The safety problems of Boeing 787 Dreamliner raised a great number of questions about the supply chain of this company as well as its reputation (Irving 1). One of the issues that are often discussed is the inability of the company to take control over the manufacturing and design process.
This paper is aimed at discussing the factors that could have contributed to the challenges that Boeing currently encounters. On the whole, it is possible to argue that Boeing failed to play the leading role of a leading assembler that could identify possible defects at an early stage. This is the reason why this corporation currently faces significant difficulties. This is the main argument that should be discussed in more detail.
It should be noted that the strategies of Boeing were subjected to criticism after two of their 787 Dreamliners caught fire due to the defects of their lithium batteries (Irving 1). These incidents prompted airlines and governmental agencies to ground these jet airliners (Irving 1). At this point, one cannot tell whether 787 Dreamliners will return to the market. There are several aspects should be considered in order to explain the origins of this flaws. It should be noted that Boeing strongly relied on outsourcing while developing this plane.
For instance, one can mention that this project involved 50 supplies; moreover, these organizations were working at 135 sites that were located in different countries (Walther 104). To a great extent, this approach was aimed at reducing the costs of development. However, one can argue that it is extremely difficult to monitor and guide the efforts of these different agencies.
Some limitations of this approach manifested themselves before the launch of this jetliner. For example, the company was not able to complete this project on time (Smock 57). When designing this airplane, the management of Boeing departed from its traditional approach to supply chain. As a rule, Boeing acted as the main producer that assembles the component parts provided by other firms (Tang 77).
In other words, this organization could detect possible defects. In contrast, while designing this jetliner, Boeing enabled other companies to act as assemblers (Tang 77). The company itself was supposed to foster cooperation among the suppliers. The most important indicator is that at least 70 percent of manufacturing processes were completed by business partners of Boeing (Tang 78).
This is the main difference that should be taken into account. At the very beginning, this approach only resulted in numerous delays. Nevertheless, it turned out that the problems were much more serious than the management expected. The main problem is that an organization might fail to ensure the quality of every component and assembly.
It should be noted Boeing often used the components manufactured by outside suppliers. Such a policy is not new for this company, and it is any possible for any organization to manufacture every component part.
For example, the lithium batteries installed on Dreamliner were produced in Japan (Plumer unpaged). Such a strategy can be quite justified because it helps to reduce operational expenses. Nevertheless, the suppliers of Boeing failed to detect the possible flaws of these lithium batteries or other component parts that could be the underlying cause of ignition.
Furthermore, even now the engineers cannot accurately ascertain the cause of these defects. This is one of the challenges that Boeing has to overcome now. More importantly, this corporation has to restore its reputation and regain the trust of major customers, especially airlines (Walther 104). This task is critical for competiveness of Boeing.
Overall, it is possible to identify several obstacles that Boeing could encounter while developing the Dreamliner. One of them is the necessity to coordinate the work of many agencies. This task might have been easier if Boeing had to work with several suppliers. Nevertheless, this activity becomes very challenging when a company has to interact with fifty suppliers.
Additionally, the corporation has to ensure the highest quality of the component parts. Again, Boeing was usually able to do it when the company was the main assembler of the component parts. However, in this case, Boeing entrusted this responsibility to other firms that could have very little experience in the assembly of jetliners. This is one of the main issues that can be identified. They resulted in the main deficiencies of their supply chain.
These examples indicate that the supply chain management can be critical for the long-term sustainability of manufacturing companies. The defects of 787 Dreamliner can threaten the reputation of Boeing, and this issue can be even important than the cost of recalling and repairing their airplanes.
One should take into account several important issues. First of all, outsourcing cannot be regarded as the only factor that contributed to the problem. As it has been said before, manufacturing companies inevitably have to use the components produced by other firms. The main problem is the failure to monitor the work of suppliers and ensure the highest quality standards. The management of this corporation should be aware of these challenges
Boeing Company is the world largest aircraft manufacturer. Aerospace Support (AS) is a division of one of the two major Boeing business units. The Company has tried to cut a niche for itself by trying to prove itself the market leader in provision of support or sustenance services to airplanes, throughout their life cycle. It should be understood that the support life cycle phase of a plane usually reaches when a plane has already been sold, delivered and already in use by customers.
The products of Boeing Company in this support system includes modification; training, repair and provision of spare parts to its customers. Provision of these products to the highest degree assists many customers for the reason that some of these products such as modification, though performed at a cost, may sometime be much expensive and mostly when provided by other Companies relatively to the one that sold the airplane.
Being the world largest planes manufacturer and a market leader in this sector is not a small achievement at all. To gain such success, there must be models, theories, concepts and strategic ways in which Boeing Company at large and Boeing aerospace support deploys so successfully to drive performance and be competitive within their sector. Among the concepts and strategies deployed by Boeing aerospace support, include the way in which the company makes use of the state-of-art technology.
By use of above range technology, the company has been able to provide both indisputable goods and services to their customers in a way that is unmatched by its competitors. Such advanced technology equally gives the company a strategic position in the sector, as well as facilitating improvement of its operations (Mather, 2005, P.56). Correspondingly, the company has equally been propelled to such height by the ways in which it handles it staffs and customers.
Customer satisfaction is among the factors that drive growth and profitability, and mostly in a service offering business (Heskett & Jones, 1994, P.8). The authors further notice that in order to guarantee the satisfaction of its customers, a service offering business must manage all the aspects of its processes that affect its customers satisfaction.
Service Profit Chain
Service-profit chain is one of the strategies deployed by Boeing aerospace support in order to remain competitive in the market space. By this strategy, the company has been able to make sure that its customers are very satisfied by the quality of services it offers. The service-profit chain works when employees satisfaction enhances internal service quality. In return, employees satisfaction improves employees loyalty that enhances productivity.
On the other hand, superior output implies better external services significance for customers. Incase such a strategy can be competently implemented, Boeing aerospace support can actually benefit from improving performances and sustainable competitive advantage in the market space they occupy.
Sometimes it becomes necessary for a business to understand its level of performance and at the same time become conscious of the strength of its relationship with its customers. This aspect significantly helps a business to determine its strength and similarly the level of its customers loyalty.
This is usually achieved through collection of customer-focused data that indicates customers loyalty, satisfaction and the perceived value. It should be remembered that, Boeing Aerospace Support was a Malcolm Baldrige award winner in the Service Sector Category. Research on its service operations found them excellent as per the Malcolm Baldrige criteria. Continued research is key to the built in excellence in service provision at Boeing Aerospace.
To collect data, for instance data indicating customer satisfaction with the products and services that are offered by Boeing aerospace support, surveys tailored to those specific products and services are used. The respondents are expected to provide information concerning their knowledge of the question asked. From the data collected, analysis is done and conclusive decisions reached. Such decisions include improvement on particular areas, which according to the analysis was reflected to be in need of improvement.
Customer loyalty is also established through the same way, where customers are asked questions specifically tailored for the product mentioned. From analysis of the data collected, an individual can tell whether the customer base of the company is declining or expanding.
One of the greatest strength of Boeing aerospace is its ability to formulate policies and equally create a strategic advantage by putting into operation the intent of these strategies into action (Stern, 2002, P.134). Stern further observes that through a systematic approach to planning, a company can build up and carry out key strategies to grant value added products and services.
Boeing aerospace has utilized this chance to provide value added products to their customers through it focus on performance excellence. Being a recipient of Malcolm Baldridge Award, the company has since then improved and for this reason expanded its planning framework from a simple process to a complex systematic approach.
In order to achieve the strategic objective of the business, the Company engages the entire organization. This is for the reason that all members of the company from high in the leadership echelon to the subordinate member are equally important, if the Company is to experience growth and profitability.
Total Integrated Marketing
Total integrated marketing is yet another tool utilized by Boeing aerospace support and which indeed has catapulted the company to the level it is today. The strategy involves winning and at the same time retaining customers over the long term, for the sake of business prosperity (Hulbert et al, 2005, p.45). Through this strategy, the company has been able to focus on the growth and profitability of the company. These customers form the foundation on which the profitability structure of the company is established.
In order to retain these customers, the company has to present them with the best services, not only worthy the cash they pay, but also to appreciate their loyalty to the company. Through this strategy, Boeing aerospace support has been able to maintain a fair profit over the years; this is feat that has not been met by many of its competitors. This means that in the market space that the company occupies, it has a strategic advantage compared to its rivals.
Customer Life Cycle
Once Boeing Company has sold and delivered a plane to its customer, be it a military or a commercial plane, it stands a better chance than its competitor does to tell the type of modification the plane may need in future. Additionally, the company is best placed to tell the type of training necessary for the clients staffs in order to make it possible or easier for them to handle the plane, or the repair parts the plane may need in future in case it develops a mechanical problem.
Upon realizing this, Boeing aerospace support, which is a part of the two major business division of Boeing Company, makes use of this chance to implement a strategy called customer life cycle (CLC). Organizations that implement customer life cycle as a service strategy aim at delivering lifetime value to a customer. This means that the organization focuses on a product offering that serves the customers in a lifetime i.e. responding to their characteristic across lifes stages.
From this strategy, Boeing aerospace support ends up attaining a strategic advantage over its rivals, for the reason that the company is assured of continuous supply of its products such as spare parts to the customers plane, as well as providing the rest of the services. This propels the companys sales, which eventually enhances the company profitability and growth (Coe, 2003, p. 20).
Resource Based View
The way resources are applied in a company or organization is of paramount importance. Internal capacity of an organization is determined by the kind of resources at its disposal. Whether a company is to be successful in a competitive market can hugely be determined by the way its resources are applied and utilized (Norton, 2000, p.76).
In order to overcome this predicament, Boeing aerospace support has systematically applied a theory called Resource Based View. According to resource based theorists in strategy, companies can establish a competitive advantage based on how they build resources and apply the same resources towards organizational goals. In order for a company to create a competitive advantage, it must not own or possess resources owned by other numerous competitive companies.
A good example of the way Boeing aerospace support has taken advantage of this theory and competently utilized it, is through technological advancement. State-of-Art Technology is one resource that Boeing aerospace Support, has managed to outdo its competitors.
To achieve such advanced technology requires a lot of money, which many companies cannot raise. This implies that through such elaborate technology, Boeing aerospace has been able to provide products and services that its rivals cannot match, not only in monetary value, but also in Quality. Eventually, the Company creates a competitive advantage and in the process becomes the market leader.
Although it may sound obvious, employees are the main determinants of the success or failure of any organization (Godfrey, 2000, p. 219). This is the reason why, after becoming conscious of this, Boeing aerospace tried to improve the effectiveness and efficiency of their workforce through creation of conducive environment for learning.
Availability of competent staff has many advantages to an organization, in that they help execute obligation with a lot of professionalism and competency. Similarly, such competent or high trained staffs will enable the company reduce unnecessary cost of operation caused by redundant mistake and errors. Staff training will therefore enhance competitive advantage in a Company.
Boeing Company believes that high skilled employees stand a better chance of enabling the company to achieve both its short and long-term goals. In this perspective, the company has hugely invested in education, training and development of it staffs. This investment by Boeing includes a charitable tuition support program and a number of distinctively tailored programs. There are a number of techniques in which it staffs are trained.
The company implements the formal system where test are given after the end of a lesson in order to reinforce learning (Griffin, 2007, p.167) Similarly, there is some online training where a person is given a lecture and afterward provided with a test to check his understanding.
Finally, to those who successfully complete the course they are issued with a certificate from the company reflecting what someone was trained on, as well as the grade that the trainee attained. A number of advantages ensue from this type of training. Boeing Company after successfully training a person usually retains that staff and in many cases, such a person is promoted or receives a higher income. Incase such a program is well managed it is capable of delivering outcomes that sustain performance enhancement and a spirited advantage.
The Current business environment has become so unpredictable and sometimes very volatile for a business to flourish. This tendency has heavily been because of world economic shock that has affected businesses worldwide regardless of their sizes or monetary worthiness (Takahashi, 1987, p.45). Takahashi in addition observes that it is in this perspective that only those businesses, which are adoptive to changes, will overcome such economic turmoil and other volatile circumstances that may face businesses in the near future.
Having equally experienced the same hardships and yet be able to maintain it number one spot as the world leading plane manufacture, Boeing company in general and Boeing aerospace support must be strategically strong compared to their competitors on matters pertaining changes (Kotler, 1982, p.234). Among the strategies that the company could have taken advantage of, is their ability to adopt rapidly when faced with changes in condition.
In case of changes in their customers demand, the company is well versed with the appropriate technological knowhow, which gives it a spirited advantage compared to its opponent. In most cases, one will realize that the opponents to Boeing Company are mostly incapacitated in some fundamental areas like finance, which makes it completely impossible for them to mount any competition that can actually challenge Boeing aerospace support.
Key Success Factors
It is important for internal managers and external investors to be aware of how a business organization is likely to perform in both the medium and in the long-run (Parmenter, 2010, p.34).
Parmenter further notes that some of the reasons why an internal manager may wish to know how a business is likely to operate both in the middle and in the end, may include their desire to make the necessary amendments to prevent chances of the business incurring any loss. Similarly, the manager may also be tempted to know the areas that need strengthening in order to enhance the company generate more revenue.
On the other hand, an investor may wish to be acquainted with information on the performance of a Company in order to be able to make a rational decision entailing whether to really invest his money on that particular company or shift his mind and invest on a more lucrative company. Boeing aerospace has been able, for a long time, to realize profitability in the course of its business operations, as a result of being able to assess the chances of a particular venture becoming successful or not in the near future and in the long run.
The whole process can be summarized as identifying the key performance indicators or the key factor that are likely to determine success. Boeing Company in general and Boeing aerospace support in particular have applied key success indicator identification as a strategy thus recording such immense success against their opponents. Through identifying the success factors in an industry or during given times, the company has been able to create a competitive advantage over its opponents.
Value Creation
Many companies rush to drive growth at the expense of value creation. This is however not the right way of operation and mostly when an organization is expecting long-term growth. Through creation of value, a company is not supposed to be anxious on the issue of growth. Growth comes automatically after a company has given value development the first priority. Once a company has attained value growth, it means that its customers can now afford to enjoy the quality of products they have been yawning for (Elsdon, 2003, p.54).
Putting value creation first gives companies several advantages over their rivals in driving for cost-effective and sustainable growth. A thriving value creator by no means suffers from a capital deficiency (Fernandez, 2002, p.76).
Fernandez additionally states that they can generate enough capital internally or draw the capital they have need of from the market, which constantly keeps on looking for a lucrative investment possibility. Companies that put value creation first will over time create a group of managers who possess higher standards and better capability than their opponent does.
In order to rank first in the world, Boeing Company has adequately over time produced goods and services that have value. This has been experienced following the inexhaustible demand of its products by variety of customers the world over. The planes made by the company could not be as marketable as they are today, had they had no value in them.
The creation of value by Boeing aerospace is one of its strategies which though has been developed over time has been able to facilitate the company to create a competitive advantage over its opponents. Similarly, Boeing aerospace Support has equally provided services and products with value, and that is why they have cut a niche for themselves as the market leaders.
In the course of provision of its services, Boeing aerospace find it noble to have a more interactive affiliation with their clients, so that the customers do not feel left out in the progressing function or operation. For example, in case of modification and training, the company will perceptibly make use of a physical environment in which the service development is progressed. This physical environment will enhance the interactivity between the company and the customers attainable (Rao, 2004, p. 35).
Servisescape
A servicescape is defined as the environment in which the service is bought collectively and in which the seller and customer interact, collective with substantial commodities that makes easy the performance or communication of the service. This theory has for a long time been competently used by Boeing aerospace support and has actually enhanced the relationship between the company and its customer.
This has equally boosted the loyalty of the customers to the company a matter that has made it possible for Boeing aerospace to create a competitive advantage over its rivals. In case a company take advantage of such a theory and competently manage its affairs as stipulated, it will produce outcomes that support performance improvement and competitive advantage.
Serqual
It is possible for a company to experience some service gap between the organization and its customers (Switalski, 1990, p.156). In this case, the service gap could have caused some damage already to the company before it is realized. In order to avoid such future occurrences, Switalski further observes that some companies make use of SERQUAL, which is a survey tool that is well demonstrated and extensively recognized.
Once the service gap are recognized SERVQUAL can once again help the company to prioritize those gaps in term of the impact they may have on the quality of service provided by the company. The same instrument will also assist the firm in knowing the cause and how the gaps have really existed there.
Boeing aerospace has been able to competitively deal with its opponents through utilizing services provided by this instrument. In the end, the instrument has helped the company to avoid incurring preventable losses similar to its rivals for the reason that most of the time it will be aware of such incidences that causes such great loss to incur. This practice has enhanced the company chances of delivering results that sustain performance enhancement and competitive advantage.
Conclusion
From the report on Boeing aerospace above, it is in order to state categorically that mounting a competitive force that can drive a company to number one rank in the world is not a simple feat. Similarly, in order for a company to drive its efforts in trying to clinch the market leader stature equally need a lot of patience and other valuable information and resources that your fellow competitors may not so easily attain.
Boeing aerospace has achieved all there is for a company to achieve. Following the procedure in which the company has travelled however, it is correspondingly important to state that the company has had quite a great deal of patience and a mountain of work to propel its effort for such a stature.
Reference List
Coe, J., 2003.The Fundamentals of Business-To-Business Sales and Marketing. McGraw-Hill Professional: New Jersey
Elsdon, R., 2003. Affiliation in the Workplace: Value Creation in the New Organization. Taylor & Francis Publishers: New York.
Fernandez, P., 2002. Valuation Methods and Shareholder Value Creation. CIPD Publishers: London
Godfrey, P., 2000. Doing It Differently: Systems For Rethinking Construction, Thomas Telford: London.
Griffin, J., 2007. Behind The Logic. Cengage Learning Publishers: New Jersey.
Heskett, J., L., and Jones, T., O., 1994. Putting Service -Profit Chain to Work. Harvard Business Review: Massachusetts
Hulbert, J., M., Capon, N., & Piercy, N., 2005. Total Integrated Marketing: Breaking The Bounds Of The Function. Kogan Page Publishers: New York.
Kotler, P., 1982. Marketing For Non-Profit Organization. Prentice Hall Publishers: New York.
Mather, D., 2005. Capabilities for Strategic Advantage: Leading Through Technological Innovation. Palgrave Macmillan: New York.
Norton, W., 2000. The Resource-Based View: An Empirical Assessment Of The Joint Influence Of Distinctive Competencies And Functional Strategies On Firm Performance. UMI publishers: Louisiana.
Parmenter, D., 2010. Key Performance Indicators: Developing, Implementing, and Using Winning KPIs, John Wiley & Son: New Jersey.
Rao, R., M., 2004. Service Marketing. Pearson Education: New Delhi.
Stern, N., 2002. A Strategy for Development. World Bank Publication: Washington
Switalski, D., 1990. Servqual: a Test of Structure and Application. University of Florida: Florida.
Takahashi, N., 1987. Design of Adaptive Organizations: Models and Empirical Research, Springer publishers: New York.
Disclosure of financial information is an important component of accounting practices. In some cases, companies time the release of the information in an attempt to manipulate stock prices. The following paper discusses the violation of the full disclosure principle by Boeing.
Based on the information from the case study, it is possible to identify three main groups of stakeholders. The first group includes the stockholders of McDonnell Douglas, who received payment in Boeing stocks issued to pay for the acquisition. The second group includes the management of the Boeing company as well as all employees associated with the decision to withhold financial information. The third group includes the stockholders of Boeing stocks who obtained them prior to the acquisition of McDonnell Douglas.
The main ethical issues are related to the decision to withhold Boeings financial information. According to the case study, production line inefficiencies have resulted in significant cost overruns (Kimmel, Weygandt, & Kieso, 2015). The disclosure of this fact was considered a major threat to the companys valuation on the market. By extension, the decline of stock prices will require the revocation of a major deal, which is highly undesirable for Boeing. In other words, Boeing managements decision can be considered unfair practice aimed at the concealment of important information from its stockholders in order to avoid the expected complications.
The main accounting principle relevant to the case is the full disclosure principle. According to it, a business is required to provide all of the financial information necessary for financially informed stakeholders to make respective decisions. The disclosure is made through one of the established information channels, such as a financial statement or a dedicated section in the companys annual report. Importantly, the principle also requires the disclosure to be timed in accordance with predefined schedules. Understandably, the nature and amount of information considered necessary can change over time. Nevertheless, failure to comply with it in order to mislead the stakeholders is considered a violation.
It is important to note that the information in question was eventually released, resulting in the anticipated decline in the price of stocks. However, the time chosen for the announcement made it impossible to revoke the deal with McDonnell Douglas. Such an approach is unethical for two reasons. First, it compromises the integrity of the acquisition by allowing the management to keep the price of stocks high artificially. Second, and, perhaps, more importantly, it relies on emotional and psychological aspects of human perception. In the example above, one of the factors expected to reduce the adverse effects for the company was the funeral of a public figure. From this perspective, it can be considered an attempt to manipulate human emotions for financial gain, which is unethical from a humanitarian standpoint.
Considering the information above, it would be more appropriate for the CEO of Boeing to disclose the information once it becomes available to the companys accounting department and acknowledge its implications for the recent acquisition. Admittedly, such a strategy would not help to avoid the revocation. However, in the long term, it would have a positive effect on the companys reputation.
Finally, it is important to identify possible implications of the decision for investors and analysts. It is possible to assume that Boeings top managements actions did not violate any obligations. However, it constitutes an example of unfair business practice and, by extension, suggests that similar unfair practices might be used by the company in the future. As a result, the market valuation of Boeing can be considered unrepresentative, repelling potential investors and, by extension, inhibiting growth.
As can be seen, Boeing managements decision is ethically flawed. In addition to violating the full disclosure principle, it compromises the trust of its stockholders. Such actions are known to have adverse long-term effects and are to be avoided.
Reference
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2015). Financial accounting, binder ready version: Tools for business decision making (8th ed.). Danvers, MA: John Wiley & Sons.
Organization culture is defined through the application of various aspects of the firm including rules, leadership, organization structure as well as the daily activities that determine the work processes.
In most cases, organization cultures are perceived as the processes that guide and determine the behavior of employees as well as other stakeholders within the firm.
Besides, organization culture promotes integration of the belief system as well as internal and external work processes undertaken by the organization.
The paper examines the concept of organization culture particularly within the precincts of Boeing. The paper will first examine the various cultural aspects of the firm before looking into the causes of several aspects of the organization culture.
Introduction
Organization culture is defined through the application of various aspects of the organization including rules, leadership, organization structure as well as the daily activities that determine the work processes. In most cases, organization cultures are perceived as the processes that guide and determine the behavior of employees as well as other stakeholders within the firm.
According to Hofstede (2001), organization culture is the way through which people within the business think and act. In other words, views and actions of individuals within the organization determine the cultural practices.
Essentially, the organization culture deal with the belief system enshrined within the set goals and objectives of the firm (DeRoche, 2008). Besides, organization culture promotes integration of the belief system as well as internal and external work processes undertaken by the organization.
In essence, cultural aspects of the organization are critical in enabling employees to understand the differences that exist between individuals as well as the external environment.
Organization culture is critical particularly in the situations where new strategies that affect the basic norms of the organization need to be implemented (Weick, 2007). In fact, organization culture exists in various types and dimensions.
According to Schein (2004), organization culture provides ways through which people within the firm find solution to various challenges. As such, organization cultures influences the behaviors of individuals as well as work processes. Conversely, organization culture can be influenced.
In order to have positive influence, organization culture should be imbued within the core values of the firm. Moreover, culture influences various aspects of the organization ranging from recruitment strategies to compensation policies (House, Hanges, Javidan, Dorfman, & Gupta, 2004).
Cultural Aspects of Boeing
Boeing is one of the major multinational corporations in the airline industry. Like any large firm, culture within the organization influences all the processes ranging from production to the relationship between the business and various stakeholders.
Besides, various aspects determine culture in Boeing. In fact, behaviors, activities and work processes determine the cultural values of the organization.
In Boeing, there are practices, management behaviors as well as activities that determine the culture of the organization. For instances, the Boeing management embraces diversity within the workforce. Diversity is one of the cultural aspects that have led to the success of the organization.
In fact, being a large corporation, diversity within the workforce cannot be avoided. In addition, diversity in views, technical skills as well as competencies are inevitable. As such, the firm must embrace diversity within all work processes in order to be successful.
The manner in which the organization manages diversity determines its success. Boeing values diversity in all levels of the organization and work processes. Therefore, diversity is one of the cultural aspects of the firm that has contributed to its success.
Besides diversity and inclusion, the firm values other cultural aspects including corporate citizenship, trust and respect, safety, integrity, quality, hard work and success as well as innovation.
Diversity and Inclusion
As indicated, Boeing consists of diverse workforce, customers, suppliers as well as other stakeholders. Taking advantage of the differences existing between the diverse groups is critical for the success of the firm.
In fact, diversity within the workforce is the central competency that provides the firm with increased competitive advantage (Goffee & Jones, 2006). In the current global competitive market, engaging diverse employees and being inclusive at all levels of business processes is critical for the attainment of the organizations objectives.
The firm tends to capitalize on the diverse competencies existing within the workforce to attain the set objectives. In fact, all employees are made to acknowledge different roles they play in the organization and orient their skills, strengths and perspectives towards attaining the set goals.
In addition, the employees competencies, strengths and views are valued by the organization. Moreover, Boeing tends to encourage participatory and inclusive workforce at all levels.
In an environment where the employees competencies, strengths and views are valued by the organization, there is likelihood of increased positive outcomes on set goals due to derived motivation (Belassi, Kondra, & Tukel, 2007).
At the organizational level, the firm organizes teams with complementary skills to achieve a particular goal. In addition, line managers are allowed to come up with individual strategies that enable the attainment of the required objective.
Further, the firm promotes integrated teams of site leaders as well as line managers working together to generate an all-inclusive culture where respect of individual contribution is highly valued.
The teams provide leadership and knowledge-based opportunities, enhance communication between individual employees and immediate managements as well as assist in the realization of the managerial multiplicity strategies.
Besides, the organization has various programs that promote and help in the achievement of the diversity strategies. In fact, the firm has created internal programs that work together to promote various employees competencies and skills.
Important internal events and programs such as training, heritage month commemorations, diversity summits and mentoring programs are critical in promoting diversity and inclusiveness within the organization. Training is provided on areas that are concerned with importance of workforce inclusiveness.
In addition, training on cultural, gender and global conceptions are critical in eliminating stereotypes and micro-inequities within the workplace (Gupta, Hanges, & Dorman, 2002). Moreover, such trainings are critical in the understanding of intergenerational differences and the way the variations positively influence the cultural change.
The organization also promotes diversity within the workplace through recruitment. In fact, it is through such recruitments that the firm has managed to get the competent workforce.
The new recruits normally undergo training process through which the organizations values and expectations are inculcated. At individual level, employees are provided with enough space to think and act independently.
Trust and Respect
The firm take into consideration the views and actions that contributes positively to the progress and attainment of the firms goals. In addition, the firm respects the views of employees as well as other stakeholders particularly views that encourage the attainment of goals.
Essentially, the firm act with veracity, respect, reliability as well as sincerity in all activities within the business processes. Besides, all employees are encouraged to uphold the corporate values.
Corporate Citizenship
The organization and all its stakeholders including employees appreciate the fact that they belong to the wider global corporate citizenship. In addition, the firm promotes initiatives that enhance the developments of communities in which it operates.
Through such responsibilities, the firm shows close partnership with various communities and customers it serves. Activities that promote good corporate citizenship are encouraged at all levels and places the firm operates.
Besides, all employees are made to believe that appropriate corporate actions geared towards developing communities as well as customers are critical for the growth and progress of the firm.
Moreover, the firm promotes good health and well-being of all stakeholders including their families as well as the immediate communities in which it operates.
Corporate social responsibilities such as protection of environment, community help voluntarism as well as support of education indicate the cultural commitment of corporate citizenship (Walker & Schmitz, 2003).
The Success of the Stakeholders
The firm is committed to the increased achievements of all the stakeholders. Through profit-making operations, the firm provides customers with the best value innovation. In addition, the capabilities of making profits enable the firm to provide customers with products and services that increase their competitiveness in their own markets.
In other words, the firm is committed to offer products and services that increase the competitive edge of the clients businesses. Besides, the increased revenue enables the firm to provide a better working environment to the employees, offer attractive and competitive compensation as well as the capability to have a share in the success of the firm.
Further, the investors are rewarded with the increased shareholders value. In addition, the firm is committed to conduct the business within the precincts of legal procedures and ethical values with the suppliers as well as strengthening communities around the world.
Safety
Safety is one of the significant aspects that the firm values and promotes in all the work processes. With the type of products offered by the firm, safety is highly emphasized. In addition, safety is valued both at the workplace level and at the level in which the client utilizes the final product.
In other words, the manufacturing of safe products is one of the fundamental values of the firm. Safety also involves taking into consideration the health status of the employees, clients as well as the end users of the firms products.
The firms safety policy is that employees are responsible all the safety measures put in place. Besides, employees understand that in as much as the set objectives, excellence, reduced costs and schedule need to be met safety is not compromised.
Integrity
Integrity is one of the cultural aspects the firm encourages. Integrity is closely linked to the observance of ethical values and standards. In order to ensure the existence of honesty within the workforce, the firm is committed to work within the precincts of ethical requirements.
In addition, employees understand the accountability required in their actions. In fact, the firm takes responsibility where collective actions are applied.
Reasons why the Values are Culture
Corporate culture often contributes to the success of the firm. In fact, corporate culture is embedded in the core values of the firm. In most cases, culture is the common practices that help the firm attain its goals and objectives.
As such, corporate cultures that encourage success are often positive in nature and promote values that orient the business processes towards attaining the set objectives (Hofstede, 2001).
From the basic definitions, corporate culture is the core of business operations. In other words, corporate culture determines all the actions and informs the firms decision-making process. Essentially, corporate culture indicates the manner in which all the operations of the firm are undertaken.
Actually, organization cultures are the fundamental ethical values and standards that business processes are based (DeRoche, 2008).
In addition, corporate culture encompasses perceptions and commitments of the organizations employees as well as the stakeholders. Moreover, new employees observe and perceive corporate culture through observations of both internal and external business interactions.
Besides, organization culture are found within the actions of employees, customers, suppliers, investors and controls all the business processes including communications, morals and standards (Schein, 2004). In addition, corporate culture is derived from national or societal cultures.
In large organizations such as Boeing, corporate culture is derived from the national culture. The core values of the organization provide a framework through which corporate culture is practiced within the firm.
Causes of the Organization Culture
In most cases, organization culture is determined by how the firm is perceived by internal players as well as what other people are saying about the firm. In other words, corporate culture is critical in the development of the firms brand. In fact, Boeing needs organization culture in order to be identified as a distinct firm.
Besides, the past events provide a great symbol about the firms beliefs values and perceived behaviors. In addition, the daily rituals and routines of the firm determine the expected behavioral outcomes.
In other words, the daily actions as well as behaviors of workers signals acceptable behavior and determine the expectations of the firm in given state of affairs and the values upheld by the management.
Moreover, the visual representation of the firm symbolizes the beliefs and values of the firm. Further, the control system of the firm, structure, power influence and rewards determine the firms values. Essentially, Boeing needs culture that is critical in the management and identification of the brand.
Effects of Culture
Effects of Culture on the Organization
Culture has a greater influence on the organization. As indicated, organization culture determines all the work processes and influences decision-making. Besides, culture has promoted innovation, assembly of quality products as well as adhering to the ethical standards of the industry.
Moreover, the organization has a cultural behavior that enhances profit sharing. The culture of share ownership increases the employees motivation and productivity and decreases turnover.
In addition, cultural practices of the firm that offers higher quality of life and more meaningful work impact directly on the firms profits through enhanced productivity.
In addition, the culture of share ownership enhances greater innovation, higher reliability and quality as well as more skillful and committed employees at all levels.
Effects of Culture on the Firms Employees
Corporate culture influences the actions of employees and decisions the firm make concerning the work processes. Essentially, through the applications of values, ethical standards as well as the organizational practices, the firm is providing meaningful work to employees and helps the workers develop and realize their potential.
The organization practices also enables employees develop their skills and competencies within the areas of specialization. Besides, the firm makes every effort to reward their employees with fair remuneration as well as providing favorable work environment. In addition, the organization cultivates respect in the work environment.
In fact, organizational values and policies that include employees empowerment, better dissemination of information throughout the firm, increased balance between work, family affairs and leisure as well as advancement of employees skills remains critical in the attainment of greater satisfaction and increased output among employees.
Moreover, cultural practices demonstrated in ethical practices, management and human resources policies enhances greater diversity in the workforce, incessant skills development and training, concerns with the employability as well as job security for all employees.
The impact of the corporate culture on society
Various aspects of the Boeing corporate values have direct impact on the society. For instance, corporate citizenship is a Boeing practice that is geared towards developing communities. As such, various communities around the globe have benefitted through diverse programs under the corporate citizenship initiatives.
Moreover, the firm promotes good health and well-being of all stakeholders including immediate communities in which it operates. Corporate social responsibilities such as protection of environment, community help voluntarism as well as support of education indicate the cultural commitments that support societies.
The Dynamism of Organization Culture
One of the major characteristics of corporate culture is its dynamic nature. Essentially, a good and successful corporate culture should be dynamic. In other words, the organization should transform its practices depending on the changes in the external environment. Essentially, organization culture should not be static.
Core values of the firm should be framed in such a way that they become adaptable to the situations within the environment. In other words, they should be flexible depending on the circumstances. As such, cultural values of Boeing are adaptable to the conditions of the environment.
Other Aspects of the Organization Culture
Quality and Innovativeness
The firm encourages continuous improvements on the products and services. In fact, the firm has put in place activities that promote excellence and innovativeness among employees.
Innovativeness is one of the cultural practices that directly increase the firms competitive advantage (Kimbrough & Componation, 2009). Besides, innovativeness among employees is encouraged particularly in the development of new products and services.
Stability
One of the most important aspects of the organization culture for Boeing is its stability. In other words, there is consistency in terms of individual behaviors within the organization. Despite changes that have occurred overtime, there are certain characteristics that the organization has maintained and passed down through various generations of employees.
For instance, problems are solved in the same way and behavioral efforts of employees continue to be directed towards attaining the goals of the organization.
Team Orientation
Team orientation is also another important cultural behavior in Boeing. In fact, almost all the work processes are organized around teams. In addition, the team members are offered enough space to determine their own strategies on how the assigned tasks can be achieved. Along the assembly line, the teams have to be coordinated in order to achieve the desired outcome.
Risk Taking
Risk taking is closely associated with innovativeness and entrepreneurial capabilities. In Boeing, risk taking normally occurs at individual levels. In fact, individuals taking risk often come up with new products and services and hugely contribute to the organization success. Individuals are allowed to take risks at Boeing but accountability for their actions is highly encouraged.
References
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Boeing 737 Max is one of the newest plane models produced by Boeing, that first took flight in 2016. Ever since, it had suffered 2 crashes, which resulted in the loss of 346 passengers and 2 crews. The company is blamed for these tragedies, as the root of all problems is seen in poor quality control, constrained time schedules, and poor pilot training, among other factors. Boeing is known for implementing Six Sigma, with over 360 personnel trained in its tenets, methods, and practices. The catastrophe could have been avoided, had Six Sigma remained prevalent during the engineering and production of the Boeing 737 Max.
Introduction
Boeing 737 Max is the fourth-generation narrow-body airplane produced by Boeing, as a reconfigured and updated design of the Boeing 737, featuring better engines, aerodynamic improvements, and modifications to the existing airplane ( About the Boeing, n.d.). Despite the features mentioned by the company after its first deployment in 2016, the plane turned out to be a major fiasco for the company, proving to have major safety and quality issues, which caused numerous groundings along with 2 crashes that caused the deaths of 346 passengers and 2 crews in total (CNA, 2019). The blame was placed on insufficient testing, quality, and preparation of pilots. The purpose of this paper is to analyze the failures of Boeing through the prism of Six Sigma.
Summary of Both Crashes
The first crash happened on October 29, 2018, near Jakarta. An Indonesian flight owned by Lion Air crashed into the Java sea soon after leaving the airport. The crash that took the lives of 189 passengers and the crew was attributed to an erroneous angle-of-attack caused by the defective MCAS unit, which ordered an automatic nose-down trim, which the crew was not trained to deal with (CNA, 2019). The lack of appropriate training in flying Boeing 737 Max was also blamed on the company, which had declared, upon releasing the new machine, that pilots needed no additional training to fly it.
The second crash occurred on March 19, 2019, with an Ethiopian Airlines flight, which crashed under circumstances similar to tragedy in Jakarta, claiming the lives of 157 passengers and the crew (Gates, 2019). The perpetrators were declared to be similar ? the pilot was unable to turn off the MCAS unit and manually pull the plane out of the pivot, which resulted in a crash 6 minutes after leaving the airport in Nairobi. Although the company claims that the pilots have received proper training after the first incident, they deny any pilot responsible for the crash. MCAS remains the only potential candidate for causing the crash.
Lean Six Sigma and the Airline Industry
Lean Six Sigma is a continuous methodology for quality improvement, that is utilized throughout the airline industry by companies such as Boeing, Airbus, and numerous others. The primary objectives of the system are to reduce waste and improve the quality of the products, processes, and services by eliminating variance. It is a data-driven approach that analyzes the information about process performance, seeks to enhance value-adding activities while removing wasteful and pointless operations (Lee, 2018). As a result, the process is optimized and controlled at every stage, resulting in faster, less wasteful, and more efficient production.
Boeing is allegedly committed to following Lean Six Sigma procedures, as prior to the 737 Max fiasco, the company had a reputation for excellent quality, high safety standards, and high training standards for pilots allowed to operate their machines. The companys reliability and quality assurance director boasted that the company employs over 300 Six Sigma green belts and 60 black belts in order to exclude any chances of defects that might lead to the loss of life or financial costs for Boeings clients (Lee, 2018).
Reasons for Boeings Failure Through the Prism of Six Sigma
Many observers note that the primary reason for the poor quality of the MCAS unit of the Boeing 737 Max model, as well as other constructional, operational, and training issues, lie in the effort to push the product quickly enough to provide it to potential customers as soon as they were ready to replace their old models with new ones. The main pitches that Boeing offered were the improved capacity, quality of engines, reduced fuel consumption, speed of production, and the lack of necessity to retrain personnel to use it. At the same time, it violated several aspects of safety and quality control, as outlined by the Lean Six Sigma paradigm, namely:
Testing and quality control: Being pushed by the circumstances of the market and the promises made to shareholders and customers, Boeing neglected to properly test the systems in order to save time and keep production costs down (Ma, 2019);
Pilot training: Six Sigma puts an emphasis on ensuring that employees and customers know how to properly utilize the plane in order to ensure the safety and security of its passengers (Gates, 2019). Boeings failure to inform and train the pilots in disabling MCAS in the case of an emergency caused the crashes of both planes.
Downplaying of the planes features. Recent reports indicate that in order to pass FAA inspection, various systems were either left not mentioned or avoided (Ma, 2019).
Poor resource allocation: Due to time constraints placed on the project, each part of it lacked either the appropriate time or human resources allocated to it. One of the important tenets of Six Sigma is to ensure that the processes receive exactly as much time and personnel as needed, no more and no less (Lee, 2018).
Cost-driven corporate culture: As reported by Ma (2019), the product development and production stages were largely driven by cost-efficiency. Six Sigma achieves savings in money by implementing high-quality standards. Boeing did so by setting clear budget limits and forcing the engineers to adhere to them, often at the cost of quality.
As it is possible to see, all of these practices violate the tenets of Six Sigma in one way or another. Quality control was rejected in favor of speed and direct cost-saving practices that contradicted the basic premises of the practice.
Six Sigma: Costs of Poor Quality
The reasons why the high standards of practice promoted by Six Sigma are important in the airplane production industry lies in the incrementally high costs associated with poor quality. A poorly-made toaster may malfunction and cause a short circuit; a poor-quality car may cause the loss of one or several lives in a roadside accident. A systematic mistake in the construction of an airplane can kill hundreds of people, which is what happened in Nairobi and Jakarta. The identified costs of poor quality for Boeing are as follows:
Value of human life. It would be unethical to measure this point in a monetary equivalent, as it takes precedence over any other costs. Any industry that deals with the safety and security of individuals on such a scale are expected to have the highest standards of quality.
Costs of improving the performance of the flight control system. Since MCAS was to blame for nearly all groundings and crashes that have occurred with the Boeing 737 Max model, the company is forced to ground all planes, fix the issues of the MCAS unit, and run thorough tests in order to ensure its safety. The time and money expenditures associated with these post-factum procedures are significant.
Defense and settlement of legal claims: As it stands, Boeing is engaged in numerous lawsuits from Leon Airlines, Ethiopian Airlines, the victims of the crashes, and other organizations that feel the company engaged in deceitful practices that caused the tragedies. Investigations into how the plane was certified are also underway.
Losses of future orders: After the crashes, many airline companies that considered replacing or adding the new Boeing 737 Max planes to their fleets have reconsidered, which caused massive losses in potential orders.
Long-term damage to the Boeing brand: It will take years for the accidents to be forgotten by the international community, which weakens the company brand name, improves the standing of its competitors, and results in long-term losses in contracts and money.
As it is possible to see, the potential costs for Boeing were significant, meaning that the decision to save money and time on the quality of software testing and development was extremely flawed. The costs of testing the software and issuing an appropriate upgrade are relatively small, compared to the existing and future losses of Boeing.
Conclusions
In airline industries, it is unacceptable to save money and time at the expense of quality. The case of Boeing 737 Max is a case study demonstrating the truthfulness of such conclusions. Had the company not step away from the tenets of Six Sigma already implemented in its production and operational processes for years, the company would have suffered minor losses in orders but produced a high-quality product that would have made Boeing proud. Instead, its brand name was ruined, the company faces numerous charges, and over 346 lives were lost ? the cost of poor quality.
When Boeing introduced an updated version of its original 737 aircraft, several faults were quickly uncovered after two tragic plane crashes. Critical safety issues riddled the original Boeing 737 MAX aircrafts design, pertaining specifically to the functioning aspects of the maneuvering characteristics augmentation system (MCAS) system. The technical and human aspects of the system implementation and documentation contributed to the fatal accidents involving this aircraft model.
There were considerable mistakes in the technical design and the new models release. 737 MAX had larger engines, which caused their relocation and aircraft destabilization in steep angles like hard turns or takeoffs (Johnston & Harris, 2019). The angle of the planes wings against the air is also known as the angle of attack (AOA); when it exceeds a certain point, the aircraft may over-swing and stall (Johnston & Harris, 2019). The solution was the MCAS system, a flight control software designed to deliver consistent airplane control to compensate for the altered balance (Johnston & Harris, 2019). The initial system relied on a single AOA sensor to determine how the aircrafts nose is angled relative to oncoming air (Boeing, n.d.). Relying on a single data source was the first critical technical error that severely compromised safety.
The second error was in the systems actions once it detected that AOA was too high. To prevent stalling, it automatically commanded the plane trim system to correct the rear stabilizer and lower the nose and moved the pilots rudder down (Johnston & Harris, 2019). MCAS was only activated under the simultaneously occurring circumstances: the pilot controls the airplane manually; the airplanes nose is at an unusually high angle; the pilot raised the wing flaps (Boeing, n.d.). MCAS would deactivate if the AOA dropped below the target threshold, the pilot overrode it with the manual trim setting, or the pilot activated the CUTOUT switch (Johnston & Harris, 2019). However, if the pilot overrode the system with trim controls, it would be reactivated within five seconds if the sensors were registering a higher-than-normal AOA another critical error (Johnston & Harris, 2019). The only way to disable the automatic stabilizer trim control was to use the CUTOUT switch and handle the trim manually (Johnston & Harris, 2019). Thus, another vital flaw was the complicated system that resisted the switch to manual control.
Hence, Boeing designed the MCAS system to not turn off after the pilot manually engaged the controls. This design defeated the systems original purpose, which was to prevent an inadvertent entrance into a stall-risk angle (Johnston & Harris, 2019). In the two accidents, a faulty AOA sensor reported incorrect information to the MCAS system, repeatedly triggering the system (Boeing, n.d.). As a result, the software repeatedly pushed the nose of faulty aircraft down whenever pilots tried to exit the dive, ultimately leading to a fatal crash (Johnston & Harris, 2019). The MCAS system thus became the suspected cause of two major fatal accidents.
There is then the question of why the pilots did not engage the CUTOUT switch to disable the system entirely. The 737 MAX aircraft was initially designed as a minor upgrade to the original 737; hence, Boeing claimed that the pilots did not need to be relicensed, which was the human safety error (Johnston & Harris, 2019). In returning to the lack of additional training for the new model, Johnston and Harris (2019) speculate that the pilots likely had no idea that the system existed. Therefore, poor documentation and the lack of appropriate training were the last factors that exacerbated this models safety issues.
In conclusion, the safety issue in the Boeing 737 MAX design was multifaceted. Upon the engines size and positioning change, the MCAS system was introduced to handle the resulting balancing issues. However, the issue with the automated mode overriding the manual command after five seconds, its single-sensor reliance, and the lack of appropriate licensing and documentation all contributed to the system becoming a safety threat. Therefore, two recorded accidents resulted from the MCAS system relying on the faulty sensor and erroneously correcting the aircrafts angle, unbeknownst to the pilots.
The crash of two Boeing 737 Max planes was one of the most significant aircraft accidents affecting the entire world. Hundreds of people died in the two crashes, and many families are still looking for a fair solution and an apology from the company. The main reason for the concerns was that accident was caused by mistake in the manufacture of a whole series of aircraft used around the world but not the inexperience of the pilots, coordinators, or airlines. In addition, some investigations demonstrated that Boeing had the opportunity to fix the problem and prevent a second crash by admitting its mistake (Newburger and Josephs, 2019). However, the lack of a quality emergency response plan and communication resulted in the deaths of hundreds of people, as well as the loss of the reputation and legitimacy of the Boeing company. Consequently, this paper will examine the actions of Boeing company that led to the crisis, as well as managements attempts to resolve it, to assess the effectiveness of emergency response management.
History of the Crisis
The Boeing crisis was triggered by a series of events and management choices that put the companys operations at risk. The first accident occurred in Indonesia when Lion Air Flight JT 610 crashed after takeoff in October 2018, and all 189 passengers and crew were killed (Gelles, 2019). An investigation into the accident has begun; however, the Boeing 737 Max continued to operate under various airlines. Five months later, on March 10, 2019, an Ethiopian Airlines plane crashed, killing 157 people on board (Gelles, 2019). This accident was similar to the previous one, since, in both cases, the nose of the aircraft dropped down during rising of height, which caused the fall (Travica, 2020). Consequently, this connection gave impetus for a more thorough investigation and verification of the Boeing 737 Max, since this coincidence, in the opinion of many people, could not be accidental.
Further investigations showed that the cause of this malfunction was several flaws in the aircraft design. Precisely, these flaws were engine misalignment and failure of the Maneuvering Characteristics Augmentation System (MCAS) due to the use of only one sensor for monitoring the position of the plane (MacMillan, 2019). At the same time, the pilots did not receive training to operate the new aircraft model, and did not know about its new element, and therefore could not respond to a dangerous situation (Herkert, Borenstein, and Miller, 2020). Consequently, a technical malfunction of the aircraft caused accidents but not human factors or weather conditions.
However, more important are the mistakes in management and leadership, which led to the emergence of a technical failure and the deterioration of the crisis. First, according to some experts, the shortcomings of the Maneuvering Characteristics Augmentation System (MCAS) were the result of a disregard for company values and a desire to make a profit. Pontefract (2019) notes that Boeing was keen to release a new aircraft model faster with fewer fuel costs as their competitor Airbus had already announced the release of a similar model. The company did not want to lose customers and developed the Boeing 737 Max based on the existing line in a short time, and this time pressure is one of the causes of technical flaws. For example, Herkert, Borenstein, and Miller (2020) suggest that the MCAS setup was a way to mask the dynamic instability of the jet because of engine relocation to save fuel. Consequently, the tight deadline for the development of a new model has led to inadequate engineering planning, which eliminates the significance of Boeings safety values.
Moreover, the subsequent certification and evaluation of the Boeing 737 Max was also insufficiently accurate, which allowed Boeing to bring the aircraft into service without pilot training. As Herkert, Borenstein, and Miller (2020) note, aircraft self-certification has become a standard procedure allowed by the Federal Aviation Administration (FAA), and by 2018 Boeing had certified 96% of its aircraft. Boeing received approval for a simplified safety certification procedure as the company introduced a new aircraft derived from the existing line as if it had no significant changes (Hall and Goelz, 2019). This factor also relates to the issue of training and informing pilots about new features of the model, since training requires significant time and money, and telling about changes would not allow Boeing to get certified quickly. Moreover, Gelles (2019), says that key officials at the FAA never thoroughly reviewed the final version of the MCAS software, which demonstrates another management issue but at a higher level. Consequently, deliberate or unintentional neglect of safety led to technical problems and the pilots ignorance of the ability to respond to the problem, which caused the death of 350 people.
Analysis of Steps Taken by Boeing After the Accidents
A crisis response plan is a necessity, especially in the aviation field as the life of the people and the reputation of the company depend on the steps of management. The Emergency Response Plan should be elaborate, timely, and relevant to different situations, and should include both steps to assist accident victims and their families and steps to communicate with the public. Moreover, all staff member should know their responsibilities, the leader needs to be ready to control and direct subordinates, and the press center can even have templates for a quick reaction in the media. However, Boeings reaction demonstrates that the company did not have a good strategy for action, which led to a decrease in its reputation, user confidence, and thus profit.
One of Boeings most significant mistakes was the lack of action following the plane crash in Indonesia, which led to a decline in trust in the company and the second crash in Ethiopia. First, there was virtually no information about the accident on the companys official social media pages, apart from a sympathetic Twitter post with the link to this statement on the official site (Boeing, 2018; Travica, 2020). In addition, Boeing executives did not take any steps to ground the Boeing 737 Max or warn pilots about the new aircraft features. The reasons for this silence could be different since the company later took a defensive position by claiming that theres nothing wrong with the 737 Max design (Newburger and Josephs, 2019). Consequently, if the second accident had not occurred, it would have been easier for Boeing to defend its reputation.
The steps following the Ethiopia Airlines plane crash were even more ill-considered and erroneous. First, The International Air Transport Association (IATA) recommends sending key messages within 24 hours of the incident to monitor and direct public response. For example, the first tweet should be posted 15 minutes after the event, and then the company should continually add relevant information, including the first media appearance of the most senior executive within 3 hours, and a press conference within 6 hours (IATA, 2016). Goldstein (2019) also cites a media expert noting that the main rule of PR is to direct the story before the media does it instead of the company. In this way, the company can have more control over the information that the media spreads and inspire more trust in viewers.
Nevertheless, Boeings management did not follow this rule of immediate reaction and also has sent confusing messages. Apart from several tweets on and after the day of the crash, Boeing CEO Dennis Muilenburgs first statement came only a week after the crash, in which he expressed condolences to the families of the victims (Goldstein, 2019). Muilenburg recorded a video message instead of a conference, which further aroused mistrust since journalists and citizens could not ask questions. Boeing also declared for a long time about the good state of the aircraft and the error of the pilots that led to accidents (Baker, 2019). Therefore, communication with the media and public does not contribute to Boeings reputation.
Furthermore, helping the victims and their families, as well as offering apologies and condolences, is an important element of post-accident reaction. The International Civil Aviation Organization (2013) in its guideline, outlines the essential points in the interaction with the families of victims, such as the provision of information, physical, material, and psychological assistance. For example, these steps could include connecting a 24-hour hotline, placing families in hotels, providing assistance with extradition of the body, and psychological support. This responsibility also lies with the staff of the airport and the airline that operated the flight, but in the case of Boeing, they had to perform the main actions.
There is not enough open-source information to judge the companys response immediately after the crashes, but Boeings actions demonstrate that management has not done enough to support families and protect the reputation of the company. First, as Goldenstein (2019) notes, the families of people killed in Ethiopia were forced to bury empty coffins, since the identification of the remains took up to 6 months. Boeing also announced that it would pay compensation to families only six months after the second crash under the pressure of numerous lawsuits (Shepardson, 2019). Consequently, this slowdown and the need for families to go through all the events on the continuation of a long time negatively affected their reaction and trust in the company.
Moreover, the leaders of the company were required to express condolences and apologies and make every effort to demonstrate their disturbance and concerns about the accidents. However, Boeings confusing statements about the state of aircraft, changes to the software, pilots fault, and other attempts to protect the company are not sincere apologies and remorse (Baker, 2019). On the contrary, instead of grounding the Boeing 737 Max unimpeded, the company asked Donald Trump for help, which was a harmful PR move (Sucher, 2019). These actions are an impulse for mistrust and anger, not only of the families of the victims but of all people tracking the situation. Consequently, Boeings reaction to the two plane crashes demonstrates a lack of an emergency response plan as well as a lack of understanding of public communications.
Impact of Boeings Response on the Company
The wrong steps that were taken by Boeings management after the accidents hurt the companys reputation and legitimacy, as well as its profit and operations. Firstly, the very fact of the accidents frightened many passengers and airlines, which became the reason for the refusal to use the Boeing 737, Max. All countries, including the United States, have grounded the Boeing 737 Max after the crash in Ethiopia, until the end of the investigation to prevent possible new accidents. This step is logical and appropriate from the safety point of view and is a consequence of the very fact of the crash.
Furthermore, a lack of empathy, admitting mistakes, and efforts to correct harm have created Boeings image as a company that cares about profit but not safety. As Goldstein writes (2019), in its attempts to avoid a legal trial, Boeing still cannot prevent public judgments, which has more severe consequences for it. At the same time, the families of the victims express their distrust to both Boeing and the FAA that allowed the aircraft to be certified despite errors in the design and systems of the new model (Leggett, 2020). Consequently, the confidence of passengers and airlines in Boeing as a manufacturer has also declined, affecting the demand for their other products. As Newburger and Josephs noted (2019), one poll of passengers indicated that they would avoid the Max aircraft for extended periods, even when they were returned to service. Thus, Boeings inappropriate response to the crisis and defending its positions instead of expressing sympathy and offering help to the families of the victims provoked a more negative reaction to the companys mistakes. This approach has destroyed Boeings image as one of the best aircraft manufacturers.
These events also impacted Boeings earnings due to aircraft grounding and a loss in company stock. Profit losses after two accidents are a natural result of such an event, since assistance to victims and families, investigation, as well as legal services, require significant funds. In addition, the recall of aircraft and orders has cost the company billions of dollars; for example, Indonesians airline, Garuda, canceled a $ 5 billion order for a Boeing 737 Max (Baker, 2019). However, this airline was not the only one who took such measures to protect passengers and their own business.
Nevertheless, the decline in customer and public trust and the manufacturers reputation has also led to a significant decrease in Boeings share price. On the same day after the crash in Ethiopia, the companys stocks fell 16%, and its losses for the year are about $ 18 billion only due to the cost of the Boeing 737 Max (Newburger and Josephs, 2019; Johnsson and Blomberg, 2020). Moreover, Jacques (2019) notes that the total cost can reach $ 30 billion or more. These losses are the result of both the crashes and aircraft problems themselves and the deterioration of the companys reputation due to the lack of a crisis response plan; however, the impact of accidents might not be as devastating if leaders could properly manage their consequences.
Conclusion
Therefore, the Boeing example demonstrates that the lack of strategic steps and appropriate responses to crises is one of the most significant mistakes for the company. Unfortunately, fatal accidents in aviation happen, since people are behind every process of designing, creating, and operating an aircraft. For this reason, for airlines and aircraft manufacturers, responding to an accident is as crucial as taking action to prevent it. In Boeings case, there were many unclear details and mistakes of leaders that led to the crash; however, management cannot change them and return time. The golden rule of emergency response is to give up trying to manage the accident but to manage the response. However, Boeing damaged its reputation and profit by denying its mistakes, not having a response plan, and, as a consequence, taking the wrong steps.
Boeings main mistakes were the lack of response to the first accident in Indonesia, the unwillingness to admit guilt and apologize for its mistakes, and insufficient communication with the press. The first three mistakes led to both a repeat accident and the formation of the companys image as one that prioritizes profit over customer interests. Consequently, customers distrust the company and its products, which affected Boeings sales and profits. At the same time, insufficient use of social networks and media, as well as significant time delays allowed the media to shape their vision of the situation, and Boeing could only make excuses. These aspects had decisive implications for Boeing, as the quick response, apology, and harm remedy would show the as responsible and wanting to improve, which would soften public reaction. However, the company adopted a wrong and inconsistent strategy with devastating consequences. Consequently, the Boeing 737 crash demonstrates the importance of emergency response management in aviation and the need for planning.
Project management is an essential part of the activities of a company or business in any field. Primarily, it includes an assessment of the scope, risks and planning of the project. In-depth analysis of project management aspects is especially urgent in industries such as aviation, since the liability for erroneous assessment is high. In this case, it includes the situation with the Boeing 373 MAX, namely problems with some project management items (Hoffmann & Walton, 2018). In turn, these issues led to two massive air crashes, with a large number of victims, which articulates the need to reassess many aspects. Thus, the purpose of the work is to consider the case through the prism of project management, assess the risks of the project, compare the plane with another aircraft of the same category, and draw conclusions.
Key Project Management Issues
Miscommunication
In order to effectively analyze the Boeing 373 MAX case, it is necessary to identify issues that may arise in project management. Many items are included, however, only some of them are relevant in this case. Miscommunication is an urgent issue that involves invalid transmission, interpretation, understanding, or awareness of information. In the current case, it is argued by one of the causes of the disasters, namely the Maneuvering Control Augmentation System (Johnston & Harris, 2019). It is a system that keeps the aircraft from potentially nose up by deliberately lowering it in the event of certain conditions. The MCAS was implemented in the Boeing 373 MAX series as during the flight the aircraft lifts its nose due to the design features and the location of the engines. It can potentially lead to loss of speed and falling, which can be corrected by lowering the nose thanks to the system.
However, The MCAS was not installed on previous models, and the pilots did not have enough experience to work with it so it was not used on its full potential. The aviators should have been provided with sufficient training on how to operate the MCAS but they were not, which led to not being aware of crucial data (Akyüz, 2021). Therefore, there was an invalid exchange of information regarding the implementation and use of this system. In addition, miscommunication occurred about the degree of training and experience in using the MCAS.
Management Model
The next key issue of project management is finding the right management model. More precisely, each project has its own goals and methods for achieving these goals, which includes certain actions that affect the environment. The management model was used in a wrong way which resulted in choosing the wrong targets, so these actions had a negative impact on the environment. Thus, the wrong management model and the goals set, namely the simplification of pilot training for the Boeing 373 MAX, has become another reason in the project management context (Gailagista et al., 2018). The management model should have been focused on the process and not on the result, which would be more appropriate in areas such as aviation.
Risk Assessment
Furthermore, one of the most essential issues is risk assessment. In this case, it was used for an inadequate evaluation of risks, which led to the inability to level the problem. As risks arise in unpredictable environments constant risk assessment should have been done and not a one-time plan development. Under risks, there are two strategies for leveling the problem, namely actions aimed at reducing risks and methods of dealing with consequences (Ossa et al., 2021). In the case of the Boeing 373 MAX, one did not apply a risk-mitigation strategy. On the contrary, the consequences of risk led to catastrophic consequences. The risks in this case were justified by the minimum training of pilots, and the insufficient allocation of financial and time resources to pay attention to the system.
Sufficient Accountability
Finally, the last key issue in the aspect of project management in this case was the lack of sufficient accountability. It was not thoroughly used so that a lack of accountability meant that one could not be aware of all the potential consequences of ones actions. A central factor in the project and in business should have been formulated so it could allow one to visualize the work done, the solution of problems, and the risks that have arisen (Jiménez-Crisóstomo et al., 2021). In addition, accountability promotes elaborating effective development strategies based on the work done. Finally, it is necessary to maintain communication between the participants of the project or business, and to support the understanding of progress. In addition, it affected the degree of response to a possible problem in the operation of the Boeing 373 MAX.
Major Risks
Project management includes risk assessment as well, which is one of the points of project administration issues. As it has already been indicated, assessment is formulated by analyzing the actions taken to achieve the goal and the impact on the environment, and the risks to which actions may lead. It is worth emphasizing that risks can arise both intentionally due to actions in the project, and unintentionally due to the environment (Chalayonnawin et al., 2022). As one may notice, in the case of the Boeing 373 MAX and the disasters, the risks were intentional in order to achieve certain goals. These goals included improving flight efficiency and fuel economy with the aim of increasing profitability. However, underestimation and inadequate risk assessment led to serious negative consequences.
Improving Flight Efficiency
The first major risk was formulated by redesigning the aircraft to improve flight efficiency. Any aviation company is interested in fuel economy, as it is the main key to success and one has the right to strive for efficiency. However, the savings must end where the margin of safety begins. For several decades, people have so trusted the Boeing company that these catastrophes have become shocking. The new Boeing 373 MAX received new engines of larger diameter and power, which led to some changes in the design and specifics of aerodynamics (Gonela et al., 2020). Moreover, the engines had to be moved forward a short distance, so as not to violate the integrity of the structure during flight. It changed the behavior of the aircraft in the air, namely, it led to a nose-up, which can lead to a stall. In this regard, a system has been developed that prevents stalls in the event of a critical nose up.
As one knows, in the future, it led to tragic consequences, namely, disasters and a halt in the production of these aircraft. The risk assessment in this case consisted of an inadequate analysis of the consequences of an excessive desire to improve flight efficiency. In other words, one had to sacrifice efficiency for flight stability, rather than allowing the aircraft to fly nose up (Bravo et al., 2019). Definitely, the system solved the problem at the local level, but entailed the need to carry out many procedures. In addition, the safety criterion should be a priority in risk assessment, which formulates the preservation of the margin in terms of safety. However, in this case, security was sacrificed in favor of efficiency.
Fuel Economy
Suggested Likelihood
The second major risks across the project life are caused by the desire to increase profitability and increase the budget item that is developing the company with the help of fuel economy. The presence of additional cargo on the aircraft makes it necessary to increase the lifting force of the aircraft, which is achieved by increasing the angle of attack. At the same time, the drag increases, which requires additional engine thrust and corresponding additional fuel consumption to overcome (Vargas-Hernández & Martínez, 2019). Therefore, increasing the efficiency of the Boeing 373 MAX is one of the important tasks, since its improvement is associated with saving large material and financial resources. The solution to the problem of increasing the efficiency of the Boeing 373 MAX flight is partially carried out by saving fuel, which accounts for the bulk of the expenditure of financial and material resources. Such an increase in the level of efficiency of operation makes it possible to increase sales, since an aircraft with less fuel consumption is more profitable for airlines, and they are more interested in buying it.
Consequence
The Boeing 373 MAX is equipped with a motion mode selection system. Eco-mode helps to save fuel, but does not save money the service life of an aircraft engine may decrease when using it. When flying with a standard volume of fuel, the engines capabilities are used by no more than 80% (Kahfie et al., 2019). The power that the manufacturer claims, the engine produces only at its peak. The primary task of the eco-flight mode of the Boeing 373 MAX is to save fuel, and this mode really copes well with this. In most cases, the consumption of gasoline and diesel is reduced, and the mileage of the aircraft on one tank increases. The transmission in this mode also switches to economy mode. Therefore, the eco-mode gradually spoils the condition of the Boeing 373 MAX engine if it is used too often.
Impact Potential
When driving at low speeds, the performance of the oil pump automatically decreases, which inevitably leads to engine oil starvation. The consequence of such a problem is accelerated wear of all the most important components, including the cylinder piston group (Kahfie et al., 2019). The gaps between the pistons and cylinders increase, and the hon is erased. The process leads to a decrease in compression, an increase in detonation, the development of inserts and the wear of the necks of the crankshaft of the aircraft.
At the same time, flying in eco-mode leads to the formation of a large amount of carbon deposits and oil deposits. The motor loses power and even switches to emergency operation algorithms. Abuse of the economical driving mode leads to a longer warming up of the aircraft engine and suboptimal working conditions, leading to accelerated wear and expensive frequent replacement of the aircraft engine (Johnston & Harris, 2019). This causes the need for more regular overhauls, and also creates the threat of unexpected engine failure. In turn, it creates a danger to the lives of the crew and passengers, since engine failure can occur directly during the flight.
Suggested Mitigation Strategies
Suggested mitigation strategies consist in the reasonable use of eco-mode on the Boeing 373 MAX. At least several times a month, it is worth turning on the standard mode without saving fuel. At the same time, an impressive part of the harmful deposits in the engine will burn, and the increased temperature will expel water condensate from the oil. When changing the mode from eco to standard, the engine will have time to warm up, and the exhaust system will have time to burn off the carbon and soot that form in the catalyst when flying frequently in economy mode (Ozçelik & Durmu_-Özdemir, 2021). Thus, an optimal balance will be maintained between maintaining the performance of the aircraft engine and moderate fuel economy. At the same time, the need for frequent expensive engine overhaul will not be created, and the risk of engine failure during flight will be reduced.
Comparison to Another Aircraft
Another aircraft in the airliner category which will be compared to the B737-MAX is its main competitor Airbus 320neo. This is the basic model of a new family of medium-haul passenger aircraft developed by the European concern Airbus. A320neo is a deep modernization of the popular Airbus A320 airliner with new generation engines, improved onboard systems and larger wingtips. Boeing 737 and Airbus A320 are passenger planes for medium distances, which are characterized by relatively large dimensions and large capacity (Vargas-Hernández & Martínez, 2019). Airliners have approximately the same characteristics: the flagship models of Airbus and Boeing are similar according to some technical parameters. As in the B737-MAX, fuel consumption is lower per seat compared to potential competitors. Similarly, to the B737-MAX, this aircraft aims to increase fuel efficiency including with the help of management.
Management Model
The management model factor of the Airbus 320neo creates less significant risks than that of the B737-MAX. The set of administration methods used in this company is different from the methods used in B737-MAX. In B737-MAX, the main strategy is continuous growth, prosperity and expansion. Success depends on the rational organization of labor and production, cost reduction, efficient use of resources and finding ways to increase productivity. In the management model, the Airbus 320neo has a maximum focus on technology development and related innovations, so the management structures are more flexible (Hoffmann & Walton, 2018). At the same time, the management organization seems to be more inclined to democratic forms of interaction. The management of Airbus320neo involves every management link at the level of quality control in the area entrusted to them, while the management of the B737-MAX is a closed system of evaluation by managers. Therefore, when manufacturing Airbus320neo, each employees feels responsible for the result, whereas in the B737-MAX, the head is responsible for what is happening in production.
Risk Assessment
The risk assessment model in the Airbus 320neo and B737-MAX is similar. The basic factor of both models is the ultimate goal expressed in reducing production costs by reducing fuel consumption. The advantage of both risk assessment models is its ease of use. However, at the same time, both the Airbus 320neo and the B737-MAX remain insensitive to factors poorly represented in the initially developed plan. The use of this model, where the main evaluation factor is the achievement of the initially set goal, in both companies ignores the risks that arise in the course of work on the implementation of the initial plan (Jiménez-Crisóstomo et al., 2021). The weaknesses of risk assessment in both the Airbus 320neo and the B737-MAX are an attempt to predict risks in advance, and emerging threats that were not foreseen in advance are not taken into account. There are slight differences in the degree of significance in explaining the potential income when evaluating it at different time periods (it is lower for Airbus 320neo), but otherwise the risk assessment in companies is identical.
Sufficient Accountability
Similarly to the B737-MAX, in the Airbus320neo, the accountability is imperfect, but the weaknesses of the managers are different. In both companies, accountability serve the goals of managers: they always contain up-to-date information on the necessary stages of the implementation of the plan and in the necessary detail. The B737-MAX accountability is too concise: the information presented in the shortest form, and does not fully reflect what is happening at the production stage. On the contrary, Airbus 320neo accountability is too informative: they contain an excessive amount of contradictory information, which makes it difficult to analyze and make management decisions information (Gonela et al., 2020). For both companies, accountability is not timely enough: reports do not reflect the current situation. Because of this, it is difficult to make a forecast of the development of production for several periods ahead.
Conclusion
All enterprises, when implementing their business processes, systematically face the need to manage various types of risks. Therefore, the top management of the company should ensure that the need for risk management is recognized by all managers and personnel of the organization as one of the factors of paramount importance. The B737-MAX failed to create an effective management base. Concentrating in the management process on the favorable consequences: fuel economy and income increase, due attention was not paid to negative factors. As a result, no potential deviations from the planned results were identified. The B737-MAX did not manage these deviations to improve prospects, reduce losses and improve the validity of decisions made. Prospects were not correctly identified and opportunities for improving activities were identified, as a result of which an undesirable course of events was allowed and the probability of their occurrence increased.
Future directions for research can be the development of standards and guidelines in the field of risk management in the field of aviation based on the information provided. For example, it can be the development of mechanisms, classifications and algorithms for risk management. In all the variety of fundamental and applied research on this issue, there is often no novelty, industry-specific risk management, consideration of the relationship and mutual influence of various risks. Therefore, as considerations for further research, it is possible to adapt a standard well-known risk management mechanism specifically for the aviation sector. For example, based on this work, it is possible to build risk management subsystems within the general management system in the company. Also, using the data obtained in this paper, it is possible to further analyze the implementation of standard procedures and risk algorithms: identification, qualitative and quantitative assessment, selection of methods and methods of risk leveling in relation to aviation production.
Recommendations
The three lessons identified from an audit trail that can be learned by todays project managers are: when a certain goal is achieved, the process of accomplishing it is of paramount importance; during project management, it is necessary to regularly assess risks; monitoring the implementation of the plan and its prompt correction are the key to the successful operation of the company.
References
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Boeing, like many other aerospace companies, needs to ensure that its clients are fully satisfied with their services or that their consumer expectations have been fully met. The paper shall look at how Boeing does this and analysis carried out on its effectiveness.
Customer service at Boeing
There are several customer service activities carried out by Boeing. First of all, it has a website where consumers can access twenty-four-hour support for their merchandise. In so doing, the company can receive feedback from buyers about their services and suggestions on possible improvements. (Boeing par 15)
The company offers training opportunities to its employees to ascertain that they are in good shape to deal with any problems or discrepancies. By doing this, it has eliminated the possibility of their staff appearing ignorant before valuable clients. Training is knowledge-based but at the same time, people-centered. This means that their employees are a valuable asset in making customer satisfaction possible within the company.
The company has a series of field representatives whose main purpose is to ensure that whenever a client purchases a certain aircraft from then, then everything goes according to plan. Here, pilots are informed on how best to fly their aircraft to receive maximum utility and they are also taught some of the necessary maintenance methods required to take care of the aircraft. This goes a long way towards boosting consumer satisfaction. One of the most dominant areas that their representatives focus on is the provision and availability of spare parts. Overly, these representatives boost client satisfaction by dealing with hurdles that arise out of the use of their products and offering real-time solutions.
There are a series of dedicated engineers within Boeing Corporation whose main tasks are to handle consumer needs and concerns. When a certain airline claims that it would prefer a specific engine type in its jets, Boeings engineers are quick to partner with those companies to boost their experience.
The company has special units designed to meet common but unique problems in aircraft flying. One such group is its Airplane on Ground Unit (AOG). The latter group largely focuses on the repair and maintenance of aircraft that cannot function in remote locations. This customer service unit was established as far back as the nineteen sixties but has continuously improved over the past few years. It is now possible for the team to repair a damaged Boeing aircraft in record time at any remote location in the world. This aspect is a highly creative one that has gone a long way in exceeding consumer expectations. (Dall 304)
The company also considers technology a crucial part of its customer service activities. It employs solutions such as People soft data management support to boost customer relationships.
It can be said that the major aspect of the company that employs customer relations management is its operational side. Communication functions especially through IT are also another area. After-sales service functions also depict customer services.
Strengths in Boeing customer care are:
Employs technology in increasing flexibility
Has special units for peculiar clients problems
Trains workers and clients on its products and services
Weaknesses
Lacks major performance indicators that can be linked to its customer care strategy
Has not employed current customer service standards such as 1S0 10003 on dispute resolution
Conclusion
Boeing has continuously improved customer service over the years as reflected in its data management systems, continuous support, training programs, and special units. Some of the activities that harm this companys customer services include its inability to employ customer service standards in operations and its lack of alignment of key performance indicators to its customer care strategy
References
Dall, Michael. Winning the war against customer disservice. New York: Routledge, 2004.
It should be claimed that the company has been leveraging its capital structure even further for a long period by continuing the practice of a share buyback, which has been accompanied by the constant, equity-reducing pension liabilities regulations that finance the firms pension benefits. Then, this considerably leveraged approach is still balanced by acceptable liquidity, as well as by substantial cash flows (Wei, 2018). Nevertheless, there is no space for debt-financed further business activities if necessary. It might be suggested that the ongoing significant stock performance of Boeing can get worse in the aftermath when recent projected results within the scope of finances provide a too optimistic picture of the companys future.
Here, it should be emphasized that the firm is to be perceived as a highly-leveraged one, given the fact that its debts exceed its equities. However, such an approach is quite common among large-capitalized corporations as debt may usually be a less cost-taking option than equity because of the deductibility of taxes of interest payments.
Hence, huge firms frequently possess lower costs of their capital, given the financial flows that are gained easily, which provides a plethora of advantages over smaller enterprises. At this point, it may even be stated that Boeings debt ratios are sustainable, given the measurement of interest payments against the earnings of this corporation (Market Watch, 2020). In this regard, it is perfect when EBIT covers net interest by three times as a minimum.
For Boeing, this condition is met, which allows assuming that interest is adequately covered. High-interest coverages are considered a reliable and secure practice this emphasizes the reason why most investors perceive large-capitalized like Boeing as an appropriate option to invest in. Thus, the peculiarities of the firms capital structure may be considered optimal.
Boeings capital structure issues
Despite the described above pros of Boeings capital structure, there are still some important issues to take into account, according to the current numbers. It should be admitted that BA is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (2%) (Simply Wall St., 2020, para. 4).
What is more, the company is predicted to be profitable over the next three-year period this is a higher rate in comparison with average market growth. However, negative shareholder equity that is inherent in the corporation might be understood as a more insignificant indicator than the high level of debt. Then, the firms operating cash flow is negative as well, which indicates the fact that debts are not adequately covered (Benzinga Insights, 2020) even keeping in mind Boeings capital structure approach.
Overall, the companys significant cash coverages imply that even though its debt level is high, Boeing is capable of utilizing the borrowings to obtain cash flows. It can mean that currently, the firm has an optimal policy regarding its capital structure, taking into account the point that it also meets the short-term commitments. The provided rationale allows suggesting that Boeing is not need to move toward a new capital-structure strategy to optimize the ongoing situation. In the long run, it will remain profitable, and the present issues may be characterized as temporary. The company seems to face these issues and face the related risks intentionally, given its highly-leveraged approach.
References
Benzinga Insights. (2020). What does Boeings debt look like? Yahoo! finance. Web.