#4 International Business: What non-US companies are key players in the industry?

The Defense and Aerospace industry specializes in international involvement and foreign exchanges. Although Boeing is one of the industry’s primary aircraft and jetliner companies, its foreign competitors are continuously rising. Right behind Boeing is the prestigious Airbus, which is located east of the United States in Europe (Blagnac, France). Airbus and Boeing are constantly in competition with each other, developing new innovations for airline companies all over the world. Two days ago on October 14^th, China has recently ordered five of Airbus’s A380’s for its major cities Beijing, Shanghai, and Guangzhou. The fifth plane ordered was Airbus’s 58^th A380 sold within the past four years. With 350,000 hours flown and over 15 million passengers transported, the A380’s unremitting usage from companies like China Southern Airlines is expanding. China’s increasing urbanization and affluence is demanding over 200 aircrafts from Airbus by 2030. As time progresses, countries will grow in population and the rate of passenger travel will increase. Airbus (Europe) is not far behind Boeing (U.S.), and with future advances in technology, their aircraft models will be of higher demand, which will eventually make Airbus of higher status as a European manufacturer.

The BAE Systems is a global defense and security company with approximately 100,000 employees worldwide. The company distributes wide variety and range of products and services for land, air, and naval forces. It also supplies electronics, security, support provision, and information technology solutions. The BAE Systems are very prominent especially in the United Kingdom. It is the largest defense and security company in the UK by having 39,000 employees and approximately 9,000 businesses in its supply chain. BAE Systems is also the UK’s largest manufacturing based employer and engineering company. It contributes about £3.3 billion to the United Kingdom’s GDP, exports about £4.9 billion on average every year, and expenditures of about £4 billion for every 9,000 workers. All the BAE Systems around the world work off of each other in order to bring in revenue. The United Kingdom strongly relies on this company, and similar to Airbus, further improvements will only increase these two companies globally.

http://www.airbus.com/newsevents/news-events-single/detail/china-southern-airlines-receives-its-first-pearl-of-the-sky-a380-jetliner/

http://www.baesystems.com/WorldwideLocations/UK/KeyFacts/index.htm

#4 Do players in your industry manufacture overseas? What aspects of their operations to the outsource?

The defense and aerospace industry consists many sectors including armory, weaponry, aircrafts, technologies, and many more. Within such sectors, countless components are needed to produce finished products, many of which are obtained from foreign sources. To keep a high level of organization, which is needed in large companies and corporations, rather than outsourcing individual components, joint ventures between companies with different specialties are formed. Recently, United States based United Technologies ended a joint venture with England based Rolls-Royce in order to start a new one. As a premier innovating company in engine development and manufacturing, Rolls-Royce provided United Technologies with engines for their crafts, however is now beginning a new joint venture with Pratt and Whitney. This redesigned joint venture resulted in Pratt and Whitney investing $1.5 billion in the sector of Rolls-Royce that produces engines for the all new Airbus A320 jetliner.

      As in this venture, other large companies, such as Boeing, also rely on forms of outsourcing to complete projects with maximum efficiency. Though Boeing did not choose Rolls-Royce to produce the engines in their new 737 dreamliner, they do not manufacturer their own engines. Rather, they obtain them from CFM located in the United States. Nearly no large company in the aerospace and defense industry contains both the time frame and recourses to produce every part in-house; therefore outsourcing occurs (occasionally overseas). Due to comparative advantages, it is clear that certain countries have the capabilities of producing different components with higher qualities and for cheaper prices. It is my belief that large companies, such as Boeing, may actually benefit from limiting their manufacturing overseas and advertizing its nationalism. Many people favor industry remaining in their country.

     

What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about the

The Boeing Company mission’s statement reveals a bundle of values that consists of leadership, integrity, quality, customer satisfaction, and other values that make up Boeing. “People working together as a global enterprise for aerospace leadership.” (Boeing 2011). Boeing’s vision in achieving this mission statement is through “run healthy core businesses, leverage our strengths into new products and services, and open new frontiers.” (Boeing 2011). The Boeing Company also takes into account and places a strong emphasis on “Detailed customer knowledge and focus that understand, anticipate and respond to customer needs, a lean enterprise characterized by efficiency, supplier management, short cycle times, high quality and low transaction costs, and -scale systems integration that continually develops and advances technical excellence.”( Boeing 2011). Basically, Boeing takes into account these values and incorporates them in their performance of developing new products such as weapons, airplanes, and satellites.

Boeing Company provides a mission statement to all individuals and businesses in the world that exemplifies their values and mission in the industry. It’s interesting how Boeing states that “satisfied customers are essential to our success.” This small statement by Boeing creates a large impact in recognizing their achievement of customer satisfaction and continuously working for people to share ideas and knowledge. Boeing also take in the role of leadership by serving as a “world-class leader in every aspect of our business: in developing our team leadership skills at every level, in our management performance, in the way we design, build and support our products, and in our financial results.” (Boeing 2011). I think that this statement provides insight to customers about how Boeing performs at its highest in building new products that support financial results. In sum with the core qualities of leadership and customer satisfaction, Boeing stands out in other multiple values such as quality, integrity, good corporate citizenship, enhancing shareholder value, and a diverse and involved team in order to reach their mission statement.

What are pricing trends in the industry?

The market for jetliners in North America is expected to rise a modest 41% by 2030 as carriers replace aging single-aisle planes with models that promise better fuel efficiency, Boeing Co. said.

Taking into account plane retirements, the regional fleet will grow to 9,330 aircraft from 6,610 today, with new plane sales amounting to a $760 billion business in the next two decades, the aerospace company said in its 2011 regional market outlook. Boeing said North American demand will focus on the single-aisle category, which will account for 73% of the North America fleet by 2030. The U.S. and Canada offer modest growth for big jet makers such as Boeing, while emerging economies in Asia and elsewhere offer high growth rates. Boeing projects jetliner fleets in the Asia-Pacific region to roughly triple in size by 2030. About 65% of demand in the U.S. and Canada is aimed at replacing aging airliners, higher than the global average of about 40%, said Randy Tinseth, vice president of marketing for Boeing's commercial-airliner unit. Chicago-based Boeing intends to boost sales in the single-aisle market with its 737 MAX, a version of the company's popular narrow-body jet, that will carry new, advanced engines. Boeing said in August that it plans to deliver the plane in 2017 and that it had lined up 496 commitments from five airlines. Finally, Boeing said airline-passenger traffic in North America is expected to grow at an annual rate of 2% over the next 20 years, down from about 3% recently.

Question Number 3: Which companies in the industry stand out in regards to their view and actions in CSR?

The defense and aerospace industry contains multiple amounts of companies, whether private or public, that work to supply the industry with materials that they need (such as weapons, tanks, satellites, etc.) Each company contains ethical guidelines as well as corporate social responsibility (CSR) in order to sustain a company’s functions and encourage an environment filled with qualities such as responsibility, a positive impact on the environment (such as consumers, employees, and stakeholders…), and to promote the public interest. Corporate social responsibility embraces responsibility around the public, and communities within the public sphere, in order to honor the triple bottom line- people, planet, profit.

For example, Lockheed Martin is a worldwide public company that is part of both the Aerospace and Defense industry. During 2008, Lockheed Martin had stood out in excelling in corporate social responsibility by participating in volunteerism and philanthropy. Lockheed Martin and its employees volunteered in their communities and regarded a personal way of displaying the culture and social responsibility that exists through the corporation. “The Corporation contributed $22 million to charitable causes; Employees added another $22.6 million through personal charitable donations, Employees logged more than 1 million volunteer hours.” (Lockheed Martin, 2011). As shown here, Lockheed Martin embraced their social responsibility that ranged from environmental programs to community involvement programs. An environment program implemented by Lockheed Marin in recent years is known as Go Green which ranges of activities that aims to conserve resources and lower emissions in the environment.

Boeing is another big company that takes part in embracing corporate social responsibility. Since Boeing deals with developing aircraft, the aviation company has set aside a percentage of its revenue to be donated to nonprofit organizations for education, wealth, and other things for the environment. Also, CACI is another company that demonstrates high social responsibility by launching Green ACORN GreenACORN has informed marketing professionals in understanding consumer’s behaviors toward the environment. Consumer’s attitudes include green issues such encouraging wiser choices and eliminating barriers for going “green”.

http://www.lockheedmartin.com/aboutus/culture/csr.html
http://www.caci.co.uk/greenacorn.aspx

#3- Competitive Landscape

Defense and aerospace is a very broad and extensive industry. It is very hard to tell who their competition is mainly because the companies in this industry take over their market. The reason for this is because they are such large corporations producing products that are needed for the government (i.e.: aircrafts, military products, satellites, missiles, defense systems, etc.). It is also very rare to find the Defense and Aerospace industry’s competitors in the United States, because most of the companies in the industry directly deal with the government and/or are deal internationally with foreigners.

The competitive landscape in the U.S. among companies in this industry is very limited. Recently, Boeing has been reaching out to Middle-eastern investors to fund aircraft deals. European banks looked into the present European debt crisis and its future effect on them, giving Middle-East investors new aircraft opportunities. Boeing did not hesitate one second to take advantage of this and expand their market for revenue growth. The importance of this geographic expansion leads to higher competition not only in Europe (Airbus), but also in the U.S (Lockheed Martin). In order for similar companies to stay in competition with Boeing’s progressive company, they must produce comparable innovations attempting to expand at similar rates to its competitor (Boeing).

#3 - • What are some current events in your industry? What is the impact of these events on the industry?

Over the course of the past few years, many companies have altered their business strategies in order to obtain a green reputation.  Becoming green is a process, which takes time; however, gives companies better reputations while reducing their carbon footprints and in many cases saving funds.   Boeing, a company who cares about the environment and their reputation, has been making changes in future aircraft designs and other aspects of the corporation in order to reduce their negative impact on the environment.  Their newest innovation was the proposal to eliminate paper maps and charts containing navigation information and replace them with the Apple I-Pad. 

Though still a potential innovation to Boeing, other companies have already began using the product with great success. United Continental Holdings has purchased 11,000 units and has eliminated all paper manuals.  Alaska Airlines has acted in a similar manner by replacing many documents with the I-Pad.  Such technological innovations have the ability to impact the industry in a multitude of positive ways.  The pilots will be faced with less clutter in the cockpit and easily be able to multitask while in route by reviewing uploaded manuals and current flight information downloaded from the Apple APP store.  More knowledgeable pilots result in safer travel for the public.  Boeing has high hopes of reducing its carbon footprint.  With an estimated need of 460,000 pilots and 650,000 technical staff over the next 20 years, doing away with paper products of any sort can reduce the company’s waist dramatically.  Including the Apple I-Pad within airlines’ business strategies can improve efficiency, better reputations as green companies, enhance flying safety, and benefit companies economically.