The Boeing 747: The History of the Jumbo Jet

Introduction 

Boeing Company is a multinational organization that manufactures aircrafts for both commercial and military purposes and commands over forty percent of the global commercial aircrafts sales. Headquartered in Seattle, Washington, the company produces state of the art aircrafts and develops aerospace technologies for both commercial and military uses (Tang & Zimmerman, 2009). The essence of this paper is to discuss differences in domestic and international strategy of Boeing, the difficulties that managers face in gauging costs, benefits, and risks in foreign markets, and the relative advantages and disadvantages of joint ventures for multinationals like Boeing when entering foreign markets. 

Differences between a domestic and an international strategy 

Firms formulate strategies through their strategic planning process that guides organizations in making decisions concerning their operations in human resources, resource allocation, product development and research and budgeting. While the general premise of the planning process is similar for both domestic and international strategy, noticeable variations exists (Bryson, 2012) . Imperatively, both strategies offer an organization the opportunity to create products that respond to market needs. Secondly, they offer an opportunity for an organization to make projections of its performance and business processes that it must improve. However, these strategies differ in that an international strategy establishes products and services based on an individual market needs. Secondly, the breadth of issues involved in an international strategy is greater compared to a domestic one (Kokemuller, n.d). Thirdly, an international strategy needs to incorporate the culture of the people in its different markets as compared to a domestic strategy that may only focus on cultural dynamics in one single market. For example, an organization must address emerging issues, especially in its international strategy because of the impact of its product. 

Boeing Company’s domestic strategy is focused meeting the growing commercial needs in the U.S. aviation sector. Imperatively, Boeing controls over ninety percent of the civil aircraft market in the United States (Sweetman, 2013). Therefore, its domestic strategy is based on ensuring that it delivers quality products in a market that it controls. The firm recognizes that business travelers are sensitive to flight times and anticipate a high level of service delivery. As a result its civil aircrafts are designed with interior features that meet these dynamic demands in a stagnating domestic market. However, its international strategy is premised on its need to remain competitive in a market where it controls over forty-eight percent of global fleet demands (Seil, 2011). Furthermore, it must ensure that it maintains its leading position by developing products for increased low-cost carrier services demanded in Southeast Asia, Asia, Eastern Europe and Latin America (Seil, 2011). Additionally, its international strategy also focuses on maintaining its alliance with traditional network carriers that include largest airlines like Air France, British Airways, and United Airlines among others. Imperatively, Boeing’s international strategy is based on the formation of mergers and acquisitions in the aviation sector in the different markets that it operates (Boeing, 2015). 

Difficulties in gauging costs, benefits and risks in certain foreign markets 

Foreign markets present unique challenges for managers when it comes to gauging operational costs, benefits to the multinational, and business risks involved in running these enterprises. For example, managers may find it difficult to gauge operational costs because of unethical business practices like corruption and bribe payments in emerging economies (Tang & Zimmerman, 2009). Furthermore, the benefits to a multinational corporation may be eroded if the business environment is highly volatile in some countries because of increased competition or social-political environment. For example, increased taxation, political unrests, and high inflationary pressure erode such benefits. Additionally, gauging risks becomes difficult if uncertainties in the business environment are not tackled appropriately. For instance, political risks are expensive for international firms operating in non-domestic markets because it may lead to loss of assets. 

The Boeing Company’s managers have faced such difficulties, especially in their international business model for the Asian market, particularly the Chinese market. As reflected, the organization’s strategy for China in 2015 had to change with the entry of the Chinese Commercial Aircraft Corporation of China (COMAC) (Boeing, 2015). The firm must formulate an international strategy that will cushion it against the entry of COMAC in the Asian region. 

Advantages and disadvantages of joint ventures 

Joint ventures are arrangements between two or more organizations (usually competing) to come together for the purposes of market entry, sharing of risks and rewards and technology, product development and complying with the regulatory environment (Ekeledo & Sivakumar, 2004) . The benefits of joint ventures include convergence of competing goals, entry into a market that one of the partners could not access initially, and improving the market share, size, power and resources. They also provide better local market intelligence through indigenous joint venture partners. On the flip side, they may create conflict of interests between the parties because of issues concerning sharing of profits, management of the business and the kind of marketing strategy to be used (Peng, 2014). 

Boeing Company has not formed any joint ventures in its international strategy because of the nature of the industry that is characterized by few manufacturers and thus less competition and risks. However, it pursues acquisitions and mergers in local aircraft manufacturers, for example some of the local aircraft manufacturers in Europe have been acquired by the company or merged their operations to enjoy scale economies. 

Conclusion 

Organizations must formulate strategies that will enable them compete in the global business environment. Such strategies must consider the market dynamics in their domestic and international markets. As demonstrated, Boeing strives to increase its market share by forming mergers and acquisitions in its domestic and international markets. 

Lessons learned and recommendations 

One of the lessons learned in this assignment is that global organizations like Boeing need firm and long term strategies that can enable them remain competitive and develop products based on different market needs. Furthermore, I have learned that global organizations must strive to create products that reduce risks and formulate alliances that will enable them get local market intelligence from indigenous organizations. I would recommend the Boeing seeks to form joint venture with the Chinese COMAC so that it maintains its market share in Southern and East Asia. 

References 

Boeing., (2015). Long Term Market. Accessed on December 6, 2016 from 

http://www.boeing.com/commercial/market/long-term-market/airline-strategies-and-business-models/ 

Bryson, J. M. (2012). Strategic Planning and. The SAGE Handbook of Public Administration , 50. 

Ekeledo, I., & Sivakumar, K. (2004). International market entry mode strategies of 

manufacturing firms and service firms: A resource-based perspective. International marketing review , 21 (1), 68-101. 

Kokemuller, N. (n.d). Differences in Strategic Planning for Domestic & International 

Companies. Accessed on December 6, 2016 from http://yourbusiness.azcentral.com/differences-strategic-planning-domestic-international-companies-28898.html 

Peng, M. (2014). Global Strategy (3 rd . ed). Hoboken, New Jersey: Cengage Learning. 

Seil, B. (2011). Global Boeing. Boeing Frontiers, pp.44-45. 

Sweetman, B. (2013). Boeing Building On ‘One Boeing’ Strategy. Aerospace Daily. Accessed 

on December 6, 2016 from http://aviationweek.com/awin/boeing-building-one-boeing-strategy 

Tang, C., and Zimmerman, J. (2009). Managing new product development and supply chain 

risks: The Boeing 787 case, Supply Chain Forum: International Journal, Vol.10, No.2, pp.74-86.