Commercial business is always meant for profit returns and companies, in one way or another do this in various ways. Whether big or small, companies involve themselves in businesses that sometimes go beyond the borders of their respective countries. This is normally called international business. If a small town company was importing or exporting certain goods across the border of the neighboring country, then this would be an international engagement. Same goes for big commercial enterprises who have connection deals all around the world. International business may involve the movement of goods from one country to another or formation and operations of sales, manufacturing, research and development alongside distribution of facilities in foreign markets, a tact that needs a clear business strategy (Mourdoukoutas, 2015). A case in point is Boeing which is the world’s largest aerospace company where it is involved in commercial airline production and defense jets and other related technologies both for commercial and military endeavors. This paper is going to address the business strategic initiatives that Boeing has taken in a bid to embrace the massive effect of globalization in the industry.
Boeing was founded in 1916 as Pacific Aero Product Co. by William Boeing after the successful construction of two seaplanes in the Seattle area which he piloted himself (boeing.com, 2016). Since then, Boeing has been a success of a business story, and this success can be attributed to the sheer drive to improve innovation and invest in new technologies and opportunities. The fact that it has been able to adjust to the ever changing global environment explains why it is and still growing as a powerhouse in the business perspective. Just to give an overview of how big this company is, Boeing commands 48 percent of all commercial aircraft in the world which means over 10,000 planes in operation. It is also one of the largest providers of satellites and electronic warfare technologies. Boeing commands close to 100 percent market share for civil aircraft in the US and also serves as one of the biggest exporters worldwide with deliveries to 150 different countries which has created an annual revenue income of close to 91 US billion as of last year (boeing.com, 2016). To continue muscling itself among some of the world’s best, Boeing currently has five main strategic business units namely; commercial planes, military aircraft, network and space, global services and support and the capital and financial unit.
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This dominance by Boeing it should be said has not come through mere luck but through cycles that are both vicious and virtuous at the same time. The business model behind Boeing has ensured that it has remained relevant through the dominance of some of its aircraft for many decades. Boeing has had several virtuous cycles that have seen to the fact it effectively deals with its competition. Knowing a virtuous cycle can help any business, and Boeing has perfected this art over the years hence leading to profitability and on the other hand rendering competitors in a vicious cycle of their own (Strohhecker & Größler, 2012). Every virtuous cycle has components that are designed to foster a more efficient profitable environment.
For instance, Boeing has been increasing its production efficiency over the years to deal with the growing demand world over. Being in a viciously competitive world, companies cannot risk slacking in their production department for this would mean risking the loss of a once reliable customer that is always looking (boeing.com, 2016). Boeing has been on the edge of improving its production department in the sense that for the past half century, they have produced a big amount of aircraft in order to meet the astronomical number of orders coming in from various stakeholders. Today there are many other airline companies that are growing fast and others still upcoming which pose the risk of losing customers.
To further counter its competitors still in the line of efficient production, Boeing has over time been innovative with its products. Consumers as said earlier are always looking, and if a company cannot come up with new and improved models of their product, then they stand a high risk of losing their customer base. In 1969 when Boeing introduced the Boeing 747 model, every consumer on the market wanted a piece of this new innovation. Since its launch, the Boeing 747 made the most of the sales for close to two decades. But since competitors are also looking to enhance their foothold on the market, they tend to catch-up or even create what is newer. Boeing’s competitor Airbus then introduced the 380 aircraft which consequently weakened the influence of the 747 on the market (boeing.com, 2016). To keep up with this global effect of innovation, Boeing had to step-up a notch by later on introducing new aircraft models with the recent one being the 787 Dreamliner.
The essence of creating new models is to improve the cost and flexibility of the manufacturing process. A company that has managed to figure out an efficient production system usually makes it easier for themselves in terms of the cost of production (Hitt, Hoskisson, & Ireland, 2016). Boeing for example through its effort to improve its production system in order to cope with the fast growing world managed to cut down on the cost of producing the same or similar products. This is because the processes of production become more efficient where they need little to no improvement when it comes to the production of more, new and better goods. Because of the ease of which the goods are produced, the company can afford to sell them to consumers at lower prices without having to dent its overall profit margin (George, 2014). By producing quality products on a higher margin, and selling them at a slightly lower price, Boeing has perfected the killer blow to its competitors where it taps more consumers with the appeal of quality and affordability.
When the lower prices do get to hit the market, consumers would definitely want more of the product. Boeing’s strategy coins itself up in the best way since because of the affordable prices they have put up for their products, the result is an increase in the orders since more customer segments at this time have access to something they want to relate to. Increase in orders also means that Boeing has important information that is beneficial both in the present and the future (Czinkota, Ronkainen, & Moffett, 2011). Boeing is able to know whether its new customers have any new specific needs that could be met. This needs of information can then be added to the product of their specification. For this reason, Boeing is able to attract more consumers because of its urgency in meeting their preferences.
The impact of globalization on small time and big have businesses has left one thing very clear; that the engagement rules in businesses will never be the same again. This means that companies cannot go it alone anymore and expect big returns in profits. That success in the modern world is founded around collaborations and even the management at Boeing knows this. Teaming up with the right partners’ means that Boeing has the ability to increase the speed of its production, improve innovation, and in so doing, gain market share. To have a chance of survival in this fast growing economy, even with its stature, partnerships are always important to see to the fact that a company stays afloat and able to cope with the competition around it (Ghobadian, Rugman, & Tung, 2014). For instance, Boeing amalgamated with HCL Technologies in a bid to help in co-developing software that would help in designing navigation systems, landing gear, and the cockpit controls. Also, Boeing consults with startup airlines which have an internal accelerator program that could “supply Boeing aircraft for better brand recognition” (Scanlan, 2015).
Companies like Boeing have now realized that competing just on the basis of products and services is not that much as important and that embracing the right processes can put you a step ahead of the others. What this means is that a company can have good services and products but then not know how to make a profit from it hence showing the importance of the strength of their supply chains. That having a superior product at the cheapest price can only be important and valued if gets to the anticipated customer before other competitors seize the moment (Scanlan, 2015).
Boeing has noted and realized its supply chains and in so doing, has had a foothold on this parts where it has an array of loyal customers. For instance, Boeing in ‘’Over the next 20 years, we are forecasting to a need for 38,050 airplanes valued at more than 5.6 USD trillion.” With this, their strategy is to make 40 percent of their aircraft deliveries to the Asian market, 20 percent to Europe and North America and another 20 percent delivered to Latin America, Africa, and the Middle East (Gaille, 2015). This means that Boeing has put a foothold on its supply chain and the demand of each chain and so expects to strengthen their loyalty and in the process, fight off the fierce competition.
Also, because of globalization, companies have resulted to setting up manufacturing facilities and sites in regions that have a lower cost, placing them close to end markets and by also “outsourcing the manufacturing of select models to third parties” (Scanlan, 2015). Boeing and its subsidiaries have employees based outside of the United States in close to more than 61 countries. A group of this is located in Australia, Europe- mostly in Britain and Germany and Russia and in the Middle East (boeing.com, 2016). This personnel is aimed at bringing the service close to Boeing's chains of supply hence getting to know the needs of the customer and in the process improving their loyalty and also learning new tricks from competitors.
As we have seen in the paper, globalization has created a new dynamic market that has encouraged new competition, high demand in efficiency, and one that requires real expertise in optimization of supply chains. We have also seen how established companies like Boeing get fierce competition from upcoming companies in the same field with massive capitals and an understandable number of supply chains. To avoid being bullied by these companies, Boeing has to strategize on how to improve its innovation and supply systems, partnerships and also how to get hold of its supply chains. The essay also shows that it’s the might of one’s supply chains that determines dominance in the market. This finding is hence worth the parting shot that although a result of competition, globalization should be embraced as it’s the reason behind new innovations and so companies have to be flexible enough to come up with influential strategies that ought to keep up with the speed of change.
References
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