Boeing's Expansion into China: An Analysis of Internationalization Strategies

GLOBAL BUSINESS MANAGEMENT
Global Business Management
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Executive Summary
The report sheds light on the concept of internationalization and the various factors that needs
to be taken into consideration by the companies which are embarking on such a process. For
the purpose of this analysis the report takes the help of the case of Boeing’s expansion into
the business market of China. The report begins by providing an overview of Boeing and also
the airlines industry of China. The report next introduces the concept of cross-border strategic
alliance. The decision of the company Boeing to expand into the business market of China
has been analyzed through the use of various frameworks and tools like SWOT, CAGE and
VRIO. Furthermore, the competition that the company is likely to face in the business market
of China has also been analyzed through the framework of Porter’s Five Forces. A discussion
of the internationalization strategies that the company can use like licensing, exporting and
global strategy had been provided. Finally, the report concludes with an analysis of the major
problems like competition and national differences that the company is likely to face in
China.

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Table of Contents
Introduction................................................................................................................................3
Boeing........................................................................................................................................4
Airline industry and China.........................................................................................................4
Cross-Border Strategic Alliance................................................................................................5
SWOT analysis...........................................................................................................................6
CAGE Framework.....................................................................................................................8
VRIO Framework.....................................................................................................................10
Porter’s Five Forces.................................................................................................................12
Internationalization Strategies..................................................................................................14
Problem identification..............................................................................................................15
Problem Analysis.....................................................................................................................15
Conclusion................................................................................................................................16
References................................................................................................................................17

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Introduction
Globalization has transformed the entire world into a small village wherein the
business enterprises of the diverse nations can indulge into business negotiations with each
other (Lasserre 2017). Hill et al. (2017) are of the viewpoint that the process of globalization
has opened new windows of opportunities for the various business enterprises like the chance
to expand their customer base, the opportunity to not only produce surplus products or
services and offer them to the customers, higher profitability and others. However, the
benefits associated with the process of globalization notwithstanding, there are several factors
which the organizations need to take into effective consideration before actually taking
following the path of internationalization (Peng 2016). For example, a detailed analysis of the
business environment of the host nation would help the organizations to understand the
opportunities as well as the threats presented by the host nation’s business market (Meschi,
Ricard and Moore 2017). This in turn would help the organization to formulate strategies for
the mitigation of the threats or the risks that they are likely to face in the host nation’s
business markets and also to make the most of the business opportunities presented by the
business market (Hilmersson et al. 2017).
The market entry strategy used by an organization also becomes important and
Nishant et al. (2018) are of the viewpoint that the success or the failure of the entire
expansion depends to a great extent on the kind of market entry strategy used by an
organization during the process of expansion. Al-Najjar et al. (2017) have shown that the
effective utilization of the various theories of internationalization is likely to help the
organizations during the time of their entry into the business markets of the host nation. This
report will discuss about the process of international business expansion in the particular light
of Boeing’s expansion into China.

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Boeing
The Boeing Company, founded by William Boeing in 1916, is an American
multinational company which not only designs but also manufactures and sells “airplanes,
rotorcraft, rockets, satellites, and missiles worldwide” (Boeing.com 2018). The company
besides being one of the largest manufacturers of airplanes is the 2nd largest defense
contractor of the world (Boeing.com 2018). Furthermore, the company is the largest exporter
in the United States of America by dollar value (Boeing.com 2018). The net production of the
company in 2016 was “748 commercial aircrafts, 80 military aircraft and 5 satellites”
(Boeing.com 2018). The company besides the manufacture and the sale of the airplanes also
provides various kinds of support services to the designing of the airplanes and their
maintenance to the other organizations (Meschi, Ricard and Moore 2017). The company is
currently operational in more than 100 different nations of the world and had more than
141,322 employees from these nations (Boeing.com 2018). As a matter of fact, the company
is the 25th largest business enterprise of the world and the net annual revenue of the company
for the year 2017 was an impressive US$93.392 billion (Boeing.com 2018). The company is
known for the high quality airplanes that it offers and also the advanced technology that is
being used for the manufacture of the same (Meschi, Ricard and Moore 2017).
Airline industry and China
China is one of the most emerging economies of the world and is one of the most
sought after host business markets (Gov.cn 2018). In this regard, the “one billion” population
of the nation are generally being seen as potential customers by the various business
enterprises (Lawrence and Thornton 2017). The airline industry is a relatively nascent one in
the nation of China with the first organization being established in the year 2003 (Gov.cn
2018). However, since then the nation have not taken any significant strides in the airline

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industry and it is the net result of this that less than 400 jets fly in the nation (Lawrence and
Thornton 2017). The lack of the initiative of the nation to develop this industry becomes
apparent when the population of the nation and the fact that China has the 2 nd highest number
of billionaires is taken into consideration (Lawrence and Thornton 2017). The lack of
effective development of the airlines industry is perhaps one of the major reasons for the slow
economic growth of the nation despite having the requisite labor force and the means for the
attainment of the same. However, in the recent times, with the latest Five-Year Plan and the
increasing focus of the various airlines companies like Boeing, Embraer, Airbus, Gulfstream
and others the future looks promising for the airlines industry in the nation of China (Gov.cn
2018).
Cross-Border Strategic Alliance
He, Hipel and Kilgour (2017) are of the viewpoint that the Cross-Border Strategic
Alliance tries to overcome of the limitations of the other market entry strategies like Merger
and Acquisition, Sole Proprietorship and others. This strategic alliance proposes a framework
wherein two or more organizations can merge or integrate their resources as well as
capabilities to not only maintain but at the same time strengthen their position within the
business market of the host nation (Prajogo 2016). Another major benefit of this strategic
framework is the fact that the organizations involved in the process get the opportunity to not
only share the profit but at the same time bear the loss in equal manner (Pritchard 2016). The
magnitude of the business loss does not falls on one organization and this ensures the steady
growth of the business of the organizations which are involved in the alliance (Teece 2017).
Furthermore, the organizations involved in the alliance, also get the opportunity to effectively
utilize the resources, strategies and other entities of the organizations with which it has
formed the alliance (Rosar 2017). Thus, it can be said that the effective utilization of this