The Boeing Company started initially as Pacific Aero Products Company and then William E. Boeing, the founder of The Boeing Company incorporated it on 15 July 1916 in Seattle, Washington. The company with its steady progress has emerged as of the leading manufacturers of commercial jets in the world. The major competitor of Boeing Company is the Airbus, which is run by the European Aeronautic Defense and Space Company. The first of the modern airliners in the world produced by the Boeing Company was Boeing 247 that was manufactured in the mid of 1933.
After conducting several researches and studying the market the company came up with an innovative pressurized cabin that was capable of flying even in the rough weathers with an altitude of 20,000 feet. This was a remarkable invention in the world of aeronautics. (Boeing Historical Archives, 2009) The Model was named “307 Stratoliner” and this was the first four-engine airliner that was offered in domestic services and with that the model also was able to mark new standards with its USP on speed and comfort jointly.
Initially Boeing manufactured 10 Stratoliners but then they stopped the production when World War II started. The Stratoliners were then used in Army Transport Command for the later five years. The smart thing that the Boeing Company did was to maintain close ties with the US Department of Defense and as a result the Boeing Defense, Space and Security is currently $34 billion dollar company with more than 68,000 employees all around the world. The Headquarter of the company is situated in St. Louis, Missouri, US. (Company Snapshot, 2010)
With increasing trend of moving towards the concern of environment and generation of substitutes to fossil-based jet fuels, the Research and Technology department of Boeing has joined forces with PetroChina that would evaluate the potential of biofuel. The company is then likely to enter in to the biofuel industry as well which will include a full-fledge laboratory that will emphasize on renewable algae biomass that can be harvested as seed and then processed to convert into a jet fuel. The research will be conducted to analyze and monitor all possible phases of sustainable aviation biofuel development.
(PR News, 2010) Boeing as provides military aircrafts and other products to different governments therefore the operations of the company are very sensitive. To consider the demands of government, special attention needs to be paid. However, up till now the company has been able to maintain good relationships with different governments of the world by providing them quality and reliable products. But this relationships needs to be tied further longer as now governments have alternatives because of competitors coming into the industry. (The Boeing Company, 2010)
In this research we would analyze how Boeing relates to different governments to whom it serves and what kinds of products do the company offers to them. Objective The objectives of the research report are: • to analyze the extent to which Boeing relates with its customers and government to it serves • to examine the relationship between Boeing and government it services and the nature of their relationships Both primary and secondary sources have been used to collect the data. Primary sources include the interviewing of executives of Boeing whereas secondary include researching through internet, published papers, books, ebooks, etc.
Government is one of the main customers of Boeing and providing military aircrafts and other items is one of the main products from which the company earns revenue therefore, Boeing needs to have a successful relationships with government in order to maintain its position. As these products are very sensitive from the government point of view, therefore it is imperative that Boeing should consider what the government demands. This will help both, the government and the company, and will help in building better relationships. Literature Review
Department of Defense: The Department of Defense generates about 80% of revenues for Boeing Defense Space. The refined communications networks of the company in air, land, sea, and even on space-based platforms for the military is unmatchable. A press release that is published few months back promotes the NewGen Tanker of being as a widebody, multi-mission aerial refueling aircraft, the NewGen Tanker is manufactured as an advancement of the commercial aircraft Boeing 767. This model projects is USP as friendly to the environment and low on fares through low taxes.
The aircraft is capable of burning 24% less fuel than its previous version. (Press Release, 2010) If the US Air Force accepts the proposal of manufacturing the model commercially, the company will be offering more than 4,500 jobs in the market and will offer an addition of $233 million dollars to the state of California. In the market of defense sales, the company’s major competitor is Lockheed Martin who revenues are largely based on the sales of US government, which results to about 85%. Boeing Defense, Space & Security or Boeing Military Airplanes
Formerly known as Boeing Integrated Defense, renamed as Boeing Defense, Space and Security is a unit of The Boeing Company is in charge of defense and aerospace products and services. It was formed in 2002 with the merger of Military Aircraft and Missile Systems and Space and Communications. Boeing has become third largest defense contractor in the world and responsible for 51% of company’s income by 2008 due to its unit Boeing Defense, Space and Security. Boeing IDS is based in Berkeley, Missouri, USA, near the city of St. Louis. It has also remained the largest employer in St.
Louis County in 2000. (The Boeing Company, 2010) Boeing Military Airplane Company; Hughes Satellite Systems; Hughes Helicopters minus the commercial helicopter products (which were stripped as MD Helicopters); Piasecki Helicopter, afterwards known as Boeing Vertol and then Boeing Helicopters; the St. Louis-based McDonnell division of the former McDonnell Douglas Company; and the former North American Aviation division of Rockwell International are few major names in aerospace which are the result of consolidated group of Boeing Defense, Space and Security
Defense and other With the increasing number of passengers it was realized that it is important to stay in touch through computers, for the reason Boeing introduced Connexion by Boeing providing internet connectivity through satellite. In 2005 it started its products to journalists. However due to huge competition it was difficult for the company to sell it to most airlines Boeing together with SAIC (Science Applications International Corporation) was the chief contractors of US military’s future combat system program.
This program was cancelled in June 2009 with the remaining system cleared to the BCT modernization program. On the transfer of Defense Secretary Robert M. Gates in defense, the spending was shifted to making the tough choices about specific systems and defense priorities based exclusively on national interest. This decision hit the Boeing hard due to the heavy involvement of them which cancelled Air Force their projects. (Norris, 2001) Boeing improving its technology The Boeing Company is also aiming to offer 787 Dreamliner that will focus on unmatched performance and combinations of newest technologies.
This model will be able to burn 20% less fuel than its competitive airplanes, with more cargo capacity, and more than half of the structure will be developed through composite materials that will eliminate the use of aluminum sheets and fasteners. About 250 passengers will be accommodated in the airplane and they will get the advantage humid interior environment. Ever since The Boeing Company came into the market in 1916, it has focus to adapt the new technologies and emphasized more on researches, their exceptional results in performance and comfort are the success factors of the company.
Government as a Client The major client of the company is governments. The U. S government is the top corporate client of The Boeing Company, but the U. S government is not the only government that is the client of Boeing. The other governments of the world are also major contributor to the revenue of the Boeing Company. The other governments are mostly the US allies and their revenue contribution although is not equal to US government but still it is better than most of the million dollar companies.
Boeing is not only responsible in the sales of military aircrafts to governments, but the company also manufactures and sells commercial airplanes to private airlines all over the world. In 2010 the Indian government also forwarded a tender to the Boeing company which resulted in the sales of eighteen Boeing 777and twenty seven 787 Dreamliners to Air India Company. Dependence on US government and WTO-incompatible subsidies As discussed above, the company’s major revenue is from the US government which incorporates the 65% of the total revenue share annually.
The Boeing Company’s major competitor Airbus criticizes the company’s policies for the subsidy contracts from the US government and its financial support to attract foreign and domestic clients especially in the model Boeing 7E7 model, Airbus states that financial support is more than double what it gets for its new model Airbus A380. This fact is undoubtedly strength for The Boeing Company where they stand on a win-win situation due to its close ties with US government. (Robertson, D. 2006) Political contributions, taxes, and advocacy
The lobby expenditures of Boeing in the year 2007 were report to $4. 14 million whereas in the year 2006, the expenditure was even more totaling to $9. 12 million. The company received $15. 3 billion as long-term debt from Export-Import Bank of the United States. (Boeing, 2010) In 2009, April issue of Business Week magazine, the Boeing Company was reported as one of 25 US companies paying the least US taxes. The magazine statistics stated that according to the accounts the company paid 3. 2 % taxes whereas the standard corporate tax rate was 35% Controversies
Boeing has been also protesting over the aid provided to its competitor Airbus in terms of long term credits, whereas Airbus has its statement that Boeing has been receiving subsidies through military and research contracts and tax breaks that are totally illegal. Methodology Both the methods were used for the collection of data for this research report on Boeing i. e. primary sources and secondary sources of data collection. Primary sources include interviewing of few Boeing staff members whereas secondary sources include different sources have been researched using internet, library, published papers, books, news and magazines.
Primary method was to interview few of Boeing staff members to know about the role government plays, how the government affects their operations, how government benefits them, and what the future plans of Boeing are. However, besides the primary research the substantial amount of research is based on secondary data collection and the main reason for selecting the secondary data as the main source for conducting the research is that it takes less time and effort. Besides this, the collection of data is easier and cheaper using secondary data rather than using primary sources of data collection.
Secondary data is readily available from different sources and also it is accessible for everyone. The advancement in technology and particularly because of internet, today conducting research has been far easier than before. Also many authentic and reliable sources were found from where data was collected; therefore the purpose of conducting primary research or interview was almost equal to zero. There are number of advantages of using secondary data as a means to conduct the research besides the time, cost and effort required.
As many of the research have been conducted by government officials and professional researchers therefore the chances of biasness have been reduced and more accurate data can be found. Secondary data is very handy because data from different geographic regions can be collected and you do not have to go to different locations to collect the data but you can all at one place. Also secondary data is important because one can analyze the trend and view the past records.
Limitations of the research include different people in the Boeing Company as well as in government sector were to be interviewed but because of lack of time these officials were not able to give us their time. Also few of the people who were to be interviewed had been out of city therefore only a small number of Boeing staff had been interviewed only. Analysis Financial Analysis of the Company 2008: Boeing’s annual revenue in the year 2008 was 60. 9 Billion USD and it had shown a decline of 8. 25% from 2007. And the net earnings of Boeing were $279 billion with a decrease of 34%. (10) 2009:
2009 proved to be a lucrative year for the company as the revenue increased by 12. 10% from 2008. The total revenue recorded in the year was $68. 3 billion showing an increase of $7,372 million. Revenues from defense also increased by $1,614 million mainly because of more revenues generated from Boeing Military Airplanes and Global Services and Support. (9) Operating earnings of the company increased by $67 million from the last year and this was because of more earnings from Military Airplanes segment. First Quarter of 2010: The year 2010 has also shown good signs for Boeing as the operating margin has increased to 7. 7% with revenue of $15.
2 billion in the first quarter, with net earnings of $0. 5 billion. The company expects the total revenue from this year would be in the range of $64 to $66 billion. Although this figure is less than 2010 revenues but Boeing in the year 2011 the company expects the revenues and profits to be much higher than what it were in 2009. The main reason for increased revenue is that Boeing would deliver new airlines – the 787. Role of Government: Going through different published papers and different materials found on the internet and library, it has been analyzed that the role of government is very important in aviation safety.
Air Commerce Act allowed the government to establish different air routes, air navigation systems, investigating in accidents, licensing pilots etc. These are the basic roles played by different governments of the world including the government of United States of America. Conclusion Providing military aircrafts has been one of the main businesses of Boeing and the main market for these crafts is the government. Therefore, it is very important for the company to have good relationships with them and realize the importance of providing high quality products to different governments because these aircrafts would be used in very sensitive areas.
Also government needs to support and allow the company to be innovative in their approach so that they could come up with new and exciting products every now and then. Works Cited Boeing Historical Archives, 2009. “The Boeing Log Book”, various volumes, published by Boeing Historical Archives. PR News, 2010. “Boeing and Chinese Energy Officials Announce Sustainable Biofuel Initiatives. ” 27, May 2010. PRNewsWire News Releases, Retrieved July 15, 2010 from http://www. prnewswire. com/news- releases/boeing-and-chinese-energy-officials-announce-sustainable-biofuel-initiatives-95007509.
html Press Release, 2010. “Boeing NewGen Tanker Win Would Bring 4,500 Jobs, $233 Million to California. ” 27 May 2010. PRNewsWire United Business Media. Retrieved July 15, 2010 from http://www. prnewswire. com/news-releases/boeing-newgen-tanker-win-would-bring-4500-jobs-233-million-to-california-95036539. html The Boeing Company, 2010. Corporate Information Snapshots. Retrieved July 15, 2010 from http://www. corporateinformation. com/Company-Snapshot Boeing 787 first flight announced”. BBC, 27 August 2009. Boeing, 2010. “Encyclop? dia Britannica. Encyclop?
dia Britannica Online”. Encyclop? dia Britannica, 2010. Web. Retrieved July 15, 2010 from <http://www. search. eb. com. ez. sccd. ctc. edu:2048/eb/article-9001610>. Boeing Company. The Boeing Company. The Company, 1979 Norris, Guy and Mark Wagner. Boeing 777: The Technological Marvel. Minneapolis, Minnesota: Zenith Imprint, 2001 Robertson, D. 2006. “Airbus will lose €4. 8bn because of A380 delays”. London: The Times Business News. Retrieved July 15, 2010 from http://business. timesonline. co. uk/tol/business/industry_sectors/engineering/article659591. ece.