A Comparative Analysis of Corporate Objectives, Strategies, and Manufacturing Processes of Boeing an

To Prepare An Individual Written Report To Extend The Theory Covered In The Lectures And To Apply Strategic Thinking In a Real Manufacturing Business Environment. The Report Needs To Address The Following Terms Of References. 

Identify Two Competitive Rivals (Boeing And Airbus) Within An Engineering Related Business Environment. First, Define The Corporate Objectives And Strategies Of Your Identified Companies.

Compare And Analyse The Similarities And/Or Differences Between Their Business Strategies.

Discuss The Linkage(s) Observed Within The Identified Firms, Between Their Corporate/Company Objectives, Marketing And Manufacturing Strategies. 

Critically Evaluate How Their Manufacturing Strategies Have Contributed To Business Performance And Competitive Advantage. Furthermore, Analyse The Effectiveness Of Such Strategies When Challenged By External Forces.

Apply Concepts Learnt From Global Engineering Strategy And Make Appropriate Recommendations To Potentially Improve The Business Performance Of Your Identified Companies. It Is Expected That Your Research Will Identify Additional Material To That Covered In The Lecture Notes.

Global engineering strategy refers to a process of combining technical knowledge of employees with the business strategy with the aim of getting highest output of it (Mittal, Singh and Sohi 2016). Technical knowledge includes skills and capabilities of improving the manufacturing process, knowledge base of employees, machinery and equipment used by the company to run their business process, etc. The primary objective of combining technical knowledge and business strategy is to gain a competitive edge over other competitors by creating cost or differentiation processes (Rabetino, Kohtamäki and Gebauer 2017). Besides this, it also assists company in improving its overall efficiency and productivity to a certain level so that sustainable performance would be attained by them. For this report, two different companies are taken for consideration i.e., Boeing and Airbus. Both companies have maintained duopoly in the aviation industry due to their advanced technology and strategies. In this report, different types of strategies that are opted and implemented by companies to perform better in the market will be discussed by taking a functional example of it. After this, ways through which company maintain its relationship between their own objectives, marketing strategies, and manufacturing process is explained. At last, how strategies in manufacturing assist companies to perform better in the market is explained and determine.

The Boeing Company is an American Multinational firm which is running their business operations in aviation industry and have operations like designing and manufacturing of airplanes, rockets, missiles, rotorcraft etc. Boeing is the large aerospace manufacturer in the world and fifth-largest as defense contractor. Company was founded in 1915 by William Boeing and has revenue of 101 billion dollars approximately with an operating income of more than 11 billion dollars. Company has been employing more than 153,000 employees worldwide and headquartered in Chicago United States of America. Till now, Boeing has been able to produce 806 commercial aircraft for different clients, 96 military aircraft for countries like USA, India etc and has produced 2 satellites that have been working for the past many years (Rong and et al. 2018).

Corporate Objectives and Strategies

Airbus is a multinational European company operating its business in the aerospace and aviation industry. Firm has recently been awarded as largest airline manufacture in the world as they have beat their direct competitors Boeing with a large number of margins. Airbus has been working in different parts of the country like Spain, India, France, etc and overall 133,677 employees worldwide. Company’s revenue in 2018 was approximately 63 Euro billion with an operating income of 5 Euro billion and a net income of 3 billion euros. Airbus was founded in 1970 and has its headquarter in Netherlands, France, and Spain respectively. Organisation has the world record of manufacturing world largest airline i.e., Airbus A380 and recently delivered their A220 airline to Delta Airlines. Airbus and Boeing are the only company that is managing aerospace manufacturing units in large numbers as well as running their own small and large fleets to maximize their organisation and institutional risk. At last, overall 120 million flights have been completed by Airbus and carry more than 12 billion passengers till now (Lawrence and Thornton 2017).

It is essential for every company to work according to their set objectives as it assist them in giving the direction which could be helpful for company’s performance and productivity if properly implemented and use. Airbus Company’s primary objective is to create best and safest aircraft in the world by satisfying needs and demands of customers. Firm mainly focuses on high customer footfall as it automatically leads to higher profitability and better performance than others (Zhu, Zhang and Xia 2016). On the other hand, Boeing corporate objective is to people coming from different ethnicity and background as a one and making mesmerising experience for customers by providing them highest quality of services as compare to others. Firm follows in their business operations as their prices are comparatively higher than Airbus but provides premium quality of service which reduces price sensitivity to a certain level.

Marketing strategy refers to set of different activities conducted by company to gain market share or attract more customer footfalls with the aim of getting higher profitability. It is mandatory for every company to understand customers’ needs and demands while deciding their marketing strategy as they are the one who will bring revenue for company (Bazargan 2016)

Price is always the factor which somehow changes customer buying process as customers wants to get higher value from the product or service they are consuming. To attain this, company maintain low price to compete with Boeing. As according to source, company price is approximately 20% cheaper than Boeing which provides them competitive edge over other competitors (Jafari and Nikolaidis 2019). Besides this, company believes in Hub and Spoke strategy which states that taking more halt in journey will bring more customer footfalls which will compensate the cheaper price. For instance, Airbus flights mainly take breaks in international airport or large airport so that more people will board in it resulting in higher revenue and profitability. In terms of seating capacity, company believes in economies of scale in which company tries to make bigger planes so that more number of customers can be on board as more seats occupied will bring more income for company as few of their planes can take up to 840 customers which is largest in the world (Hashimoto and et al. 2019). Moreover, company needs to compete with other competitors in terms of luxurious as well so to maintain it, company offers various packages on luxurious which no other company can provide with such low cost. In terms of manufacturing strategies, company focuses on making engine and other parts on their own as it reduces their operational and production cost to a certain level.

Airbus Marketing Strategies

Company business strategies is quite opposite of what Airbus did to conduct their operations. For instance, Boeing does not believe in halting in every airport as they think it affects customer relationship in the negative way. So to maintain higher customer relationship, Boeing takes less time compare to other competitors which gives them competitive edge over others. Company generally sets mid to high price ticket due to their premium quality of service which includes free breakfast, meals, drinks etc (Ang and et al. 2019). Apart from this, company focuses on innovating their engines and other parts with the aim improving operational unit by reducing operation cost thus better output. Company believes that it is essential to innovate regularly as innovation requires short term investment but provides long term benefits. It is well known that heavy airplane leads to higher consumption of fuel so to maintain it, company uses lightweight materials but with premium quality so that less fuel will be consumed. At last, firm procures engine from company like General Electronic as their outsourcing of material is much cheaper than producing their own engines (Buergin and et al. 2018).   

Overall There Are Three Different Factors Which Create And Provides Competitive Advantage To Company In Aviation Industry Which Is Mentioned Below,

Performance is the only factors which assist company like Boeing to sustain in the market for longer period of time as they do not compromise their performance in exchange of lower price of seat or cheap products. Most of the products used by Boeing is of high quality which provides memorable experience to customer. Besides this, innovation also helps company to gain competitive edge over others as it reduces overall cost of the production unit resulting in better profitability and utilisation of resources to its highest (Wang and et al. 2020). For instance, Boeing uses advanced technology in their engine which leads to less usage of fuel and higher reliability of product for longer time.

Other factor is serviceability as it is directly linked with company behaviour and loyalty towards company. Customer retention concept is also proportionate to serviceability as higher services provide in terms of money will increase customer retention and vice versa. For instance, if customer is satisfied with company services while taking flight then they will avoid changing their flight preference to other company due to resistance to change. On the other hand, if services are not up to the expectations of customer then their relationships with the company becomes unmemorable thus lower customer retention (Sheibani 2020). Both the company provides service according to the price paid by customers as Airbus also provides premium quality of services but customer supposed to be in premium class then.

Boeing Marketing Strategies

Last factor is durability in which trust of customers on company and their products. For instance, just to reduce operational cost, one airline company has installed chair which cannot holds customer weight and falls (Vieira and Loures 2016). In this aspect, both the company has favourable image in the mind of customers and in market as they are durable in nature.

As it is well known in the market that duopoly runs in the aerospace industry due to strategies used by Airbus and Boeing from past many years. For instance, both the companies tie up with the local as well as international company in the same industry to assist their operation which at last resulting in providing benefit to them only as it becomes easier for them to run their operations after understanding the local behaviour and their buying process. Like Airbus holds 50% of partnership in Airbus Canada limited partnership which helps them to understand and run two businesses at the same time (Yuan and et al. 2018). First to provide customer service by conducting long and short flights and on the other hand, manufacturing and selling their flights like Airbus 220 aircraft to the local companies. In other example also, company holds 50% of partnership with Ariana Group which is a joint venture between Airbus and French group Safron.

United launch alliance, Boeing commercial airplanes, Foreflight LLC, Jeppesen, Ricketdyne etc are few companies which are subsidies of Boeing Company and conducting their business in different parts of the world. So overall, both companies follow same business strategies i.e., acquire or joint venture with local companies so that their brand equity and duopoly remains for longer time (Hadbi and et al. 2017).

Cost price of the product or service is always the differentiation point between companies as it assist them in gaining competitive edge over others in the same market. Airbus sets their prices lower as compare to Boeing as they reduce their overall production cost by increasing seating capacity and less extra value added services to customer resulting in less cost for the company. On the other hand, Boeing focuses on premium or higher cost as they focuses on providing experience which cannot be forget by customers instead of lowering down the cost so that customers money would be save (Bartoli and et al. 2016).

In terms of advanced technology, Boeing has clear advantage over Airbus and they heavily invest on their engines and other parts of the plane which will make it more effective and productive in nature. For instance, 30% less maintenance cost is incur by Boeing as compare to Airbus due to advanced technology used in the starting. Besides this, approximately 20% less cost is incur in operating cost and fuel expense due to efficient engine. So overall, Boeing performs better in terms of technology and its efficiency.

Manufacturing Strategies and Business Performance

Risk is the factor which could assist company to gain market leader position or destroys company’s performance from core. For instance, after Airbus Engine blowout in 2010, company prefers to use those technologies which are also used by other companies as innovation risk sometimes leads to negative image of company if anything wrong or misshapen happens. On the other hand, even after various complains regarding fuel leaks, battery fires, engine inefficiency (Bian, Nener and Wang 2018), Boeing is heavily relied on advanced engine and technology as they believes that without innovation and risk, company could not be able to reduce their operational cost. So both the companies has different and almost opposite business strategies in terms of risk taking aspect.

Marketing strategies have been similar of both the companies and they invest heavily on their market awareness campaigns in various parts of world with the aim of improving their brand equity and image in the mind of customers. Promotion of aircraft in shows like Paris Air show at Le Bourget is common as defence officials of many countries visits these type of shows and fair (Dehghani and Menhaj 2016). Besides this, advertisement in magazines, newspaper, newsletter, board hoarding etc is common as it is the general way of promoting one’s business and product. Moreover, due to increase in social media platforms and its effectiveness, both the companies have their specific social media management teams which are working 24*7 to provide services or resolve queries of potential customers. So overall, it is possible that both the companies have some similar or contrasting business strategies but both have the same goal or objective of conducting their specific business i.e., fulfil stakeholders goals by improving profitability and performance of company.

Manufacturing strategy refers to a process of step by step actions conducted by company to run their manufacturing unit with the aim of attaining higher utilisation of available resources. Manufacturing strategy is based on two different factors which is explained below,

Competitive priorities: It refers to actions taken by company to gain competitive edge over other competitors by producing goods or services according to customer needs and demands. There are four aspects of it, first is quality which means quality of product or service provided to the customer. High quality of product will automatically leads to higher customer satisfaction thus better performance in the market (Beecham and et al. 2017). Other is delivery which means product or service delivery to the final customer according to their pre-set delivery date and time. If customers are getting product at the right time then their experience with the company becomes automatically higher. Other is cost which means monetary value spend by customer to get product or service from company. If cost price of the product is lower and provides higher value satisfaction, then company gains cost differentiation as compare to their competitors. Last is flexibility which means ability of any company to handle volume and high number of orders with higher efficiency (Aguilar-Ibañez and et al. 2018).

Recommendations

Decision categories: It means various decisions taken by company to run their operations unit like process, vertical integrations, facilities, capacities, manufacturing quality and control, perform measurements etc. For instance, it is up to company management and other stakeholders to implement Just in Time technique or lean management in their manufacturing unit according to their skills set and capabilities. Both the practices have different pros and cons which must monitored and analysed by companies before implementing. In other example, it is up to company to decide their facilities aspects which includes size, location, focus etc of the company. For instance, if company are fulfilling their goals or objectives in the 10000 Square feet size of manufacturing plant then it would not be worth or useless of buying or renting the place which is 150000 square feet (Ghazi and Botez 2017).

Manufacturing process plays an essential role in the success of any organisation as its main role is to reduce inventory cost, material handling cost and reduce overall operational cost so that profitability of a company would be increased or improved. To maintain it, Airbus uses Just In Time technique in their working which states that raw material must order at the time when company is about to use it instead of ordering it months back as it directly increases inventory cost which is inversely proportionate to company’s profitability i.e., increase inventory cost leads to decrease in profitability and vice versa (Fourgeau and et al. 2016).  For instance, if Airbus is manufacturing an aircraft and requires blades to complete the engine part, then they must place the order after designing of the product or when it is needed the most. By this means, capital which would be invest in buying the blades will be save and can be use in some other work for shorter period of time. Moreover, if there is inventory present in company’s premises, then Airbus requires employees or stock keeper whose work is to protect the material from external forces which requires money thus higher material handling cost for Airbus. So lower operational cost will leads to higher business performance as low operational cost leads to higher profitability which assist Airbus to gain competitive advantage over other.

In other example, Boeing considered their competitive strategies very seriously as their overall focus is to lower down the operational cost as compare to their competitors so that they can gain competitive edge over selling price of product. To attain so, company produces high quality of airplane by getting raw material from top suppliers as quality of any product is solely depends on the quality of raw material which has been used in it (Afonso and et al. 2017). For instance, if Boeing uses low quality of chairs or cockpits in their aircraft then there are high chances of customer dissatisfaction from it resulting in lower customer retention rate. Company has specific procedure and standards of procuring raw material from suppliers and material is directly rejected in the first place if it is not according to company’s expectations. So high quality of aircraft produced in the first stage will leads to high performance of products which ends up in creating favourable image with the customers that includes government officials as well thus higher profitability chances (Clothier, Williams and Hayhurst 2018) . So at last, it can be said that manufacturing strategies, business performance and competitive advantage is interconnected to each other and if any aspects fails then it will create negative impact on company’s performance in the market.

If all these strategies are properly implemented and follows by company then it becomes easier for them to compete in any circumstances created by external forces. External environment refers to those drivers which cannot be alter by company or by their performance and company itself have to change their business operations accordingly if they want to sustain in the market for longer period of time. For instance, social factor includes moods, perceptions, economic and social classes of people or target customer, age, etc plays an essential role in company’s working. For instance, there are many companies who started their business in aerospace industry but could not be able to survive it because of low profit margin resulting in bankruptcy or acquiring by company like Airbus. Airbus has understood that it they want to survive then whole process needs to change so that operational cost will be reducing. After this incident, potential customers becomes cost sensitive in nature as they prefers to buy those plane tickets who has low price as compare to market trends. So to maintain it, company implement Just In Time and six sigma techniques which reduces operational cost so that Airbus is able to reduce their cost price. So if manufacturing strategies are effective in nature then it becomes easier for any firm to survive in the market by securing their position. In other example, Boeing was about to faced competition from competitors in the market on the basis of technology which includes internet booking. So to sustain in the market, company invested more money in their process or in operation process so that it would become easier for them to remain in the market while technology disrupts the way how aerospace industry works.

There is a direct connection of company’s objectives, marketing and manufacturing strategies and company can only attain success in their operations if all these factors are align to each other. For instance, Boeing objective is to provide high quality of product to the customers with the help of diversified people, their skills and capabilities etc. This leads to their market strategies, as all the advertisement done on the basis of high quality of service provided by company in such low cost. High quality can only be achieved if company has advanced manufacturing strategies. So it can be seen that all these aspects are linked with each other (Mulia, Sumadinata and Dermawan 2018).

Same concept goes with the Airbus Company as well. Company’s objectives are to provide aircraft services in low cost and easily available to everyone. Their marketing strategy is to increase number of halts in every airport so that more customers would be attracted from it with the aim of getting higher profitability by providing service in low cost. Low cost of product or service is achievable for Airbus because of their manufacturing strategies as due to Just in time technique; it becomes easier for them to reduce their inventory and material handling cost.

At last, it can be summarise that, Airbus and Boeing corporate strategy is to sustain in the market by reducing their institutional risk and to capture more potential customers around the world. Both the companies have different business strategies as one company focuses on low cost price and other focuses on premier services. Their functional area strategy is though same as both try to secure the manufacturing location around the places which is easier for them to procure raw material. At last, their operational strategy is different as one focuses on Just in time and other focuses on longer flights to improve their customer experience (Keivanpour, Ait Kadi and Mascle 2017).

Airbus must also start investing in their research and development department as it will assist them to reduce their operation cost by improving their operation efficiency. On the other hand, Boeing must start producing engine on their own as it will improve their brand image and operational cost to a certain level.

Both the companies must move their assembly line to places where labour cost is relatable low as it will improve their company’s profitability

Companies must focus on making composite material instead of using aluminium or titanium in their aircraft as it will reduce their dependence on supplier thus better business efficiency

Relationship between foreign government and their officials must be improved as every company requires aircraft to run their country which will work as an opportunity for them

More investment on technical support is require as it will reduce various problems like flights delays or other problems which affects customer relationship in a negative way.

Conclusion

From the above-mentioned information, it can be summarised that company needs to modify and change its business strategies on a regular basis so that it would become easier for them to retain their customers for a longer period of time. This can only be attained if a firm has a better and clear understanding of customer perception towards products and services offered by them. Besides this, business strategy must also be changed by organisation according to their capabilities and skill set as optimum utilization of resources will be only be achieved by then. Apart from this, to improve the manufacturing and production process, company must implement just in time techniques in their operations as it will assist them in reducing the inventory and material handling cost which automatically leads to an increase in profitability and overall efficiency of a business. Six Sigma will also help the firm to run its operations smoothly and error-free which assist company to produce high quality of a product by considering their needs and demands. It is the responsibility and duty of management and board of directors to align their business strategy, objectives, vision, and marketing strategy according to their short and long term goals so that optimum utilization of available resources would be achieved by them. At last, manufacturing is the stage where the company can reduce the overall price of goods so that favourable result will be shown on the cost price as it will reduce to a certain level if properly marinated and managed.

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