Boeing’s company culture revolves around “three pronged strategies”: run healthy core businesses, leverage strengths into new products and services, and open new frontiers. Boeing continually works to maintain the company values (previously referred to in the introduction): leadership, integrity, quality, customer satisfaction, and people working together, a diverse and involved team, good corporate citizenship, and enhancing shareholder value. Lack of company culture, leadership, and moral value by former CEO’s, affected the company, but it has now moved into a better direction, under W. James McNerney. Currently, problems affecting the overall fast paced, productive, and innovative cultured environment created by the company, are a few human resource issues concerning labor unions.
Marketing
Boeing controls a significant portion of the Aircraft market, being the world’s largest aerospace company with two major segments: Commercial Airplanes and Integrated Defense Systems. They are the number two maker of large commercial jets, falling just behind Airbus, and the number two defense contractor, falling behind Lockheed martin. In the Business jet category, Boeing has only a .62% market share. However, when you move to the wide body Aircraft market Worldwide by Platform they control 65% of the market share. The Boeing-747 has 21%, B-767 has 19%, the B-777 has 25%, and they will move farther up in the category once the 787 Dreamliner gets kinks worked out into major production. On the defense side of things, Boeing is the top firm in the Asia-pacific region with 13.2% of the market share.
At the moment, Air cargo traffic is on the slower side of things, but this is only a short-term slowdown. The Aviation market will pick up in the near future and will stay strong for upwards of twenty years as fleets want to renew their almost antiquated vessels. After the market begins to turn around and gain strength, so will the market for Air cargo. Air cargo is a driver for economic growth and is crucial to globalization. With China being at the forefront of the growing aviation market, Boeing has its work cut out. Boeing’s forecast looks at today’s market with a long-term view for the next twenty years, and it indicates a need for new airplanes because of world trade and economic growth. Worldwide, Boeing projects 29,400 commercial airplanes to be delivered worldwide with investments of $3.2 trillion.
Airbus is Boeing’s archrival in the commercial jet category, with no other threatening competition on their heels. Airbus, which is based out of France, produces about half of the world’s commercial jets having almost equal share with Boeing. Together the two powerhouses control around 90% of the market. However, Airbus is gaining ground on Boeing with their mammoth jet the A-380 double-decker that can seat eight hundred and fifty three passengers. Also in production is Airbus’s A-350 mid-size plane that will compete directly with the B-787 Dreamliner. With these two airplanes in production, they pose a threat to Boeing Corporation in the head-to-head battle for the number one spot in the commercial jet category.
Lockheed Martin is based out of Bethesda, Maryland is the number one defense contractor whose include: Aeronautics; Electronic Systems; ; and . The U.S. government is its number one customer, accounting for 85% of sales. Its aeronautics and electronics systems account for 60% of sales. Lockheed Martin’s main products consist of the F-22 Raptor and the F-35 Lightning II, which have been used heavily in the war on terror in Afghanistan and Iraq. Recently Lockheed Martin and Northrop Grumman (#3 defense contractor) have teamed up to develop weapons systems for the F-22 Raptor and the F-35 Lightning II.
Northrop Grumman is based out of Los Angeles, California, and they are the number three defense contractor, but the world’s number one shipbuilder. They are the supplier of the B-2 stealth bomber and the amphibious assault ships for the military. They were awarded a $35 million dollar contract in conjunction with EADS (the number one defense contractor in Europe and parent company of Airbus) to build refueling tankers for the U.S. Navy. Boeing contested the contract saying the bidding was problematic. The case was examined; the government found flaws in the system which will make the contract go through the bidding process for the third time in seven years.
Boeing has an extensive product line in commercial airplane’s which accounted for fifty percent of their sales in 2007 at over sixty-six million dollars. The product line includes six models: 737, 747, 767, 777, and 787. The 747 is the world’s most recognizable aircraft nicknamed the “jumbo-jet”. It was the first wide-bodied airplane; it was first flown in 1970 and held the passenger capacity record for thirty-seven years until it was surpassed by the Airbus 380. The 787 Dreamliner is Boeings newest product for which they have put countless hours of research and development into. It is a completely innovative aircraft; it is the first major airliner to be made primarily out of composite materials. The windows of the dreamliner are larger than most, and have electronic dimming or smart glass which reduces glare while increasing transparency. The cabin uses LED lighting which can produce 128 different color combinations, and the lighting can help recreate natural light changes going from brighter to darker or vice-versa to help ease jet-lag. The cabin also contains an advanced air conditioning system with HEPA filter technology to remove viruses, bacteria, and fungi which conventional airplanes do not accommodate. In addition to, there is an advanced cabin control system to minimize turbulence and increase passenger comfort.
There is a wide range of products under the Defense category. The Integrated Defense Systems or IDS combines weapons and aircraft capabilities which produce a number of Military Aircraft and missiles. Boeing is also a manufacturer of satellites, defense systems, and space exploration; they are the prime contractor for the International Space Station. The overall product line extends further, and in much more detail that would be far more intensive for the primary purpose of this paper.
Boeing has a strong competitive advantage compared to most firms in their category as an employer and a leader in Aerospace. As an employer they have incredible benefits for their employees, they have educational reimbursement programs, and encourage their employees to further their education. So on, Boeing is very accommodating in this area, providing flexible hours, as well as, paying for relocation. In the aerospace industry, Boeing has an influential part in the government; a large number of projects are contracted with Boeing, along with a large number of military aircrafts being produced by Boeing. Boeing Corporation has a heavy corporate culture that is based not only on their ethics, but their strong corporate culture. In the past, Boeing has relied solely on intensive research and development to have a competitive advantage. Now its advantages are increasingly tied to its unique skills in which the firm orchestrates and manages its network of global partners. Further relying on the collaboration between Boeing and its partners in the production of the 787, Boeing positioned itself as not just a manufacturer but also as a technology company. This intensive globalization has not only helped them with savings helping them build the planes faster and cheaper. It has also spread the costs of design and development through its partner network. This collaboration is at the forefront of their competitive advantage in making them a leader in innovation.
The types of customers that Boeing deals with are Commercial airliners, the U.S. government and NASA. Commercial airliners that Boeing sells are the major and minor airliners throughout the World, including many companies who rely on airplanes for shipping as well.
Finance
As shown, Table 1 describes the financial highlights for Boeing during the year 2007.
Table 1-Financial Highlights as of 12/31/2007
From the 2006 to 2007, Boeing’s revenues increased by 7.89 % (Mergent Online 2008). Current quarterly reports have a decreased for 2007 to present of 665(in millions) (Secfillings.com, 2008). Gross profit increased from 2006 to 2007 from 11,093(in millions) to 12,985(in millions). The quarterly report, as of September 30, 2008, has current revenue at 48,245(in millions). The unaudited quarterly balance sheet has total assets at 56,519(in millions), and total liability and shareholders’ equity at 56,519(in millions) (Secfillings.com, 2008). The unaudited quarterly report statement of cash flows is at 4,186(in millions) (Secfillings.com, 2008). In addition to, Boeings Military Aircraft results have increased by $204 million and $398 million.
Due to the strike, revenues are down. With about a seven year order backlog, and a scheduled delivery rate of more than 40 planes a month, the company stands to lose $100 million to $110 million a day in deferred revenue by most analysts' estimates. Boeings European rival Airbus could take away future orders from Boeing, though Airbus also has a large backlog of four to seven years, and is in no position to take on any of Boeings orders (Klass, 2008, p.1).
Revenues for the nine and three months quarterly report ended September 30, 2008, and decreased by $665 million and $1,224 million, a 1% and a 7% decrease compared with the same periods in 2007. Commercial airplane revenues decreased by $846 million and $1,312 million. The decrease in commercial airplanes for the nine months was primarily due to decreases in new airplane revenues reflecting both the ongoing labor strike and supplier production challenges on customer-furnished galleys (Secfilings.com, 2008).
Revenues for the nine months ended September 30, 2008, and decreased by $846 million, compared with the same period of 2007. This was attributable to a $1,545 million decrease in new airplane revenues combined with a decrease of $251 million primarily from aircraft trading, partially offset by an increase in commercial aviation services business of $179 million and higher intercompany revenues of $771 million. (Secfillings.com, 2008)
Table 2 illustrates Boeing financial data in comparison to competition within the industry.
Table 2-Comparison Data to Competition
As reflected in the numbers, the strike with the machinist and aerospace workers caused growth numbers to decrease. The 52 week range on Boeings stock prices has changed from 39.99 to 95.55. With the strike and the stock market price volatility, Boeing has seen a steady decrease in stock prices. Lockheed Martin is currently trading at 78.75 per share of stock. Lockheed Martin has also seen the share decrease due to the stock market. Lockheed Martin, as of December 31, 2007, had total revenue 41,862(in millions). Boeings return on Assets and Equity ratios are 7.36 and 59.29, compared to Lockheed Martin’s ROA and ROE 10.61 and 36.35(Mergent Online, 2008).
In net sales of products, Boeing is well above Lockheed Martin. Boeing’s sales of products are 40,393(in millions), and sales of services are 7,852(in millions). Total revenue as of September 30, 2008 was 48,245(in millions). Lockheed Martin’s sales of products are 8,475(in millions) and sales of services are 2,102(in millions) (SECfillings.com, 2008)
Operations/ Production
Human Resources
According to the company’s website, Boeing’s main strength and competitive advantage is their people. So, it comes as no surprise that they consider their human resources department to be integral to their success as a company. They pride themselves on their ability to solve company problems on the global scale, their flexibility toward their labor force, and their comprehensive training resources. Additionally, they are focused on trying to maximize each of their employee’s individual potential, so as to maximize the company’s collective potential. When looking at Boeing’s human resources department and its relations to their employees, there are two areas of import, which should be considered, company/ union relations and career opportunities.
When looking at the environment between a company and its employees, one factor you must consider is the presence of unions. As for Boeing, they deal with several unions. Some of the more noteworthy are these: the International Association of Machinists (IAM), the Society of Professional Engineering Employees in Aerospace (SPEEA), and the International Metalworkers’ Federation (IMWF). The purpose of these various unions is to join the voices of the individual workers in each area, so as to give them more power in negotiating with the companies they work for such as Boeing. Many of them have similar goals, such as: keeping wage rates on the same level as cost of living, paid sick leave, life insurance, and other benefits for workers and their families, equality, a safe workplace, and quality pension programs.
Once it has been established that there are unions involved with a company, it is very important to analyze how effectively they interact with each other. As for Boeing and its unions, lately, they have been having difficulties. Currently, two major strikes are in the process of ending. The first was a strike by the IAM. This blue-collar union of machinists went on strike because they were not satisfied with several things, but most importantly, they were upset about their lack of job security. While talks have been up and down, latest reports say they have just recently ratified a new four year contract with Boeing. The other major strike is being lead by the SPEEA. They are the more white-collar union of engineers, and they were unhappy about both their amount of job security, as well as, the increasing amount of design and engineering work being outsourced. This strike is still ongoing, but the SPEEA feels that it has unusually strong leverage due to the fact that they are skilled workers at a profitable company in a critical industry. Due to the need for Boeing’s products, as well as, the record year it had last year, both Boeing and the unions should be able to come away from the strikes without to much financial harm. However, it remains to be seen just to what extent the effect on their relationship will be.
Boeing is a huge company with many career opportunities which vary. Some of these opportunities include: Aerospace, Chemical, Civil, Electrical, Manufacturing, Mechanical, Software or Systems engineering, and Computer Science, not to mention opportunities in the various business related parts of the company. Due to the nature of Boeing’s business, when you think of them you probably think of the various engineering positions available, some of which are previously listed, but Boeing just like any other major company needs people to control areas like Finance, Accounting, Logistics, and Marketing. Specifically, there are several areas of career opportunity in Marketing. One such area is advertising. Boeing is very focused on new and exciting advertising campaigns that close the gap between current perceptions of their company and their true scope as a global aerospace company. From brand building efforts to global sales to any number of other areas, there is always a place for Marketing at Boeing.
References
“Boeing” (2008). Retrieved October 29, 2008, from Boeing.com.
“Boeing Co. (The).” (2008). Retrieved October 29, 2008, from Mergent Online.
“Boeing Strike 2008” (2008). Retrieved November 12, 2008 from goiam.org
“The Boeing Company” (2008). Retrieved October 29, 2008, from Hoovers Online.
“The Boeing Company” (2008). Retrieved November 3, 2008, from SECFilings.com.
Klass, Tim. (2008, September 9). “Lengthy Boeing Strike could Harm US Exports.”
Retrieved October 15, 2008, from SFGate.com.
OR Would it be
Klass, Tim. "Lengthy Boeing Strike could Harm US Exports." 9 Sept. 2008. 15 Oct. 2008 <http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/09/09/financial/f040509d05.dtl>
Lunsford, J. Lynn. (2008, September 25). “Boeing, Machinists Run Risk of a Drawn-Out Strike.” The Wall Street Journal, p. B3.
Lunsford, J. Lynn. (2008, November 3). “Boeing Begins Gearing Up Following Strike.” The Wall Street Journal, p. B3.
Lunsford, J. Lynn. (2008, November 5). “Fastener Woes to Delay Flight of First Boeing 787 Jets.” The Wall Street Journal, p. B1.
West, Karen. (2008, November 3). “Labor Movement gets Boost from Boeing Strike.” Retrieved November 12, 2008, from Msnbc.msn.com.
<www.speea.org>