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This paper analyzes the goals and actions of Boeing by analyzing its critical success factors as well as its strategic roadmap.
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
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Critical Success Factors
Critical success factors can be used to guide a business in creating and measuring success. A Critical success factor is defined as the identification of a key area where successful performance is required in order for the business to achieve its goals. Identifying critical success factors can help a business identify the tasks and requirements needed for success (Austin, 2002). Development of critical success factors allows a business to measure success and prioritize goals in a way that is meaningful to the business. In "Strategic Thinking: A Four Piece Puzzle", by Bill Birnbaum, he states that it is important to keep the list of key critical success factors to tow or three at the most. Many teams make long lists of ideas on what a company should address in planning which results in the team being unable to focus on a plan. Limiting success factors to two or three helps a company to maintain a focus on the desired outcomes (Birnbaum, 2004).
Critical success factors for the Boeing Company include maintaining a strong financial performance, nurturing a culture of leadership and responsibility, steady defense business and strong growth from developing geographic markets.
Strong Financial Performance
In the last year, earnings per share of Boeing stock rose 42%. Boeing Company revenues rose 5% and their operating cash flow doubled. Excluding special items, the company's core earnings per share rose 16%. The Commercial Airplane division of Boeing set a record with 1,002 net orders for new airplanes. The Defense System business showed a strong financial performance with record revenues, earnings and margins. The growing strength of these two divisions can be seen in the 34% increase in the company's total backlog to a record $205 billion at the end of the 2005 fiscal year, almost four times the company's total revenues for the year. Boeing was also able to increase their shareholder dividend by 20% (Boeing Annual Report).
Nurturing A Culture of Leadership and Responsibility
Leadership development has been identified as the key to driving sustainable growth and productivity by Boeing leadership. Boeing has developed an internal leadership model that not only defines leadership, but operationalizes it. The model defines a set of attributes that personalizes the behaviors that the Boeing Company expects their leaders and employees to follow. This model is in the process of being implemented into the company's human resource systems and processes. Over a period of the next two years, the company will implement a compensation approach that measures their leaders against both performance goals and leadership attributes. This process will promote growth in Boeing employees (DATAMONITOR). The Boeing Company has also communicated the expectation of performance and values. Boeing leadership have been directed to make ethics and compliance a regular topic of conversation with all employees (Boeing Annual Report).
Steady Defense Business Growth
The Boeing Company's defense business has been growing steadily over the past few years. Revenues from the integrated defense system grew from $27,361 million in 2003 to $30,791 million in 2005. The defense business accounts for over 55% of the company's revenues. Continued strong performance of this division of the Boeing Company would counter any downturn in the commercial aircraft industry (DATAMONITOR).
Strong Growth from Developing Geographic Markets
The Boeing Company has registered strong growth in the developing markets in China, Oceania and Africa (Boeing Frontiers, Nov. 2005). For the fiscal year 2005, revenues from China grew by 87.9%; revenues from Oceania grew by $32; and revenues from Africa grew 61.8% over the 2004 fiscal year. These regions represent some of the fastest growing economies of the world. The Boeing Company's growing market share in these regions would boost the company revenues of the future (DATAMONITOR).
Strategic Analysis and Choice
The main objective of Boeing's strategy is to analyze the commercial aircraft industry, to understand the demand that is present, and to formulate a solution that will fulfill that segment. Currently, there are only two major players in the global market: Boeing and Airbus. Boeing is widely known as the "free market" champion, while Airbus represents the "not-so-free" approach of the European Union's organized and government subsidized competition in so-called strategic markets" (Boeing Corporation's Analysis Paper). Thus, it is necessary that managers review the strategy's execution, make concurrent changes and remain on top of technological advances in order to maximize item usage and increase marketability of its products.
Plan Goals and Implementation
A plan goal for Boeing is to implement a three-point transformation strategy in their commercial airplanes segment by: transforming and simplifying their product offerings; transforming their customer relationships to ensure the requirements and deliverance are met on time; and transforming and streamlining their product systems through the Lean+ process.
Boeing is focusing its new airplane development efforts on the Boeing 787 Dreamliner, a super efficient commercial airplane that applies the latest technologies in aerospace. The airplane will carry 200 to 300 passengers and fly 8,000 to 8,800 miles while providing dramatic savings in fuel use and operating costs. The Dreamliner will be the most advanced and efficient commercial airplane in its class and will set new standards for environmental performance and passenger comfort. The first delivery is scheduled for 2008 (2005 Annual Report).
Through Boeing's new passenger-to-freighter conversion program, Boeing helped their customers run their businesses more profitably by offering alternative uses for older airplanes. Boeing also responded to the customers' need for around-the-clock support by opening the Commercial Aviation Services Operations Center, which is available 24 hours a day, 365 days a year.
The plan is to use disciplined production increases to reach higher delivery levels over the next two years. The disciplined approach is continuous implementation of Lean principles across the company and improved sourcing throughout the business. Boeing has begun in their "factory of the future" in Renton, Washington, an initiative to apply the best knowledge and experience with Lean and value stream alignment to their most complex operations.
Boeing employees have successfully applied Lean+ processes to improve productivity in several major product lines. For example, on the 737 moving assembly line, Boeing cut final assembly time by 50% and now adapting those successes to the 777 assembly line. Lessons learned from 737 and 777 are being leveraged for the 787 assembly. Another example is two Boeing employees that modified a hay elevator for seat installation, reducing installation time by two-thirds and personnel needed to lift the seats from the factory floor into the airplane by one-third. Colleagues in other facilities adapted their innovative approach, creating additional savings.
"Lean+ will take our productivity improvements to the next level" (2005 Annual Report). Boeing has implemented Lean+ well, but to become more productive and support future growth, it needs to initiate it more efficiently and across the entire enterprise. The rationale for the "+" in Lean+ is about expanding Lead principles further in the factories and beyond into the office environment and to the suppliers' and customers' operations.
Lean+ is all about employees analyzing what they do on a daily basis and doing it more efficiently by eliminating waste, shortening lead and cycle times, reducing transactions and improving quality while adding value (Boeing Annual Report).
By implementing these goals, Boeing will expand their capabilities of existing airplanes and increase the efficiency and performance of new developments beyond the 787. Achieving these goals will give Boeing a competitive advantage over their competitors and position the business for long-term growth.
In conclusion, Boeing's goal of listening to and fulfilling market demands and improving its operational performance depend on many aspects of the aerospace firm's operation. Boeing has the capacity to successfully complete these objectives, but in order to remain successful, it must concentrate on tapping other markets and maintaining consistency in all its operations.
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