Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market
Boeing and Airbus are contemplating entry into very-large-aircraft (VLA) markets. Both firms are convinced the market cannot support two players due to the extremely high R&D costs and the limited (and highly uncertain) state of demand. The key strategic issue is the uncertainty surrounding Boeing's development cost: to what extent would Boeing's experience with the 747 help it reduce the R&D cost of a new VLA prototype? The main point is that Boeing's strategic moves signal its private information, and that this eliminates any first-mover advantage Boeing might have had in this market.
Authors :: Nabil Al-Najjar, Ichiro Aoyagi, Guy Goldstein, Ted Korupp
Swot Analysis of "Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market" written by Nabil Al-Najjar, Ichiro Aoyagi, Guy Goldstein, Ted Korupp includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Boeing's Boeing facing as an external strategic factors. Some of the topics covered in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market case study are - Strategic Management Strategies, Economics and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market casestudy better are - – increasing energy prices, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, technology disruption, etc
Introduction to SWOT Analysis of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Boeing's Boeing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Boeing's Boeing operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market can be done for the following purposes –
1. Strategic planning using facts provided in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market case study
2. Improving business portfolio management of Boeing's Boeing
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Boeing's Boeing
Strengths Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Boeing's Boeing in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Boeing's Boeing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Strategy & Execution industry
– Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market firm has clearly differentiated products in the market place. This has enabled Boeing's Boeing to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Boeing's Boeing to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Boeing's Boeing is one of the leading recruiters in the industry. Managers in the Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Boeing's Boeing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Boeing's Boeing is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Nabil Al-Najjar, Ichiro Aoyagi, Guy Goldstein, Ted Korupp can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Boeing's Boeing are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Boeing's Boeing has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Boeing's Boeing is present in almost all the verticals within the industry. This has provided firm in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Boeing's Boeing is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Boeing's Boeing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Boeing's Boeing has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Boeing's Boeing has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Boeing's Boeing in the sector have low bargaining power. Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Boeing's Boeing to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market, is just above the industry average. Boeing's Boeing needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Boeing's Boeing has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Boeing's Boeing has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High cash cycle compare to competitors
Boeing's Boeing has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, Nabil Al-Najjar, Ichiro Aoyagi, Guy Goldstein, Ted Korupp suggests that, Boeing's Boeing is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Boeing's Boeing products
– To increase the profitability and margins on the products, Boeing's Boeing needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Boeing's Boeing supply chain. Even after few cautionary changes mentioned in the HBR case study - Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Boeing's Boeing vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market can leverage the sales team experience to cultivate customer relationships as Boeing's Boeing is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Boeing's Boeing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Boeing's Boeing has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market are -
Developing new processes and practices
– Boeing's Boeing can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Boeing's Boeing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Boeing's Boeing has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Boeing's Boeing can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Boeing's Boeing can use these opportunities to build new business models that can help the communities that Boeing's Boeing operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Boeing's Boeing to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Boeing's Boeing to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Boeing's Boeing can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Leveraging digital technologies
– Boeing's Boeing can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Boeing's Boeing has opened avenues for new revenue streams for the organization in the industry. This can help Boeing's Boeing to build a more holistic ecosystem as suggested in the Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market case study. Boeing's Boeing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Boeing's Boeing to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Boeing's Boeing to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Boeing's Boeing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Boeing's Boeing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market are -
High dependence on third party suppliers
– Boeing's Boeing high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of Boeing's Boeing
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Boeing's Boeing.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Boeing's Boeing with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Boeing's Boeing needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market, Boeing's Boeing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Boeing's Boeing.
Consumer confidence and its impact on Boeing's Boeing demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Boeing's Boeing has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Boeing's Boeing needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Stagnating economy with rate increase
– Boeing's Boeing can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Boeing's Boeing needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Environmental challenges
– Boeing's Boeing needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Boeing's Boeing can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Boeing's Boeing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Boeing's Boeing will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Boeing and Airbus: Competitive Strategy in the Very-Large-Aircraft Market is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Boeing's Boeing needs to make to build a sustainable competitive advantage.
