BUS-499 CAPSTONE
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Assignment 5: Capstone Due Week 10 and worth 400 points Select a publicly traded corporation for which you would like to work or are currently working. Research the corporation on its own Website, the public filings on the Securities and Exchange Commission EDGAR database (http://www.sec.gov/edgar.
Answer
Introduction
The Boeing Company, after its union in 1997 with McDonnell Douglas and procurement in 1996 of the safeguard and space units of Rockwell International, turned into the most significant aviation organization in the world (Weiss, 2017). Its history reflects the historical backdrop of aeronautics. Boeing, the American aviation organization, is the world biggest and the first producer of business aviation transports. It is the leading manufacturer of the military airplane, helicopters, space vehicles, and rockets, a standing fundamentally improved with the organization’s obtaining of the aviation and safeguard units of Rockwell International Corporation in 1996 (Boeing General Information, n.d.). The experience of skilled Boeing managers helped produce the world’s most prominent aviation organization in history.
Boeing’s Mission, Vision, and Stakeholders
The Boeing organization’s motivation and values are intended to rouse and concentrate all employees on a shared future and to reaffirm that, together, they can address the difficulties that lie ahead (Lance, 2005).
The company mission statement is “Facilitate the partnership of the International Association of Machinists and Aerospace workers and The Boeing Company in order to provide innovative solutions that improve the Health and Safety, Quality, Productivity and Employee Development in the workplace.” The statement presents the generic strategic approach that assists the company’s advancement and reaches its corporate vision (Babnik, Breznik & Trunk, 2014). The mission statement replicates the company’s vision statement on its business aviation transports. Also, the company’s mission tends to protect, explore and inspire the world through Aerospace Innovation (Lance, 2005).
The Boeing Vision statement is “Recognized as the premier labor/management partnering organization creating high-value benefits for the IAM represented employees and the Company.” The statement is a manifestation of the organization’s commitment and principles, intended to motivate and emphasis all workforces on a shared future and to reiterate that, together, they can address the difficulties that lie ahead (Boeing A Foundation, n.d.). The company is best in aerospace and enduring global industrial accomplishments. The vision outlines what the corporation can do for the people based on the value of the company’s services and products. Both the mission and the vision statement are tailored towards meeting the company’s success as a global aviation transport, besides empowering its customers.
Boeing is centered on conveying significant and enhancing financially related execution programs (Smith, 2018). The company showed a culture that values continuous change and development. They are driving productivity with their suppliers while concentrating on normal execution that conveys unmatched value to their clients. According to Grünig & Kühn (2015), shareholders play significant roles in the operations, financing governance, and control aspects of a business. Boeing’s shareholders provide the general notion of the strategic direction that the company aims to follow in association with the mentioned roles the shareholders in the company.
Boeing Five Forces of Competition
Boeing opportunities are holding up in the aviation market that worth trillions of dollars (Pratap, 2017). Its place in the commercial, defense, space and services markets is formidable. With some remarkable foundations of competitive advantage separated from its capacity for innovation, Boeing is ready to convey profitable growth and higher trade in this decade (Pratap, 2017). As affirmed by Porter (2008), the company’s forces of competition emanate from the strategical concern of addressing the issues that have an impact on the company. Porter tends to display the forces of Boeing analysis through the procedure of Porter’s big picture.
The Bargaining power of the Suppliers. This force is considered low. This significance originates from the reason that in case the of aircraft manufacturers, it has been realized that both of that the company makes outsource to a large number of suppliers throughout the globe. The company has nearly 150 supplying firms of its aircrafts parts. The company has the capability of negotiating with the price of supplies due to its economies of scale. Boeing’s providers are a few understood organizations like General Electric, Honeywell, UTC Aerospace, Rolls Royce, Triumph Group (Pratap, 2017). It depends intensely on its providers for the raw material required to create the world-class and innovatively the most incredible aircraft.
The Bargaining power of the Customers. This competition force is regarded rather mild. The mildness originates from the following point of views:
- The customers purchase in bulk. Thus resulting in a high bargaining power of the buyers.
- High capital investment by the buyer in the purchase. The customer includes a long-term contract with the seller and thus low bargaining power.
- The high cost of switching. Resulting from the technological factors and the long-term contracts included, and the low bargaining power (Dobbs, 2014).
In any industry, the power has moved under the control of the clients. Presently, organizations are giving themselves to conveying better deliver value to the clients and different stakeholders (Pratap, 2017). The customers of Boeing incorporate a few noteworthy and minor carrier’s brands around the world including Delta Airlines, Lufthansa, and FedEx. The government, military, and space agencies are additional clients of Boeing.
The Threat of Substitutes. This competition force is regarded mild. The threat for aircraft manufacturing is negligible as people prefer aircraft mainly due to the time factor. Boeing threat of substitutes is low claiming because there are quite a few substitutes for aircraft and afterward the quantity of plane manufacturers is not high on demand (Pratap, 2017). Barely any competitors can give matching quality like Airbus or Bombardier. The drastic developments in bullet trains and cars might affect the aircraft manufacturing business in the coming future.
The Threat of New Entrants. This competition force is regarded low. The threat of new entrants is low simply because of the vast amount of fixed cost of competition. Such factors as high capital investment, extensive R&D activities and a huge level of technological know-how creates a high entry barrier thus lowering the new entrance threat. The danger of new contestants is low in the aircraft’s business. To convey extraordinary quality, they must put resources into technological development (Pratap, 2017). Every one of these factors alongside the regulatory environment and the abnormal state of control adds to consistency expenses and make the entry in the aviation industry very difficult and troublesome.
Level of Competitive Rivalry. This threat is regarded to be high. The level of competitive rivalry is driven by no certain market leader, slow industry growth, the barrier to market exit and undistinguishable strategies from the critical players of the industry. The industry is widely a duopoly, thus resulting in a low-profit-margin. The critical players in the competitive rivalry include Boeing, Airbus, Bombardier and Embraer (Pratap, 2017). The Boeing and the Airbus industries are the markets leading companies with the massive piece of the overall industry. Alternate brands are pushing the line of value and development. The primary factor that somewhat directs the force of aggressive competition is the quality and image of Boeing. Its innovation, technology and budgetary quality likewise make it exceptionally competitive.
Boeing SWOT Analysis
Business people, likewise used by nonprofit associations, and to a lesser degree, people for individual assessment utilized the Boeing SWOT. Moreover, it can be used to survey activities, products or projects (Bhasin, 2017). According to Ahmed et al., (2006), the Boeing Company have had standouts over the past years, a slightly stretched valuation by historical values. In fact, the company’s stock has been recorded as among the Dow’s best performers today, inclining roughly by 75% since the year 2014 began, credits to the strong industrial essential strategies. The brief outline below gives a look at the company’s business and performance, through its SWOT analysis, with the aim of evaluating its strengths, weaknesses, opportunities, and threats.
Strengths
Strong Market Position. Boeing is one of the most significant aviation organizations in the world. The company is the leading maker of the defense, space and security frameworks; and business airplanes (Bhasin, 2017). A healthy market enables Boeing to accomplish economies of scale and enhances organization’s brand image.
Revenue. The growth in income was fundamental because of the delivery of airplanes (Bhasin, 2017). Subsequently, expanded operational effectiveness has helped Boeing increment its income and therefore, profits. The company maintains a healthy balance sheet – Financial Strength: A++, which is committed to returning most of its cash from operations to shareholders in the form of either quarterly dividends or stock buybacks. According to the management’s preferences, is steered towards repurchases – which are set to exceed $3B this year alone, since they would likely afford to maintain the company’s financial flexibility.
The KC-46 Tanker Program. The triumph of this program, based on the 767 jetliners, is backing up the results all through the company’s otherwise slow-moving Defense, Space, and Security segment, along with cost cuts and gains in the fast-growing emerging markets. Remarkably, in the year 2012, the program was renowned the winner in a key competition that made it get picked by the U.S Air force to replace the aging KC-135 Strat-tankers.
Product Line. Boeing is consistently improving its product line to meet the client needs (Bhasin, 2017). Boeing has been concentrating on economic powers on sustainable fuels that assist in decreasing emission and products that are earth-friendly. The company experiences a robust commercial order book, originating from the fact that there exists an abrupt demand for new airplanes – the Boeing 787 Dreamliner and its variations, coming out of the last recession. The company also supports various services to such organs as NASA, the military, and the commercial airline industry.
Weaknesses
Work Issues. Boeing has 37% of its aggregate workforce as a significant aspect of a worker’s union which causes occasionally work stoppages (Bhasin, 2017). These influences on productivity transmit and turn into an issue. The work stoppages have been spotty at times, especially with regard to the significance of 787 programs that have gotten off to a rough start. However, the company remains committed to settling the menace as things so far seem to be getting better.
Dependency on United States Government Contracts. The United States government shapes a significant piece of Boeing’s total sales (Bhasin, 2017). Be that it may, long-haul government contracts are liable to different political and economic influences, and over-reliance on the United States government can be an undermining factor.
Suppliers Bargaining Power. Boeing is reliant on some of the providers for producing raw materials and integrated product components (Bhasin, 2017). These make the Boeing weak as any of the primary providers end up inaccessible, the profitability performance of the company will be affected.
The High Rate of Research and Development Spending. As much the company tends to maintain spending in check, R&D expenditures remain high – $4.1 billion, or 5% of sales annually. The high rate of spending tends to squeeze margins, thus penalizing the bottom line. Additionally, the pressures may ease over the next few years, as the company predicts even higher spending levels in years to come, while the company actions to influence its popular 737 and 777 platforms.
Opportunities
Demand for Commercial Airplanes. Passenger and customers numbers are growing, and the need for new commercial planes are on the high market (Bhasin, 2017). After crashing during the financial crisis and recession, the company has been in a powerful recovery mode over the last few years in meeting the demand expectations. Additionally, carriers, are looking to secure new planes as quickly as possible these days, rather than, as has been the historical norm, defer a bulk of their deliveries. The demand, therefore, advocates that the company will endure having the wind at its back for some time to come.
Military Market. The aviation and defense market is expanding globally (Bhasin, 2017). These give surprising chances to the organization to support income in the future.
International Expansion. Boeing should hope to extend its operations globally by developing naturally and human-made products (Bhasin, 2017). Boeing has already connected with different organizations, for example, General Electric, Lockheed Martin, Raytheon, and so forth for new projects. Through the introduction of the 787 Dreamliner platform, the company has been overwhelmed by its share of delays and performance issues. However, with various adjustments, the platform rejoices the revolutionary long-range, fuel-efficient jetliner that is considered the first jet to use mostly composite components.
Threats
Stepped-up competition. Boeing faces stiff rivalry in every one of its classifications from numerous global organizations around the world. The company experiences such rivalry from the Bombardier’s new C-Series jets and the C919 family of airliners produced by the Commercial Aircraft Corporation of China (COMAC). These companies compel the Boeing Company and leave it with no option but to further boost its R&D investment in the eve of upgrading its products.
Defense Expenses. The U.S defense reduces it spending, which continues to hamper results across the Defense unit and, Space and Security division. The situation ceases to reverse anytime soon, especially when considering the push by the Washington state for more budgetary cuts.
Boeing Exploit, Their Strength, and Opportunity Minimize Weakness and Threats
The most effective strength controlled by Boeing is its capacity to take the change in a market that is continuously evolving (Boeing SWOT Analysis, 2014). The type of products delivered by the Boeing Company requests the utilization of cutting-edge innovation while keeping up all the best possible shields for security, direction, and profitability (Boeing SWOT Analysis, 2014).
Strength. One of Boeing strengths they can exploit is the production of a variety of products to the upkeep of the demand of the customers, with an outstanding global image that is everywhere throughout the world (Boeing SWOT Analysis, 2014). These diversifications of products categories and services give the organization strength, for example, business airplanes, defense systems, military, rocket system, space, and communication.
Opportunity. The opportunity that Boeing Company can exploit is other products such as joint military defense system, space missile systems, and communication to be produced and to satisfy the requirements of quality products that must lead the organization on the market demand (Boeing SWOT Analysis, 2014).
Weakness. The organization limits the disadvantage by diminishing the competition between manufacturers, give better costs, and reduced the operational value and production plan (Boeing SWOT Analysis, 2014). One more of the weaknesses of the Boeing Company is the highly innovative work on research and development (R&D) spending, which influences the organization’s net income.
Threats. One of the risks to the company can limit reducing the dependability of the United States government’s products controls and national defense contracts (Boeing SWOT Analysis, 2014). Likewise, another threat that the Boeing Company had is the excessive additional overtime employee work, which is one of the risks to the maintainability of the organization.
Boeing Industry Competitive and Profitability Strategies
Competitive Strategy
The Boeing Company may utilize the following strategies to exploit its competition: first, broad aircraft portfolio to fulfill necessities of customer airlines no matter how they look at it and pushing great innovation, and second, electronic fly by wire procedures to decrease the numbers of pilots required (Schmidt, 2014). Also, creating solutions for enhancing the cost-effective exploitation of their planes and renting and financing services to clients and partnerships with foreign government-supported projects and broad campaigning, political posing in the national and global forum (Schmidt, 2014).
Profitability Strategy
The organization is re-building itself to end up more adaptable and useful in outlining and building jetliners, utilizing automation innovation, 3-D printing, and other different methods. The organization is chipping away at decreasing the expenses from their providers to acquire higher income (Schmidt, 2014). The aeronautic trade sees developing open doors in the Asia-Pacific, Middle East, and African regions. Rising global tensions would make an interest in security products for the Boeing industries. The satellite demand makes benefit accessible entries for the organization. The increase in incomes has helped the organization environment harmful industry conditions.
Boeing Communication Strategy
Communication Plan. Boeing communicates its values and strategies by electronic means of communications and passes messages to its people through official statements, signs, and contraptions (Saeed, n.d.). Boeing utilizes three electronic structures to convey its partners: organization’s website, intranet, and extranet. The intranet is frequently used to speak with internal clients, i.e., workers. Through this, the organization conveys its beliefs, qualities, and focuses on accomplishing its mission and vision statement. Through the intranet, the employees receive leadership messages, changes in business acts, prizes, derivations, and other vital declarations. Boeing communicates data remotely to existing and potential clients electronically through the website. Another source of electronic correspondence is extranet which is regularly utilized by the organization to relate to the suppliers (Saeed, n.d.). Boeing employs extranet to observe, control and target potential customers.
Boeing Corporate Governance
The Boeing Board’s Governance, Organization and Nominating Committee occasionally surveys the Company’s corporate governance standards and current practice (Boeing Governance, Organization, 2017). Its workers lead the Boeing Company, managers, and corporate officers drove by the chief executive officer (CEO), with control from the Board of Directors. The Board has approved a Code of Ethical Business Conduct to center the Board and every Director on territories of good risk give direction to enable them to keep on efficiently perceive and manage ethical issues. The company improves existing mechanism to proceed with the detailing of unethical conduct and help to continue to cultivate and maintain a culture of honesty and responsibility (Boeing Governance, Organization, 2017).
Internal Mechanism. Boeing inside mechanism integrates oversight of management, independent interior audits, the structure of the top managerial staff into levels of responsibility, segregation of control and policy advancement (Davoren, n.d.). These controls screen the progress and activities of the corporation and take corrective actions when the business goes off track. Keeping up the company’s more significant internal power, they serve the internal goals of the corporation and its inner partners, including workers, directors, and proprietors.
External Mechanism. Those outside an organization control Boeing external control mechanism and serve the destinations of elements, for example, controllers, governments, exchange associations and money related establishments (Davoren, n.d.). These goals incorporate sufficient obligation administration and legitimate consistency. Outside systems are frequently forced on associations by outer partners in the types of association contracts or administrative rules.
Boeing Leadership Effectiveness
To improve the values of leadership and responsibility within the company, Boeing outlined its beliefs for leaders (Boeing Redesign for Workplace, 2017). These expectations are known as the leadership attributes: sets high expectations, inspires others, finds a way, lives the Boeing values, and delivers results. Boeing has a long belief in aerospace governance and innovation. The organization keeps expanding its product line and services to meet rising client requirements (Boeing Redesign for Workplace, 2017). The administration has ensured that the company has a range of capabilities that includes creating new, more efficient commercial airplane; designing, building and integrating military platforms and defense systems; creating advanced technology solutions; and arranging innovative financing and service options for customers (Boeing Redesign for Workplace, 2017).
Recommendation. The leadership needs to think and invest heavily on innovations on new technology that can be used to create cheaper models and still maintaining high quality (Cable, 2010).
Boeing Bottom Line Ethical Responsibilities
The bottom line effects on the Boeing moral duties influenced the business reputation and future contracts with the government (Chandler, 2003). If the organization disregarded the whole enterprise risk of unethical behavior, this could cut down the entire organization. Boeing has not gone suitably far; the organization’s severe activity is in sharp difference to the way different organizations have managed moral outrages (Chandler, 2003).
Unethical Examples. The Justice Department had charged $615 million punishment charges against the Boeing Company for the result of an investigation over the uncalled-for procurement of restrictive archives from an opponent, the Lockheed Martin Corporation that Boeing workers used to try to pick up government rocket propelling business (Wayne, 2006). A government investigation concerning Boeing’s unethical conduct is the procuring of a previous Air Force official who had administered Boeing contracts while working at the Pentagon (Wayne, 2006). Another charge, which Boeing said would be $300 million to $500 million, identified with delays in its $4 billion Airborne Early Warning and Control program for Australia and Turkey. The program, known as Wedgetail in Australia and Peace Eagle in Turkey, comprises of equipping Boeing 737-700 flying machine with cutting-edge radar systems (Wayne, 2006).
Conclusion
In conclusion, while these shares seem, by all accounts, to be on the expensive side, there is a great deal to like about the Boeing story, from the organization’s fantastic finances and rising free income to its booming business and sensibly stable defense unit. The organization can convey and create an advanced airplane that meets the essentials of present-day society and customers. These are to satisfy the market interest for business commercial planes. The Boeing 787 Dreamliner is one of the most recent airplane models that offers the world’s a standout amongst the most exceptional in-flight experience. Without a doubt, Boeing’s strengths and opportunities hope to exceed its shortcomings and threats at present. Therefore, they trust that this segment still has a place in diversified value portfolios.
That said, we have to anticipate that the company will be able to counterbalance the top-line breezes, at least moderately, through the inroads and the rearrangement of its overhead. The company has so far made achievements that are steered towards beefing up its multinational business – external sales incline to be very high margined, that currently constitute around 30% of the defense segment’s total revenues and 45% of its work accumulation. What’s more, Boeing Company maintains its overall objective of ultimately shedding nearly $3.1 billion from the cost structure.
In sum, as much as the shares tend to be on the costly side, there exist various-like about the company’s overview, ranging from the company’s good finances and the increasing free cash flow to its thriving viable business and sensibly steady defense unit.
References
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