Publicly_Traded_Company_–_the_Boeing_Co.

Abstract The Boeing Co. is the largest aircraft manufacturer in the world. It has successfully branded its product and services globally and most every airline company uses their product. It has also diversified its self by extending its manufacturing talents to the production of defense and military aircraft. Boeing has also established a unique product line that produces satellites and missiles and works closely with major government entities such as the United States Military and NASA. Throughout its accomplishments Boeing has developed a superior wa of doing business through its strategic plans, and have escalated its self in the competitive market as an industry leader. Boeing’s Mission and Vision Statement The Boeing Company has a strong mission and vision statement that it operates on. Their vision is simply, “People working together as a global enterprise for aerospace leadership.” Boeing feels that in order to realize their vision, we consider where we are today and where we would like to be tomorrow (Boeing Co., 1995-2011). Knowing where you would like to be tomorrow sets the pace for how you operate the business to get to tomorrow’s goals. Boeing has new and innovative initiatives in place that encourages and promotes performance goals which are developed through the ideals of their vision and mission statements. Boeing has several large-scale systems integration that continually develops and advances technical excellence, and supports lean enterprise characterized by efficiency, supplier management, short cycle times, high quality and low transaction costs (Boeing Co., 1995-2011). While embracing its vision, Boeing focuses on its mission: “To be the number one aerospace company in the world and among the premier industrial concerns in terms of quality, profitability and growth” (Boeing Co., 1995-2011) The exceptional team has created a stellar performance record that highlights how they have taken the mission and vision statement and have penetrated into a culture that expects and reflects performance excellence. The Boeing Co, has been selected as a Malcolm Baldrige Receipt twice in its history, which speaks volumes of its drive and motivation to excel trough its values and mission. The Baldrige Program is the nation's public-private partnership dedicated to performance excellence. The Baldrige Program, in short does some the following: • Raises awareness about the importance of performance excellence in driving the U.S. and global economy • Provides organizational assessment tools and criteria • Educates leaders in businesses, schools, health care organizations, and government and nonprofit agencies about the practices of best-in-class organizations • Recognizes national role models and honors them with the only Presidential Award for performance excellence The programs mission is to improve the competitiveness and performance of U.S. organizations for the benefit of all U.S. residents, the Baldrige Performance Excellence Program is a customer-focused federal change agent that: • Develops and disseminates evaluation criteria • Manages the Malcolm Baldrige National Quality Award • Promotes performance excellence • Provides global leadership in the learning and sharing of successful strategies and performance practices, principles, and methodologies Also in October of 2010, Boeing was the recipient of the 2010 Secretary of Defense Performance Based Logistics (PBL) Award. The Secretary of Defense Performance-Based Logistics (PBL) Awards Program honors outstanding PBL performance in three categories: the System Level, the Sub-system Level and the Component Level. The System Level Award is named in honor of the late Gerald R. "Jerry" Beck who had a long distinguished career as a DoD Logistician. Mr. Beck was instrumental in establishing the PBL Program and helped initiate the annual awards program. The public and private winners in each category receive a plaque acknowledging their achievement. The permanent PBL award is on display in the Pentagon in the Deputy Assistant Secretary of Defense (Dept of Defense PBL Award, 2011). Each of these awards and accomplishments could not be achieved without the bases of the vision and mission statement embodied by the Boeing Co. Boeing’s strategic goals link to the company’s mission and vision. The Boeing Company has several different divisions that all align themselves with the same strategic goals which are based on everyone working together as a global enterprise for aerospace leadership “To be the number one aerospace company in the world and among the premier industrial concerns in terms of quality, profitability and growth .” Boeing also sets strategic goals for developing more environmentally friendly operating air planes that are more cost effective to operate. Strategic goals are set towards these developments and carried out in the tactical and operational planning, making the new technology available to airline companies, which then in turn would make flights more affordable to the public. Government contracts are another factor that greatly affects all levels of planning. A large part of Boeing’s business depends on defense and aerospace contracts. This also ties in with their competitors. In order to stay competitive, The Boeing Company has to stay on the cutting edge of research and development of defense contracts and aerospace developments. To do this, they must have strong strategic plans in place and these plans must be followed up with good tactical and operational planning. (Boeing Corporate Bond, 2009) Financial performance link between the company’s strategic goals The Boeing Company portrays a very strong financial portfolio which reflects a defined link to its strategic goals. Boeing’s two-fold operation features its Military and Defense products as well as its Commercial fleet. Though different in many ways, the two entities have only one financial bottom line. Its strategic goals are streamlined through each division focusing on its competitors, remaining at the top of its game in the development of new technologies and innovations while maintaining world-renown customer satisfaction. The following chart reflects growing financial that highlights Boeing’s successful financial portfolio. 2008 2007 2006 Revenues 64,306 68,281 60,909 66,387 61,530 Net earnings 3,307 1,312 2,672 4,074 2,215 Earnings per share* 4.46 1.87 3.65 5.26 2.84 Operating margins 7.7% 3.1% 6.5% 8.8% 4.9% Contractual backlog 303,955 296,500 323,860 296,964 216,563 Total backlog† 320,826 315,558 351,926 327,137 250,211 * Represents diluted earnings per share from continuing operations. Strong operating performance and exceptional cash generation from our core businesses in 2010 helped mitigate the impact of development program challenges. In 2010, our core production and services programs in Boeing Commercial Airplanes and Boeing Defense, Space & Security performed exceptionally well, leading to near-double-digit operating margins in each of these businesses. Boeing ended the year with net earnings of $3.3 billion (the second highest in company history), and our positive operating cash flow of nearly $3.0 billion maintained strong liquidity of $10.5 billion — all this despite the impact of development program challenges in both businesses and budget pressures on defense programs (Co, 2011). Competitive and Marketing Analysis Commercial airplane manufacturing is currently saturated with two large key manufacturers, Boeing and Airbus. They are very competitive and continuous grow toward succession of the other. Boeing however, has the competitive market edge because they also manufacture military aircraft as well and have joined in contractual partnerships with the government to maintain its fleet of weapon systems. Boeing has many prominent strengths beginning with the fact that it is currently the largest aircraft manufacturer globally; it has expanded its market to many large countries who are significant consumers for their product. They are recognized as a leading defense contractor in many of those countries as well. Boeing has a flawless design plan in its aircraft and has developed a reputation for building a reliable, efficient product. This is due largely in part to Boeing’s highly skilled workforce who thrives in a culture of producing the best manufactured aircraft for its customer at lower production cost. This allows growing under developed countries to be able to afford their products. They have built strong customer relationships with international customers globally. Having the ability to manufacture and sell both commercial and defense aircrafts maybe Boeing’s greatest strength. Having this type of product diversification is what gives Boeing its large competitive advantage. Many opportunities are readily open to Boeing the advancement of new technologies allows them to build lighter, longer range aircrafts. Also, the possibility of gaining new customers in Asia and Pacific market is another huge opportunity. Asia is an open market area for both commercial and military aircraft so the opportunity for growth in that market is great. Differentiation Strategy and its Return to Shareholders Boeing has both a commercial aircraft and a defense line of products where they share some of the same core competencies and benefits of a differentiation strategy. Utilizing this strategy allows Boeing to set themselves distinctly apart from their products and services. Their brand notably gives them a competitive advantage that is superior to their competitor. Adopting the differentiation strategy only benefits Boeing’s Captial Finance, which inturn produces a huge return to its shareholders. the Aircraft Financial Services portfolio approximates US $4.4 billion and is comprised primarily of approximately 280 commercial airplanes. The group's experience and expertise in structuring commercial aircraft financing is coupled with detailed customer knowledge to address current financing requirements and to shape the future of aircraft finance. Their broad range of financial products is partnered with third-party aircraft capital to expand capital markets and increase the value and stability of aircraft investments. This is done by ensuring that Boeing's product strategy, engineering, support and production discipline are responsive to aircraft investors. Through a comprehensive investor outreach program, Boeing Capital is capturing the financial community's requirements and ensuring that they understand the Boeing product strategy and the significant value discriminators that differentiate Boeing from its competition (Boeing Co., 1995-2011). Merger or Acquisition Strategy In my opinion Boeing is a justifiable stable organization that doesn’t currently have a need for a new merger or acquisition at this time. However in Aug. of 2010, Boeing recently completed its acquisition of Argon ST Inc. [NASDAQ: STST]. Argon ST, based in Fairfax, Va., develops C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) and combat systems. On June 30 Boeing announced its intent to acquire Argon ST as part of the company's strategy to expand its capabilities to address the C4ISR, cyber and intelligence markets. As a result of the merger, Argon ST is now a wholly owned subsidiary of Boeing and a new division of Boeing Network & Space Systems, a business within the Boeing Defense, Space & Security operating unit. Immediately prior to the merger, Vortex Merger Sub Inc., a wholly owned subsidiary of Boeing, successfully completed its cash tender offer to purchase all of the outstanding shares of common stock of Argon ST. Based on information from the depositary for the tender offer, as of the expiration of the tender offer at 12:00 midnight, Eastern time, at the end of the day on Wednesday, Aug. 4, 2010, 20,055,713 shares of common stock of Argon ST (excluding shares to be delivered pursuant to notices of guaranteed delivery), representing approximately 91 percent of the shares outstanding and 83 percent of the shares outstanding on a fully diluted basis, were validly tendered and not validly withdrawn prior to the expiration of the tender offer. All such shares have been accepted for payment in accordance with the terms of the tender offer. In order to effect the short-form merger with Argon ST, Vortex Merger Sub exercised its option to purchase 16,600,352 shares of Argon ST common stock, which is the number of shares sufficient to cause Vortex Merger Sub to own one share more than 90 percent of the shares outstanding on a fully diluted basis immediately after the exercise of such option. Shareholders of Argon ST will receive $34.50 in cash, without interest and less any applicable withholding taxes, for each share of Argon ST common stock (Boeing, Manufacturing News, 2011). Appropriate Rewards and Financial Performance If I were the leader of this company I would focus mainly on building and maintaining a high employee moral system that included a rewards system that constantly recognized my employees on various levels. This is vital because the success of a company’s products and service is relatively dependant on repeat customers, which are usually happy and satisfied customers. In addition, identifying your customer’s needs and meeting them with flawless execution is what generates revenue for a successful financial performance rating. In order to do this I believe each company should produce happy and secure employees who are recognized and rewarded for their daily efforts to produce a superior product and extend excellent customer service along with it. Employees who feel valued reflect that in their work ethic so they strive hard to produce significant revenue channels for the company as hole. I would invest funds to create cash award programs and increase team building within the organization. However, Boeing does currently have a employee incentive program in place that encourages employee excellence, which in turn produces top notch financial performance. The Employee Incentive Plan (EIP), as an incentive program, provides cash bonuses of between 1 and 20 days of additional pay to eligible employees if the Company achieves annual economic profit objectives. Currently, more than 114,000 nonexecutive employees are eligible. First payment occurred in the first quarter of 2001, based on meeting economic profit targets for the year 2000. Targets are very demanding and track with our goal to provide total shareholder returns within the top quartile of S&P 500 companies. Meeting the annual operating plan target for economic profit will result in two weeks (10 days) of extra pay. Exceeding the target will earn up to four weeks (20 days) of extra pay. Achieving economic profit levels below the operating plan goal but above a target minimum will pay between 1 and 9 days of extra pay. If target minimums are not met, no payments will be made. Economic profit targets are considered material information and will not be made public. However, progress toward the targets will be tracked quarterly and reported to employees following each earnings release. Employee eligibility for subsidiaries and selected smaller sites will be considered on a case-by-case basis. A high-performance culture is critical to our future. We want our employees to be actively engaged in seeking customer-focused solutions to grow the business and boost economic profit. We will generate shareholder value and boost economic profit by focusing on the key aspects of our business identified in Vision 2016. In our daily efforts, we can enhance shareholder value by improving quality and customer satisfaction. This initiative helps trim cycle times, reduce costs and streamlining processes, and more. Decisions are made that affect the Company's revenues, costs, and use of assets. The Employee Incentive Plan asks for employees' commitment to think and act like owners of the business--and gives them a direct stake in that success. Objectives of EIP include Share Boeing's financial success. Motivate employees to focus on specific performance objectives. Reward employees annually based on overall Company performance. (Boeing Co., 1995-2011) Current Strategy supports or discourages Ethical business Boeing has suffered greatly in the past due to unethical business practices. The drama unfolds in three subplots. The first begins in the late 1990s, when Boeing employees start stealing proprietary documents from Lockheed, a competitor for government business in rocket launching programs. In 2004, the Pentagon strips $1 billion in rocket launch contracts from Boeing and nails the company with a 20-month suspension of its right to re-bid — a record among major military contractors. Meanwhile, the second subplot comes to a head in 2002, when Darleen Druyun, a procurement officer at the Pentagon working on Boeing contracts, is recruited secretly by Boeing’s chief financial officer, Michael Sears, to a position within the company. In return for a promised job, she steers contracts toward Boeing. Convicted on charges stemming from this conflict of interest, both she and Sears are fired, fined, and jailed. The third subplot erupts when Boeing CEO Philip Condit suddenly resigns in late 2003, as the above-mentioned scandals are braiding themselves together into a federal ethics investigation. His replacement, Harry Stonecipher, moves quickly to work out a settlement with the government, which by February 2005 he is predicting confidently. The settlement finally comes three months later. It frees Boeing of criminal charges relating to the earlier scandals, but imposes a $615 million fine, said to be the largest ever levied on a military contractor. But by then, Stonecipher himself is already out of office. Two months earlier, he had been sacked for having an affair with D.C.-based Boeing employee Debra Peabody, breaking ethics rules he himself imposed on the company. Conflict of interest, stealing documents, sexual dalliances — you couldn’t write a textbook case on the collapse of corporate integrity that features a more potent interweaving of unethical forces. In fact, of all of the temptations known to and studied by defense-industry ethics officers, these three are the showstoppers: • Procurement scandals. When 32 major defense contractors formed the Defense Industry Initiative on Business Ethics and Conduct in 1986, it was partly in response to public outrage over press accounts of spare-parts suppliers colluding to charge the Pentagon $600 for a toilet seat and $400 for a hammer. Now the DII, as it is currently known, vigorously promotes its ethics training programs through case studies on conflict of interest. One of their training videos — involving Jim, a defense contractor, doing insider deals with Mike, an old friend who is now a government procurement officer — could have set Darleen Druyun’s and Michael Sears’s hair on fire by its parallels to their own situation. • Information theft. An earlier case widely noted in the defense industry teaches this lesson. It began early on May 16, 1991, when William Haggett, the CEO of Bath Iron Works, a Navy shipbuilder in Maine, spent 15 minutes examining documents obtained from a competitor and then asked to have them copied. He recognized and reversed his mistake by late afternoon — and was exonerated finally by the Navy. But he lasted only three more months before his board, unable to tolerate even that 15-minute lapse of integrity, sent him packing. • Sexual affairs. Of all of the pitfalls Stonecipher should have foreseen, this was perhaps the most obvious. His predecessor, Philip Condit, had fallen into that very trap by having an affair with Boeing receptionist Laverne Hawthorne. Condit had other difficulties — a penchant for lavish spending, spectacular parties, and bad financial decisions. But at least part of the reason for his firing appears to have been his tangled personal life and his fraternization with a junior employee. Now, having thought they had found in Stonecipher a well-settled grandparent and husband of 50 years, the board simply couldn’t tolerate this further down-drag on the company’s reputation. Ten days after they were alerted to the affair, Stonecipher, like Condit, was history (Kidder, 2008) Due to these unfortunate incidents Boeing has implemented a ridge and uniformed ethics program that is mandatory to all employees. This current strategy promotes and encourages a stream lined ethical conduct procedures and policy program, which eliminates any appearance of non-proprietary actions/behaviors as well as corrective actions that promptly rectifies any situation before it becomes a problem. The company now shuts down its operations globally for 2 hours quarterly to conduct training sessions with interactive ethical scenarios as well has implemented and accountability system where employees are mandated to participate in these sessions. These sessions are geared toward reminding, informing for new employees and implementing any changes that may have occurred since the last session. The loss of that large $40 billion dollar contract has Boeing executives coherent to the importance of ethics in the workplace. They are driven by the mishap to increase awareness and enforce policies that will educate employees of their actions. The Boeing Co. is a multi-billion dollar operation that has branded its name and reputation in the aerospace industry and has made a mark globally. It has developed structured strategies, values and goals that it lives by and has created a culture for developing, manufacturing the best aerospace products world-wide. References Boeing Co. (1995-2011). Retrieved from Boeing Co.: www.boeing.com Boeing Corporate Bond. (2009, June 30th). Retrieved 12 4, 2011, from Investment Income: http://investment-income.net/boeing-corporate-bond-news-rates-quotes-bond-list.html Boeing. (2011). Manufacturing News. Retrieved from Manufacturing Net: http://www.manufacturing.net/news/2010/08/boeing-successfully-completes-acquisition-of-argon-st Co, T. B. (2011). 2010 Annual Report. Chicago, IL: The Boeing Co. Dept of Defense PBL Award. (2011, Sept). Retrieved 12 4, 2011, from Dept of Defense: http://www.acq.osd.mil/log/mr/pbl_awards.html James, A. (2009, April 8). Seattle Pi. Retrieved 12 4, 2011, from Pentagon budget cuts slam Boeing, raise stakes on tanker win : http://blog.seattlepi.com/aerospace/2009/04/08/pentagon-budget-cuts-slam-boeing-raise-stakes-on-tanker-win/ Kidder, R. M. (2008, March 3). Ethics Newline. Retrieved 12 4, 2011, from Global Ethics: http://www.globalethics.org/newsline/2008/03/03/boeings-40-billion-ethics-bill/