* By outsourcing, Boeing is able to reduce costs and generate sales. Outsourcing to countries such as India can give the company access to cost-effective services and get access to specialized skills and services. * Boeings’ strategy allowed entry into two of the largest and fastest growing airplane markets (china and India). * It gained the ability to distribute some of the risks associated with large investment required to build an airplane. * By outsourcing LCA manufacturers are able to share risks and focus on marketing and supplier relationships. * By developing component of the Dreamliner in Japan, Boeing also acquires support from Asian air lines through the purchase of planes, aided by Japanese government incentives. * Another indirect financial benefit to Boeing is the fact that Japanese and Italian companies are all subsidized by their governments.
Disadvantages of Boeing’s outsourcing strategy
* The company’ employees including engineers are not happy and disagree with the company’s outsourcing strategy. * The Japanese suppliers may use the technology shared by Boeing to design their own airplanes. * Delay of parts can also be a disadvantage of outsourcing this means some companies might not deliver the parts to build the airplane on time. * Loss of control of property and management.
* Reduced the quality of the product.
Do you agree with the company’s offload parts production?
* Yes, I agree because outsourcing is the global trend that happen in many industries. With the offload of some parts of production, Boeing can focus on their core competencies and increase the production efficiency. Moreover, Boeing could have the opportunity to develop or exploit new market with offloading some parts of production to foreign partners.