Example Audit On Boeing
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This report was developed to analyze the global position of The Boeing Company and how their its current business strategy competes with its competitors and fits their its global forecast. Research was conducted through the use of financial data and through the company’s website using public information to determine the areas that they excel in and areas that is is weak in. Charts and comparative analyses were conducted to further evaluate The Boeing Company and develop areas of necessary improvement. The following report contains the charts and tables that support the researched data. The results of the data analyzed shows that Boeing is very successful and it is holding true as a dominant force within the aircraft industry. There are some areas of concern for building the future success of the company that should be addressed before further growth is achieved.
The report finds that The Boeing Company is on track for success but highlights some areas of concern and some areas that continuous improvement need to be made in: The battleground for the Asia region and the European region, for launch customers and overall sales.
Technical support and logistical support for the current fleet worldwide. Research and development competition from Airbus, providing new technology to the aviation industry. Product issues resulting in aircraft emergency evacuation need immediate correction and proven reliability to recover brand name. Continuous fulfillment of backorders and ability to handle new production models
Boeing’s business model is based around globalization and a differentiated niche, as it produces aircraft for both the commercial and military segments. The business approach is developed around their 20 year forecast that they produce to project the needs of the aviation industry and what the developing markets will be. This forecast takes into consideration current fleet age, traffic flown by region, and the need for new and additional aircraft in expanding markets.
The goal is to increase the profits for the company while increasing the shareholders equity. Boeing and its board of directors are dedicated in reinvestment of its earnings back into the company to build a bigger and stronger Boeing for tomorrow (Boeing Market Outlook, 2013). Boeing reports it revenues as one entire entity, however it is diversified in the way it conducts business around several divisions. Boeing’s divisions include: Boeing Commercial Airplanes (BCA); Boeing Defense, Space & Security (BDS); Boeing Engineering; Boeing Operations & Technology; and Boeing Capital and Shared Services Group (Boeing About Us, 2013). The company generates over 88 billion dollars in sales revenue every year while continuously growing across all different divisions.
Boeing produces Commercial Aircraft, Military Aircraft, Provides Engineering support to the current fleet, and research and development for products within the aviation industry. The products that Boeing produces are used by Airlines and Military’s throughout the world. Boeings competitive advantage is their proven reliability, its current technologically advanced fleet of production aircraft, and its strong support for aircraft. The global reach of Boeing is not limited to just a small group of countries, it is invested and has products and support in almost every country, their reach is very wide and effective.
The value chain composes the logistics process as well as operations, marketing and sales, and service and support. Fortunately, Boeing excels in all of these areas as it is a major importer and exporter of raw materials and per assembled parts from their vast group of certified parts suppliers. Boeing is also a major part of the United States Export Control Board as it is a major product exporter with their aircraft and their parts. Boeing’s operations are very structured to provide efficiency and custom tailored to deliver what the needs of the customer are. The service it provides is exceptional in parts and engineering and even overhaul services. Its marketing is an area that is not seen by many; as Boeing is very good at targeting their current audience and they market specifically to those people worldwide (Boeing Edge, 2013).
Boeing’s major disadvantage is a limited market as their target customers are usually companies not individuals. Its advantages are that it has a wide variety of services and products to meet its customers’ needs worldwide. Boeing is diversified as it consults operations all over the globe with employees working in the field supporting its customers. Its business strategies that it has been using are working very well for them and it has generated a solid trend of positive financial growth and has aided in the expansion of the company. Boeing’s mission statement is: People working together as a global enterprise for aerospace leadership (Boeing About Us, 2013). Its mission statement is simple and leaves it open to cover the vast role the company plays and there are no revisions necessary. Using the Campbell’s 10 Criteria for evaluating mission statements, Boeing scores a 14, this is one point below the exceptional mark. The strategy of Boeing is consistent with the internal and external environments in which Boeing operates.
Boeing is an American aircraft manufacturer and global leader in commercial and defense aviation products. It has a large board of directors which varies from 10 to 14 board members as per its Corporate Governance Policy. The Boeing board meets the New York Stock Exchange criteria for independence of at least 75% of its board. The board members are paid in two different ways; they all receive a cash retainer fee for being on the board and are paid for their services through the issuance of Boeing’s Stock or Stock Equivalents. Boeing is also a unique company as it requires after a board members third year to have Boeing stock equal to three times their retainer fee, which varies every year after the third year, but mandates that the board of directors be invested in the company (Corporate Governance Principles, 2013).
Boeings’ current 11 advisor board of directors is made up of: David L. Calhoun, Arthur D. Collins, Linda Z. Cook, Kenneth M. Duberstien, Admiral Edmund P. Giambastiani, Jr., Lawrence W. Kellner, Edward M. Liddy, W. James McNerney, Jr., Susan C. Schwab, Ronald A. Williams, and Mike S. Zafirovski. (Board of Directors, 2013). David L. Calhoun is the current CEO of Nielson Holdings and the Nielson Company and has been a board member of the Boeing board of directors for five years. He brings several traits to the table including his previous tenure as the Vice chairman, Infrastructure, and Aircraft Engines CEO of General Electric (GE). He has a vast knowledge of aircraft engines and the partnership that GE has with Boeing. He gained a great deal of his international business experience while working for GE in their lighting and aircraft engines divisions. Mr. Calhoun holds several duties while serving on the Boeing board to include being a member of the compensation committee, and the Governance, Organization, and Nominating committee, and externally serves on the board of directors for Caterpillar, Inc.
Arthur D. Collins, Jr. is another Board member of Boeing’s board and he is currently a Senior Advisor for the Oak Hill Capital Partners. Mr. Collins has served the board for seven years and is the former CEO and Chairman of the board for Medtronic, Inc. Mr. Collins brings unique skills to the table with his experience with technology and medical device sales both domestically and internationally. Mr. Collins serves Boeings board of directors as the chairman of the Compensation committee and a member of the Governance, Organization, and Nominating committees. He also sits a as a member of the Alcoa, Inc Board, which is one the largest aluminum producers in the world, and having this incite in the raw materials trade is good for Boeing as he is a reliable source of information for the future of aircraft production.
Linda Z. Cook is a board of director’s veteran, serving the board for 10 years; she is the former executive director of Royal Dutch Shell. She is currently retired and is working as a board member for the Marathon Oil Company and Boeing. The international business experience Ms. Cook has received is from her time living abroad while working for Shell Gas and Power; she brings expertise in international business and that natural resource use and conservation. Ms. Cook is the chairman of the Finance committee and a member of the audit committee. Kenneth M. Duberstein is the longest running board member, and has been working with Boeing for 16 years. He is the chairman and CEO of the Duberstein Group and previously served as the White House Chief of Staff for President Ronald Reagan. His extensive background is based in politics and enables him to being in a unique factor to the board that may not be apparent in many other boards. The CEO of Boeing reports to the current president on Export matters as Boeing is the largest exporter per capital, Mr. Duberstein’s skills come in handy in this place. He is also a board member for the Dell Corporation and Mack-Cali Real Estate. Mr. Duberstein holds the position of Lead Director, Chair of the Governance, Organization, and Nominating Committee, and is a member of the Compensation Committee.
Admiral Edmund P. Giambastiani, Jr. has been a Boeing board member for five years and brings management and strategic planning skills to the mixture or directors. His previous accomplishments include Commander, US Joint Forces Command, and the Chairman Joint Chiefs of Staff. He has also spent time on the Defense Acquisitions Board and has a strong history in Nuclear Engineering. Admiral Giambastiani serves Boeing as a member of the Audit Committee, the Finance Committee, and the Special Programs Committee and is also involved in the board of Monster Worldwide, Inc.
Lawrence W. Kellner is the newest member to join the Boeing board of directors in his second year. Mr. Kellner is the president of the Emerald Creek Group and is the former Chairman and CEO of Continental Airlines. Continental airlines are one of the major supporters of Boeing and Mr. Kellner and his former company had a great love for Boeing’s products. Mr. Kellner brings in the aspect of once being one of the major Boeing customers and being able to redefine the way the customer service is run, based upon his experiences. He also serves on the board of directors for Marriott Hotels, International and is a member of Boeing’s Audit Committee and the Finance Committee.
Edward M. Liddy is a partner in the firm Clayton, Dubilier, and Rice,
LLC and is the former CEO or Allstate insurance. He has been a member of the Boeing board of directors for three years and contributes very useful connections to the aviation community. Even though Mr. Liddy is not of an aeronautical background his experiences at Allstate and at American International Group (AIG), he provides great knowledge about the insurance industry. He is currently a member of the 3M board of directors which makes aviation consumables and designs custom products for Boeing. His duties include the Chairman of the Audit Committee, and a member of the Finance Committee. W. James McNerney, Jr. is the current President, Chairman of the Board, and Chief Executive Officer of The Boeing Company. He is in internal member to the Boeing Company and has been serving the Boeing board of directors for 12 years. He is the former CEO of 3M, and previously served various management positions for GE aircraft engines, and currently serves President Obama on the US Export Council. His vast corporate responsibility also reaches the Proctor and Gamble Company and International Business Machines Corporation, broadening what he brings to the Boeing Company serving such a high role for the world’s largest aircraft manufacturer. His duties on the board are limited, as he has other executive duties; he serves as the chairman of the Special Programs Committee.
Susan S. Schwab is a three year member of the board and brings in a unique background. She is a current Professor at the University Of Maryland School Of Public Policy and has served as the 15th US Trade Representative and the Deputy US Trade Ambassador. Ms. Schwab is current member of Mayer Brown, LLP and is a board member of Caterpillar and FEDEX. Her vast educational experiences and time as a trade ambassador have given her key insights into the international trade market and her educational background allows her wealth of knowledge to grow and expand, further aiding the Boeing board of directors. She serves Boeing as the Chairman of the Financial Committee and a member of the Audit Committee.
Ronald A. Williams is a retired three year member of the Boeing Board of Directors. He is the former chairman and CEO of Atena, which is a health insurance company. Mr. Williams has a large knowledge of insurance and aids the board in areas concerning this particular matter and the benefits of the stockholders. He is a member of the American Express and Johnson and Johnson Boards of Directors. Mr. Williams’s servers the Boeing board of directors as a member of the Compensation Committee, The Governance, Organization, and Nominating Committee, and the Special Programs Committee.
The final member of the Boeing board of directors is Mike S. Zafirovski, and he has been a board member for nine years. Mr. Zafirovski’s professional experience derives from his time as the CEO of Nortel Networks Corporation and 25 years in General Electric’s various divisions. His experience in international relations comes from Motorola while he served as the Chief Operating Officer. He is also a board member of Stericycle, Inc., a medical waste disposal company, and serves as the president of the Zaf Group. Mr. Zafirovski’s is a member of the Compensation Committee, and the Governance, Organization, and Nominating Committee, and the Special Programs Committee.
Boeings’ board of directors has a very challenging job to regulate, promote growth and project the future direction of the world’s largest aircraft manufacturer in both commercial and military aircraft. There is a recent news article talking about Boeing’s board of directors in response to the Boeing 787 battery fire issue that occurred with All Nippon Airlines. The article talks about the results of how the board handled the event and that the occurrences were not normal of the issue stating that the board was not holding anyone accountable for the incident. The board defends themselves in a statement about the future growth. Later in the year, the board released its projections for continued growth of the 787 project and increased production numbers, as if the incident did not even affect the company. This is the sign of a strong board that protected the company and its assets by not publically reprimanding a high level executive, and stating that the growth of the company would continue, even in the wake of an incident. Boeing’s board of directors is definitely looking out for the interest of their stockholders and the future of the company. (Talton, 2013).
External Environment: Opportunities and Threats:
The EFAS table focuses on the external opportunities and threats. After a review of Boeing company profile and the business relations they are involved in, the external factors were extracted. The opportunities including Boeings current events are its new defense contracts, their backlog of customer’s orders, and focusing on the 20 year outlook. Launch Customers are also important to the manufacturer as they need customers to exclusively launch their new models. The Boeing data is derived from their most recent business events and the state of the industry in strength relation to its competitors. There are threats that are investigated as well. They include Europe and Asia expansion by a foreign manufacturer, Research and Development efforts, and the success of competition of similar frame size models. The New 787 and A350XWB, the 747-8I and the A380, the 737 and the A320 are just a few examples of things
Implementation of Recommended Strategy:
Boeing is heading in an overall favorable direction with the need to only improve in certain areas of business. No major structural changed is needed to the infrastructure of the company, just minor refinement in certain areas and continued planning and dedicated research for the future. The areas needing improvement is more dominance and need fulfillment in the Asia region and the European region. It must continue to provide and offer Technical support and logistical support for the current fleet and increase the level of Research and development to prosper over their competition. The product issues resulting in aircraft emergency evacuation have been handled well and need to have steps taken to prevent future incidents and keeping the continuous fulfillment of backorders and ability to handle new production models with precision and excellence are essential to the company’s success.
Boeings current standings are very good as a company, and they areits is currently on a progressive improving track. It is experiencing continuous growth over the last several years and the new developments that are planned are in line with their its current outlook and fit to meet the operational needs of their its customers and fill aircraft gaps. The status of Boeing is very well; however there is always room for improvement. Overall, Boeing should continue their its current approach and continue to fulfill customer’s orders and secure new orders. The recommendations from this report are to help Boeing prosper and avoid having weak areas in the future that may hurt their competitive advantage.
Asia and Europe sales need attention to limit the advancing of their major competitor in Europe. Its technical support for their customers worldwide needs to remain strong and as new customers emerge offer them the same level of support you provide to your best customer to keep that new customer ordering more.
Research and Development efforts need to be made to stay on top of the competition creating a competitive advantage and making the customers choose a Boeing product over the competition. Keeping up with the needs of aircraft as they areit has produced and managing safety concerns with lightening accuracy will help keep Boeing’s reputation alive as the safest airliner company. Finally, keeping up with the production and delivery demand and producing a quality product will keep the customers returning for decades to come. Boeing is very well controls its own fate, with such a well structured globally run organization they will be able to gain the necessary competitive advantage and dominate the skies with the best aircraft available.
Boeing (2013). Boeing About Us. Retrieved November 15, 2013, from http://www.boeing.com/boeing/companyoffices/aboutus/brief.page Boeing (2013). Board of Directors. Retrieved October 29, 2013, from http://www.boeing.com/boeing/corp_gov/board_directors.page?
Boeing (2013). Boeing Edge. Retrieved November 10, 2013, from http://www.boeing.com/boeing/commercial/aviationservices/index.page? Boeing (2013). Boeing Market Outlook. Retrieved November 07, 2013, from http://www.boeing.com/boeing/commercial/cmo/
Boeing (2013). Corporate Governance Principles. Retrieved October 28, 2013, from http://www.boeing.com/assets/pdf/corp_gov/corp_gov_principles.pdf NASDAQ (2013). Boeing Company (The) Stock Quote & Summary Data. Retrieved November 18, 2013, from http://www.nasdaq.com/symbol/ba
Talton, J. (2013, February 2). Boeing Board of Directors, Where are you? The Seattle Times. Retrieved October 31, 2013, from