International Expansion

This report analyses the strategies and techniques undertaken by Boeing to expand its growth into the Chinese economy while remaining ahead of its competitors. The report discusses the challenges faced by the company and the strategies used by the company to overcome them. The report also discusses the importance of organic growth and joint ventures in the expansion of the company.

Running head: INTERNATIONAL EXPANSION
International Expansion
Name of the Student
Name of the University
Author Note

1INTERNATIONAL EXPANSION
Introduction
Boeing is an American jet manufacturing firm providing its goods and services to
countries situated in different parts of the world but headquartered in Illinois, Chicago. It is a
multinational firm that is involved with designing, manufacturing and selling aircrafts all over
the world. It is one of the largest aircraft manufacturers in the world and the largest exporter in
the United States considering USD value. China on the other hand has always been a market
aimed by many aircraft manufacturers to develop some part of their manufacturing and
production units (Boeing.com 2018). Studies assert that even though the economy of China has
slowed down, jet manufacturers still think that it has one of the highest priced markets for selling
its aircrafts. Aircraft manufacturers are increasingly selling aircrafts and competing amongst
each other in order to gain larger shares of the market. This report essentially considers the case
of Boeing (Boeing.com.2018). The report is concerned with studying and analysing the strategies
and techniques undertaken by the firm to expand the growth into the Chinese economy while
remaining ahead of its competitors.
Discussion
Problem identification
Unlike before, the current situation persisting in China is such that it is improving in
leaps and bounds and the economy is booming slowly and gradually. According to reports and
experts, the demand will increase even more in the next twenty years and will cause China to
emerge as the third largest market in the world following the United States and Europe. This is
the major reason behind, jet manufacturers targeting the market of China as compared to most
other countries in the world. It is important to note here, in this context that even though the

2INTERNATIONAL EXPANSION
existence of institutional barriers might be the source of challenges for the aircraft
manufacturing firms willing to expand in China, the government of China is trying to promote al
the cooperation possible to enable faster growth of these firms. Initiatives taken up the
government of China also include leaving some parts of the air space of the country for the
activities and the initiatives of these jet manufacturing and selling firms. In addition to this, the
country’s growth is also being expected to propel because of the investments and activities of
these aircraft manufacturing firms in the country. In other words, the situation of the economy in
China has improved after the financial crisis that occurred in the year 2008 and now the situation
existing in the country is conducive to the growth of the aircraft-manufacturing firms. The
President of China Xi Jinping, has in fact, helped in clearing the market by driving off some
state owned enterprises in this sector to make the markets free for the foreign countries so that
greater amounts of foreign direct investments can be obtained and can be used for re-investment
by the country.
Problem analysis
As mentioned before, Boeing is an aircraft manufacturing firm based out of America and
is involved with manufacturing diverse varieties of products including missiles, security alarms,
airplanes and rockets as well. It has operated for over a period of 80 years now and has been able
to continuously cater to the changing demand patterns of the customers all around the world. To
continuously cater to the changing demands and needs of the customers, the firm has always
used the most innovative technologies. The firm has recently been expanding into the country of
China. Boeing Business Jets are being increasingly produced and sold in China. The firm has set
up its first overseas manufacturing unit in China and has delivered around a total of 100 Boeing

3INTERNATIONAL EXPANSION
737 airplanes. The firm has built up strategies and techniques which help it to compete not only
in China but also globally across different parts of the world.
A joint venture is a form of a business expansion strategy or a business technique used by
firms for expansion in which two or more firms try to collaborate and share ownership of the
collaboration formed. The major features of a joint venture also include shared risks and shared
returns. It also includes the concept of shared governance (Yan and Luo 2016). There are
essentially three types of joint ventures including business partnerships, separate joint venture
business and limited cooperation. Boeing as a firm utilises the feature of business partnership in
the context of joint ventures with Commercial Aircraft Corporation of China Ltd. The first and
the most important strategy used by the firm is the partnernership with Commercial Aircraft
Corporation of China Ltd (COMAC) which is a Chinese aviation manufacturer (Vitalis and
Scott 2015). The production unit was to be set up in Zhoushan and the first delivery has been
made in the year 2018. The two firms are also currently trying to produce a modified version of
this aircraft series by the year 2025. The partnership between Boeing and Commercial Aircraft
Corporation of China Ltd is occurring in two parts of which the first part consists of a 737-
completion centre (which is a joint venture) and a 737 delivery centre (which is completely
owned by Boeing).
Organic growth is the type of growth strategy used by firms to expand their growth rates
internally using internal sales (Zollo, Minoja and Coda 2015). This strategy is a safer way to
increase growth and expand internationally because it does not involve the acquisition of another
firm and the growth rate is not dependent on the growth rate of another firm. This strategy
involves maximising the potential and hence returns to a particular business from within the
internal functioning of the business (Green 2016). The different strategies used for organic

4INTERNATIONAL EXPANSION
growth and expansion include promotions, new lines of products, customised products and
continuous catering of the changing demand trends of the customers. Boeing as a firm trying to
expand internationally and especially in China utilises all of these strategies to gain increased
momentum of growth and surpass the barriers or resistances offered by its competitors.
The next strategy followed by the firm is that or organic growth wherein the firm utilises
the internal strategies of growth instead of expanding with the help of other companies (in the
form of mergers and acquisitions). It includes the use of innovative technology and reinvestment
of revenues generated so that there is continuous evolution of the methods used for reaching
highest possible amount of profit generation in less time than needed by its competitors. This
causes Boeing to appear as a safe company to invest. This is so because even if its growth rate is
less it is not dependent on other firms as it has not bought other firms. However in case of its
competitors it has usually been found that they grow by buying other firms and hence appear to
have higher returns of growth (the concept of mergers and acquisitions). This causes investors
and shareholders to have more trust in Boeing and hence provide them with greater opportunities
and options to expand internationally. Boeing is increasingly using a mix of organic growth
along with strategic acquisitions to increase the amount of expansion in China. Some of the
efforts taken up by the firm in this regard include better seating arrangements, sale of parts of the
aircrafts and specially engineered goods like cargo conversions. The firm is essentially trying to
invest in deals and options that will open up aftermarket possibilities and expansion
opportunities in turn. This is directly related to the vertical relationship established by Boeing
with the Commercial Aircraft Corporation of China Ltd.
The firm has also been successfully able to establish a strong place in the target market in
spite of the existence of so many potential competitors is because of the excellent customer

5INTERNATIONAL EXPANSION
servicing options provided by the firm. The firm provides personalised and specialised customer
satisfaction services. This includes use of two tools primarily. The first is the use of disruptive
business models and smart devices to cater to the ever changing demand trends of the customers.
The second is to provide services of support throughout the entire life cycle of the aeroplane
manufacturing to the sale of the airplane to the reaching of the step wherein the plane is
completely in the operating condition. Boeing Business Jets is a variant of the Boeing jet
airliners produced by the firm to capture the market in the context of the corporate market
especially. This venture is also a partnership in between Boeing Commercial Airplanes and GE
Aviation. This strategy has been excessively in the target market of China with 21 in-service
airplanes and almost three BBJ MAXs already in order. This has been possible because of the
extremely stringent value of the firm in providing product reliability and brand trust. The firm
increasingly uses disruptive business models with the use of smart devices which help the firm in
identifying the major variables and parameters that affect the demand patterns of the customers
especially in China. The firm uses the strategy of continuously being in touch with the customers
from the starting of manufacturing to the completion of the aircraft including the interior decor
and manufacturing of the aircraft.
It has particularly been challenging for the firm because the Chinese economy is very
wide and comprises of a population of around 1.3 billion people and a land mass area which is
larger when compared to the United States. Boeing as a firm has been efficiently able to identify
the market areas and products particularly demanded by the Chinese population residing in
different parts of the country. Hence, it becomes difficult for every firm whether already having
multinational expansion experience and lack of local market understanding. It is very important
to note in this regard that the Chinese market is not at all a homogeneous market as it is flooded

6INTERNATIONAL EXPANSION
with competitors from all different types of countries and regions of the world. The firm has
been able to carefully investigate the different geographical regions within the country with the
help of smart devices and figure out the markets which are the most conducive to expansion of
the business.
As a matter of fact, the company has focussed on the attempts being taken by the firm to
sell an increased number of aircrafts and aircraft products in China. By the year 2037, Boeing is
expecting to sell a total of 7690 airplanes in China (Boeing.com 2018). Reports from the firm
have also suggested and asserted that the firm will be able to grow at increased rates and that
China will account for 18% of the total growth (Rong, Wu and Boeing 2017). Boeing has been
competing with the biggest European Competitor Airbus to capture larger shares of the market in
China as it is currently the fastest growing aircraft market in the world. Boeing is also currently
involved in making strategies and techniques to cater to the increasing base of customers arising
from the increasing middle class population of the country. The plant set up in China by Boeing
is being considered to produce a total of 6,810 new aircraft in the next twenty years. Thus, the
market expansion strategies are very conducive to the growth of the firm.
Conclusion
In order to conclude it can be asserted that Boeing is one of the largest aircraft
manufacturing firms in the world based out of America and headquartered in Chicago, Illinois.
The multinational firm is involved with designing, manufacturing and selling aircrafts all over
the world. It has been expanding into the Chinese sub-continent and is using a set of smart
strategies using organic growth and joint ventures to expand into this country. The firm also uses
the concepts of smart devices and disruptive business models to expand into this country. These
features enable the firm to remain ahead of its competitors and cater to the ever changing

7INTERNATIONAL EXPANSION
demand patterns of its customers. Even though the Chinese economy is diverse and not
homogeneous and the demand patterns are varied, the firm has been successful in identifying the
investment regions and the specific market demands of the customers in China.

8INTERNATIONAL EXPANSION
References:
Boeing.com. (2018). [online] Available at:
https://www.boeing.com/news/frontiers/archive/2009/october/oct09frontiers.pdf [Accessed 14
Oct. 2018].
Boeing.com. (2018). Boeing: The Boeing Company. [online] Available at:
https://www.boeing.com/ [Accessed 14 Oct. 2018].
Boeing.com. (2018). Boeing: Boeing Business Jets Grows Presence in China. [online] Available
at: https://www.boeing.com/commercial/bbj/news/boeing-business-jets-grows-presence-in-
china.page [Accessed 14 Oct. 2018]
Green, M.B., 2016. Mergers and acquisitions. International Encyclopedia of Geography: People,
the Earth, Environment and Technology: People, the Earth, Environment and Technology, pp.1-
8.
Rong, Z., Wu, X. and Boeing, P., 2017. The effect of institutional ownership on firm innovation:
Evidence from Chinese listed firms. Research Policy, 46(9), pp.1533-1551.
Vitalis, H. and Scott, R., 2015. Joint ventures in the public sector: Translating lessons from the
private sector to New Zealand government departments. Proceedings of the 2015 Australia and
New Zealand Academy of Management.
Yan, A. and Luo, Y., 2016. International Joint Ventures: Theory and Practice: Theory and
Practice. Routledge.

9INTERNATIONAL EXPANSION
Zollo, M., Minoja, M. and Coda, V., 2015. Toward an integrated model of strategy. In Academy
of Management Proceedings (Vol. 2015, No. 1, p. 18733). Briarcliff Manor, NY 10510:
Academy of Management.