TOWS Matrix
To succeed in the target environment, Boeing will have to consider the opportunities and threats that lurk in the global economy environment, as well as have a clear understanding of its weaknesses and strengths. For these purposes, one should consider the TOWS Matrix. Though often mistakenly considered the exact copy of a SWOT analysis (Fleisher & Bensoussan, 2015), the matrix offers a more detailed and nearly comprehensive analysis of the external and internal factors that affect the performance of a company.
Table 1. TOWS Matrix.
It is noteworthy, though, that some of the internal characteristics of Boeing that have been marked as weaknesses may turn out to be its strengths in the long run. For instance, the increasingly high costs of R&D can be viewed as investments into the search for a new brand image and product that will help Boeing stand out of the range of organizations that are likely to enter the global market shortly.
Strategic Alternatives
Marketing
At present, the organization has several strategic alternatives that could also used to propel it to the top. The emphasis on the marketing approach is one of the strategies that can advised. To be more specific, one should consider focusing on the redesign of the brand image of the organization, as well as a massive upgrade of its brand product. Despite the fact that both have suffered significant changes over the course of the organization’s development, they still need a consistent update which will, nevertheless, allow the firm retain its unique characteristics and remain memorable for the target audience.
Expansion
Furthermore, given the fact that a comparatively small amount of funds has been provided for the defense industry, Boeing may have to consider other areas for which it may produce its aircraft. For example, commercial airplanes, space aircraft, and security vehicles production will need to be considered an opportunity. Given the recent growth of the tourism industry, it would be reasonable for Boeing to focus on the design of commercial airplanes as the foundation for its further marketing framework and the process of building a customer base (Parker, Stranghoener, & Womack, 2016).
Customer relationships
Enhancing the customer loyalty levels and building the customer base on which the organization will be able to exert its influence should also be viewed among the primary strategic alternatives. As seen from the description of the primary strategies that the organization will have to consider, improving the communication with the target population is one of Boeing’s subgoals – in fact, the enhancement of the quality standards listed above among the essential objectives to be accomplished is aimed at increasing Boeing’s popularity with the target customers. However, it could be argued that the firm would win from a more explicit focus on customers and their needs.
Particularly, it will be crucial to establish not only relationships with the current customers but also the foundation for successful communication with the future ones. The identified objective can be attained by reconsidering the current communication approaches and the pricing strategy. For instance, it would be reasonable to introduce a different discount policy into the organizational setting and, therefore, offer loyal customers more options. Specifically, apart from seasonal and general discounts, Boeing marketers may consider the options for including the discounts for regular customers, as well as seasonal discounts and other options for clients to save money.
Pros and Cons
It should be borne in mind that the suggested frameworks have their advantages and problems. As far as the strengths of the strategy are concerned, Boeing may enjoy a number of opportunities as far as the expansion of its services and the further operations are concerned, yet the adoption of a relatively new approach also implies that the firm is likely to face a number of risks. Therefore, a sustainable approach toward risk management must be designed.
The current strategy
The fact that the organization is clearly looking for new and improved ways of diversifying its revenue stream shows that, from a financial perspective, Boeing is developing at a rather fast pace. The company is clearly seeking new ways of managing the challenges of the global economy and exploring new opportunities for maintaining loyalty levels among its shareholders high.
In light of the fact that there have been significant defense cuts over the past year, there are reasons for Boeing to reconsider its current approach toward the use of its financial assets and design a more elaborate approach toward managing its financial resources. However, keeping the shareholders satisfied and retaining their credibility is also important in keeping the top position in the global market. Therefore, one must give the current strategy credit for balancing between the needs of shareholders and those of the organization.
One must also admit that the strategy currently deployed at Boeing is far from being inept; in fact, it fits the current situation quite well. Given the issues associated with the lack of financing for Boeing’s defense-related products, using Saab’s assistance as the means of retrieving the required amount of financial resources and reducing the associated threats can be viewed as a rather smart move. More importantly, the fact that Boeing’s leaders do not abandon the defense area as the niche that they can fill with their products should be deemed as an important step in retaining the company’s position in the global market.
Furthermore, there is a need to reduce the costs of R&D, which have gone through the roof by now, and at the same time promote an active increase in product quality levels. Thus, the principles of sustainability as the means of distributing the available financial resources between the company’s departments and stakeholders so that the necessary processes could continue should be deemed as the only possible solution in the current situation.
However, the framework suggested for the development of the organization has its problems. The design of a powerful competitive advantage is a challenging task, and the increasingly large number of competitors that have new and exciting opportunities to offer to the target population pose a significant threat to the financial and economic well-being of the organization. Furthermore, the emphasis on the relationships between the company and its specific stakeholders, primarily, its customers and shareholders, may suggest that other aspects of the communication process, such as maintaining an open conversation with employees, might be overlooked. As a result, there is a threat that the levels of satisfaction among the staff members will inevitably start to shrink, thus, leading to a drop in quality levels.
Furthermore, relying far too heavily on the opportunities that the KC-46 program has provided is bound to make Boeing vulnerable in the global market. With new companies exploring new opportunities and designing new and innovative products, Boeing needs to maintain the required rates of product diversity as well. In fact, the approach described above also suggests that product diversification must be viewed as a crucial step in improving the current situation that Boeing is facing.
The alternatives
Other available solutions, though not as popular as the framework that Boeing is currently implementing, should not be dismissed as unfeasible in the context of the global market. Quite on the contrary, some of them offer a range of ideas that may be used to develop a viable solution for the organization’s current issues. The associated issues are, however, rather complex and, therefore, need an elaborate management approach. For instance, even though Boeing has been quite successful in Japan so far, building more trustworthy relationships and forming a closer bond may become a problem. The reasons for the concern are linked to the delay in the introduction of 787 Dreamer into the Japanese market (Schwarz & Busby, 2014).
Recommended Strategy
Corporate strategy
As stressed above, it is important for Boeing not to lose its opportunities as far as the production of defense-related goods is concerned. Granted that Boeing’s leaders have been placing a strong emphasis on the subject matter by exploring the opportunities for partnerships, particularly, developing strong business ties with Saab is worth appreciation, more needs to be done.
Even though Saab is a widely recognized brand, partnership with a well-known organization can only do so much as long as Boeing delivers the product of the finest quality and is capable of developing its own unique competitive advantage. Therefore, apart from focusing extensively on the cooperation with Saab and the Japanese organizations that will help Boeing strive in the Asian market, the company will also have to consider redesigning some of its internal processes. To be more accurate, closer attention must be paid to the issues associated with the quality of the product and the introduction of innovative features and goods.
At the same time, the fact that Boeing must meet the needs of its stakeholders must be borne in mind. Therefore, the company will have to distribute its resources in a very careful and elaborate manner so that the R&D processes should not be stalled and at the same time the shareholders could remain satisfied. For this purpose, it is recommended to redesign the approach toward the resource management by using a cost-efficient approach toward the distribution of the company’s financial resources. Curbing the staff’s overtime salaries, while being an admittedly undesirable strategy, must be listed among the primary tools for managing the issue.
Seeing that the suggested approach proved to be rather efficient the previous year, it might also help Boeing sustain its profit margins in 2017 as well: “”By curbing exempt overtime pay, Boeing is challenging leaders and employees to come up with work solutions that curb the need to work overtime,” said the memo, which was first reported by the Seattle Times” (Scott, 2014, par. 6). Even though the identified measure is rather harsh and does not reflect the organization’s ethical stance on employee relationships, it must be viewed as a temporary measure that will help the company strive in the hostile economy. In fact, there are opportunities for reducing the harm that the identified approach causes to the employees:
Boeing’s white-collar engineering union said the new policy likely would not affect many of its 19,000 members, since they are governed by labor contracts. Professional engineers receive regular pay plus $6.50 an hour when they work past 40 hours. A group of about 20 pilots do not have that provision. (Scott, 2014, par. 8)
Hence, the corporate strategy that the company should consider as the means of advancing in the global market and at the same time maintaining the levels of satisfaction among the essential stakeholders high will have to include a sustainable approach toward the management of financial resources. Curbing overtime payments is one of the ways of handling the current financial issues. In light of the fact that the company will receive support from Saab and its Japanese partners, the suggested framework is bound to be rather efficient.
Therefore, it is crucial that the organization should determine the way in which it should build relationships with its stakeholders. Even though the concept of meeting the needs of all stakeholders involved and maintaining satisfaction levels high among employees, customers, and shareholders alike is typically viewed as the preferable approach, Boeing currently cannot allow taking the specified avenue due to the budget restrictions.
It would be wrong to assume that the identified strategy is bound to become the foundation for the future system of corporate values in the organization. Boeing does not have to reconsider its concept of meeting the needs of the people involved, and has to keep its ethical standard high. Furthermore, given the support that it will supposedly receive from Saab and its Japanese partners, the firm may soon be able to return to the standard framework that requires providing all stakeholders involved (i.e., employees, business partners, customers, suppliers, etc.) with equal opportunities and advantages. However, at present, refusing from the concept of overtime cuts as the way of managing the financial issues will imply suffering significant losses. As a result, job cuts may ensue, leading to even more devastating outcomes for the employees, the shareholders, and even customers, since, with the drop in the number of staff members, product quality is likely to suffer extensively.
Herein lies the gravity of adopting the sustainable framework that will help create a foundation for a gradual improvement. Several strategies for managing change successfully in the context of Boeing’s corporate environment can be suggested. To be more specific, it can be assumed that Kotter’s eight-step model can be used as the means of promoting change and compelling the staff members to accept the new approach toward the management of the corporate processes.
Naturally, it would be wrong to expect that the introduction of changes and new rules, especially as far as the quality improvement and the payment issues are concerned, will be welcomed by all employees. Quite on the contrary, the staff members are likely to express negativity to the idea of facing changes in the corporate financial policy in the payment area and at the same time being forced to excel in their performance.
This is the point at which the strategies for enhancing motivation levels should be brought up. It is crucial to design the leadership framework based on the combination of the transformational and visionary approaches so that the personnel could have a clear role model that they could follow. More importantly, the use of the said leadership approaches will help avoid a rise in employee dissatisfaction levels. Indeed, once the relevant values and corporate philosophies are integrated into the target environment, the staff members are likely to agree about the necessity to promote change and meet the new quality standards.
Business strategy
As stressed above, Boeing is currently in desperate need for renewing its competitive advantage and updating its branding strategy. Even though the organization and its products have become a household name for the residents of numerous states, Boeing needs to introduce something new that could entice and attract an even larger number of customers. At the time when a range of competitors enter the global market on a regular basis and offer an innovative service or product, Boeing cannot afford to be old-fashioned. Instead, it must be viewed as an innovative organization that is willing to cater to the needs of an extremely diverse population and can succeed in every domain in which it operates.
It should be noted, though, that there has already been a significant shift in Boeing’s approach toward building a competitive advantage and developing its business strategy in the realm of the global market. The significance of improving the technological aspects of the firm’s performance has been the foundation for the dominant business model for years.
However, in the 2000s, Boeing’s leaders developed a propensity toward focusing on the firm’s cost efficacy and, therefore, reducing the expenses taken in the process of producing aircraft, managing the supply chain, etc. (The Boeing Company, 2017). In light of the globalization process and the need to build a supply chain that will help introduce the firm into the global community, the identified approach seems to be quite legitimate. However, the idea of making the expenses drop is at odds with Boeing’s need to invest in the R&D process and come up with the product of high technological efficacy.
One might argue that the specified issue could be addressed by helping the technical community integrate into the global network and, thus, use the available resources to design high-quality products, at the same time maintaining the costs relatively low. The said framework is also likely to allow the technical team to coordinate their actions with the strategies designed by the representatives of the financial department; therefore, the resulting approach will not affect the company’s financial well-being as badly as it might otherwise.
In other words, the emphasis must be placed on the cooperation between different departments of the company and the accurate transfer of information. The identified objectives will allow maintaining the quality levels high, at the same time preventing the firm from taking significant expenses due to being misinformed. Furthermore, the number of errors will be reduced significantly, allowing for a rapid increase in quality levels in the organization.
Consequently, the redesign of the business strategy must be geared toward the consistent improvement of the supply chain, the communication processes, and the product quality at the same time. The simultaneous update of the identified systems will become a possibility as soon as every employee at Boeing realizes that the corporate processes are linked and, therefore, relevant data must be shared actively across departments.
Furthermore, in order to attain the goals related to the improvement in the product quality standards, Boeing will have to reconsider some of its performance metrics. Although the identified approach concerns primarily the issue of meeting the needs of the employees, it will also help the organization manage its production quality. Particularly, the introduction of the new performance metrics will permit identifying the changes in the organization’s progress and, therefore, either encourage the improvements or consider the ways of handling the hiccups in Boeing’s performance:
Beginning in 2017, annual incentive awards and performance awards under our long-term incentive program will no longer pay out based on one- and three-year economic profit. Instead, they will pay out based 50% on free cash flow, 25% on core earnings per share, or EPS, and 25% on revenue, in each case during the appropriate performance period. (The Boeing Company, 2017, p. 33)
Furthermore, the introduction of the identified approach will allow meeting the needs of the company’s stakeholders in a more efficient manner, at the same time introducing orderliness and a rigid system into the management of the stakeholders’ interests. The use of the metric elements such as free cash flow levels, earnings per share, and revenue as the foundation for defining the financial strategy will be a perfect solution to the financial resources management issue since the logic behind the distribution of the financial resources will imply that an analysis of not only internal but also external factors should be conducted. As a result, an adequate distribution of the company’s financial assets can be expected. The business strategy described above will serve as the foundation for promoting a sustainable use of financial resources in the organization.
Functional strategy
The current emphasis on the R&D processes is an admittedly important step in helping the organization gain influence in the environment of the global economy. Even though there are understandable concerns about the possible financial risks that Boeing will face in case the R&D processes will not lead to the improvement in the service and product quality, the analysis of what makes Boeing efficient in the global market is the most important objective for the organization right now.
At present, it is crucial to locate the opportunities for developing an impressive competitive advantage that could set Boeing’s aircraft aside from the vehicles produced by the rest of the companies operating in the same industry. As a result, the premises for identifying the niche that the company will be able to take and helping it gain weight in the global economy realm can be created.
The focus on the R&D processes is also imperative due to the fact that new entrants in the transportation industry have a plethora of innovative solutions, with which Boeing needs to keep up. The fact that Boeing has a very long presence in the global economy can be viewed as both an advantage and the source of problems. On the one hand, knowing the identified economic environment for so long is important to determine the current trends and be able to make prognoses as far as the further changes in demand among the target population are concerned.
On the other hand, even the organization as popular as Boeing cannot remain in the spotlight forever unless innovative solutions are offered to the target population on a regular basis. Boeing, in its turn, has been offering a rather homogenous product for a consecutive time period; as a result, its popularity may have worn out. Furthermore, with public attention being focused on Boeing for so long, the organization leaders may feel that they have enough power to keep offering the same product to the customers and still take the top position in the target market. Both issues are topical for the company at present, and they need to be addressed by placing a heavy emphasis on the R&D processes. The search for new opportunities for quality improvement is bound to help Boeing retain its competitiveness.
The shareholder issue mentioned above will also require extensive support from the organization. As stressed above, it is imperative that the shareholders’ interests should not be infringed and that they should receive the profits that they expect from an organization of Boeing’s caliber. More importantly, it is also crucial that the needs of executives should be met along with those of shareholders. The approach that Boeing is currently using should be viewed as a temporary solution to the financial problems faced in the competitive global economy:
The Board remains committed to ensuring that executives maintain meaningful stock ownership in the Company, which further aligns the interests of executives with the interests of shareholders. As evidence of this long-standing commitment, senior executives must own Boeing stock valued at three to six times their annual base salary, depending on executive grade. In 2016, the Board enhanced these requirements by requiring executive officers to hold all newlyvested stock until their stock holding requirements are met. (The Boeing Company, 2017, p. 27)
The idea of maintaining the value of the stock is in direct proportion to the salary of the executives should be mentioned among the crucial steps toward keeping the target audience satisfied. The drop in the difference between the salary of the shareholders and the value of their shares can be viewed as a sensible compromise that Boeing must make in order to retain its economic sustainability in the global economy realm. The specified approach help align the interests of executives and shareholders so that they could strive toward the common goal and focus on making the organization competitive in the aircraft industry.
Furthermore, the improvement of the Enterprise Resource Planning (ERP) framework can be viewed as the means of managing the issues associated with the financial sustainability of the organization. Even though the system has been deployed successfully in the company, it still needs to be refined in order to become the foundation for a consistent improvement in the company’s’ quality and, therefore, a continuous growth of its profit margins. To be more specific, it is crucial that the ERP system should be integrated with the operations of the rest of Boeing’s departments. The reasons for the identified step to be taken are quite simple.
As stressed above, facilitating the transfer of the relevant information, as well as making sure that the crucial data is available to all members of the company, and that the employees should be updated on the essential changes, is crucial to avoid errors and misunderstandings that lead to an increase in the number of defects and, therefore, a gradual drop in quality levels. ERP, in its turn, can be viewed as a framework for integrating the basic processes that occur in the organization. As a result, the employees at Boeing will be able to see the firm as not a contraption of different departments but a cohesive whole, i.e., a system in which every single element represented by a corresponding department matters.
The enhancement of the role of ERP in the functioning of the organization, as well as the promotion of collaboration and information sharing among the members of all units and departments, is, therefore, imperative for the successful implementation of the changes required to make the company develop a strong competitive advantage. Furthermore, ERP will become the basis for an unceasing quality improvement in the organization. As stressed above, the framework can be used to address the issue of defects, thus, increasing the repeatability and reproducibility levels at Boeing.
The fact that the ERP system has already tested positively in the target industry can be viewed as the proof that the approach must be incorporated into the Boeing’s operational design. Indeed, according to a recent study, the use of ERP has helped not only improve the production processes but also increase safety levels to a considerable extent:
IFS Defence provides maintenance and logistics solutions for aerospace and defense. IFS Applications is a component-based extended ERP suite built on service-oriented-architecture technology. The suite has more than 100 business components. Customers choose the ones they require, such as IFS Financials, IFS Sales and Service or IFS Maintenance. (Canaday, 2013, par. 1)
Therefore, the introduction of ERP principles into the functional strategy of the organization is an essential step in facilitating the environment in which the employees will feel motivated and enabled to excel in their performance. The emphasis placed on the communication process will serve as the basis for a rapid improvement in the quality of the output due to the reduction in the number of misunderstandings and misconceptions between the representatives of different departments. In other words, the ERP framework will become the tool for aligning the essential corporate processes.
Furthermore, it could be argued that the use of the ERP tools will produce the results that will inform the further changes in the financial strategy of the organization. For instance, once there is the lack of support for a particular aspect of Boeing’s operations, not only the employees but also the managers and the company’s leaders will become instantly aware of the subject matter. As a result, the necessary changes in the distribution of funds among the departments will be made within the shortest amount of time possible, therefore, creating prerequisites for managing the problem in a manner as efficient and expeditious as possible.
Policies
The concepts of ethics and compliance are currently the key direction in which Boeing is going with its corporate policies. One must admit that the specified approach has its advantages, the opportunities for promoting change actively without facing significant resistance among the staff members being the key one.
Furthermore, the enhancement of compliance allows for minimizing the number of conflicts that occur in the organizational setting. As a result, the decisions are made faster and from a more objective point of view in the environment of the organization. Moreover, the concepts associated with cooperation, mutual assistance, and support can be promoted more easily in the context of Boeing’s organizational environment. Therefore, Boeing has created the system of policies that is linked directly to the firm’s vision, mission, and philosophy. The enhancement of the relevant qualities in the staff members, e.g., the promotion of the Corporate Social Responsibility among the employees, becomes much easier once the identified policy is applied since it makes the target population understand the importance of following the set regulations.
That being said, Boeing could use an update in its policies to make them more resistant to the negative effects of the external factors. With the recent changes in the U.S. state policies, which can be witnessed since Trump was elected as the president, Boeing has been struggling to keep its corporate policies together and maintain integrity in the new environment:
While a company such as Boeing supports a massive manufacturing presence in the US, it has cultivated a broad network of international partners that have invested decades and billions of dollars into relationships with Boeing. These partners have deep ties to their local governments and business communities, but the new administration’s hardline stance on globalization threatens those bonds. (Zhang, 2017, par. 4)
However, the challenges that the firm is facing at present may take its toll on the quality of the communication process, take the best of the staff, and compel the firm to alter its values toward a lesser focus on diversity, abandonment of the search for efficient communication approaches, etc. Therefore, the measures for making Boeing’s policies stronger must be introduced into the company’s design. For this purpose, one may consider the idea of enhancing the significance of corporate citizenship in the organizational environment, as well as the importance of multiculturalist principles.
It is, therefore, strongly recommended that Boeing should maintain its integrity and continue cooperation with its foreign partners despite the changes in the foreign policy of the state. Even though developing ties with foreign organizations may require larger investments that it used to, Boeing’s leaders still have to engage in the active development of intercultural dialogue in the context of the global market. Thus, the organization will be able to create a large supply chain and build the competitive advantage that will set it aside from the rest of the firms operating in the specified industry.
References
The Boeing Company. (2016). Boeing in brief. Web.
The Boeing Company. (2017). 2017 annual meeting of shareholders. Web.
Canaday, H. (2013). Enterprise Resource Planning (ERP) systems with aircraft MRO capabilities. Aviation Week Network. Web.
Drew, J. (2015). Japan chooses Boeing KC-46, halting Airbus tanker winning streak. Flight Global. Web.
Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: Effective application of new and classic methods. New York, NY: FT Press.
Parker, A., Stranghoener, S., & Womack, J. (2016). Joint supply cost models. Boeing Technical Journal, 1(1), 1-15.
Schwarz, L. A., & Busby, J. (2014). The 787 Dreamliner: Will it be a dream or nightmare for Boeing Co.? Journal of Case Research in Business and Economics, 1(1), 1-20.
Scott, A. (2014). Boeing to curb overtime for U.S. salaried workers to reduce costs. Reuters. Web.
Sink, J., & Wasson, E. (2017). Trump plans historic cuts across government to fund defense. Bloomberg. Web.
Zhang, B. (2017). Trump’s ‘America First’ policies are catapulting Boeing into dangerous territory. Business Insider. Web.