Boeing Company’s Strategic Management and Governance

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Table of Contents

On the Basics
On Corporate Governance
On Competition
On the Value Chain
On General Strategy
References

On the Basics

Strategic management is an evolution and a destination. What does this mean?

Strategic management in business is a concept that encompasses a variety of aspects that can be generally divided into two major categories:

what is to be achieved and
how it can and should be achieved.

In other words, strategic management focuses on the practices, activities, and developments of a business (i.e., its evolution) while constantly adjusting them to the goals and vision of what the business is striving for (i.e., its destination).

Provide three examples of how your team company is or is not a ‘strategic management’ firm

The Boeing Company recognizes the importance of strategic planning in terms of addressing two major factors in their business:

the growing and intensifying competition and
the evolution of demand and customers’ definitions of value (“Airline strategies and business models,” 2016).

Part of the company’s strategic management efforts is focused on developing business models that are adjusted to the changing needs of the market. Creating models such as the low-cost carrier model and the cargo model is evidence of the company’s strategic approach to doing business. Another relevant example is the Boeing Company’s pursuit of establishing partnerships and alliances within their industry to ensure the industry’s growth overall. Finally, the corporation also dedicates a lot of effort to planning and predicting, which is demonstrated in their long-term market initiative—a series of strategic programs aimed at keeping up with the industry’s technological progress and the evolving market.

Describe your team company’s mission statement as well as the 2017 goals and objectives of the firm

The Boeing Company’s mission, as defined by the company itself, is to “connect, protect, explore and inspire the world through aerospace innovation” (“Our vision,” 2016, para. 2). Including the concept of innovation as a key element of their mission statement signals the company’s dedication to the strategic approach because dealing with innovation is always a matter of strategy. By this approach, the company revealed the goals it plans to achieve by 2025, which include accelerated innovation and global expansion.

Besides these major goals, the company will also strive for better performance and returns; growth based on high productivity; the high quality of design, production, and services; the attraction of talented employees and leaders; and the establishment of Boeing’s position as a top corporate citizen. However, the goal that comes first on the list is somewhat more definitive and precise—achieving market leadership.

On Corporate Governance

Discuss three traditional roles of the board of directors. Also, identify and discuss the most urgent governance issue impacting your team company’s board – what are they doing to manage this important issue?

The body that executes the corporate governance of a company is the board of directors. Much research has been dedicated to exploring the roles and responsibilities of the board and determining the most important aspects of its work. Among this research, three main traditional roles can be identified. First of all, the board’s role is to develop strategies, provide strategic objectives, and design corporate policies based on the selected strategy.

Unlike managers at lower levels of the company, the board needs to look further into the future, detect the potential changes in their industry, and reveal the needs of the market that need to be addressed. That is how effective strategies are developed. Second, the board’s responsibility is to appoint chief executive positions and to monitor their activities and performance. This is a key role because selecting a CEO or an Executive Director is a crucial aspect of managing a corporation. Finally, the board is in charge of monitoring the adequacy of company resources, meaning that it revises and approves the annual budget and ensures the ongoing availability of funds.

Concerning the corporate governance of the Boeing Company, a major issue that has been recognized by the board is ethics. Building a corporate culture, providing ethical standards and principles, and ensuring compliance with them among employees and directors themselves are all part of the responsibilities of the board of directors, too. Recently, the board of the Boeing Company has been engaged in issuing several important developments to employees as well as to the members of the board: written ethical guidelines, mechanisms for reporting unethical behavior, and tools for building an environment of trust and accountability.

Identify and evaluate a major philanthropic initiative/program to which your team company contributes or leads that aims to do good while also helping the firm do well

The Boeing Company runs the Humanitarian Delivery Flight program, which has involved more than 170 humanitarian flights within the last 25 years. These flights deliver medicines, food supplements, equipment, clothing, and educational materials to vulnerable groups and victims of disasters around the world (“Community engagement,” 2016). The company conducts many other activities related to charity and community service, thus contributing to the well-being of the society in which it operates as well as the well-being of the global community.

On Competition

Identify and discuss your team company’s competitive advantage and core competency

Competition is often seen as a driving force of the market because it constantly increases standards and provides higher value. Under these circumstances, companies struggle to gain competitive advantages, which refer to features or aspects that make their products and services better than those of their competitors and thus viable in the market. The main competitive advantage of the Boeing Company is its global scale. Both production and sales are performed internationally, ensuring a global presence that allows the company to stay in the game.

Provide a descriptive discussion of the Porter’s Five Forces Model of your team’s company and include what Wheelen and Hunger call the sixth force in your analysis

The Five Forces analysis of a company is an evaluation of its strategic position from the perspective of its competition. This analysis should regard a company as a player in a certain industry and recognize various factors that may affect its competitive advantage and other aspects of strategic development. The forces are three types of threats and two types of bargaining powers (Porter, 2008). These forces are considered to affect the profitability of a company, thus providing a framework for assessing the current state of the business.

For the Boeing Company, the threat of new entrants and the threat of substitutes have a minimal effect on profitability due to the corporation’s large scope, international presence, and well-established position in the market. The same reasons explain why the Boeing Company is unlikely to be put under significant pressure by the two “vertical forces”: the bargaining power of customers and the bargaining power of suppliers.

However, the fifth force, which refers to industry rivalry, can and does constantly affect the activities of the Boeing Company, forcing it to search for new and innovative solutions. Wheelen and Hunger (2011) also recognized the sixth force at play, which is the influence of other stakeholders on the industry competition. Because the activities of the Boeing Company are complicated and involve many parties, a comprehensive examination of the sixth force, in this case, requires further research.

Kim and Mauborgne argue that sustaining a “competitive advantage” is to make the competition irrelevant – hence, the blue ocean metaphor. Identify and discuss what must be done to achieve or sustain your team company’s position in a ‘blue ocean’

The blue ocean strategy is about discovering hidden demand and uncontested needs of the market (Kim & Mauborgne, 2004). In a blue ocean industry, the competition becomes irrelevant, and new opportunities for businesses emerge. To sustain its position in the blue ocean, the Boeing Company needs to monitor its position in the market and its definition of the industry in which it operates. Instead of defining itself as only an airplane manufacturer, for example, the corporation strives for the bigger picture by producing various types of aircraft and providing other support services. The expansion of activities and the better detection of market needs allow companies to remain in a blue ocean instead of fighting with competitors in a red ocean.

On the Value Chain

Identify and discuss the business model that best describes your team company

The Boeing Company employs different business models for different aspects of the businesses it runs. Also, the corporation recognizes that “airline business models continue to evolve to adapt to the dynamic marketplace” (“Airline strategies and business models,” 2016). With such a wide network of operations, the Boeing Company is forced to adopt a flexible business model known as “the virtuous cycle,” a model in which efficiency is raised, costs are lowered, and operations are constantly critically assessed and revised for improvement.

Provide a descriptive overview of the various components of Porter’s value chain model as they apply to your CEO company. Identify the areas within the value chain needing to be strengthened

Porter (1985) suggested a value chain model in which the primary activities of a company are inbound logistics, operations, outbound logistics, marketing and sales, and service. The Boeing Company recognizes the last element—service—as its weakness and has dedicated much effort to improve it. Recently, the company has announced its goal of doubling profitability in four years (Cahill, 2016). As ambitious as this goal is, it is well supported by the corporation’s aspirations and technological innovations.

What are the central pillars of your CEO company’s corporate theory?

A corporate theory is something that identifies distinctive features about a company’s assets and activities and is aimed at making unique contributions to value creation (Zenger, 2013). Having a theory ensures that a company will continue to grow instead of remaining on the same level regardless of its strategic activities. The Boeing Company’s distinctive advantages are its wide network of operations and its international presence, as well as its ready access to technological advancements. In combination, these advantages shape the theory that allows for higher ambitions such as travel to Mars (Cahill, 2016). This approach encompasses the three major considerations for building a successful corporate theory according to Zenger (2013): foresight, insight, and cross-sight.

On General Strategy

Define and discuss the current business and corporate strategies of your team company using the language from our readings

The Boeing Company’s business and corporate strategies are largely based on two principal goals: to strengthen internal operations and to explore external opportunities. The company itself defines its enterprise strategies as follows: “operate as one Boeing, build strength on strength, [and] sharpen and accelerate to win” (“Our vision,” 2016, para. 4). Therefore, the company has adopted a corporate strategy to constantly improve the way it functions through critical assessment. This strategy also includes solidifying the company through encouraging ethical behaviors without damaging its flexibility. The business strategy is to expand and move forward by discovering new needs in the market that the Boeing Company can address effectively with its resources.

What are the strengths and weaknesses of the current strategies?

The strength of the current strategy is that it recognizes the importance of looking ahead, thus ensuring the company’s growth and movement toward new achievements through discovering uncontested needs and demand. Also, the corporation pays significant attention to designing plans for long-term development and cooperation with partners under newly arising market conditions. Such planning shows a strong strategic approach.

A possible weakness, however, is that the Boeing Company strives to centralize its activities, which may turn out to be a factor that hinders the corporation’s development. Prioritizing rapid growth over higher flexibility can jeopardize the company’s operations.

Identify the most urgent decision needing to be made to ensure the competitive sustainability of the company or to move toward a sustainable competitive advantage

As mentioned above, the issue that the board of directors of the Boeing Company is currently preoccupied with is ethics (see On Corporate Governance). It can be thus concluded that the company has acknowledged a serious current threat coming from unethical conduct. A lack of corporate ethics jeopardizes the management of internal operations and the achievement of strategic goals such as accumulating resources and gaining new strengths by reinforcing existing ones. Therefore, a necessary decision is to make the entire corporation follow the ethical principles issued by the board of directors.

References

Airline strategies and business models. (2016). Web.

Cahill, J. (2016). Boeing CEO’s goals don’t stop at interplanetary travel. Web.

Community engagement. (2016). Web.

Kim, W. C., & Mauborgne, R. (2004). Blue ocean strategy. Harvard Business Review, 82(10), 76-84.

Our vision. (2016). Web.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York, NY: Free Press.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 25-40.

Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Delhi, IN: Pearson Education India.

Zenger, T. (2013). What is the theory of your firm? Harvard Business Review, 91(6), 72-78.

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