Michael Porter’s 5 Competitive Forces
Boeing is a world leader in the aerospace industry. At one point they were the highest seller’s commercial aviation with no competition in sight. That all changed, and soon Boeing had to change. Background
Boeing was founded in 1916 by William Boeing. The company started by making small seaplanes with low top speeds. The first customer of Boeing was the New Zealand government. They used the planes for the countries mail, and to train pilots. The real pay-off was when the United States entered World War I and ordered a large amount of seaplanes. Between World War I and II, they became one of largest manufacturers by supplying the Air force with fighter planes. Skipping ahead to 1985, we see the start of record breaking sales for six years in a row. By 1992 Boeing had employed 150,000 people with net earnings of 1.55 billion dollars. But, in 1994 they had to cut those 150,000 employees to 126,000, and earnings down to 856 million. An economic slowdown, the Gulf War, competitors, and outdated business models were all contributors to this downturn. Problem Statement
Boeing is a world leader in Aerospace technology, development, and manufacturing. After year upon year of growth, Boeing was hit with adversity which threatened their position within the market. Boeing had to come up with a new business plan so they could sustain current and future changes with the aerospace industry, and allow them to stay a strong company in a mature industry. Internal SWOT
* Boeing has extensively detailed knowledge and information about its customers. * Have a healthy core business with new products and services. * Large scale integrations system.
* Boeing does have a history of production delays.
* The need to develop a plan to retrofit existing planes with e-Enabled technology. * High development costs for technology and equipment.
* Replace old aircraft with new ones that have better technology. * They are capable of easily developing new designs for aircraft and implementing them with ease through their extensively integrated technology.
* Difficulty differentiating itself from other companies. * More competition means that there is more pressure to keep costs down. * Convincing customers that they are a service provider.
* Market wise they are one of the largest aerospace manufacturers in the world. * Boeing is able to offer a comprehensive package of services and solutions that can address airline operations across the board. * Boeing has proven their longevity in the market, and that bodes well for them moving forward. * Boeing also has their name and is a well-known aerospace technology company. * Outsourcing has allowed Boeing to become more competitive.
* Historically Boeing has relied heavily on Government subsidies. * Inability to adapt to a changing environment.
* A matured industry making differentiation difficult
* Boeing can of course increase its market share with this new technology. * Sell and promote its e-Enabled technology that adds value to a business. * Develop new services that can integrate with the e-Enabled technology. * Expand into new markets such as China or India.
* There is expected to be increased air traffic; both passenger and cargo in the next 5 years.
* Increasing fuel prices along with inflation pose threats for Boeing. * There is adequate and capable competition, especially from Airbus. * Airbus is able to match everything Boeing does, but Airbus sells their products for cheaper prices due to extensive outsourcing. * Some customers are pushing ahead and are capable of taking steps to e-Enable themselves...
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