Boeing Case Analysis - Team 3

Boeing Case Analysis - Team 3 - Executive Summary Table of...

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Executive Summary Table of Contents Introduction/Organization Background External Analysis Industrial Organizational Model The industrial Organizational Model for above average returns has the core assumption that the firm’s external environment has more of an influence on the choice of strategies than do the firm’s internal resources, capabilities and core competencies. When analyzing Boeing through this model it is most important to analyze its key competitor: Airbus. The industry is basically a duopoly between Airbus Industries and Boeing Co. Both competitors offer airplanes in all categories based on size, range and technology. The companies compete for market share mostly based on strategic timing. The companies must forecast the market needs based on many unknowns such as what size airplane the airlines will need in order to carry an unknown amount of people, in an industry that is constantly changing. When airbus emerged as a main competitor by making midsize, cost efficient airplanes, Boeing had to analyze the industry in which it operated, using the I/O model for above average returns, to deal with its new rival. Boeing answered by analyzing its relationship with its suppliers. Boeing decided to outsource the design of its wings and parts of its fuselage to Japan, and outsource its fuselage panel work to an Italian company. This made 70 percent of the components of any airplane outsourced, leaving Boeing responsible for assembly.
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Outsourcing ended up being a profitable strategic move for other reasons. Outsourcing meant that the risks associated with an investment such as building an airplane are shared, allowing for more focus to be spent on marketing and supplier relationships. Also by outsourcing to Japan Boeing gained support from Asian Airlines. Also beneficial is the fact that Japanese and Italian firms are subsidized by their governments. Although sharing risk also means sharing profit, Boeing made an excellent decision using the I/O model to deal with the entry of Airbus into the industry, and how to compete efficiently in a global economy. Boeing also must continue to analyze the external environment in which it operates to maintain positive relationships with all of its stakeholders. Opportunities/Threats An opportunity for a firm is defined as a condition in the general environment that, if exploited, helps a company achieve strategic competitiveness. A threat, on the other hand, is a condition in the general environment that may hinder a company’s efforts to achieve strategic competitiveness. Boeing has taken advantage of several opportunities that have kept it competitive in the aircraft industry. One example was that Boeing recognized the need for long-range capabilities and direct connections in the aircraft market. It developed the 787 to meet these needs, and initial trends indicate support for these strategies based on current orders for the 787. The major threat to Boeing is undoubtedly Airbus, its main competitor. One threat Airbus
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Boeing Case Analysis - Team 3 - Executive Summary Table of...

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