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PEST & Industry Analysis By: Karim Badr PowerPoint Presentation
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PEST & Industry Analysis By: Karim Badr

PEST & Industry Analysis By: Karim Badr

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PEST & Industry Analysis By: Karim Badr

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  1. PEST & Industry AnalysisBy: KarimBadr

  2. Snap shot of Boeing • Founded in 1916 by William E. Boeing in Seattle, Washington. • In 1997, Boeing merged with McDonnell Douglas. • The world's largest aerospace and Defense Company. • Boeing has customers in more than 90 countries around the world. • Boeing employs more than 158,000 people across the United States and in 70 countries.

  3. Snap shot of Boeing Continued • Boeing operates three divisions: • commercial airplanes • Integrated Defense Systems (IDS) • Boeing Capital Corporation (BCC) • In 2009, the firm generated $60.9 billion in revenue and $2.7 billion in net income. • Boeing’s newest airplane is the 787 Dreamliner. • Competition: Airbus industries of Europe.

  4. Breakdown of Boeing Divisions% of Revenue

  5. Boeing’s PEST Analysis

  6. Boeing’s PEST Analysis

  7. Boeing’s PEST Analysis

  8. Boeing’s Industry Analysis • Boeing’s Buyers • Airlines: Commercial aircrafts • US Governments: Military aircrafts, global services and support, and network and space systems. • Global based buyers: Customers in more than 90 countries. • Boeing’s Suppliers • Global based suppliers: Contracts with 22,000 suppliers and partners globally. • Engine manufacturers represent the single most significant group of suppliers: • General Electric, Pratt & Whitney (US), Rolls-Royce (UK), CFM International

  9. Boeing’s Industry Analysis • Boeing’s Competition: Airbus • Airbus: European aerospace company based in Blagnac, France. • Conglomerate funded by various countries throughout Europe • Airbus produces half of the world’s jet airlines and shares the market with Boeing. • Airline wars: Intense competition between Boeing and Airbus. • Producer of the AB-380.

  10. Boeing’s Industry Analysis • Boeing’s Competition: Embraer • Emerging competitor • Company founded in 1969 in Brazil • 11,000 Employees • Historically produces Aircrafts: seats between 30-50 passengers • Currently developing new jetliner family in the 70-110 seat capacity

  11. Boeing’s Porters Five Forces

  12. Barriers to Entry: High

  13. Supplier Power: Low

  14. Buyer Power: High

  15. Threat of Substitutes: Low

  16. Rivalry: High

  17. Key Force: High Intensity of Rivalry • The High Intensity of Rivalry is due: • Two firms controlling the Aerospace industry • Similarity of products produced by the two firms • Firms adopting the same strategies • Regulations and policies enforced by the WTO. • Firms in the industry need to find ways to differentiate between their products and continue to innovate.

  18. Boeing Strategies • Strategies: • Run Healthy Core businesses • Leverage strengths into new products and services • Open new Frontiers

  19. Concluding Thoughts • PEST • Technological opportunities are most opportunities to Boeing. • Political factors represent the major threats to Boeing in the form of the WTO regulations and laws • Aircraft Industry and Porter Five Forces • Low: • Supplier Power • Threat of Substitutes

  20. Concluding Thoughts • High: • Intensity of Rivalry • Barriers to Entry • Buyers Power • Key Force: Intensity of Rivalry. • Airbus and Boeing control the Aircraft industry, Embraer as a potential emerging competitor. “If you don’t take care of your customers….someone else will”

  21. Assignment 2Competitor and Market Analysis By: KarimBadr

  22. Segmentation of Aircraft Industry World Aircraft manufacturing industry Military & Space Commercial Aircraft Cargo Aircraft Passenger Aircraft Large Civil Aircraft( LCA) Small to Medium- sized Aircrafts

  23. Key Competitors in the Aerospace Industry • Boeing • Airbus • Bombardier • Embraer

  24. Key Competitors in the Aerospace IndustryBoeing • Leader in the commercial jet manufacturing for decades • Merged with McDonnell Douglas in 1996 • Second largest defense contractor in 2000 • Leader in the satellite making (space industry) business as of 2001

  25. Key Competitors in the Aerospace IndustryAirbus • Established in December of 1970 • Boeing’s only competitor in commercial jet manufacturing • Controlled 55% of the large passenger aircraft market in 2001

  26. Key Competitors in the Aerospace IndustryBombardier • World’s largest maker of small planes in Canada • Make jets that seat between 25-90 passengers • Control 36% of the global market for business and regional jets

  27. Key Competitors in the Aerospace IndustryEmbraer • Company founded in 1969 in Brazil • 11,000 employees • Historically their planes seat between 30-50 passengers • Currently developing new jetliner family in the 70-110 seat category

  28. Evaluation of Competitors

  29. Evaluation of Competitors: Focus • Boeing • Supersonic Jet • Airbus • Super-Jumbo Jet • Bombardier • Focus on Smaller Jets • Embraer • Focusing on the 70-110 seat market

  30. How do competitors compete:

  31. How does Boeing compete • Products Differentiation Boeing adopts a differentiation strategy , Faster aircrafts in the form of the supersonic 787 Dreamliner series that compete against Airbus bigger airplane the A-380 jumbo Aircraft. • By Outsourcing 70% of the 787 Dreamliner was built outside the USA, that enables Boeing to lower its production costs in a very expensive industry. • By Technology The 787 will be the first airliner to use composites for most of its airframe construction, that will allow for a lighter aircraft and lower fuel consumption( 20% lower)

  32. Boeing Vs. Airbus

  33. Boeing’s Competitive Positioning • Strong Global Network( Buyers, Suppliers) • Broad Product line that covers most market niches( commercial, defense and military, ammunitions, space and security) • R&D

  34. Aerospace Growth Opportunity • Global Aerospace and Defense Market has reached a value of USD 674.6 Billion in 2008 and reports forecast that this figure would go up to USD 910 billion in 2013 based on a year on year increase of 6.17%. • Within the aerospace and defense market the defense market accounts for almost 70% of the market value.

  35. Key Trends in the Aerospace Industry • Globalization of Aerospace manufacturing It is estimated that the amount of manufacturing outsourcing in the aerospace industry is close to about 80% of the airplane. • Technical Expertise Airplanes have got increasingly complex and it is not expected that a single company would have the technical expertise to meet the myriad requirements. • Outsourcing Manufacturers are outsourcing the sub system value chain since they want to shorten development time by increased focus on higher value added portion.

  36. Key Trends of Aircraft Development: Development of LCAs is split into two markets Consolidation Fragmentation Large number of smaller high speed aircraft(100-290 seats) Large and high capacity aircraft (300-600 seats) Boeing 787-Dreamliner Super Sonic jet Airbus A-380 Super Jumbo Jet

  37. Boeing’s Target Market:

  38. Boeing’s B2B-Social Media • Started by Randy Baseler, Vice President, Marketing Commercial Airplanes in January 2005. • Way to expand the conversation of commercial aviation to the Web. • In its first two years, Randy’s Journal, as the blog was named, saw more than half million individual. • Randy’s blog is another communication outlet for a large public company, he also includes transparent reflections on quarterly earnings, orders and how the impact of results financial results on production and development of ongoing projects. • From Randy’s Blog: “We’ve just been through another tough quarter, not only for Boeing but for our industry. So, understandably our results are somewhat parallel to what’s happening in the global economy and its deep effects on the commercial airplane market. Boeing’s first-quarter earnings dropped 50%, to $610 million.”

  39. Conclusion Four mains players in the aerospace industry, with Boeing and airbus controlling the market of big size commercial aircrafts Companies in the industry focus on differentiation due to the intensity of rivalry • Boeing focus: Supersonic jets- 787 Dreamliner • Airbus Focus: Jumbo Jets- A380 series Companied use different strategies to compete • By Product • By Outsourcing • By the use of technology

  40. Conclusion Cont’d Key trends in the aerospace industry • Globalization of aerospace manufacturers • Outsourcing • Technical expertise Key Trends of aircraft development: • Consolidation • Fragmentation Boeing’s Positioning • Long distance-Medium capacity:Many • Short distance-High capacity: None • Long distance-High capacity: some • Long distance-Low capacity: Niche Boeing’s social media • B2B social media to interact with its stakeholders( employees, buyers…etc)

  41. Internal Analysis, SWOT Analysis, Generic Strategy, and Grand Strategy By: Karim Badr

  42. Boeing Business Model • Design, assemble and support commercial jetliners • Boeing 7-series family of airplanes lead the industry • Commercial Aviation Services (CAS) offers broad range of services to passenger and freight carriers • Design, assemble and support defense systems • World’s largest designer and manufacturer of military transports, tankers, fighters and helicopters • Support Systems provides services to government customers worldwide • Design and assemble satellites and launch vehicles • World’s largest provider of commercial and military satellites; largest NASA contractor • Integrate large-scale systems; develop networking technology and network-centric solutions • Provide financing solutions focused on customer requirements • Develop advanced systems and technology to meet future customer needs

  43. Boeing Performance over the past 5 years U.S dollars in millions 2006-2007: Increase in Operating margin by 3.9% 2007-2008: Decrease in Operating margin by (2.3%) 2008-2009: Decrease in Operating margin by (3.4%) 2009-2010: Increase in Operating margin by 4.6% * Peek of Revenue & Operating margin in 2007

  44. Changes in Distribution of Revenues: Revenues By segment U.S dollars in millions

  45. Boeing’s Key Assets • Cash • Accounts Receivables • Inventories • Goodwill • Property, Plant & Equipment • Other Acquired Intangibles • Investments Total Assets account for: $68,565 Million Dollars

  46. Boeing’s SWOT Analysis

  47. Boeing’s BCG Matrix Stars Question Marks HIGH MARKET SHARE: Boeing controls the aerospace market for commercial aircrafts along with Airbus HIGH MARKET GROWTH RATE High MARKET GROWTH: Growing demand for commercial Airplanes. LOW Cash Cows Dogs HIGH LOW RELATIVE MARKET SHARE

  48. Boeing’s Strategies • Run healthy core businesses • Leverage strengths into new products and services • Open new frontiers • People working together as a globalenterprise for aerospace leadership

  49. Boeing’s generic Strategy • Generic Strategy: • Differentiation based-competitive advantage • Keys to Successful Differentiation: • Understanding customers needs and preferences • Commitment to customers • Knowledge of company’s capabilities • Innovation

  50. Boeing’s Generic Strategy Competitive Advantage Differentiation: Boeing follows this strategy by developing products that offers unique attributes to customers and that are different from the competition products: the 787 Dreamliner low Cost High Cost Stars Overall Cost Leadership Broad Differentiation Competitive Scope • Broad Scope: • Broad Product line that covers most market niches( commercial, defense and military, ammunitions, space and security). Cost Focus Differentiation Focus Narrow HIGH LOW