Boeing is one of the dominant businesses in the large commercial airlines (LCA). It has travelled a long journey to reach this position. During this long journey, it has exploited various opportunities and strengths and has overcome weakness and threats to reach this position. The assessment of Boeing's strengths, weaknesses, opportunities and threats and how these elements were perceived within the time scale of the case study between 2002 and 2006 are explained in this case study.
Strengths
Multiple Business Units
In outset, Boeing was mainly dependent on USA’s defence in WWI and WWII while after the end of the WWII, it diverted its focus to commercial airline industry. The long standing experience in defence integrated systems …show more content…
It receives large amounts of subsidy from the government in form of research and development. It is estimated that US’s contribution to the 787 Dream-liner was around US$4.2 billion (Pavcnik, 2002) and receives tax cuts from Washington. Boeing also enjoys the subsidies from Japan and Italy for the design of Boeing’s 787 (Hayward 2005, as cited in Baskett, 2010).
Financial Performance
The financial growth of Boeing has expanded dramatically in 2006. The revenue has increased 15% and the net profit has almost doubled. Upsurge in revenue and profit increases the net margin, operating margin and leverage ratio of the firm in the market. High level of profit also increases the goodwill and value of the shares. Account receivables, liabilities and long term debts have decreased which is a good indicator of financial management. …show more content…
Less commonality between its models increase the cost for the customers e.g the customer has to bear extra cost for the training of the personal. On the other hand, Airbus has given high preference in commonality because of its potential to reduce pilot and attendant training costs as well as improve airplane turnaround time.
Weak Sales Force
The weak sales force in Boeing along some other factors left the manufacturing giant fell from its number one position in 2002. Boeing’s sales force was weak while Airbus consistently used the opportunity and priced its products below Boeing’s prices. As a result, Boeing lost its considerable amount of deals from United Airline, Air Berline, Air Asia and Southwest to its competitor.
Dependence on Government Subsidy
Boeing receives large amounts of subsidy from the US government especially for its defence integrated system. The subsidy is invested in R&D for defence integrated system however the knowledge can also be used in the commercial airlines. For example about half of the 787 Dream-liner’s composites knowledge can be directly drawn from Boeing’s experience with the B-2 stealth bomber program. Any change in government policy can harm the both of the commercial and defence