Boeing Strategic Analysis Report

In: Business and Management

Submitted By thuongitb
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Boeing |1

Boeing Strategic Analysis Report

Professor Jiang Bus 189 Matt Fong Karolyn Vong Kenneth Wong Vivian Li Jae Woo Chae Joseph Eslao

Boeing |2 Assessing the Industry 
 Each year the strong economic growth of the U.S. has led to sustained high oil and fuel prices. Between 2003 and 2007, jet fuel expenses have increased dramatically by 15 percent to more than 30 percent of operating cost. Because of this, many airlines are demanding new aircraft that are fuel efficiency in order to help reduce their operational costs. The current trend of increasing fuel prices plays a key role in increasing the current demand for new aircraft or commercial airplanes that are more fuel-efficient. In addition, the rising fuel prices have taken a big effect on the economy. As fuel prices affect consumer goods and spending, leisure travel is expected to decrease, thus affecting the airline industry's bottom line. Furthermore, since the economy has gradually moved into a recession from the effects of rising fuel prices, many airlines that are struggling to stay out of bankruptcy, are looking for more ways to become cost effective. Thus, further fueling the demand for new commercial aircrafts to become more fuelefficient (2007 Annual Report).
 In order to save on costs so that Boeing can provide lower prices to its customers, Boeing and its competitor, Airbus, have both turned to outsourcing. Outsourcing has allowed Boeing to become more competitive. Furthermore, the option of outsourcing also allows Boeing to share risks and focus on their relationship with marketing and suppliers. However there is a down side when Boeing decided to outsource. Engineers feel that outsourcing is not a great idea for the company (Hit, Ireland and Hoskisson: 52). One of the reasons why engineers are against outsourcing is because they feel that their job is at stake and the company has lost…...

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