Boeing is the largest manufacturer of aerospace aircraft in the world today. It is so large, in fact, than it serves hundreds of airlines all around the world today and, at least with a few exceptions, has airplanes that have penetrated almost all aspects of the consumer air transportation industry today. Its product lines, although considered to be only a relative few, are being used in consumer aerospace transportation and continues to be the leading name in the industry so much so that although its operations are strictly based in the united states, has corporate offices in all developed countries and even in third world and developing economies – as long as there is the availability of air transportation.
Therefore, for an operation of an international corporation at this scale, the management process has become ever so essential in bringing about its success and its survival in the airline industry.
From an academic point of view, management in theory gives large focus on the process of planning, organizing, staffing, directing, and controlling. However, much like other theoretical knowledge is in academic institutions, at least from the point of view of management, these processes are taken into large consideration and are actually being used for best business practices and operational templates. Therefore, from this observation, we immediately see that Boeing as a company is not exempt from such a process (Boeder & Dorman, 2000). In fact, each phase of operations in Boeing gives heavy weight on the various management processes that has been identified above. However, one intrinsic difference that is important to recognize is that although these are indeed the best business practices of management, each phase is adapted specifically to the operations of a certain firm. Especially from the point of view of Boeing — a large multinational corporation with many aspects of its business already adapted from the mind of its strategists — the theoretical planning phase of management is changed every day in order to ensure the success of the company.
In various case studies that have been made for Boeing, the operations of its manufacturing facilities for producing both commercial grade airlines and various military aerospace devices, the planning phase is adjusted to fit the specific needs of each department (Georgeson, Focal, Maintenance, & Works, 2001). Therefore, the management of the company plays an essential role for not only the short run and long run profitability of the company but also for its survival. Researchers of the operations of Boeing had pointed out that for a company whose operations, although dedicated to a specific and constrained product line, span a large supply chain and production process, the planning methods that are implemented by management in order to create goods from start to finish require not only managerial skills – skills that are usually received in an academic environment, but also other practical skills as well such as logistics, human resources, and the like, The management would eventually play an essential function of planning because it is that tool that allows them to, as managers, oversee the operations of the firm not only from the point of view of traditional management areas but also specifically tailored to the needs of the company. In fact, other researchers have pointed out that companies that have elements of scientific application, such as engineering, require management not only to have knowledge in their specific fields but also the ability to understand the various other scientific and practical details of the firm in order for their management process and methods – specifically management planning – to be more effective. This is already a relevant fact for technical companies, and therefore what more for a highly specialized technical one such as Boeing’s aerospace industry.
However, economics points out that the operations of a firm, although largely dependent on traditional and partial equilibrium models of supply and demand, in fact have real world variables that significantly influence its methodologies. Boeing, as a firm, and a multinational firm for that matter, is certainly not except from the effects of such variables. In theoretical economics, the operations of a firm would ultimately depend on the market structure that it is operating in. This means that being in a natural monopoly in the industry; the only factors that it must taker into consideration are the pricing and quantity strategies of the firm’s operations. However, consumers in recent economic markets have recognized the problems that are eventually created by market imperfections on both sides of the welfare model. Anticompetitive charges have been brought to Boeing in recent years where consumers – and even producers who have recognized the barriers to entry that the company eventually creates – in the aerospace market (Georgeson et al., 2001).
Therefore, from a strategic point of view of the companies planning process, government regulation, support, and legal issues are just one of the many factors that are considered by the firm in its operations. This has resulted in the formulation of its short run and long run business models in order to fit its operations. In fact, the book of Nobel Prize Economics professor Paul Krugman, a professor of Economics and Management, which serves as the basic foundation for the discussion of international trade for students, takes the interactions of Boeing and Airbus as its prime example of government protectionism and support and its effect on the industry of international trade. And the Boeing example does not stop there (Pritchard & MacPherson, 2004a). Discussions of game theory have also taken Boeing as an example of the decision making process of firms especially if there are government and public externalities which must be addressed.
Another factor that influences the strategies of the firm is the competition market. We have already indicated that Boeing has a natural monopoly in the aerospace industry in market which has been generated by various factors such as economies of scale. Economies of scale is the concept that firms could gain monopoly in markets where they are able to create more efficient production methods for their operations because of the improvement of various factors of production. Traditionally, knowledge accumulation and technology are the main factors that have been associated for the creation of economies of scale for the firm (Pritchard & MacPherson, 2004b). However, recent publications in management have pointed out that even managerial training and process can be a form of economies of scale for the company because of the integration of management personnel to its operations. In fact this has been proven by other literature in the topic, pointing out that the management selection and promotion scheme of the company usually occurs through in house promotion rather than external hiring processes. As a result of this management and promotion method, together with the other factors of economies of scale that has resulted in natural monopoly, a significant strategic framework that the firm builds upon is the maintenance of that monopoly by maintaining the scalability of its operations. Through this, it could not be able to face serious government intervention if indeed the time comes that policy makers decide to remove public support for the firm and give other players subsidy in the entering of the industry.
A third factor that influences the strategies of the company are the technology involved – or rather the protection of that existing technology in order to prevent rising variable costs for the firm. Usually, firms in the technology industry continuously replace their existing line of products in order to keep ahead of competitors. However, the lack of competition of the aerospace market has made Boeing’s operations rely on existing product lines – which its factories have been adapted to produce. Technological innovations, from the perspective of Boeing, are introduced only if relatively weak competitors – such as Airbus – pose threats to its market share. Through this strategy, the firm is able to preserve large margins of profit by constricting technology integration, use, and development only when it is needed.
Boeder, T. L., & Dorman, G. J. (2000). The Boeing/McDonnell Douglas Merger: the Economics, Antitrust Law and Politics of the Aerospace industry. Antitrust Bulletin, 45(1), 119-152.
Georgeson, G., Focal, N. D. I., Maintenance, M., & Works, R. B. P. (2001). NDT: A Continuing Responsibility in the Future of Aerospace. Proceedings of the 10th APCNDT, Brisbane, www. ndt. net.
Pritchard, D., & MacPherson, A. (2004a). Industrial subsidies and the politics of world trade: the case of the Boeing 7e7. The Industrial Geographer, 1(2), 57-73.
Pritchard, D., & MacPherson, A. (2004b). The trade and employment implications of a new aircraft launch, the case of the Boeing 7e7. Occasional Paper, 23.