This is a Darden case study.In October 1990, the Boeing Company announced that it was launching a new aircraft model, the 777. The fanfare praised the technological superiority of the product and the fact that it filled a gap in Boeing's product line. The task for students is to evaluate the 777 against a financial standard, the investors' required returns. Gives internal rates of return (IRRs) for the 777 project under base-case and alternative forecasts. The students must estimate a weighted-average cost of capital (WACC) for Boeing's commercial aircraft business segment in order to evaluate these IRRs. As a result of this analysis, students identify the "key value drivers" and distinguish, on a qualitative basis, the key gambles Boeing is making.
Authors :: Robert F. Bruner, Dena Gollish, Henrik Clausen, Niels Koggersbol
Swot Analysis of "Boeing 777" written by Robert F. Bruner, Dena Gollish, Henrik Clausen, Niels Koggersbol includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that 777 Irrs facing as an external strategic factors. Some of the topics covered in Boeing 777 case study are - Strategic Management Strategies, Financial analysis and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Boeing 777 casestudy better are - – there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing energy prices, supply chains are disrupted by pandemic , there is backlash against globalization, wage bills are increasing, cloud computing is disrupting traditional business models,
banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Boeing 777 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the 777 Irrs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which 777 Irrs 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 777 can be done for the following purposes –
1. Strategic planning using facts provided in Boeing 777 case study
2. Improving business portfolio management of 777 Irrs
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of 777 Irrs
Strengths Boeing 777 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of 777 Irrs in Boeing 777 Harvard Business Review case study are -
Successful track record of launching new products
– 777 Irrs has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. 777 Irrs 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.
Effective Research and Development (R&D)
– 777 Irrs has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Boeing 777 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– 777 Irrs has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled 777 Irrs to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– 777 Irrs is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- 777 Irrs 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 777 Irrs is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Boeing 777 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of 777 Irrs in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– 777 Irrs 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 777 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Boeing 777 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For 777 Irrs digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. 777 Irrs has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Finance & Accounting field
– 777 Irrs is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled 777 Irrs in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of 777 Irrs in the sector have low bargaining power. Boeing 777 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps 777 Irrs to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of 777 Irrs
– The covid-19 pandemic has put organizational resilience at the centre of everthing that 777 Irrs does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Boeing 777 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Boeing 777 are -
Aligning sales with marketing
– It come across in the case study Boeing 777 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 777 can leverage the sales team experience to cultivate customer relationships as 777 Irrs is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at 777 Irrs 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 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 777 Irrs supply chain. Even after few cautionary changes mentioned in the HBR case study - Boeing 777, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left 777 Irrs vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Boeing 777, in the dynamic environment 777 Irrs has struggled to respond to the nimble upstart competition. 777 Irrs has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Boeing 777, is just above the industry average. 777 Irrs 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.
Workers concerns about automation
– As automation is fast increasing in the segment, 777 Irrs needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– 777 Irrs has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of 777 Irrs is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. 777 Irrs needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help 777 Irrs to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Boeing 777 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract 777 Irrs 's lucrative customers.
Slow to strategic competitive environment developments
– As Boeing 777 HBR case study mentions - 777 Irrs takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of 777 Irrs, firm in the HBR case study Boeing 777 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Boeing 777 | 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 777 are -
Developing new processes and practices
– 777 Irrs can develop new processes and procedures in Finance & Accounting 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.
Manufacturing automation
– 777 Irrs can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for 777 Irrs 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 777 Irrs to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– 777 Irrs 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.
Better consumer reach
– The expansion of the 5G network will help 777 Irrs to increase its market reach. 777 Irrs will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Building a culture of innovation
– managers at 777 Irrs 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 Finance & Accounting segment.
Buying journey improvements
– 777 Irrs can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Boeing 777 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 777 Irrs can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, 777 Irrs can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Boeing 777, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of 777 Irrs has opened avenues for new revenue streams for the organization in the industry. This can help 777 Irrs to build a more holistic ecosystem as suggested in the Boeing 777 case study. 777 Irrs can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– 777 Irrs has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Boeing 777 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help 777 Irrs to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for 777 Irrs 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, 777 Irrs can use these opportunities to build new business models that can help the communities that 777 Irrs operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Boeing 777 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Boeing 777 are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for 777 Irrs in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Regulatory challenges
– 777 Irrs 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 Finance & Accounting industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents 777 Irrs with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that 777 Irrs is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, 777 Irrs can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Boeing 777 .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of 777 Irrs business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on 777 Irrs 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.
Increasing wage structure of 777 Irrs
– 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 777 Irrs.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– 777 Irrs 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. 777 Irrs can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– 777 Irrs has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, 777 Irrs needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 777, 777 Irrs may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of Boeing 777 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 777 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 777 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 777 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 777 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 777 Irrs needs to make to build a sustainable competitive advantage.
