Strategic Management - Boeing (Essay #2) (Essay Sample)

Strategic Management- Boeing
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Strategic Management
In order to start looking at the various strategic management methodology and analysis, it is important to first and foremost understand what strategic management is. In every organisation, the owners trust the top most management to come up with a plan that will maximize production of the said organization. Therefore, the top management has to do continuous planning of all the factors that affect the organization; continuous monitoring and evaluation of internal and external factors affecting the organization and analyzing these factors. They come up with major company goals depending on the available resources both internally and externally. These goals are meant to be the best in the field of operation so that the company can become the best in that field. This is what we call strategic management.
In strategic management, there are various factors to consider. These include:
The organizations mission, vision and objectives.
The micro and macro environment analysis
The industry analysis, that is the industry that the company falls under
The company’s capability analysis
Coming up with a proposed strategy and evaluating it
And, presenting the said strategic plan.
These factors define how a company will operate and whether it will come out on top. Throughout this paper, the task will be to explore some of the above factors for Boeing. Boeing is an airline that was started in Seattle, Washington by William E. Boeing. The task will involve exploring some of the environmental and industrial factors that have influenced its performance and have worked for it and against it.
Boeing- Mission
In the earlier days, the mission statement for Boeing was ‘To be the number one aerospace company in the world and among the premier industrial concerns in terms of quality, profitability and growth (“The Boeing Company, 2015 HYPERLINK "/view.asp?id=88896" ). They strive to become Aerospace leaders by working together as a global company. This year however, the Boeing Company even in their website do not seem to have a clearly defined statement though they have a verbiage which resembles a mission statement that states, ‘We are constantly re-examining our capabilities and processes to ensure that our company is a strong and vital as our heritage. In fact, our culture mirrors the heritage of aviation itself, built on a foundation of innovation, aspiration and imagination’. (Farfan, 2015 HYPERLINK "http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Boeing-Mission-Statement---Vision.htm" ) We can see that in both statements,
Boeing- Vision
The ultimate vision for Boeing is ‘People working together as a global enterprise for aerospace industry leadership’ (Boeing, 2015).
Objectives
The Boeing company objectives are:
Selling airplanes that are of the best quality and are fuel efficient. This is because of their sensitivity to environmental issues thus they are making eco-friendly airplanes which have engines that are advanced technologically
Growth is another objective. Boeing would love to reach an even wider market in order for them to beat competitors like the Airbus, Embraer, COMAC, and Mitsubishi aircraft just to mention a few. They want both the company and the members of the staff to grow. They have even sponsored some program for their members of staff.
To have a capable and focused management team which will ensure that they observe and follow the clear cut path to success. They believe that as the company’s leadership grows, so does the organization.
To be able to have financial strength by them being able to increase the company’s profitability margin. This has seen them be involved in the airplane manufacturing industry so that their aircrafts can dominate the airspace.
Macro Environment Analysis
In this industry, there are many factors that can affect the company growth and scope of operation. These include:
Political changes in a state/country
National and international laws
Financial stability of the people
Climate changes
Industrial competitors
Availability of resources both human and material resources
In this section I will use the PESTLE that is the Political. Economic, Social, Technological, Legal and Environmental analysis that have affected and can affect Boeing in having the competitive edge over their competitors.
The politics of a country greatly affect the functionality of an airline. When issues like terrorism, war, diseases outbreak occur, the airlines feel the change since they also must protect themselves and the members of their staff. For example, in 2011 when there was a terrorist attack in the US, many flight schedules and planes were affected. The global airline industry was seriously affected to an extent that they reported their first net profit in 2006, five years later (Schmidt, 2014) Also, most of the countries that have had war outbreaks have earned them a travel advisory issued against them. This means that even the people who risk to travel are not as many and sometimes they might even have to look for alternative routes to their destination. This causes a financial impact on both the economy of the two countries and of the airline industry. Consequently, Boeing was also affected here since they recorded a decrease in commercial flights. There was also an increase in fuel prices which contributed to the decrease in the company profits.
Economic factors also greatly influence the travel arrangements. It is said that the Millennials (those people born between 1980 and 1999) will and are greatly influencing the airline industry. We see that these generation will be at their prime in the next ten years and they make numerous business trips across the world. This means that also the population margin of a country greatly influences their economic growth and depending on the economic stability of a country, the number and quality of the preferred airline is determined. A country with a struggling economy will opt to use cheaper modes of transport which means that they might not even use air travel depending on the distance they want to travel to. The monetary policies set for a country also influence the economic growth since the more unstable they are, the less the business confidence of the individuals.
The social factors have also contributed to the growth of the airline industry. The Millennials again are seen here building their social networks globally which means that there is global social growth. Most Millennials will prefer to travel on business and therefore the airline industry is making sure that they are constantly changing to accommodate the generation change. The current business travel generation will decrease over the years which will give room to the millennials to also boom.
Technology is dynamic and this means that it keeps on changing by the hour. They are technological advances that have given room to cheaper and more eco-friendly materials that Boeing has seriously taken into consideration. Boeing is thriving to be the best aircraft manufacturer and have even released planes that consume less fuel and others that use special fuel that emits less environment pollutants (Carbon dioxide- CO2). There has also been technical advances in the reduction of noise. Boeing had even tried to come up with a high speed sonic cruise which unfortunately met some challenges and failed.
The whole world is governed by various laws and regulations. This is also a major factor when it comes to the airline industry. For example, in 1978 the US government removed all the already set regulations for airfares, routes and also the introduction of commercial airlines to a country. This in turn introduced competition among the airlines which came as a benefit to the passengers as fares were also reduced. There were also cheaper carriers that came in to the market. Some countries have laws that do not give room for competitive environment. Some of them have very strict laws that hinder even market entry for airlines like Boeing since some of them prefer their locally manufactured and assembled airplanes. Therefore the legal attribute is also determines a lot in this industry.
The environment also contributes to the success of an airline. People are becoming more and more aware of their environment and especially due to an increase in global warming, the sensitivity level to the environment has increased. As previously stated, Boeing are working constantly to improve on the factors that affect the environment such as noise and air pollution. Boeing try to build fuel efficient planes and with them having clients such as the army, they are also trying to come up with faster yet safer planes. Also, we can look at the environment in terms of looking at the competition. This is the environment that gives room for competition. This helps in the airline industry as the airline will constantly try to improve their airlines to best suit the client.
Industry Analysis
The main competitor in the aerospace/airline industry are Airbus and Northrup Grumman. Northrup does not manufacture their own planes however but they compete well in getting government contracts with Coach Guard, the Army, Navy and the Air force. Many of these companies team up with other airplane manufacturing companies in order to have a competitive advantage over Boeing in getting the government contracts. Here, we will assess the industry using the Porters 5 Model which looks at five main factors:
Rivalry- when companies compete, this can drive their profits to zero as they are looking to be the best in terms of rates and routes. It is said that when an industry has limited competition, it is termed as disciplined. This can be...