boeing case reading

Boeing case reading

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Boeing Aircraft Company with its numerous strategic subsidiaries is an airspace and defense company that operates in the following segments: commercial airplanes, Aircraft and Weapons (A&WS), Network systems, Support systems and launch, and orbital systems (L&OS), Integrated defense systems (IDS) and Boeing Capital corporation (BCC).

Despite numerous strategic departments (business units) Boeing relies highly on the commercial airplanes sales which because of their low volume, high cost nature and durability cannot be accommodated solely by the US market but rather require additional world markets, namely the developing markets of China.

Boeing reading

Boeing company commercial airplanes department is all about the development, production and marketing of different commercial jet airplanes. The department provides the needed support for the given airplanes on a routine basis. Currently Boeing creates numerous airlines with different carrying capabilities. The most recent airplanes are Boeing 717, 737 slim body planes and 747, 767, and 777 wide body planes which certainly show superior characteristics compared to a majority of Boeing competitors. Currently, Boeing invests in the super fast jet airplanes with moderate carrying capacity. Yet as one can understand it does not always take a producer of superior planes to remain the best and most profitable company; it also takes a buyer to complete the transaction and if the multi-billion dollar buying decisions are influenced by the governments of individual countries, then it becomes apparent that these governments certainly can have Boeing company as a lobbying agent in their political games. The following essay will speak about the need of some US government support of Boeing if this company is to remain competitive enough to surpass Airbus.

Airbus consortium, on the other hand is the European competitor of Boeing, the only commercial airplane producer of Europe which is highly supported and subsidized by the European governments for political and nationalistic reasons. Current trends for Airbus show that this airplane maker slightly surpasses Boeing in sales and currently strives to capture the market with its new A380, a huge airplane capable of carrying 550 people! Airbus, unlike Boeing invests in the high-capacity airplanes and somewhat negates the speed. Airbus is owned by European Aeronautic defense and Space company (80% of ownership) and UK-based BAE Systems (20% of ownership). Being the EU government’s most favored airplane company, Airbus would get numerous subsidies and governmental orders of all European countries. Furthermore, being less expansionist and aggressive than the USA, Europe appears to be more favored by the foreigners who oftentimes base their buying decisions on politics.

The article noted that Chinese oftentimes throughout their history would use Boeing in their political talks with the USA. Namely, it was Boeing company that lobbying the USA to accept China into the world Trade organization. It was Airbus to get the orders from the Chinese should the Boeing company not comply with the Chinese demands. The issue over Taiwan cost Boeing Company $1.8 billion in lost orders to Airbus, which because of being second best would get all the orders around the world that Boeing would not.

The need for the governmental support of Boeing is apparent:

  1. Boeing is currently losing its position to Airbus. Taking into account that the commercial airplane market specifics (once the market is filled, the new planes are needed only after several years), it is extremely important for the Boeing corporate to constantly supply the new markets with its airplane. Repair services will not do it for Boeing.
  2. Airbus is supported by the European governments politically (all new orders are given to Airbus) and economically (Airbus gets subsidy and money grants from the government) to assure that this European giant survives the competition from Boeing. Thus, it would be fair for the US government to do the same to assure the survival of Boeing.

It is of importance to note that Boeing Company is a financial sound organization that certainly can survive the competition in the competitive free market environment which would be based only on the product characteristics rather than on politics. Thus, the US government should not think that by subsidizing Boeing it would reduce its competitiveness. ON the contrary, it would just provide more opportunities for Boeing, which for political reasons is not able to sell as many planes as Airbus does.

Boeing case reading

The US government should understand that the US Company, Boeing, does not get a fair treatment in different countries, namely China. The US government should sponsor Boeing in the following ways:

  1. Give Boeing exclusive orders on a regular basis just like the EU government does for Airbus.
  2. Give Boeing some tax benefits to assure that the company is able to sell abroad (and perhaps use that tax-savings portion to bribe the government officials as it oftentimes proves to be a sound practice around the world).
  3. Give Boeing governmental and political support, i.e. during different negotiations with the Chinese or other markets should promulgate fair treatment of Boeing.
  4. Give Boeing government grants and monetary help just like the European Union does to Airbus which despite sales larger than that of Boeing still appears to lack efficiency and thus needs extra support, too.

In conclusion, it should be noted that Boeing is an extremely sophisticated and profitable company that manages to create state-of-the-art airplanes, the demand for which, nevertheless, appears to be influenced by the political decisions and political games between the USA and other countries (china in this case) rather than the product performance. Airbus, Boeing’s main competitor, on the other hand is a government-owned consortium which currently not only gets government subsidies, but also because of the peaceful European politics (compared to the USA) gets all the orders that Boeing fails to get. Such sponsorship currently contributed to Airbus’s increased sales and profitability which already surpassed Boeing’s. If the USA wants to help Boeing survive this unjust competition with political influence, it should provide Boeing some support in one of the four ways shown in the essay.

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