Influence of Recent Economic Trends
The Boeing company (Boeing) has done a good job of keeping sales and market share high through the recent economic downturn. Much of this has been due to the increase of demand in air travel internationally. In 2011, about 50% of Boeing’s revenues came from international markets (Boeing, 2011). Countries like China and India have a growing middle class, with greater opportunity for travel. With this greater demand for travel opportunities in these areas, new commercial airlines have started business. The inception of new airlines has meant new contracts for Boeing. These increases in foreign sales have greatly helped Boeing deal with losses from the economic downturn here in the US.
Another economic trend affecting the airline industry it the increased cost of fuel. Boeing has tried to tackle this issue head on by developing new products that will increase fuel efficiency. Boeing hopes that these new products will increase its sales and market share. One project is the Boeing 737 MAX. This is a new version of the original single-aisle 737 has new, more fuel-efficient engines (Boeing, 2012a). The 737 MAX will be 10-12% more fuel efficient than the original, and will cost significantly less to operate when compared to competition aircraft of the same size. Another project is the new 787 Dreamliner. The 787 is 20% more fuel efficient that comparable aircraft yet travels at speed similar to the fastest airliners (Boeing, 2012b). Adapting Strategy
Boeing has taken great strides to improve its internal structure and processes in the last eight years. At the heart of this improvement is what the company calls the “One-Boeing” concept (Thompson, 2012). This program was started by current CEO Jim McNerney to bring what were fractured segments of the company and integrate them into a single, high-performing unit. When McNerney took over as CEO the company was full of redundant facilities and divided loyalties, all products of the many aerospace acquisitions that Boeing has made (Thompson, 2012). The first thing the “One-Boeing” concept did was to change the structure of the company to eliminate these problems. To do this, Boeing found that it could not just attach its own culture onto the acquired companies and expect instant harmony. Instead, Boeing has looked to integrate the combined cultures of all its different parts into one culture (Thompson, 2012). It has taken many years, but has paid off in the end. Hopefully, this program and the lessons learned for its implementation will help in the future as Boeing continues to acquire other aerospace firms to increase its own capabilities.
A second part of Boeing’s “One Boeing” strategy is the integration of all its technology development into one plan. Boeing calls it their “Enterprise Technology Strategy” (Boeing, 2008). Historically, each of Boeing’s many sections pursued technological development on its own. This led to many redundancies, all of which added unnecessary costs. This new strategy will bring in experts from all of Boeing’s different sections to help the company integrate technology as a whole. This will be done while continuing to concentrate on bringing value and worth to the products Boeing sells and to Boeing’s customers (Boeing, 2008).
Boeing’s biggest strategy shift is most likely its determination to be a global company (Seil, 2011a). This strategy has affected all of Boeing’s operations. In each of its international locations, Boeing has tried to develop relationships with local suppliers, universities, communities, and available research talent. Boeing has also started sending many of its American employees to work in these countries, enhancing their ability to work internationally. Altogether, Boeing currently has more than 8,500 employees working outside the US (Seil, 2011a). Boeing has also put emphasis international research and development. International expenditures on research and development as a whole...
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