The Boeing High-Level Change Drivers - Case Study Example

DIAGNOSIS FOR CHANGE By Name Course Instructor Institution City/State Date Diagnosis for Change Introduction Readiness for organizational change is a construct at a multi-level, and readiness could be somewhat be available at the individual, group, unit, department, or organizational, department, unit, group, and individual (Khang et al., 2014, p.242). Basically, readiness can be hypothesized, measures, as well as studied at any of such analysis levels. Yet, Vandore (2008) maintains that readiness for organizational change is not a construct at homologous multi-level. Explicitly, the construct's relationships, meaning, and measurement with different variables vary across analysis level. Boeing, which is the leading Aerospace Corporation in the world, offers military and commercial aircraft as well as other security, defence, and space based services and products to governments as well as commercial users across the globe (Hoiness, 2006, p.72). Boeing produces, develops as well as markets commercial aeroplanes (like the Boeing 767 and 747), military jets (like the CH-47 the F/A-18 Hornet) as well as other products like surveillance systems, satellite systems, and missile systems. Boeing as well offers funding like leases and loans for its military as well as commercial aircraft clients (Irwin & Pavcnik, 2004, p.225). The report seeks to summarize the Boeing high level change drivers presented in the case situation, diagnose the change agenda using the chosen frameworks, and outline the integrated change areas that the organisation should address.  High level Change Drivers Fundamentally, aircraft demand is connected to air travel, which as a result, is associated to the heightening wealth, rising per capita income as well as positive outlook in Gross Domestic Product (GDP). Ibsen (2009, p.343) posit that the rise in air travel has taken place in the countries like China and India; both countries indicate robust expectation for the Boeing. Other drivers bringing about Boeing growth consist of globalization as well as international trade. However, the worldwide economy has exhibited slow recovery signs from the recent economic depression. In this regard, International Monetary Fund (IMF) projects that the global economic recovery is expected to continue and world GDP is likely to increase to 4.6 percent by 2015. Tong and Lee-Ing (2003) study of Boeing with regard to its past five decades in business established that the unsurpassed indicator for examining the Boeing performance is the global GDP. Their study further established that the recessions endured by the Airline industry on average equals the global economic depressions. Owing to the current economic state of affairs, Nolan (2012, p.94) assert that it is apparent that the Aerospace industry will continue to recuperate. on the horizon with growing demand from upcoming economies such as China and India, which will counterbalance the comparative demand slowdown from developed economies like Europe and US. According to Jones (2004, p.11) consumption of energy is the top concern for military and commercial airplane manufacturers like Boeing. With soaring oil prices as well as community worries concerning carbon footprints, even the United States Air Force has begun to make use of energy efficiency as the key measure in its prospect purchasing plan. Besides that, driving demanding modernism for the likes of Rolls-Royce as well as GE with regard to their engines’ fuel efficiency, Irwin and Pavcnik (2004, p.231) posit that this has as well been paid attention by Boeing with regard to the weight of the controls, the seats as well as the aircrafts. Above any other concern at present, doing anything to decrease consumption of fuel in an environmentally resourceful way is the vital concern in Boeing. Beside this concern, the other two key change drivers in Boeing is the Pentagon as well as are NASA. Since the US is still leading in satellite production as well as space exploration, what the Pentagon and NASA need to accomplish is top of Boeing priority list. Not only in the military platform, but as well in the market of commercial aircrafts, development of technology in areas like intelligent systems, virtual engineering, safer airframes as well as more dependable guidance systems are all being steered by requirements outlined by the Pentagon and NASA (Tong & Lee-Ing, 2003, p.30). Equally from a competitive point of view, it is unsurprising that there is a major responsibility for the European Union in sustaining an autonomous aerospace industry. Whereas China, India and Brazil, all have wide-ranging military as well as commercial aerospace activities, with regard to scale just the likes of BAE Systems, Rolls-Royce and most importantly, EADS are in a position to compete with Boeing. The European Space Agency (ESA) along with the governments of the Germany, France and United Kingdom particularly are all devoted to have dynamic innovation in the European Union; thus, they support numerous key programs. According to Ibsen (2009, p.344), for the European-based Airline Corporation, the US remains to be the main market, the only one that lays down the program and therefore, politics is fundamental in innovation strategy. Importantly, the worldwide economic recovery has improved oil demand throughout the world, generating additional pressure on prices of energy. In addition, the latest political unrest in the Arab World has as well added to the oil price increase. Even though the political threat is abridged, the projected economic development will continue to rationalize the changes in oil price projections in the recent years. Based on IATA report, prices for jet kerosene have doubled since economic recession in 2008, hitting a rocketing price of $113 a barrel in 2011. Since such costs signify around 25% of total costs of operation this increase in price has added 25 percent to costs of unit. In the same time limit the usual return ticket, exclusive of fuel add-ons, has increased by 20 percent. So far the airlines have only managed the effects of the growing input costs by toting up add-ons, which to all intents and purposes counterbalance their increase in income in the same time period. Still, ultimately, Boeing will be coerced to embark on premature manufacture of commercial aircraft if it fails to explore more fuel efficient alternatives. PESTEL Framework Political factor Regulatory as well as policy resolutions by governments can have what Khang et al. (2014, p.247) terms as dramatic effects on the demand for commercial aircraft. The government of US along with its Federal Aviation Administration (FAA) are mainly powerful in Aerospace industry, given that they supervise the world’s leading air transport market. Therefore, Wang (2014, p.304) maintain that regulations by the European as well as US governments could prove to be a key thrust for new engines and aircrafts orders in the future. Correspondingly, the European airlines deregulation, which had already started in 90s, guarantees a long-drawn-out market prospects for Boeing. Besides that, under the General Agreement on Tariffs and Trade (GATT), trade for big commercial jetliners has been practically tariff-free ever since 1979. The sophisticated government intervention as well has a crucial effect on the sales of Boeing aircraft. Diverse customer’s decisions of using a lot of money at all times depend to a certain extent on the political grounds given that the intervention and support of government might influence the consumer’s future (Sompong et al., 2014, p.519). For instance: at present China is the largest Boeing market and it is projected to remain so for the coming two decades. Actually, China, by means of its sizeable buying of Boeing aircrafts, has been able to get a great deal of political influence in the United States. Without doubt, government regulations have circuitously influenced the production of Boeing aircrafts since when the company designs novel planes models; prior to being flown Boeing have to acquire a certificate issued by the government of US. This system has been designed by the government has to ensure people are travelling in secure airplane. Therefore, this information is considered during the process of planning when Boeing strategizes every development phase of a new airplane. There are scores of safety specifications laid down by U.S. FAA that aircrafts have to meet so as to be sanctioned for flight. Ibsen (2009, p.345) affirm that this can have an effect on the general manufacture of aircrafts for the reason that there will be a setback prior to the aircraft being cleared. Boeing has time and again admitted to having a number of setbacks with the manufacture of several of their aircrafts, which ultimately delays their date for release. Therefore, they are strategically planning so the aircraft will not experience dismissal afterwards. Aircraft demand has been influenced by noise regulations that characterize the flight hours, and it is extremely apparent that smaller numbers of aircrafts are flying out per day: this denotes that aircrafts are long lasting in view of the fact that they are not affected as promptly by tare and ware. Economic factor Hoiness (2006, p.73) posit that Aircraft manufacturers depend a lot on subsidies; for instance, Airbus and Boeing are recently on the debate of inequitable subsidies.  Chances of heightening costs of fuel, jamming as well as other environmental limitations, and the likelihood of higher insurance as well as security costs to reflect the terrorism risk has influenced Boeing economic wise. The future cost of fuel is heightening, and IATA estimates the current price to double by 2020 (Ibsen, 2009, p.344). What’s more, IATA has projected that the Aerospace industry might lose $10 billion due to the increasing price of the fuels.  With the worldwide tourism industry in slump and a number of aircraft companies shutting down, Hoiness (2006, p.73) project an increase in the price of aircraft by almost 20%. Present economic state of affairs is the breaking point of how Boeing plans strategically, operationally, and purposefully. Given that the US has endured an economic recession ever since 2001; Boeing has endured a lot owing to airlines being in economic dilemma. Trade has declined considerably, and Boeing has been compelled to rely on other nations like in Asia and Europe for business, a different centre of attention has been production of more military aircrafts as well as equipment. This is the reason why Boeing became relieved after getting a contract worth $49.2 billion with United States Air force. Furthermore, Boeing started a business association with Saudi Arabia-based Airlines and ever since has experienced an increase in business operations due to the air traffic increase (Irwin & Pavcnik, 2004, p.232). Boeing is as well making a progressive endeavour to make the most out of the aircraft demand in Saudi Arabia, India, as well as China. Importantly, Boeing future plans rotate around the global as well as demand market trends. Social factor Social factor consist of the cultural factors and consist of population growth rate, health consciousness, distribution of age and so on. With regard to Boeing case, the company must take into account the social factors trends, which have an effect on the aircrafts demand. For instance, heightened population growth rate will directly influence the aircraft demand in the coming few years. Age population, on other hand, could involve a workforce that is not willing to work. Technological factor According to Vandore (2008) the supersonic transportation is as well a chance for the reason that a completely entire novel market segment will be created. Commercial airliners will purchase scores of such supersonic aircrafts so as to satisfy the needs of their customers to arrive at destinations promptly and punctual. The largest and most economical technological progress for the Aerospace industry is creating fast moving aircrafts. The heightened time for production will save labour cost and facilitates improved utilisation of resource for every aircraft manufactured. Boeing according to Hoiness (2006) has used this technology to manufacture a novel aircraft model known as the Boeing 777; this was achieved through utilization of computer technology to put up a prototype. Undoubtedly, this is extremely economical given that the Boeing must not take in the prototype cost that they generally must build. Advancements in technology will as well assist Boeing utilize resources more resourcefully. Boeing has been utilising robots to accomplish this, and Sompong et al. (2014, p.522) argue that robots are extremely resourceful tool in manufacturing aircrafts. Using lighter materials is an additional way that is used by Boeing to attempt to utilize its resources efficiently. Research indicates that using lighter materials in construction of aircrafts is better since it reduces the amount of energy used. The past aircrafts were built by metal, which as per Ibsen (2009, p.346) added loads of weight. Environmental Factors The external setting of Aerospace industry is extremely vital to the continued existence of the diverse airlines, given that it puts forth huge impact on the Aerospace industry. The Aerospace industry external environment can be depicted as extremely unstable since there are recurrent variations in the macro-environments. Latest occurrence taking place in the macro-environment has influenced the Boeing considerably, and US EPA regulations generally have been restrictive as well as unstable. The Aerospace industry is time and again overwhelmed by the diseases outbreak, recession, terrorism as well as war. Such risks frequently have an effect on the Boeing operability as well as the continued existence of the majority companies in the Aerospace industry (Lehtiranta & Junnonen, 2014, p.132). Legal Factors Normally, the process of planning is convoluted by legal aspects, which may place the firm in an uncomfortable situation (Wang, 2014, p.307). Boeing was in 200 charged over a convoluted legal issue concerning degree of difference in gender pay. In this legal issue, there was clear proof that their subsisted pay differential; yet, attorney-client privilege saved the corporation from legal responsibility and nearly all of the proof was afterward dismissed, ultimately Boeing resolved the issue out of court and protected the firm from public shame. Jones (2004, p.12) claim that having a legal team supervising all vital decisions and documents offered Boeing the chance to save millions of dollars that they could use in case they were prosecuted. In this state of affairs, it was wise for the company to settle since it would resonate well with the public, workers, and customers. Areas that Boeing should address and Recommendations Boeing has to reflect on whether it must act in response to novel entrants by relinquishing niche-segments or by contending insistently on service and price in an effort to force the new competitor outside the aircraft market. What’s more, to make the strategic decision with regard to market research, dimension of diverse service and pricing combinations is required. Boeing as well must discern how much it will cost the competitor to operate, and the competitor ability to produce cost-effective aircrafts, which can pose serious competition to the company. By getting hold of such information the remaining uncertainty could be partial, and Boeing might be in a position to develop secure business case around its organisational strategy. Basically, no real chance presents the long-haul business since it is extremely distinct, both in principle as well as in needs of the customer. Boeing must continue to concentrate on price and endeavour to join its network dots, which is economical in countries that are willing to purchase its aircrafts. Boeing should as well invest much on direct marketing by for instance, introducing a client retention system. To distinguish its models further on line of promotion, Boeing must introduce a cause related marketing (CRM) plan, which can help the company develop a reputation for being a ‘caring company’, for example, by taking part in community development activities, in that way offering its customers a sense of psychosomatic ease as well as comfort. In general, Boeing must develop a rational and accurate market-niche assessment to be served, and also they should exhibit a persistent dedication to quality products. Conclusion In conclusion, it has been argued that there are scores of factors concerned with Boeing business planning ranging from government regulations, legal issues ethics, economic state of affairs, as well as corporate social responsibility. Notably, Boeing has a legal team that helps it with every planning aspect. Besides the process of planning, the legal team is responsible managing internal as well as external legal matters. Boeing understands that corporate social responsibility is very imperative, since buyers and potential customers’ judge companies with regard to the efforts expressed. Every worker is anticipated to follow the company ethics based on the Boeing code of conduct. Undoubtedly, a firm code of ethics has assisted the company to retain prolonged existence in a competitive industry. Owing to the deprived economic state of affairs, Boeing has signed several agreements with different countries that possess an increased aircraft demand. US government regulations have an effect on how quick Boeing aircrafts are approved for flight, which leads to more holdups. Besides that, the process of planning at Boeing is relentlessly changing because of conditions in the external as well as internal environment. References Hoiness, M., 2006. Business Futures: The Boeing Co. And The Boeing 787 Dreamliner. Futurics, vol. 30, no. 3/4, pp.72-73. Ibsen, A.Z., 2009. The politics of airplane production: The emergence of two technological frames in the competition between Boeing and Airbus. Technology in Society, vol. 31, no. 4, pp.342-49. Irwin, D.A. & Pavcnik, N., 2004. Airbus versus Boeing revisited: international competition in the aircraft market. Journal of International Economics, vol. 4, no. 2, pp.223-45. Jones, W.D., 2004. Boeing Runs Into Turbulence. IEEE Spectrum, vol. 41, no. 7, pp.10-13. Khang, J., Yu, Y.-m. & Lee, H.-h., 2014. Moderating effects of the fit between service tangibilization and organizational performance. 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