Boeing Case Study
Boeing is an American Multinational Corporation that specializes in designing, manufacturing, and the sale of aeroplanes, rotorcraft, rockets, Satellites, Missiles, and Telecommunications equipment. In addition to this, the company also provides leasing and product support services. The second-largest defence contractor in the world by revenue, and the largest exporter in the United States by dollar value, Boeing, alongside Airbus, are the largest aeroplane manufacturers in the world (Boeing 2020).
Founded in 1916 by William Boeing in Seattle, the current corporation is a result of a merger between Boeing and McDonnell Douglas that took place in 1997. The company has its headquarters in Chicago, Illinois. It is organized into five divisions these being commercial planes (BCA), defence and security (BDS), engineering, operations and technology, Boeing capital, and Boeing shared services group. Despite its success, the company’s global reputation was shattered in 2019 with its commercial business and financial ratings suffering after the twin crashes of its 737 max planes in late 2018 and early 2019 (Demrovsky, 2019).
For this assignment, we will examine the Boeing commercial planes, division.
Step 3: Strategic Priorities
While many companies at some point may face challenges, Boeing’s problems are unique because it led to the death of 346 passengers. To make matters worse, the accidents were due to engineering problems that arose because of the company’s gradual shift from being driven by engineers to being driven by finance. This meant that technical decisions were no longer made by engineers but by managers with no technical background and sales as their main priority. Furthermore, there are unethical practices that the company conducted that led to accidents. Because the company wanted to keep the switching costs low by creating a modification on the 737 so that there is no need to train pilots, they failed to inform their clients that the changes they made were so significant that it changed how the plane could be handled. Pilots thus flew the plane without knowing that there was an auto corrective mechanism that could override their action. In the case of the fateful accidents, the device malfunctioned, making the plane nosedive, yet pilots were unaware of what was going on. Remember, the company did not even bother to inform the pilots after the first crush, and as such, the second crush was basically because of negligence (Useem, 2019). Under such circumstances, the most critical strategic priorities should be to restore the company’s reputation. These should include
Changing the company’s management
The problem facing Boeing is a direct result of management policy that deviated from the organization’s vision, mission, values, and culture that had made the company what it is today. Those directly responsible for this deviation, including the CEO, must go so that the company may begin with a clean management slate (Demrovsky, 2019). Only by doing so would the company get back on course to building trust amongst its stakeholders.
Measuring and monitoring
The success of the program is measure by how the company can bring in a new management team with suitable skills and temperament to accomplish the company’s goals.
This goal is to be achieved within three months.
Responsible parties
Boeings board of directors.
Restructure management
As mentioned earlier, Boeing’s problems began when the company stopped being driven by engineers and was instead driven by finance. As a result, the company stopped focusing on its core business which is engineering and instead focused on books and stocks. Decisions on technical issues were now being handled by people who did not know about engineering only eager to push forward a product to increase sales. To prevent such a situation, it is essential to
- Created a permanent Aerospace Safety committee to oversee the design, development, manufacturing, operation, maintenance and delivery of products and services with the engineering team playing a significant role (Demrovsky, 2019).
- Set up a Product and Services Safety team that reports directly to the chief engineer (Demrovsky, 2019).
Monitoring and Measurement
The success is measured by how soon the committee and teams can be set up and how they can be integrated to function adequately within the company’s structure.
The goals should be met within three months after a new team takes office.
Responsible Parties
CEO and senior management team
Retake the leadership position
While Boeing has been a significant player, it was no longer the leader in the industry, and instead, Boeing was playing catchup to companies like Airbus. Indeed the 737 Max debacle was created when Airbus created a more fuel-efficient engine and mounted it on an airbus 320 frame, thus eliminating the need to retrain pilots. As a result, Boeing was under enormous pressure to come up with its version of the Airbus or else loose even airlines in the US to Airbus. Unfortunately, an arbitrary decision to make Boeing planes shorter made it impossible to mount the new wider engines without further modifications which changed the plane’s aerodynamics making its nose go up sharply during takeoff. To solve the problem Boeing installed software which when it malfunctioned overcorrected pushing the nose down. If the company had not been playing catchup, then it would not be under such pressure (Demrovsky, 2019).
Monitoring and measurement
- Dealing with the 737 Max design flows – Six months after a management restructure
- Making a final decision in what to do with the to-do about Boeing’s 777 Series- Three months after an administration restructure
- Going back to redesign and build planes to meet the needs of its clients and not to respond to Airbus Immediately after an administration restructure
Responsible parties
Senior management and engineering team
Step 4: Allocation of Resources
Resources to achieve strategic goals
To change the company’s leadership, Boeing should opt to outsource the service to HR firms that have the necessary capabilities to recruit a CEO whose values are aligned to Boeings values. The firm would then work with the recruiting agency to find the best possible candidates. This is an activity that would be driven by the board and would commence immediately.
To restructure management, new the CEO would be tasked with leading the process but will have proposed changes approved by the board. Funds needed to set up new offices or support structures for the offices would be allocated by the finance department. The process would commence immediately the new CEO takes office and should be completed within three months.
Taking back the leadership position is a long process. Once restructuring of the organization is complete, the CEO and the engineering team should decide on what to do about the 777 series as it is proving to be a huge drain to the organization’s resources. This decision needs to be taken as soon as the new team is created. Also, the engineering team should prioritize fixing problems with the 737 not by using software solutions but to provide an engineering solution to it. The team should be given six months, and an adequate budget to the program off the ground be allocated to them. Lastly, the company should increase its research and development program by 50% to ensure that it can stay ahead of the competition rather than react to it. This should be done at the start of the new finical year.
How Successful resource allocation is measured
The company will have allocated resources successfully if it can provide the above-stated resources at the time that is stated. Besides, resource allocation should not paralyze other organizational activities since we are aware that resources are always scared and as such prudent management means prioritizing what needs to be done but not paralyzing everything else. For example, in taking the lead, the company would consider successful resource allocation when the research and development budget is increased by 50% and when it has restructured the organization to once again give the engineering team a more significant role in the decision-making process of the organization.
Those accountable
The people accountable for resource allocation include the board of management when it comes to recruiting a new CEO, the board and the new CEO when it comes to restructuring and the senior management and the engineering team when it comes to taking the lead as described in the sections above.
Step 5: Value Chain activities
Boeing provides value by developing, producing and marketing of commercial jet aircraft. To support these activities, the company also provides fleet support services mainly to the commercial airline industry across the globe. The company has been able to achieve this by leveraging on its technical and engineering capabilities while working on new technological solutions and innovations (Boeing, 2020).
By considering itself as an engineering form first, the company can come up with engineering solutions to the most pressing problems of the airline industry which includes safety and fuel efficiency, especially as the world in transitioning towards cleaner forms of energy. By keeping its eyes on this, then the company can come up with innovative ideas and thus become a market leader. The loss of vision of what the company was about is how it found itself in the current predicament. Furthermore, the key here is innovative ideas, not inventions. The company, through continuous quality, can make small creative steps that over a long-term, become major innovation milestones (Demrovsky, 2019).
The people who are accountable for the success of the value chain process are the CEO and his senior management team.
Step 6: Information and operating systems that enable Boeing personnel to carry out their strategic roles
Information systems play a crucial role in carrying out strategic functions because they help gather, process information and present it in a manner that can be used to make informed strategic decisions. Besides, information systems keep employees up to date on what is being done, the milestones achieved, and what still needs to be done (Sinha, 2016). In essence, it helps to make communication smooth. At Boeing, information system is critical for the engineers who have to communicate within their departments on work schedules and processes, gather and process test results, and communicate this in a non-technical term to senior management. Besides, information systems help the company collect data from their planes as they fly so that they can be able to make necessary adjustments and designs in future developments as part of continuous quality improvements.
Conclusion
Boeing I a great company with a long history of excellent performance. However, it finds itself at a crossroads, and the company has to decide whether it wants to go back to its glory days through innovative solutions to engineering problems or wither away and die. It is also essential to consider that the company’s predicament was caused by poor leadership which shifted their eyes from what the company was all about, which is engineering to focusing on the company’s stock performance. To make a bad situation worse, engineers who previously played critical decision-making roles in the company were relegated to the back seat while those with no technical expertise begun making technical decisions based on how they believed those decisions would look in their books. The only way to move forward is to recalibrate the organization’s culture and reorient it towards providing engineering solutions. This can only be done through a change in leadership and restructuring of the organization’s management. The new CEO must have an excellent understanding of the company’s history and what it is that built the company to the towering heights it reached. It is a good thing for him/her because the CEO does not need to reinvent the wheel (Demrovsky, 2019).
References
Boeing. (2020, March 1). Quarterly Reports. Retrieved June 22, 2020, from https://investors.boeing.com/investors/financial-reports/default.aspx
Nemirovsky, C. (2019, March 15). The Broader Business Lessons From The Boeing 737 Crash. Retrieved June 22, 2020, from https://www.forbes.com/sites/chloedemrovsky/2019/03/14/the-broader-business-lessons-from-the-boeing-737-crash/#272297db6ebd
Sinha, P. K. (2016). Management control systems: A managerial emphasis. New Delhi: Excel Books.
Useem, J. (2019, November 20). The Long-Forgotten Flight That Sent Boeing Off Course. Retrieved June 22, 2020, from https://www.theatlantic.com/ideas/archive/2019/11/how-boeing-lost-its-bearings/602188/
https://www.vox.com/business-and-finance/2019/3/29/18281270/737-max-faa-scandal-explained
https://hbr.org/2019/03/how-boeing-should-have-responded-to-the-737-max-safety-crisis
https://www.theatlantic.com/ideas/archive/2019/11/how-boeing-lost-its-bearings/602188/
https://www.npr.org/2019/11/26/783197253/737-max-scandal-cuts-boeings-once-rock-solid-image
https://s2.q4cdn.com/661678649/files/doc_financials/2019/ar/2019_Boeing_Annual_Report.pdf
https://www.researchgate.net/publication/333417295_Case_study_The_Boeing_company_strategic_analysis
https://ivypanda.com/essays/boeing-strategic-plan/