International Expansion Strategies for Boeing in Indonesia's Aerospace Industry

Global Business Management 1
Global Business Management

Global business management 2
Introduction
There are number of companies which make investments and build capacity in terms of creating
the economies of scale. Organization mainly targets the expansion into the new markets by using
their potential in effective manner and creating the opportunities related to the additional
sustainable incoming. There are various opportunities available in both developed countries and
developing countries. It is necessary for the organization to target any particular market, and
make their strategies after considering and evaluating all the aspects of the market.
Strategy related to the international expansion mainly includes the market entry strategies. All
these market entry strategies mainly focus on the primary markets, determine the target
customers, channel strategy, resource allocation, demand of products and service, positioning of
brand, and creation of the operating model (International Expansion, no date).
This paper discusses the international strategy adopted by the firm in terms of taking the
advantage of the emerging economic opportunities. This is done from the perspective of the
multinational firms in the emerging economy. Structure of this paper includes the quality
analysis of the necessary frameworks and concepts, understanding of the key issues and
implications, arguments which are supported by data, and growth opportunities available in the
emerging economies. Lastly, brief conclusion is stated for concluding all the necessary facts of
this paper. In terms of discussing this paper the chosen organization is the Boeing and the chosen
emerging economy is the Indonesia.
About the company
Boeing is deemed as largest aerospace company of the world and also the leading manufacturers
of the commercial jetliners, defence, space and security system, and also the service provider of
the aftermarket support. This company is the biggest manufacturer of the America, and it also
provides its support to the airlines, U.S. and other countries allied governments. It must be noted
that, this country has the customers in more than 150 countries. Services of this company mainly
includes the commercial and military aircraft satellites, weapons, electronic and defence systems,
launch systems, advanced information and communication systems, and performance-based
logistics and training (Boeing, no date).
Frameworks & Concepts
Indonesia is deemed as that country that contains the great economic potential, and this potential
is noticed across the globe by number of communities. Indonesia is the largest economy of the
South East Asia, and it includes number of characteristics for putting the country into the great
position and also ensures advanced economic development for the country. There is one more
example of the international recognition in terms of Indonesia economy and that is upgrades in
context of the credit rating of the country by the companies of the financial services, and the
reasons of this upgrade are the continuous growth of economy, low debts of government, and
effective fiscal management. All these things automatically attract the financial inflows and
investments from multinational organizations in Indonesia, which means, both portfolio flows
and foreign direct investment (FDI). These inflows related to the FDI had been weak for the

Global business management 3
Indonesia during the time of the financial crises of Asia, and these crises mainly shake the
foundations of the country. However, situations changed after sometime and this country proved
itself as the emerging economy of the Asia. As this country make continuous efforts in reduce its
dependency on the raw commodity exports and trying to boost their manufacturing industry. This
transformation mainly occurred because of the falling prices of commodity after the period of
2011 and these prices fall because of the economic growth of China, and this impacted the
economy of this country. Export performance of Indonesia weakens significantly, and this
implied the few foreign exchange earnings and reduced purchasing power, and it can be said that
it result in the economic slowdown in the country (Indonesia Investments, no date).
Indonesia is deemed as one of the new Asian emerging markets that mainly run the current-
account deficits and as per the recent data these deficits are widening to the four-year high. Al
these deficit economies mainly depend on the foreign inflows in terms of financing their import
needs and this makes them vulnerable to the crash in sentiments and also in the sharp outflows.
Almost 40% of the binds of Indonesia are held by the foreign investors, and this percentage is
highest in the emerging markets of Asia (SCM, 2018).
Aerospace Industry
This industry is deemed as world’s fastest growing industry. In next 20 years, it is expected that
this country shows the growth of the average annual 7%. It must be noted that, Indonesia
witnessed the fast growth of their aerospace industry and it reflects the economic growth in the
Southeast Asia, and also the one of the largest economies of the Asia-pacific. This industry also
attracts the middle class sector, as they are using the airplanes for both national and international
tours.
In context of being the world’s largest archipelago, peoples consider the airplanes as the most
logical option for travelling across the country. In the year 2014, number of passengers recorded
by BSP in Indonesia reached almost 72.6 million people in comparison of 2013 that is only 68.5
million people (Wasserbaeur, 2018).
However, there is a roadblock also, as increasing competition reduced the profit margin of the
organizations, but still capital investments in this industry are still high. In the year 2016,
Indonesia officially holds almost 297 Airports and only few of these airports have runways
above 3 KM in length. Therefore, presently there are number of new projects in terms of building
the new and older airports and systems.
Market positioning is also strengthening by the local organizations, such as Lion air. As this
organization order almost 230 aircrafts in the year 2011 from the Boeing Company for the price
of almost US$21.7 billion. This purchase of the Lion air involved 201 737 MAX aircraft and 29
737-900 ER aircraft, and this boost the airline’s fleet to more than 400 aircraft by the year 2017.
In March 2013, Lion Air ordered almost 234 airplanes from the France-based Airbus, and in
2016, Lion ordered almost 42 aircrafts from the ATR, Boeing, and Airbus in terms of increasing
their capacity (Cekindo, 2018).