I recently moved to a home just over the Philadelphia border to Lester, PA. I live directly in front of the Philadelphia International Airport. Planes come and go at just about every minute of every day. When I started to take notice, I was completely fascinated that each time these behemoth airplanes landed and took off like birds in flight. I volunteer at a prison and on my way to the prison each week I pass by one of Boeing’s plants. I notice that there is equipment and testing grounds that look like they are straight out of an Orson Wells novel. Again, I am fascinated every time I pass by. What could these machines possibly do? I would ask myself. When the I received this assignment and it read “chose a company that you would like to know more about” I immediately thought of Boeing. I have not been disappointed in my research on this company, just like the planes and their plant, I am still just as fascinated.
Foundations of global business
Boeing International is the world’s largest aerospace company and leading manufacturer of commercial jetliners, defense, space and security systems and service provider of aftermarket support. As America’s biggest manufacturing exporter, the company support airlines and U. S. and allied government customers in more than 150 countries. Boeing products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launching systems, advanced information and communication systems, and performance-based logistics and training. (Annual Report) Today, there are more than 10,000 Boeing commercial jetliners in service. These jetliners are the most efficient carriers of passengers and cargo in the skies. Boeing is the second largest defense company. Boeing Global Services delivers complete cost-competitive service solutions for commercial and space customers, regardless of their equipment’s original manufacturer. Boeing trades on the New York Stock Exchange under the ticker symbol BA. Analysts at Seeking Alpha report that Boeing has outperformed its peers and currently has a backlog of 7 years on current production capacity. In 2017 Boeing generated $93. 4 billion U. S. dollars in revenue, delivered 763 aircraft and employed 140,800. (Annual Report)Boeing is an extremely healthy company that is innovative, consistent and by the nature of its business must embrace globalization. Their corporate mission statement is “to value leadership, integrity, quality, customer satisfaction and a diverse and involved team. ”Boeing makes a true effort to do what they do to the best of their ability — the company works together as a global company for the Aerospace leadership.Boeing is organized under the Matrix organizational structure, a structure in which there is more than one line of reporting managers. Although this structure is complex it works well for Boeing, with so many businesses and products the complexity of the corporate structure allows for increased accountability. (Annual Report)AROUND THE WORLD Boeing is headquartered in Chicago, IL but does business around the world. Two countries where Boeing does business are Italy (European Union) and the United Arab Emirates (UAE). All three of these countries are members of the International Monetary Fund (IMF). The IMF is an international organization headquartered in Washington, D. C. consisting of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world. All three are members of The World Bank (TWB).
The TWB works in every major area of development or the poorest people. Helping create sustainable economic growth the surest path out of poverty. Investing in people, through access to health care, education, water and sanitation, and energy. Building resilience to shocks and threats that can roll back decades of progress. All three countries are members of the World Trade Organization (WTO). The WTO is the only global international organization dealing with the rules of trade between nations. At its heart are two WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in parliaments. The goal is to ensure that trade flows as smoothly, predictably and freely as possible. These three countries actively follow the guidelines of the International Money Fund, the World Bank and the World Trade Organization and have not been sanctioned for misconduct. (WTO) The United States, Italy and the United Arab Emirates all promote globalization. These countries have relatively transparent politics, ranking in the top third of most transparent countries in the world.
According to a 2018 US News and World Report list of 80 of the most transparent countries, the United States ranked #19, Italy ranked #22 and the United Arab Emirates ranked $27. (U. S. News and World Reports) These three countries each have a functioning judiciary. Each of the countries govern in a different capacity. The United States is a federal system with a federal government and with each state having individual governments. There are both state and federal courts. It is a civil law country. The Italian judiciary is a series of courts and a body of judges who are civil servants. The system is unified every court being part of the national network. It is a civil law country. The United Arab Emirates judiciary is based on the Constitution of the UAE. There are both local and federal courts with a Supreme Court located in Abu Dubai. It is a civil law and Sharia law country, based on Islamic law and Egyptian civil law.
Tariffs and barriers and trade blocs
Boeing is the leading manufacturer of commercial airplanes. They are both importers and exporters of goods and services and face many varied tariffs in conducting business around the world. Boeing will pass on any tariff costs to the end consumer, who will then pass the cost of the tariff on to the aircraft passenger, this makes the tariff more of a consumer tax. There are target export areas where the tariffs are higher, some where the tariff is lower. For instance, the World Trade Organization tariff for the United States is a traded weighted tariff of 2. 3%, for The United Arab Emirates it is 3. 3% and for Italy (European Union) it is 2. 8%(World Tariff Profiles) Boeing also faces non-tariff barriers, which are inevitable since Boeing literally reaches around the world with customers in 150 countries, employees in more than 65 countries, operations in more than 65 countries and partnerships with more than 20,000 partners and suppliers. Some of the more common non-tariff barriers for Boeing are licenses, both for importing and exporting, currency devaluation and in some cases, trade restrictions.
Boeing is almost insulated from barriers of any kind because of the expansive business in so many countries and with so many business strategies. Interestingly, Boeing is positioned to benefit from almost any trade bloc whether or not it is directly involved or not. For instance, the Asia Pacific Region Trading Bloc (APTA) is the oldest trade agreement between Bangladesh, China, India, Lao, Mongolia, Korea and Sri Lanka. Intraregional trade promotes economic strength among the countries. China currently has an ecommerce market that sold $590 billion in 2015. These purchases must be delivered all over the world. Boeing will benefit by being the supplier of the aircraft that will carry this freight all over the world. Boeing can thrive in a system of multilateral trade liberalization and with bilateral or regional trading blocs. Boeing is a company with strong international relationships along with strong regional relationships.
Boeing can survive in either environment and does. But looking closer at an international issue that could potentially affect Boeing negatively, like greenhouse gas Boeing may fare better is smaller regional trading blocs. The fact that Boeing has such strong relationships around the world helps the company to be resilient in changing global economies. (
Boeing being a multinational conglomerate faces cultural differences in every society in which it operates, which is almost every culture on the earth. Boeing must be in tuned to the cultural differences of each area and act accordingly. Geert Hofstede developed a theory. The “Hofstede Theory” has five dimensions. These dimensions “collectively portray the impact of the culture ingrained in society on the values of the members of that society”.
The Hofstede theory defines the above dimensions as:
Individualism v. Collectivism – the worth of the individual v. verses the worth of the group to which the individual belongs. Power distance – equality v. authority.
Masculine v. Feminine – whether the culture embraces male or female traits. Uncertainty Avoidance – Tolerance of risk in a society. Time Orientation – Preference of short term or long-term goals. As depicted in the about bar graph Boeing faces challenges with each culture. In some instances, the challenges are far greater in one country than another. Looking at power distance, a there is a vast divide in the cultural attitude towards power distance in the United State and the United Arab Emirates. Boeing leaders take this information seriously and executives act accordingly. Managers from the United States working in the UAE would need to be more authoritative than they would be in the US. Not being authoritative and too inclusive could jeopardize the opinions of employees. Each country has its own culture.
Boeing goes to great lengths to assure that all managers are trained properly and hires local people to assist in transitioning Boeing into the culture. The culture does not transition to Boeing.
Economic and political risk
There is some degree of political and economic risk in every country around the world, at any given time. Stock markets are vastly unpredictable and politicians unreliable to lead. The above data compiled by The World Bank show that economic growth in the United States, the United Arab Emirates and Italy is moderately stable in 2018. The data shows that the political stability in these countries is also moderate (data from 2015). By having multiple lines of businesses in multiple countries around the globe Boeing can mitigate losses due to political or economic distress in one country where they do business.
Boeing is a leader in innovative ideas for air and space travel. Boeing has many patents to protect its intellectual property. One of the most fascinating is U. S. Patent: 9,495,877 B2 for Airspace deconfliction system and method. This patent granted to Boeing in November 2016 describes systems and methods for providing safe flight of aircraft in navigable airspace. One part of the deconfliction system may include a registration system having an airspace database and an aircraft assigned to a registered airspace where the aircraft would have a guidance computer and an override unit. When the aircraft breaches the registered airspace, the override unit would take over. (Boeing web page)Boeing leads the world in innovative patents for aircraft and spacecraft and aircraft and spacecraft technology systems. These patents drive business for Boeing. Because Boeing always has new potentially innovative ideas and patents in the pipeline Boeing is a valuable company for investors.
Boeing operates in over 150 countries around the world and is obligated to abide by the laws and culture of each of these countries. Political corruption and unrest can make doing business in a country challenging. For instance, the Corruption Perception Index (CPI) measures the political corruption of a company based on several factors on scale ranging from 0 to 100. The higher the CPI the lower the corruption is in a country, the lower the CPI the higher the corruption is in a country. The CPI for the United States is 75. The CPI for the United Arab Emirates is 71. The CPI for Italy is 51. The score for the United States and the United Arab Emirates indicates that although the country is not without issues the corruption is in alignment with many of the largest countries. However, Italy falls well below. The political corruption in Italy over the last few years had made doing business in these countries less desirable. Boeing may be forced to mitigate their risk for corruption by paying bribes to countries such as Italy. North Korea has the lowest rating, a 0, which indicates high political corruption. Boeing may choose not to do business in a country with a very low CPI score to protect the company’s reputation.
Corporate structure and values
Boeing’s Mission Statement is “Facilitate the partnership of the International Association of Machinist and Aerospace workers with the Boeing Company in order to provide innovative solutions that improve the health and safety, quality, productivity and employee development in the workplace. ” Boeing uses a Matrix System of organizational structure. This means that each employee is responsible to be accountable for their actions to a person that is higher up on the matrix than they are. This makes for a company that emphasizes accountability for each employee’s role in the company and a system of oversight. Boeing has employees that are unionized and some that are not unionized depending on the country where the employees work. In the United State some employees in different cities are unionized while some are not. Boeing hires expatriates in many countries always choosing the employees that are most beneficial to their business and goals. Boeing uses online training for every employee as it is a cost-effective way to disseminate information to employees. Boeing also takes advantage of online training to train non-employees on equipment that they make to facilitate easier management and maintenance of the goods that Boeing sells. Boeing’s Global Services leverages deep experience in supply chain planning and execution, an extensive supplier network and advanced analytics capabilities to understand all aspects of fleet, part and service performance. They practice global procurement and purchase goods from all over the world.
Boeing is an innovative, healthy company that thrives on diversity and imagination. It is a welcomed partner in any country that they enter. Boring keeps the world in motion, by bringing jobs to the world and transporting its inhabitants around the globe safely and comfortably.