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Swot Paper On Boeing Corp.

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The objective of this paper is to analyze and discuss some of the Boeing Company's business decisions using their strengths, weaknesses, opportunities and threats, also known as an S.W.O.T. analysis which is defined as, "a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats. (Nickels, McHugh, McHugh, page 216)". This is a very powerful tool usable by any business that is just starting out, going through a change in direction, or in the process of a major merger. The SWOT analysis consists of a few simple steps which can provide valuable insight for direction and decision making. This paper will use The Boeing Company as an example of SWOT analysis application.

The Boeing Company originally started out as the Pacific Aero Products Co., which was founded on July 15, 1916. The name was changed about a year later to The Boeing Airplane Company. The Boeing Company stayed relatively small until World War I when they were selected by Navy officials to produce an order for 50 model C's planes for the war efforts. The company continued to prosper and by the late 1950s, Boeing President William Allen knew that the company had the scientists, the experience and the facilities to lead the company into uncharted territories. He was right, Boeing has emerged as the leading aerospace company in the world today.

The SWOT process will start by examining the internal strengths of the Boeing Company of today. One of the most dominant strengths possessed by Boeing is its ability to follow the changes in a market that is continually changing. The type of products produced by The Boeing Company demands the use of state of the art technology while maintaining all the proper safe guards for safety, regulation compliance and profitability. An example of Boeing changing with market conditions is its introduction of outsourcing. Outsourcing is defined as "assigning various functions, such as accounting, production, security, maintenance, and legal work, to an outside organization. (Nickels, McHugh, McHugh, page 257). Boeing was spending more, taking longer, and producing a lower quality product which resulted in the loss of market share. Boeing went from the leading aerospace company to second place behind the European company Airbus.

Analysis showed that Boeing was having quality issues, expensive labor, and were not responsive to immediate demands from customers. Through a process such as SWOT a strategic direction change was proposed to allow outsourcing of many of the parts and sections of an airplane. Chuck Agne, the director for Boeing's Integrated Defense System estimates that "about 65-70% of the content for a given airplane is procured from outside sources." (Destefani, Jim, March 2004.) The outsourcing in so many different areas has left boeing with the time they needed to concentrate on customer input, design concepts, and aircraft assembly which have long been a strong point for Boeing. Finding the best companies to do business with allowed Boeing to produce higher quality products, faster production from design to implementation, and also allowed Boeing to reduce inventory and the associated management of the inventory. Just In Time (JIT) production with Boeing's new outsourcing partners allowed the company to focus more on producing quality product in a timely manner. Quality has always been a trademark for Boeing and with this strategy quality is on the rise. According to Chuck Agne, "Our strategy is to become an integrator. It comes down to this: we take big pieces and assemble them and build an airplane. We get anything from small to large subassemblies from suppliers. We expect suppliers to do more of the work." (Destefani, Jim, March 2004.) This strategy allowed Boeing to become more profitable which makes the investors happy and produce a better product which makes the customers happy. One measure of the success of this strategy is watching Boeing's market share and stock price increase. Outsourcing is sometimes a risky decision to make but with Boeing, it is one of their best strengths.

Another strength of Boeing is its ability

to understand and implement the airline customer requirements. Rising fuel costs are reducing airline profits and they are looking for planes that are more fuel efficient but are still technologically advanced with airline customer's comfort and cost in mind. Boing was already a step ahead of the game with a fleet of airplanes meeting the needs of most airline's problems. Their new 787 model is Boeing's most fuel efficient airplane and a big reason for Boeing's latest success. "The 787 will provide airlines with unmatched fuel efficiency, resulting in exceptional environmental performance. The airplane will use 20 percent less fuel for comparable missions than today's similarly sized airplane." (Boeing Company, 2006). Boeing's ability to foresee the needs of the airline market has shown over the years to be a good strength.

Even the top organizations in the world have weaknesses and so does Boeing. It is the identification and reaction to those weaknesses that sets apart the strong companies from the weaker ones. As discussed early in this paper, outsourcing is a great way to cut costs and improve a product but outsourcing has its weaknesses, too. When you use outside organizations to build or supply you with a product you previously built, you have no need to pay employees who previously did those jobs. Layoffs at Boeing over the past decade or so have put thousands of employees in local communities out of work. According to Chang Mook Sohn, who is the state's (Washington) chief economist, "When the Boeing job cuts do take effect; the state's unemployment rate is expected to reach 8 percent--or more." (Shapiro, 2001). It's hard not to recognize how one company's decision to outsource can have such a dramatic affect on the economy.

The leading organization in the world today producing commercial airlines is no longer Boeing. Airbus has jumped up to be number one in the market. Airbus and Boeing are by far the two biggest producers of commercial aircraft in the world, but Airbus does have one major advantage over Boeing. Airbus can subsidize much of the design, production and aircraft sales. Subsidizing is defined as; monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. ( Airbus is an organization made up of a number of companies spread out over many countries. This allows them to take advantage of government aid in building, selling, and the all important, taxes on sales of aircraft. So while Airbus has its foot in the door of many European



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