ANALYSIS OF BOEING AEROSPACE COMPANY STRATEGY 1. Description of the chosen indus

Question

ANALYSIS OF BOEING AEROSPACE COMPANY STRATEGY
1. Description of the chosen industry: main participants, trends, forces affecting the industry.
2. Description of the chosen company: resources, capabilities, strengths, weaknesses, opportunities, threats, diversification, alliances, acquisition – anything that sets your chosen company apart and may affect its performance. Does it have any distinctive competences? This part should be connected with your analysis in #1 ANALYSIS OF BOEING AEROSPACE COMPANY STRATEGY
1. Description of the chosen industry: main participants, trends, forces affecting the industry.
2. Description of the chosen company: resources, capabilities, strengths, weaknesses, opportunities, threats, diversification, alliances, acquisition – anything that sets your chosen company apart and may affect its performance. Does it have any distinctive competences? This part should be connected with your analysis in #1 ANALYSIS OF BOEING AEROSPACE COMPANY STRATEGY
1. Description of the chosen industry: main participants, trends, forces affecting the industry.
2. Description of the chosen company: resources, capabilities, strengths, weaknesses, opportunities, threats, diversification, alliances, acquisition – anything that sets your chosen company apart and may affect its performance. Does it have any distinctive competences? This part should be connected with your analysis in #1

Explanation / Answer

1. INDUSTRY ANALYSIS

Aerospace Industry consists of manufacturers involved in designing , building, testing, selling, and maintaining aircrafts, aircraft parts, missiles, rockets, or spacecraft.

U.S. aerospace manufacturers are highly competitive both domestically as well as internationally. In 2016, the aerospace industry contributed $147 billion in export sales to the US economy. The industry has a positive trade balance of $90.5 billion which is the largest trade surplus of any manufacturing industry in the US, at the same time supporting high-wage jobs for thousands of American workers.

By the end of 2014, inward foreign direct investment (FDI) into the aerospace industry was approximately $22.5 billion which has been growing every year since 2008

MAIN PARTICIPANTS IN US AEROSPACE :

4.90

Looking at the above table, one can ascertain that the gap betwen the revenue of highest revenue eraning company and the next one is approximately $45b. Making Boeing a market leader of this industry

However in 2016 as compared to 2014, other companies have grown both in revenue and profit whereas boeing revenue fell indicating the capture of a section of market by other competitors

TRENDS IN AEROSPCAE INDUSTRY

Strong Replacement Demand- The demand to replace the aging aircrafts has been boosting the aerospcae industry.  With more fuel-efficient, technologically-advanced aircraft, many customers are now focused on replacing their older fleets.

Lower Oil Prices Influencing Both Demand and Growth- Because the low oil prices reduces the need for more fuel efficiency , consistent lower oil prices or falling prices can have negative impact on the Aerospcae industry

Excahnge Rates - With appreciation of dollar, the absolouete returns from foriegn markets decline as more and more units are now needed to be earned so that the dollar rate of return can be mainatined

PORTER'S 5 FORCE MODEL

Threat of New Entrants - This is low because of the heavy investment needed and long gestation periods. The investment needed for plant and machinery to produce aircraft and its parts require a huge capital outlay making it an unattractive sector to enter

Threat of Substitutes - The parts used in building an aircraft can be substituted however the final product i.e aircraft has very low threat of substitutability.

Rivalry Of existing Firms- Aerospace industry doesn't have a large number of manufactures . The biggest player in market is ahead by approximately $50billion. Other players have a relatively similar stake in the market

Rivalary is thus high

Bargaining Power of Customer - The customers are airlines and governments. They are organizations with bulk purchases and have high bargaining power which the aerospace industry has to manage

Bargaining power of supplier - The suppliers of the aircraft parts have a considerable power in terms of laying down their price and delivery

SWOT ANALYSIS OF BOEING

Strengths

Weaknesses

Opportunities

Threats

The biggest strength of Boeing is that it has a defense contract with US government , which has the biggest budget for military spending across the world. It gives Boeing a huge competitive advantage and is able to generate revenue 2-3 times more of its competitors

Largest Aerospace Companies US in $billions COMPANY REVENUE 2016 REVENUE 2015 PROFIT 2016 PROFIT 2015 BOEING 94.6 96.1

4.90

5.18 LOCKHEED MARTIN 47.2 40.5 5.55 4.71 UNITED TECHNOLOGIES 29.0 33.1 3.84 3.00 GE AVIATION 26.3 24.7 6.12 5.51 NORTHROP GRUMMAN 24.5 23.5 3.19 3.08 RAYTHEON 24.1 23.2 3.24 3.01

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