1. PEST & Industry Analysis By: Karim Badr

2. Snap shot of Boeing
Founded in 1916 by William E. Boeing in Seattle, Washington.
In 1997, Boeing merged with McDonnell Douglas.
The world's largest aerospace and Defense Company.
Boeing has customers in more than 90 countries around the world.
Boeing employs more than 158,000 people across the United States and in 70 countries.

3. Snap shot of Boeing Continued
Boeing operates three divisions:
commercial airplanes
Integrated Defense Systems (IDS)
Boeing Capital Corporation (BCC)
In 2009, the firm generated $60.9 billion in revenue
and $2.7 billion in net income.
Boeing’s newest airplane is the 787 Dreamliner.
Competition: Airbus industries of Europe.

4. Breakdown of Boeing Divisions % of Revenue

5. Boeing’s PEST Analysis

6. Boeing’s PEST Analysis
Factor
Trend
Evaluation
Impact
(1=low
5=High)
Rank in term of importance
Political
WTO trade restrictions in the aircraft industry.
WTO-laws and regulations prevent Boeing from government assistance
Threat 4 2
Economic
Exchange rates favoring US exports.
Economic Recession
Opportunity 3
Political:
World trade organization limits trade due to the competition and the continuous disputes between Boeing and Airbus. WTO intervenes to insure fair trade.
WTO also intervenes against unfair government subsidies. Boeing and Airbus are on the debate of unfair subsidies.
Economic:
Exchange rates favors US exports. Aircraft buyers are more likely to import from the US( Aircraft exports) due the weakness of the US currency.
Recession has caused a major collapse of the auto industry in the US,is the aircraft industry next? Recession is the suspect here.

7. Boeing’s PEST Analysis
Factor
Trend
Evaluation
Impact
(1=low
5=High)
Rank in term of importance
Social
Anti-US feelings due to the foreign policies will affect business in countries of the Middle East.
Threat 2 4
Technological
Boeing has developed sophisticated technologies that provides distinct safety advantages.
Use of new technologies in the form of robotics that help build aircrafts faster
Lighter material in aircrafts
Opportunity 5 1
Social:
Boeing have major buyers in the Middle east and anti-US feelings could affect business.
Technological:
Boeing have developed technologies that helped it differentiate itself from competition. systems designed to help pilots avoid two of the more common safety problems in years past: wind shear and controlled-flight-into-terrain (CFIT).
Light material aircrafts: Very efficient technology that will reduce the weight of the airplane and therefore reduce other costs associated such as fuel costs.

8. Boeing’s Industry Analysis
Boeing’s Buyers
Airlines: Commercial aircrafts
US Governments: Military aircrafts, global services and support, and network and space systems.
Global based buyers: Customers in more than 90 countries.
Boeing’s Suppliers
Global based suppliers: Contracts with 22,000 suppliers and partners globally.
Engine manufacturers represent the single most significant group of suppliers:
General Electric, Pratt & Whitney (US), Rolls-Royce (UK), CFM International

9. Boeing’s Industry Analysis
Boeing’s Competition: Airbus
Airbus: European aerospace company based in Blagnac, France.
Conglomerate funded by various countries throughout Europe
Airbus produces half of the world’s jet airlines and shares the market with Boeing.
Airline wars: Intense competition between Boeing and Airbus.
Producer of the AB-380.

10. Boeing’s Industry Analysis
Boeing’s Competition: Embraer
Emerging competitor
Company founded in 1969 in Brazil
11,000 Employees
Historically produces Aircrafts: seats between passengers
Currently developing new jetliner family in the seat capacity

11. Boeing’s Porters Five Forces
Barriers to Entry
High
Supplier Power
Weak
Buyer Power
Threat of Substitutes
Rivalry

12. Barriers to Entry: High
Analysis=High
New airplanes and engines require extremely high investments accompanied with great risk and the inability to get a positive return on that investment for many years.
Aerospace industry requires large amounts of continuous investment in research and development due to the complexity of the industry.

13. Supplier Power: Low Analysis=Weak
Firms in the aerospace industry have several supplier which to choose from.
Boeing have round 22,000 suppliers Globally.

14. Buyer Power: High Analysis=High
Airlines are cutting their investments which forces a deadly competition in the aircraft industry.
Due to the competition, Buyers(Airlines) force advantageous reductions in the price of Aircrafts.
Aerospace firms compete for large orders from airlines to try to recover their high costs

15. Threat of Substitutes: Low
Analysis=Weak
No threat of substitute products due to the uniqueness of speed and the ability of aircrafts to travel over water.
Exception: for short distances over land, aircrafts may compete against automobiles and trains.

16. Rivalry: High Analysis= High
Two firms competing in the Aircraft industry, Boeing and Airbus.
The two firms are equally balanced and have little differentiation in their products.

17. Key Force: High Intensity of Rivalry
The High Intensity of Rivalry is due:
Two firms controlling the Aerospace industry
Similarity of products produced by the two firms
Firms adopting the same strategies
Regulations and policies enforced by the WTO.
Firms in the industry need to find ways to differentiate between their products and continue to innovate.

18. Boeing Strategies Strategies: Run Healthy Core businesses
Leverage strengths into new products and services
Open new Frontiers

19. Concluding Thoughts Low: PEST Aircraft Industry and Porter Five Forces
Technological opportunities are most opportunities to Boeing.
Political factors represent the major threats to Boeing in the form of the WTO regulations and laws
Aircraft Industry and Porter Five Forces
Low:
Supplier Power
Threat of Substitutes

20. Concluding Thoughts High: Key Force: Intensity of Rivalry.
Barriers to Entry
Buyers Power
Key Force: Intensity of Rivalry.
Airbus and Boeing control the Aircraft industry, Embraer as a potential emerging competitor.
“If you don’t take care of your customers….someone else will”

21. Assignment 2 Competitor and Market Analysis By: Karim Badr

22. Segmentation of Aircraft Industry
World Aircraft manufacturing industry
Military & Space
Commercial Aircraft
Cargo Aircraft
Passenger Aircraft
Large Civil Aircraft( LCA)
Small to Medium- sized Aircrafts

23. Key Competitors in the Aerospace Industry
Boeing
Airbus
Bombardier
Embraer

24. Key Competitors in the Aerospace Industry Boeing
Leader in the commercial jet manufacturing for decades
Merged with McDonnell Douglas in 1996
Second largest defense contractor in 2000
Leader in the satellite making (space industry) business as of 2001

25. Key Competitors in the Aerospace Industry Airbus
Established in December of 1970
Boeing’s only competitor in commercial jet manufacturing
Controlled 55% of the large passenger aircraft market in 2001

26. Key Competitors in the Aerospace Industry Bombardier
World’s largest maker of small planes in Canada
Make jets that seat between passengers
Control 36% of the global market for business and regional jets

27. Key Competitors in the Aerospace Industry Embraer
Company founded in 1969 in Brazil
11,000 employees
Historically their planes seat between passengers
Currently developing new jetliner family in the seat category

28. Evaluation of Competitors
Boeing
Airbus
Embraer
Bombardier
Entity
Public
EADS
Products
Commercial Jets
Regional jets
Revenue
64.3B
63.7B
5.4B
9.4B
Gross Profit
12.5B
1.7B
330M
310M
Employees
160,500
52,500
17,149
28,900
Global Presence
70 countries
150 Countries
92 countries
35 countries
Market Rank 1 2 3 4
Market Rankings in term of profit

29. Evaluation of Competitors: Focus
Boeing
Supersonic Jet
Airbus
Super-Jumbo Jet
Bombardier
Focus on Smaller Jets
Embraer
Focusing on the seat market
Market Rankings in term of profit

30. How do competitors compete:
By Product Differentiation
Aircraft Seat capacity
Aircraft Speed
By Outsourcing
Subcontracting production of aircraft components or assemblies to gain competitive advantage
By the use of technology
The use of advanced technology to seek performance advantages.

31. How does Boeing compete
Products Differentiation
Boeing adopts a differentiation strategy , Faster aircrafts in the form of the supersonic
787 Dreamliner series that compete against Airbus bigger airplane the A-380 jumbo
Aircraft.
By Outsourcing
70% of the 787 Dreamliner was built outside the USA, that enables Boeing to lower its production costs in a very expensive industry.
By Technology
The 787 will be the first airliner to use composites for most of its airframe construction, that will allow for a lighter aircraft and lower fuel consumption( 20% lower)

32. Boeing Vs. Airbus Boeing Airbus By Product Faster Airplanes
787- DreamLiner
Bigger Airplanes
A-380
By Outsourcing
Assembly plant in Japan
Assembly plant in China
By the use of technology
Use of composites in Airframes
Engine noise reductions

33. Boeing’s Competitive Positioning
Strong Global Network( Buyers, Suppliers)
Broad Product line that covers most market niches( commercial, defense and military, ammunitions, space and security)
R&D

34. Aerospace Growth Opportunity
Global Aerospace and Defense Market has reached a value of USD Billion in 2008 and reports forecast that this figure would go up to USD 910 billion in 2013 based on a year on year increase of 6.17%.
Within the aerospace and defense market the defense market accounts for almost 70% of the market value.

35. Key Trends in the Aerospace Industry
Globalization of Aerospace manufacturing
It is estimated that the amount of manufacturing outsourcing
in the aerospace industry is close to about 80% of the airplane.
Technical Expertise
Airplanes have got increasingly complex and it is not expected that a single company would have the technical expertise to meet the myriad requirements.
Outsourcing
Manufacturers are outsourcing the sub system value chain since they want to shorten development time by increased focus on higher value added portion.

36. Key Trends of Aircraft Development:
Development of LCAs is split into two markets
Consolidation
Fragmentation
Large number of smaller high speed aircraft( seats)
Large and high capacity aircraft ( seats)
Boeing
787-Dreamliner
Super Sonic jet
Airbus
A-380 Super Jumbo Jet

37. Boeing’s Target Market:
Buyers
Evaluation
Short Distance-Medium capacity
Many
Boeing’s commercial airplane buyers require planes that are more effective at flying short distances with a low capacity( 737 family)
Short Distance-High Capacity
None
With high capacity airplanes the travel time is increased.
Long Distance-High Capacity
Some
Some of the buyers however Boeing is faced by a crucial competition from Airbus products in this segment
Long Distance-Low Capacity
Niche
the clients in this segment include governments or governmental agencies, private individuals, organizations, companies offering business flights, Boeing business jet operators

38. Boeing’s B2B-Social Media
Started by Randy Baseler, Vice President, Marketing Commercial Airplanes in
January 2005.
Way to expand the conversation of commercial aviation to the Web.
In its first two years, Randy’s Journal, as the blog was named, saw more than
half million individual.
Randy’s blog is another communication outlet for a large public company, he
also includes transparent reflections on quarterly earnings, orders and how
the impact of results financial results on production and development of
ongoing projects.
From Randy’s Blog:
“We’ve just been through another tough quarter, not only for Boeing but for our industry. So, understandably our results are somewhat parallel to what’s happening in the global economy and its deep effects on the commercial airplane market. Boeing’s first-quarter earnings dropped 50%, to $610 million.”

39. Conclusion Companied use different strategies to compete
Four mains players in the aerospace industry, with Boeing and airbus
controlling the market of big size commercial aircrafts
Companies in the industry focus on differentiation due to the intensity of rivalry
Boeing focus: Supersonic jets- 787 Dreamliner
Airbus Focus: Jumbo Jets- A380 series
Companied use different strategies to compete
By Product
By Outsourcing
By the use of technology

40. Conclusion Cont’d Key trends in the aerospace industry
Globalization of aerospace manufacturers
Outsourcing
Technical expertise
Key Trends of aircraft development:
Consolidation
Fragmentation
Boeing’s Positioning
Long distance-Medium capacity: Many
Short distance-High capacity: None
Long distance-High capacity: some
Long distance-Low capacity: Niche
Boeing’s social media
B2B social media to interact with its stakeholders( employees, buyers…etc)

41. Internal Analysis, SWOT Analysis, Generic Strategy, and Grand Strategy By: Karim Badr

42. Boeing Business Model
Design, assemble and support commercial jetliners
Boeing 7-series family of airplanes lead the industry
Commercial Aviation Services (CAS) offers broad range of services to passenger and freight carriers
Design, assemble and support defense systems
World’s largest designer and manufacturer of military transports, tankers, fighters and helicopters
Support Systems provides services to government customers worldwide
Design and assemble satellites and launch vehicles
World’s largest provider of commercial and military satellites; largest NASA contractor
Integrate large-scale systems; develop networking technology and network-centric solutions
Provide financing solutions focused on customer requirements
Develop advanced systems and technology to meet future customer needs

43. Boeing Performance over the past 5 years
2010
2009
2008
2007
2006
Revenues
64,306
68,281
60,909
66,387
61,530
Net earnings
3,307
1,312
2,672
4,074
2,215
Operating margins
7.7%
3.1%
6.5%
8.8%
4.9%
U.S dollars in millions
: Increase in Operating margin by 3.9%
: Decrease in Operating margin by (2.3%)
: Decrease in Operating margin by (3.4%)
: Increase in Operating margin by 4.6%
* Peek of Revenue & Operating margin in 2007

44. Changes in Distribution of Revenues:
Revenues By segment
2010 Revenues
2009 Revenues
Changes
Commercial Airplanes
$31,834
$34,051
(7%)
Defense, Space and Security
$31,943
$33,661
(5%)
Capital Corporation
$639
$660
(3%)
U.S dollars in millions

45. Total Assets account for: $68,565 Million Dollars
Boeing’s Key Assets
Cash
Accounts Receivables
Inventories
Goodwill
Property, Plant & Equipment
Other Acquired Intangibles
Investments
Total Assets account for: $68,565 Million Dollars

46. Boeing’s SWOT Analysis
Strengths
Weaknesses
Strong Global Network( Buyers, Suppliers)
Broad Product line that covers most market niches( commercial, defense and military, ammunitions, space and security).
Diversified business offering
Innovation and Technical Expertise
Strong reputation of quality and industry leadership
International customer base
Labor Problems( Cyclical employment)
Dependence on US government in the form
of incompatible subsidies
Development Costs for new products: $8-10 Billion
Weak turnover ratios
Opportunities
Threats
Growing demand for commercial Airplanes
Strong order backlog
Rising defense spending in the US
New technologies to build lighter, longer range aircraft
Aggressive Airbus Price Discount Practices.
Economic recession

47. Boeing’s BCG Matrix HIGH MARKET SHARE:
Stars
Question Marks
HIGH MARKET SHARE:
Boeing controls the aerospace market for commercial aircrafts along with Airbus
HIGH
MARKET GROWTH RATE
High MARKET GROWTH:
Growing demand for commercial Airplanes.
LOW
Cash Cows
Dogs
HIGH
LOW
RELATIVE MARKET SHARE

48. Boeing’s Strategies Run healthy core businesses
Leverage strengths into new products and services
Open new frontiers
People working together as a global enterprise for aerospace leadership

49. Boeing’s generic Strategy
Differentiation based-competitive advantage
Keys to Successful Differentiation:
Understanding customers needs and preferences
Commitment to customers
Knowledge of company’s capabilities
Innovation

50. Boeing’s Generic Strategy
Competitive Advantage
Differentiation:
Boeing follows this strategy by developing products that offers unique attributes to customers and that are different from the competition products: the 787 Dreamliner
low Cost
High Cost
Stars
Broad
Overall Cost Leadership
Differentiation
Competitive Scope
Broad Scope:
Broad Product line that covers most market niches( commercial, defense and military, ammunitions, space and security).
Cost Focus
Differentiation Focus
Narrow
HIGH
LOW

51. Boeing’s Grand Strategy
Component
Comment
Innovation
Most commercial aircraft are examples of incremental innovations . Boeing’s innovation is about taking risks, challenging assumptions and reinvestigating what customers want.
Market Development
Boeing should keep maintaining or increasing its market share of current products.
Market Penetration
Product Development
Boeing plans on providing the aerospace industry with lighter and fuel efficient Aircrafts. Boeing reduced the weight and fuel consumption of its Aircrafts by 70% over the years.
Research and Development
Boeing plans on expanding its Global R&D initiatives by establishing relationships with universities in the UK (Cambridge, Cranfield and Sheffield ) to seek the best technologies and acquire talent.

52. Boeing’s Strategy Clock
Focused Differentiation
Hybrid
Boeing focuses on differentiating its products due to the competition.
Perceived Service Benefits
Low Price
No Frills
Strategies Destined for Failure
Price

53. Boeing’s Ansoff Matrix
Existing Products
New Products
Market Penetration: Boeing should keep maintaining or increasing its market share of current products.
Market Development:
Boeing can achieve this by keeping its differentiation strategy to access new geographical markets
Market Penetration
Product Development
Market Development
Diversification
Existing Markets
New Markets

54. Boeing’s Value chain

55. Capacity Demand Control
Value chain
Boeing Value Chain
Component Manufactures
Subsystem Manufacturers
Engine Manufacturers
Airframe Manufacturers
Airlines
Capacity Demand Control
Competition/ Market Absorption
Survival
Competitive Position of Value Chain

56. Boeing Global Markets New Airplane deliveries for 2009-2028
Asia-Pacific as Boeing’s biggest market 31%

57. Conclusions Boeing Business Model Changes in distribution sales:
Design, assemble and support commercial jetliners
Design, assemble and support defense systems
Design and assemble satellites and launch vehicles
Integrate large-scale systems; develop networking technology and network-centric solutions
Provide financing solutions focused on customer requirements
Develop advanced systems and technology to meet future customer needs
Changes in distribution sales:
Small decrease in revenues
Boeing Generic Strategy
Differentiation

58. Conclusions Boeing Grand Strategy Boeing Strategy Clock
Drive long-term growth and value creation
Provide the industry's with customer-focused solutions
Provide financial services in support of Boeing sales
Pursue technical & functional excellence for the enterprise
Utilize advances in technology in making products more environmentally friendly
Boeing Strategy Clock
Differentiating
Boeing Global Markets
Asia-Pacific 31%
North America 27%
Europe 25%
Middle East 6%
Latin America 6%
CIS 3%
Africa 2%