deal with considerable criticism of its development and certification process which resulted in financial losses, damaged reputation, and changes in the leadership of the company. The grounding profoundly influenced the operations of Boeing and the wider aerospace sector, reflecting the need for safety and regulation in the air travel industry

SWOT Analysis

Strengths (Hauqe, 2024)

•    Market Share: The global company is Boeing, an aerospace leader with wide market share in the commercial airplane arena.
•    Research and Development (R&D): The Company spends big on R&D with its investment in advanced materials, artificial intelligence and autonomous systems demonstrating an emphasis of the company toward innovation.
•    Diverse Offerings: The product portfolio of Boeing is vast which includes commercial airplanes, military aircraft, rotorcraft, satellites missiles and telecommunication equipment.
•    Efficient Supply Chain: The supply chain of Boeing is highly developed, which provides timely delivery.
•    Strategic Partnerships: The firm has developed strategic alliances in the aero world and joint ventures with organizations such as NASA.

Weaknesses (Hauqe, 2024)

•    Revenue Dependence: The commercial and defense airplane division is a major revenue source for Boeing.
•    Supplier Dependency: In the case of 787 Dreamliner program, wide reliance on suppliers is responsible for many disruptions and production delays.
•    Design Failures: Over the past couple of years, design defects especially those associated with the 737 MAX planes compromise companies’ reputation and call into question safety.
•    Management Issues: Boeing’s management conduct has come under scrutiny, specifically its emphasis on profits over safety.

Opportunities (Hauqe, 2024)

•    Sustainable Offerings: Boeing invests in green aircraft and sustainable aviation fuel as the demand for environmentally sound solutions increases.
•    Market Expansion: Increasing its presence, especially in emerging markets like those found in Asia represents potential great opportunities.
•    Electric Planes: Now new ways to innovate emerge with the collaboration between NASA and GE on building electric as well has hybrid-electric aircraft.

Threats (Hauqe, 2024)

•    Intense Competition: Competitors include Airbus; there are also new entrants such as China’s COMAC and United Aircraft Corporation of Russia.
•    Labor Shortage: In this regard, the lack of qualified labour has caused delays in production and increased costs.
•    Security and Safety Issues: Security threats, such as cybersecurity and safety issues after the 737 Max crashes remain a threat.
•    Supply Chain Disruptions: Continued supply chain difficulties may impact timelines for production and delivery.

VRIO Analysis 

1.    Value: The financial resources of Boeing and their employee skills are invaluable; they add to the company’s competitive advantage (Edwards, 2018). But its cost structure and research & development are perceived as competitive weaknesses.
2.    Rarity: The factors such as Boeing’s financial flows, resourcefulness of its employees and distribution network are considered scarce resources that contribute to it being in a better position compared to rivals (Osagie et al., 2023).
3.    Imitability: Though copying Boeing’s financial resources and distribution network is costly, its local food products and employees are not so much more affordable it gives only a temporary competitive advantage (Harvey and Turnbull, 2020).
4.    Organization: The financial resources and the distribution network of Boeing are well-organized, making the firm to have an enduring advantage in competition (Edwards 2018). Yet its patents are not fully used, a potential competitive advantage that has gone unused.

Root Cause and Implications

The Boeing 737 MAX was a result of several factors the SWOT and VRIO portrayed. The company’s success in innovation and market share were overshadowed by fatal weaknesses such as the flawed Maneuvering Characteristics Augmentation System (MCAS) of Boeing 737 MAX (Boeing, 2023). This lapse in safety, one of its main weaknesses, caused two fatal crashes.

The VRIO analysis shows that the position of Boeing’s reputation and established market position was significantly affected by its heavy reliance on them. This crisis not only entailed losses and damage to the reputation but also brought out a need of strict safety regulations as well as better control over innovative technologies.

According to Berrah (2021), it highlighted the need for Boeing to align its strong resources including a knowledgeable labor force and financial assets with renewed emphasis on safety, quality control, and ethical governance. 

References

Amir, A.R. and Weiss, S.I. (2024) Boeing Company. Available at: https://www.britannica.com/topic/Boeing-Company (Accessed: 14 January 2024).
Berrah, L., Cliville, V., Trentesaux, D. and Chapel, C., 2021. Industrial performance: an evolution incorporating ethics in the context of industry 4.0. Sustainability, 13(16), p.9209.
Boeing (2023) the 737 MAX MCAS Software Enhancement. Available at: https://www.boeing.com/commercial/737max/737-max-software-updates.page (Accessed: 14 January 2024).
Boeing (2024) OUR COMPANY. Available at: https://www.boeing.com/company/ (Accessed: 14 January 2024).
Edwards, Z. (2018) Vrio analysis of Boeing. Available at: https://www.case48.com/vrio-analysis/12631-Boeing (Accessed: 14 January 2024). Harvey, G. and Turnbull, P., 2020. Ricardo flies Ryanair: Strategic human resource management and competitive advantage in a Single European Aviation Market. Human Resource Management Journal, 30(4), pp.553-565.
Hauqe, A. (2024) Boeing SWOT analysis 2024: A well-researched report. Available at: https://swotwizard.com/boeing-swot-analysis/ (Accessed: 14 January 2024). 
Herkert, J., Borenstein, J. and Miller, K., 2020. The Boeing 737 MAX: Lessons for engineering ethics. Science and engineering ethics, 26, pp.2957-2974. 
Knoll-Csete, E. and Kárász, I., 2021. The Characteristics of the Aviation Industry.
Osagie, O.E., Emeka, O.F. and Beatrice, E., 2023. Outsourcing benefits and complications. BW Academic Journal, pp.9-9.

Task

Phase 2 - Researching Trends and Opportunities

PESTLE Analysis

• Political Factors: Government policies has an impact on Boeing such as the Aviation Manufacturing Jobs Protection Program in the U.S., which subsidies aerospace organizations (Williams, 2020). But the company’s business suffers amid geopolitical tensions such as Russia-Ukraine war that disrupt its operations and contracts in regions where there is conflict.
  
  The stability of government in the countries where Boeing conducts business helps its smooth operation, but when there is political disruption it affects sales and supply chain.

• Economic Factors: The COVID-19 pandemic has massively affected the aerospace industry, this is evidenced by the sharp reduction of air travel. This has resulted in lower demand for planes such as those made by Boeing.
  
  Moreover, macroeconomic factors such as GDP growth rates and exchange rates affect Boeing’s business tactics along with resulting in profitability (Maung et al., 2022). The increasing trend rate of global inflation is also a worrying factor likely to lead to increased costs and product pricing.

• Social Factors: Air travel fell off as a result of the pandemic, and this reduced demand for new planes. Boeing also has challenges when it comes to public perception and safety concerns especially with air plane models such as the 737 Max (Güngör, 2023).
  
  The change towards sustainability and eco-friendly alternatives makes Boeing invest in alternative energy sources and sustainable technologies.

• Technological Factors: Boeing stands to reap substantial investment in U.S government aerospace R&D (Williams, 2020). New technologies such as hydrogen power planes, Blockchain for the supply chain management 3D printing and Internet of things are creating a new landscape.
  
  However, the speed of technological innovation also puts pressure on Boeing to constantly innovate and shrink product development cycles.

• Legal Factors: The activities of Boeing are closely regulated by the Federal Aviation Agency, which oversees them in U.S (Schacter, 2020). It is important to ensure compliance with numerous federal aviation laws pertaining in different areas such as an aircraft design, manufacturing, maintenance and repair.
  
  The company should also be careful about the data protection laws and consumer rights policies under different jurisdictions.

• Environmental Factors: Boeing is part of the aerospace industry, which has been held accountable by environmentalists with regard to carbon emissions (Pierrat et al., 2021). It is very important to follow the Paris Accord and other environmental agreements. Boeing is likely to innovate in developing aircraft and technologies that are more environmentally sustainable while complying with tougher emission regulations. 

Porter\'s Five Forces Analysis

• Competitive Rivalry (High): As Airbus, Boeing’s largest rival in the aerospace sector has intensified competition (Woo et al., 2021). Other major competitors are Embraer and Bombardier. The competition is defined by innovation, product improvement and the requirement for better value aircrafts services. Boeing’s history, product breadth and innovation skills enable him to maintain competitiveness.

• Bargaining Power of Suppliers (Moderate to High): Boeing relies on a huge supply base providing components and materials, some of which include critical suppliers in electronics & steel engineering sectors (Ammar et al., 2022). Although Boeing\'s large volume does provide some leverage, the highly specialized nature of aerospace industry with only few qualified suppliers has positioned these suppliers at strong negotiating positions.

• Bargaining Power of Buyers (High): Because of the amount and value that is spent in purchasing by buyers within the aerospace industry especially large airlines, these are very powerful negotiators. They can ask for discounts and further services, affecting Boeing’s profitability (Ammar et al., 2022). Nevertheless, Boeing’s established customer bases and wide-ranging support services somewhat counter the supplier power imbalance.

• Threat of New Entrants (Low): To enter the aerospace sector brings formidable challenges in terms of high initial investment, technical skills and complex safety and regulatory frameworks (Roca and O\'Sullivan, 2020). These barriers are further reinforced by Boeing’s entrenched position, technological capabilities and large supplier base making it difficult for new entrants to compete effectively in the market.

• Threat of Substitutes (Low): While there are other means of commercial flights, such as helicopters and business jets; these substitutes have very limited functioning capacities that make them quite expensive due to the lack of material convenience hence posing a low threat on Boeing (Roca and O’Sullivan, 2020). Technology innovations could present substitutes, however proactive innovation and after-sales services that Boeing has implemented is a tool to counter this threat.

Challenges

• Competitive Pressure: Boeing’s competitors are fierce, especially from Airbus meaning a continuous development to ensure cost-effectiveness in the market (Woo et al., 2021).

• Geopolitical Tensions and Regulatory Compliance: Geopolitical conflicts, as exemplified in the case of Russia-Ukraine can pose a challenge to Boeing’s international operations and contractual agreements (Schacter, 2020). Moreover, the diverse global regulatory systems present several challenges that need strict compliance standards.

Opportunities

• Technological Advancements: There are good prospects for Boeing to capture opportunities in space technology development dynamics as observed today. These include sustainable fuel, and advanced safety technologies (SK, 2023). These innovations may improve its product portfolio and market image.

• Emerging Markets: The development of emerging economies presents a profitable opportunity for Boeing to increase its market share (SK, 2023). Areas that show a significant rise in air travel demand present Boeing with an opportunity to build its presence and access emerging markets, leading to increased revenue performance.

Top Management Samples

References

Ammar, M., Haleem, A., Javaid, M., Bahl, S., Garg, S.B., Shamoon, A. and Garg, J., 2022. Significant applications of smart materials and Internet of Things (IoT) in the automotive industry. Materials Today: Proceedings, 68, pp.1542-1549.
Güngör, H., 2023. Reflections of The Strategies Applied in the Boeing 737-Max Crisis Management on Passenger Perception. İşletme Araştırmaları Dergisi, 15(3), pp.2249-2262.
Maung, Y.S.Y., Douglas, I. and Tan, D., 2022. Identifying the drivers of profitable airline growth. Transport Policy, 115, pp.275-285.
Pierrat, E., Rupcic, L., Hauschild, M.Z. and Laurent, A., 2021. Global environmental mapping of the aeronautics manufacturing sector. Journal of Cleaner Production, 297, p.126603.
Roca, J.B. and O\'Sullivan, E., 2020. Seeking coherence between barriers to manufacturing technology adoption and innovation policy. International journal of production economics, 230, p.107818.
Schacter, J.R., 2020. Delegating Safety: Boeing and the Problem of Self-Regulation. Cornell JL & Pub. Pol\'y, 30, p.637.
SK, S.K., 2023. Mission Success: A Guide to US Military Tech Jobs, Defense, and Government Careers for Prospective Engineers. Sushant Khadka.
Williams, B., 2020. Boeing and Washington State: Codependency and Moral Hazard. Gonz. L. Rev., 56, p.65.
Woo, A., Park, B., Sung, H., Yong, H., Chae, J. and Choi, S., 2021. An analysis of the competitive actions of boeing and airbus in the aerospace industry based on the competitive dynamics model. Journal of Open Innovation: Technology, Market, and Complexity, 7(3), p.192.