Internal and external factors analysis of Boeing

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Firm, Industry, and Environment

Description of firm and environment

The Boeing Company is the world's leading aerospace company and a top US exporter in terms of sales. Boeing provides products and services to customers in 145 countries.

The Boeing Company (Boeing Corporation) is, perhaps, best known for its line of civilian aircraft, the most famous being the Boeing 747 Boeing is the world's second leading weapons manufacturer and the main contractor for the Space Shuttle.

The Boeing Company operates in four principal segments: Commercial Airplanes, Military Aircraft and Missile Systems, Space and Communications and Boeing Capital Corporation (BCC). Commercial Airplanes operations principally involve development, production and marketing of commercial jet aircraft and providing related support services. Military Aircraft and Missile Systems operations principally involve research, development, production, modification and support of military aircraft, both land-based and aircraft-carrier-based, as well as helicopters and missiles. Space and Communications operations principally involve research, development, production, modification and support of space systems, missile defense systems, satellites and satellite launching vehicles, rocket engines and information and battle management systems. BCC is primarily engaged in the financing of commercial and private aircraft and commercial equipment.

Among the models Boeing has produced are the B-17 Flying Fortress, 1935; the B-52 Stratofortress (1952); the Chinook helicopter (1961); the first jetliner, the Boeing 707 (1957); the jumbo jet or Boeing 747 (1969); the jetfoil (1975); and the 777-300 jetliner (1997).

The company was founded in 1916 near Seattle, Washington, by William E Boeing, as the Pacific Aero Products Company. Renamed the following year, the company built its first seaplane and in 1919 set up an airmail service between Seattle and Victoria, Canada.

Boeing bought US aircraft manufacturers McDonnell Douglas in 1997 for $16.3 billion, to create the world's largest aerospace company, manufacturing about three-quarters of the world's commercial airliners. The same year it unveiled its 777-300 jetliner, the world's longest and largest twin-engine aircraft of its kind. The company employed 198,900 people worldwide in 2001.

The Boeing Company is the 800-pound gorilla of US aerospace. The world's largest aerospace company, Boeing is neck-and-neck with Airbus as the #1 maker of large commercial jets, and is the #3 defense contractor behind Lockheed Martin and Northrop Grumman. It has two major segments: Commercial Airplanes and Integrated Defense Systems. Boeing's commercial aircraft include the 7E7 Dream liner (due in 2008), 767, 747, and the 737; military aircraft include the F/A-18 Hornet, the F-15 Eagle, the C-17 Globe master III transport, and the AH-64D Apache helicopter. Boeing's space operations include communications satellites, Delta rockets, missiles, the International Space Station, and the Space Shuttle (with Lockheed).

The company was founded in Seattle by William E. Boeing on July 15, 1916, together with George Conrad Westervelt, a U.S. Navy engineer, and was named "B&W" after their initials. Soon the name was changed to "Pacific Aero Products" and, in 1917, the company became the "Boeing Airplane Company." William E. Boeing had studied at Yale University and worked initially in the timber industry, where he became a rich man. There he also acquired knowledge about wooden structures which was later revealed to be of value for the design and assembly of airplanes.

In 1927, Boeing created an airline, named Boeing Air Transport (BAT). A year later, BAT, as well as Pacific Air Transport and Boeing Airplane Company merge into a single corporation. The company changed its name to United Aircraft - Transport Corp. in 1929 and acquired Pratt & Whitney, Hamilton Standard Propeller Company, and Chance Vought. United Aircraft then purchased National Air Transport in 1930. The Air Mail Act of 1934 prohibited airlines and manufacturers from being under the same corporate umbrella, so the company split into three smaller companies - Boeing Airplane Company, United Airlines, and United Aircraft Corporation, the precursor to United Technologies. Bill Boeing sold his shares, as a result.

Discussion of competitive environment

This is an extraordinarily dynamic time in the aerospace industry ? with distressed conditions in some areas and robust growth in others. The commercial aviation market is experiencing its most severe downturn ever, and recent airline announcements confirm that recovery in the United States will be slower than many had expected. Conversely, defense, intelligence and noncommercial space markets remain strong, with significant growth expected in several key areas.

In 1996, Boeing adopted a new strategy. The new CEO wanted to excel in all principal aerospace markets to reduce dependence on the cyclical commercial airplane market. They set out to create a diversified aerospace company. And through a series of mergers and acquisitions of key defense and space businesses felt that they had accomplished that task.

The tragedy of September 11 seriously affected Boeings airline customers. Orders were delayed or canceled and new orders for airplanes were nonexistent for a time. Production was cut in half for a time and has still not recovered to pre 9-11 levels. In the mid 1990s Boeing committed to implementing Lean Manufacturing which allowed them the flexibility to cut their production rates, shorten flow and reduce unit costs at the same time.

Boeing is in a dramatically changed business environment. Their commercial markets remain affected by the economy, by the financial markets and by the military action in Iraq. The slow recovery of both air travel and airline profitability continues to dampen demand for new airplanes and related support. Trends vary among regions and types of carriers. But overall the downturn is severe, particularly with major U.S. carriers. Boeing's defense, intelligence and noncommercial space markets remain extremely strong. They are very well positioned in these markets as a leading provider of both existing and emerging transformational systems.

The line of demarcation between how Boeing and Airbus are investing for the future could not be clearer. While Airbus is investing in a gigantic super jumbo, Boeing is investing in developing the Boeing 7E7, a highly efficient 200-250-seat airplane that will provide nonstop service between more city pairs. Boeing's belief is millions of busy people, given a choice, will prefer to fly directly to their destinations rather than endure lengthy stopovers at major hubs like Narita and Heathrow.

Two new Boeing businesses ? Connexion by BoeingSM and Boeing Air Traffic Management ? have the potential to transform the future of flight. For passengers on long-distance flights, Connexion will make the airplane seem more like the office or home, allowing passengers to be connected ? any time, anywhere. Just as important, it will facilitate communications between the airplane and the ground regarding plane maintenance and security, passenger health and inclement weather. Two major international carriers began piloting this broadband service in early 2003. A new global air traffic management system ? proposed by Boeing ? is receiving increased attention and focus in world capitals. It would dramatically enhance the efficiency, capacity, security and safety of the current ground-based traffic control system.

Although the downturn in the commercial airplane market has affected Boeing Capital Corporation, Boeing continues to believe in the long-term value of commercial aviation to the global economy and remain committed to their finance business. One major concern with Boeing is the financing that Boeing provides to their customers. This is a very risky venture and is not adequately addressed in any literature or documentation on the company.

In the defense arena, there are tremendous opportunities for market-shaping initiatives. The United States is now embarked on a major defense buildup. More than that, the senior leaders of the U.S. armed forces are embracing sweeping change ? or "transformation" ? as a strategic imperative in the post-Cold War, post-September 11 defense environment. They talk of "integrated battle space" ? a future state in which sensors and space-based communication systems allow our forces to know with precision where everything is in relation to everything else on Earth, in the air and at sea. In a networked world of interoperable platforms and systems, sensor-to-action times are reduced from days, or hours, to minutes, or even seconds. And it is not just commanders who will possess true situational awareness, but every soldier, sailor, pilot and crew, and marine in the battle space.

Boeing is working to be established as the leading industry partner for the U.S. military's transformation. Boeing sees it as critical that they become established as a premier provider for three key defense initiatives:

? Future Combat Systems for the Army
? Joint Tactical Radio Systems, a revolutionary communications system for the Army
? FAB-T, or Family of Advanced Beyond-Line-of-Sight Terminals for the Air ...