Boeing Company
Introduction
Boeing Company is an American aerospace firm, the largest in the industry and the leader in the manufacturing of commercial jets. The headquarters of the firm is Chicago, Illinois and was founded in 1916 in Seatlle, Washington. The firm underwent various mergers and splits which bore other companies like United Airlines but it emerged as the premier aircraft manufacturer in US (Boeing, 1). It was not until 1958 that the firm started delivery of the commercial airlines and even though in its history it has been associated commercial planes, its involvement in defense and space programs has eclipsed that segment. The firm operations of the company involve manufacturing of commercial jetliners, security and space systems and provision of services related to aftermarket support. The firm supports U.S, allied government customers and airlines in over 150 countries (Boeing, 1). Apart from commercial and military aircrafts, the firm’s products also include weapons, defense and electronic and launch systems, various systems related to information communication. It also provides performance- based training and related logistics. The firm continues to grow buoyed by effective leadership and innovation in aerospace so that the expanding services and product line are able to serve the emerging needs of customers. It employs a largely diverse and innovative workforce comprising of 140,000 employees in U.S and over 65 countries (Boeing, 1). The operations of the firm are more susceptible to the state of global economy than firms in other major industries.
Organizational structure and Business models
The operations of the firms are organized into 3 units including Defense, Space and Security, Commercial Airplanes and the newly started Boeing Global Services. These business units are supported by Boeing Capital Corporation that offers financing solutions around the world. The functional organizations through which the company operates are based on program management and engineering, development program and technology (Boeing, 3). It also focuses on advanced designing and manufacture of various systems and various services related to finance, safety and improvement of IT, productivity and quality. The aforementioned business units are normally focused on these areas of operations and productivity so that they form away significant part of Boeing business operations and strategy (Boeing, 3).
Commercial airlines
Boeing is the premier manufacturer of different jetliners over the past decades including the Boeing 787-10 Dreamliner, 737 MAX and 777X. It provides a range of freighters that is most complete with around 90 % of cargo in the world is ferried by Boeing planes (Boeing, 1).
Defense, Space and Safety
The BDS is a global organization that is diversified which provides the best solutions for designing, producing and modifying for commercial and military aerospace equipments such s satellites and other systems for human exploration and related after-sale supporting services (Boeing, 3). This segment is driven by the vision of the firm which includes connecting, protecting, exploring and inspiring people through aerospace innovation. The firms is also looking for better ways for leveraging information technologies and proceed with investment in research and development related to improved platforms and capabilities(Boeing, 3).
Boeing Global Services
The launching of this business unit has been based on the company’s knowledge in providing solutions for innovative services to customers of defense, commercial and space products. The focus for this unit has been digital aviation, engineering and analytics services, training support and logistics on supply chain. This is aimed at enabling the company to provide solutions that are cost-competitive and agile for the various equipments irrespective of their original manufacturer. This will ensure that customers are able to minimize costs, improve efficiency and achieve optimal operations. In addition , the Global services is aimed at providing constant support for customers to maintain the operations of the commercial aircraft highly efficient and offer mission assurance for countries around the globe(Boeing, 2).
Boeing Capital Corporation
The operations of this organization involve global provision of financing solutions for customers in their efforts to purchase Boeing’s products and delivery of the same. The portfolio value of company that stands at $4.1 billion strengthens the reach of the corporation around the globe. It is also supported by extensive knowledge of the customers, expertise of seasoned financial professionals and better equipment (Boeing, 1).
Exportation of Aluminum Alloy and Engines
Aluminum alloys have various benefits that make them very useful in manufacturing of aerospace products, and have been in use since metal-skinned aircrafts were introduced. Major alloys have been an aluminum-magnesium alloy whose weight is less compared to other aluminum alloys, is less flammable in comparison to high percentage magnesium alloys (Rambabu, 31). Bahrain kingdom has a much liberalized airline industry and has various airlines that need these products and services offered by Boeing Company. Various airlines have established themselves and operate in the aviation sector of Bahrain since it is the most liberal in the region. These airlines run their hubs especially from the major Bahrain International Airport including the executive and business jet airlines, low-cost regional carriers like Kuwait’s Jazeera Airways and more importantly Gulf Air which is the national carrier. This means that Bharain deals with many executive and low-cost airlines that provide enough market that would serve the needs of customers for repair product. The creation of a product that can meet the need for repair of the airplanes for the airlines was based on the knowledge of this lucrative market. The product would is important to the airlines since it provides the support needed by the airline in safeguarding passengers lives and also equip the firms’ commercial services to any other country involved in exporting activities.
Competition
The Bahrain market is very important in the airline market in middle-east especially in relation to commercial airplane since the strategically planned development of the Arab’s market is defined by the Bahrain. The airline industry in Bahrain is characterized by a steady expansion of extensive networks for airlines and this has contributed to high growth in air travel. The introduction of the new product is , therefore, based on the premise that it can find a sufficient market in this country given the large demand for quality repair products for airlines. The company’s estimates that the Middle East region will require more than 3300 new commercial aircrafts at a value of around $770 billion in the next 2 decades in terms of renewal and growth of fleet is an indication that the Bahrain market is large enough. However, the growth in market for a product attracts substitute products from competing firms which have also noticed the growth in demand. The major firm that will be competing with Boeing Company for this market is Aluminum Bahrain B.S.C that has constantly been ranked among the largest aluminium smelters globally with modernized operations (Bloomberg,1). The firm is famous for the innovative policies and technological strengths that enable it to produce a wide range of products that serve the same market served by Boeing new product.
The firm operates its own aluminum related smelter and infrastructure where it produces a range of products that are used locally and exported to other areas including Europe, North America , Africa and other major markets around the globe. The firm has a large human capital with 84 percent of the Alba’s workforce being Bahrain nationals (Alba, 1). This means that Alba’s internal and market strengths provide a big threat to the intended exportation of Boeing Aircraft related products in this country and also other country’s allied to the manufacturer. Alba is able to produce high quality aluminum product that can compete with the repair product manufactured by Boeing Company and present stiff competition for the same in Bahrain market. The competition is also informed by the fact that Alba forms part of the non-petroleum market whose growth rate are exceeding any historic record , and this include high value information technology and manufacturing industry (Alba, 1). This implies that Bahrain is capable of producing high quality repair products that can compete with repair products produced by Boeing Company. In addition , buoyed by the growth in the economy and improved market conditions, the firm with the support of government has expansion strategies that are aimed at upgrading the production lines over the coming few years. The improved information technology in the manufacturing sectors means that Boeing will encounter stiff competition for Alba in terms of innovation ad this calls for better innovation in marketing of the repair product in this country.
Potential target market
Bahrain is ranked among the major open economies in the market region comprising of Middle East and North Africa (International Trade Center, 1). There have been great efforts by the country to diversify the economy which has seen the government enter into trading agreement with other countries. Since 1995, the country has been a World Trade Organization and Gulf Co-operation Council Member, and has economic and bilateral trade agreements with many countries including France, China, India, and USA, Singapore and United Kingdom and even 17 nations with membership in Greater Arab Free Trade Agreement (International Trade Center, 1). The market has high development in transport and communication facilities which makes it home to many multinational companies in the Gulf. The improved infrastructure, stable financial institutions and free trade agreements, the country has positioned itself strategically and offers various incentives to foreign investors who wish to access the regional and international markets. The nature of the market is that it has high export flows. In fact, the country is ranked the 60th biggest export economy globally and in 2016, the exports amounted to about $12.6B and imports totaled to around $11.5 B which resulted to $1.09B, a positive balance of trade (Observatory of Economic Complexity,1). The investment in the infrastructure has had positive on Aviation industry and the clearly demonstrated vision has great potential to improve the industry to the benefits of the firms targeting such a market. The market is also boosted by the logistic industry whose efficient processes give the market a competitive advantage over countries in the region. The growth and expansion in the market is also boosted by the Gulf Cooperation Council, a trade arrangement that touches on aviation, whose growth is faster in comparison to other regions in the world (Oxford Business Group 109).
There is a correlation in demand surge which means that Boeing Company has an opportunity to exploit the market by basing its operations in Bahrain. While the major airlines such as Qatar Airways, Etihad Airways and Emirates are competing to have a share of the market, Boeing is presented to export its repair products in the regions to serve the increasing need of customers who are these airlines. While the airlines are battling to capture the expanding aviation market in the region, Boeing is presented with an opportunity to exploit by introducing a highly innovative product that will serve the needs of customers and hence, gain a competitive advantage over rivals such as Alba. The improved infrastructure and information communication technology in the country can be used by the Boeing Company to its advantage especially in expanding the export business to neighboring market (Oxford Business Group 111).
The trade in the Arab countries is seen to have an upward trend which means that the potential market for exported for Bahrain will is also positive. The export flow nature of Bahrain market will also continue improving considering that traffic growth for countries in Middle East will continue growing at a health rate with an expectation that growth will reach 5.9 percent yearly over the next 2 decades. It also expected that various aircrafts such as twin-aisle airplanes will make up almost half of new airplanes in the region for Boeing in comparison with 23 % globally (Boeing, 1). The implication is that with demand for Boeing aircraft in Bahrain and regional aviation market , the demand for repair product for airlines will increase and this present a good opportunity for the firm to expand in that region. Using Bahrain as the major export market and a base for reaching the regional market, Boeing will manage to increase the sale of its product in this specific market. The demand for the product will also be improved by increased adaptation by Arab airlines to the global environment through the restructure of programs, expanding and upgrading of fleets and the implementation of new technologies.
Bahrain political environment
The country is a constitutional monarchy citizens have no right to elect a government or determine the political system. The government is normally appointed by the King who is surrounded by royal family who influence the political decisions of the country. The current king is Hamad Bin Isa al-Khalifa, who heads the state and has the power to appoint the cabinet. The government structure is also includes the parliament comprising of an upper house that is appointed, and a Consultative Council (Shura) and Council of Representatives that is elected into office (Global Security Org,1). The kingdom has been enjoying an increased freedom of expression and progression on human rights. These reforms have met opposition, with part of Shia activists complaining that they have not achieved economic and political inclusion of the Shia community which is the largest group in the constitution. While the country has experienced unrest in the past especially in 1990s , the situation has a times become worse with parliamentary opposition – Wifaq – proving its ability to destabilize the country by channeling political energy among the Shia into protests, though , non-violent.
The political environment of Bahrain is expected to remain relatively unstable in the future as continued protests against the Al Khalifa royal family rule continues driven by the legally recognized opposition and the Shia activists. The government is also expected to increasingly take a hard line while dealing with such opposition and unrest and in its attempt to eliminate or suppress them. This has the potential to affect the economic performance of the country in terms of economic growth and market stability in the future for the export and import business. It is expected that economic growth will reach a low of 2.1 percent in 2018 from a rate of 2.7 percent in 2017. This also informed by the decision of the government to impose austerity measures that will affect consumption and at the same time, reduce the output weighs on the growth of the oil sector.
In addition, the government allows 100 percent business ownership in most of the sectors although some restrictions on specific entity and sector may apply. The business policies of the country expect any company setting up its operations to have a Bahrain Investor Center and hence, to officially get Commercial Registration. In addition, firms operating in the country are expected to adhere to various set standards such International Accounting and Corporate Governance Standards. There are also other technical and standards regulations in the Bahraini law, such as a requirement to package and label products in English and/ or Arabic. The country’s taxation policies include lowest personal and corporate taxes in the Gulf region. A 5 percent custom is imposed on imported goods but goods that are destined for re-exportation are exempt. The political environment is, therefore, relatively conducive for a multinational firms like Boeing Company is keen to export goods and base its operations in the region.
Bahrain demography
The Bahrain society is major composed of Muslim population and a fewer immigrant workers, and the society is made of diverse ethnic, religious and cultural people. The official census report for 2010 that was produced by Central Informatics organization showed that the Kingdom had 1234572 as the total of resident population (Ministry of Information Affairs, 1). The population estimates for 2014 comprised of 1.316 million and by the year 2020, the population is predicted to be around 1.592 million and by 2030, it is expected to have reached 2.128 million (Ministry of Information Affairs,1). The current growth rate of the population is an average of 7.4 percent. The country is known to be an example of peaceful co-existence and tolerance among the various religions, sects and cultures in the society. This means that the country’s social environment is relatively good for business operations to stability provided. The country has led and hosted many international and regional initiatives such as hosting conferences on dialogue between Christians and Muslims and among Cultures and Civilizations in 2003 and 2014 respectively (Ministry of Information Affairs,1). An understanding of target’s market demography is important for an organization to achieve its goals, since it assist in deciding the market needs and the product mix to provide. The information is also necessary to know the promotion, pricing and packaging methods to be used. For Boeing, it is specifically important to understand the demographic growth and estimate the market in which airlines in the industry will be operating from in the future.
Works cited
Boeing. Boeing in Brief.1. Available from: http://www.boeing.com/company/general-info/
Boeing.BOEING OVERVIEW.2017. Available from: http://www.boeing.com/resources/boeingdotcom/company/general_info/pdf/boeing_overview.pdf
Rambabu, P., et al. "Aluminium Alloys for Aerospace Applications." Aerospace Materials and Material Technologies. Springer Singapore, 2017. 29-52.
International Trade Center. Bahrain. Available at: http://www.intracen.org/country/bahrain/
Oxford Business Group. The Report: Bahrain 2008. Oxford Business Group.2008. 109-112
Bloomberg .Company Overview of Bahrain Aluminium Extrusion Company B.S.C. 2017.Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=111581659
Alba. Aluminum for the world. n.d. Available at: http://www.albasmelter.com/Pages/default.aspx
Observatory of Economic Complexity. Bahrain.2016. Available at: https://atlas.media.mit.edu/en/profile/country/bhr/
Waheed, Abdul, and Shujaat Abbas. "Potential Export Markets for Bahrain: A Panel Data Analysis." International Journal of Trade, Economics and Finance 6.3 (2015): 165.
Global Security Org.Bahrain – Politics.n.d. Available at: https://www.globalsecurity.org/military/world/gulf/bahrain-politics.htm
Ministry of Information Affairs. Population and Demographics. Kingdom of Bahrain.2015. Retrieved from: http://www.mia.gov.bh/en/Kingdom-of-Bahrain/Pages/Population-and-Demographic-Growth.aspx
