The Boeing Company is the largest company in the sphere of aerospace on the planet and the main producer of commercial airplanes and defense, space, and security systems. Being the leading US exporter, the company maintains airlines in the United States and allied government customers in over 150 countries (The Boeing Company, 2015). According to the Boeing Company (2015), its products and services comprise commercial and military airplanes, weapons, satellites, defense and electronic systems, advanced communication and information systems, launch systems, as well as performance-based training and logistics. As a result, Boeing has become the leading commercial jet manufacturer in the United States and the second largest one in the world (Schmidt, 2015). However, despite the successful operation of the company, it has certain weaknesses and faces potential threats. The paper will analyze the Boeing Company, provide an overview of its products, marketing policies and strategies, financial statements, strengths and weaknesses, threats and opportunities, as well as offer recommendations for its upcoming progress.
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As the largest international aerospace corporation, the Boeing Company offers a variety of products and services. The primary segments of the company’s operation include commercial airplanes, Boeing Capital (BCC), as well as defense, space, and security (BDS) department consisting of the Boeing Military Aircraft (BMA), Global Services & Support (GS&S), and Network & Space Systems (N&SS) segments (The Boeing Company, 2015). According to the Boeing Company (2015), the commercial jet aircraft product line is represented by the 737 narrow-body model and the 747, 767, 777, and 787 wide-body models. The company’s BDS segment controls the design, production, modification, and support of rotorcraft, military fixed-wing aircraft, satellite systems, and weapons (Schmidt, 2015). The distribution centers of the Boeing Company are strategically located throughout the world and connected by modern digital systems to provide immediate parts delivery (“Marketing Plan,” n.d.). Up-to-the-minute inventory data are accessible on demand to maintain an optimum productivity of Boeing Fleets operation. Thus, the company manufactures a wide range of aerospace products that are distributed and sold all over the world.
The financial year 2015 was a profitable period for the financial development of the Boeing Company. Apart from the fact that the company’s total revenues rose by 6% to a record of $96.1 billion, Boeing also received new orders for its market-leading products and services for $83 billion (The Boeing Company, 2015). As stated in Boeing Company 2015 annual report, the corporation’s core operating earnings constituted $7.7 billion, while the operating cash flow rose by 6% to $9.4 billion (The Boeing Company, 2015). To follow its balanced cash deployment strategy, the company repurchased 47 million shares for $6.8 billion and paid $2.5 billion in dividends (The Boeing Company, 2015). In December 2015, the Boeing Company’s board of directors increased the company’s share repurchase authorization to $14 billion and raised the quarterly dividend by 20% (The Boeing Company, 2015). According to Boeing Commercial Airplanes report, the corporation earned a record revenue of $66 billion in 2015 due to the industry-record of 762 deliveries that expanded its international market-share lead within the last four years (The Boeing Company, 2015). However, in April 2016, Boeing announced earnings that did to meet the expectations of analysts, although the revenues collected from the higher deliveries of military aircraft were better than it was expected (Balakrishnan, 2016). According to Balakrishnan (2016), the company’s first-quarter earnings per share constituted $1.74, while during the same period the previous year, they constituted $1.97. Therefore, the quarter revenue of $22.63 billion was compared to the previous year’s figure of $22.15 billion (Balakrishnan, 2016). These figures do not coincide with the analysts’ prognoses of $1.82 per share and $21.44 billion revenue for the quarter (Balakrishnan, 2016). However, the actual company’s indexes do not critically lag behind the financial forecasts, meaning that the yearly revenues of Boeing may still correspond to the expected ones.
To maintain its leading position, the Boeing Company continuously develops different strategic models of operation with respect to local and international market peculiarities. One of the methods employed by Boeing is the diversification strategy, which presupposes the manufacture of different products, namely airplanes, helicopters, missiles, satellites, and a variety of other technical articles utilized in the segment of security and defense (Schmidt, 2015). This kind of the diversification of produce helps the company to hold its positions regardless of any adverse industry conditions. At present, the largest part of the corporation’s revenues comes from its commercial business segment, although it deals with government orders related to defense as well. The list of Boeing’s customers includes United Airlines (UAL), Southwest Airlines (LUV), Delta Air Lines (DAL), and General Electric (GE) (Schmidt, 2015). In addition, the company expects markets outside of the United States to become the primary sources of its income. To maintain a dominant position among a number of foreign competitors, the Boeing Company aims to deliver the high quality products and services. Therefore, the company’s primary international market development strategy lies in the exportation, regardless of the foreign outsourcing (“Strategies for Reaching Global Markets,” n.d.). Approximately 70% of the Boeing Commercial Airplanes’ backlog corresponds to jetliners ordered by international customers from both developed and emerging markets (“Strategies for Reaching Global Markets,” n.d.). In terms of geography, the company focuses on Europe and Asia Pacific as the most profitable markets for the aviation industry, especially concerning the passenger travel segment. Thus, Boing aims not only to maintain its positions in the United States but also to extend its influence in the international market.
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Over the time of its existence, the Boeing Company has built specific strengths and developed particular weaknesses that allow to determine the future potential opportunities and threats it may face. The strong points of the company under discussion have developed from its first-mover position in the industry. In the internal market, the strong presence of Boeing allows the company to manifests itself as the second largest defense contractor of the US government (Schmidt, 2015). Another advantage of the company lies in the fact that it has a variety of commercial jetliner series, mainly the 717, 737, 747, 757, 767, and 777 Boeing models, 787 Dreamliner, and Boeing Business Jet (Schmidt, 2015). In addition, one of the company’s opportunities is that Boeing’s long-term relationships with its suppliers and customers promote its development and global partnership building. To effectively compete with foreign companies, Boeing strives to develop technically advanced systems and manufactures exclusive high-quality products. On the other hand, the company’s weaknesses in regard to its operation lie in cost overruns, production delays, and technical issues in Boeing’s 787 Dreamliner design (Schmidt, 2015). The business risks and threats the Boeing Company faces include severe competition from international companies like Bombardier, Airbus, and Embraer (ERJ), the growing competition in the regional market, and the changes in the operation of Boeing’s defense segment resulting from the reductions in the defense budgets of the U. S. government (Schmidt, 2015). Regardless of these threats, Boeing has a variety of opportunities related to the development of the Middle East, Asia-Pacific, and African markets as well as an increasing demand for satellites. Within the next 20 years, the company anticipates the ongoing demand for 22,000 aircraft (Schmidt, 2015). In general, the long-term presence of Boeing in the aerospace industry allows it to predict the possible threats and to take advantage of the upcoming opportunities.
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Taking into account the abovementioned strengths and weaknesses of the Boeing Company, it is possible to make the following recommendations concerning its future development. With the emergence of the competition from other companies within the same international markets, Boeing needs to keep improving and innovating its manufacture and operations in order to offer the customers reliable products, services, and performance. To overcome the barriers of global trade, the company has to uphold the laws and regulations of the countries in which it conducts commercial transactions. Since the regulations of the aviation industry involve strict safety codes that vary in different territories, it is advisable for Boeing to be aware of them to avoid any difficulties while conducting business in diverse regions (“Strategies for Reaching Global Markets,” n.d.). To cope with the difficulties in production delays and cost overruns, the company should devise its own business model instead of using the one developed by the Toyota Company (Schmidt, 2015). Moreover, the adverse conditions in the market should not prevent Boeing from continuous development and successful operation.
Conclusion
In conclusion, the Boeing Company controls the US aerospace industry and occupies the second place in the international aircraft market. The corporation produces a wide range of products, including commercial airplanes, satellites, weapons, military airplanes, and defense systems. The financial statements of Boeing indicate that the company’s revenues grow from year to year due to the increased demand for its products on the internal and global markets. The high quality and wide range of Boeing products, as well as the company’s focus on the technical development and innovations, have contributed to its reputation as a leading aircraft manufacturer in the United States.
