Globalization of Business: Outsourcing Policy of Boeing
Verified
Added on 2023/06/11
|10
|2248
|480
AI Summary
This paper analyses the effectiveness of the outsourcing policy of Boeing from both business perspective as well as the perspective of international economic, social, cultural structure. The potential effects due to lack of outsourcing on USA economy has been examined.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Running head: GLOBALIZATION OF BUSINESS Globalization of Business Name of the student Name of the university Author note
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1GLOBALIZATION OF BUSINESS Table of Content Introduction:....................................................................................................................................3 Discussion:.......................................................................................................................................3 Benefits of outsourcing manufacturing of components:..............................................................3 Potential cost and risks of outsourcing:.......................................................................................4 The potential gainer and looser for outsourcing:.........................................................................5 Effect on community, employee and company is the absence of outsourcing:...........................6 Is the outsourcing of Boeing good for American Economy:.......................................................7 Conclusion:......................................................................................................................................8 References:......................................................................................................................................9
2GLOBALIZATION OF BUSINESS Introduction: Boeing is one of the world largest manufacturers of aircraft. In 2004-05,after the expiring of corporate contract with Airbus, Boeinghas announced the intervention of “snap together” manufacturing policy, which is more cost and time efficient (Peterson 2011). Through this outsourcing procedurefor inbound logisticslot of newand advancedfacilities were added in themanufacturedaircraftmodelforboththe passenger andcrewmembers. The management of Boeing decided to outsource most of the parts from other companies.Currently, Boeing depends on 50 outsourced international suppliers spread around the world that supplies the 65 percent of the total aircraft manufacturing components (Tang, Zimmerman and Nelson 2012).The purpose of this paper is to analyse the effectiveness of the outsourcing policy of Boeing from both business perspective as well as the perspective of international economic, social, cultural structure. In this paper, the potential effects due to lack of outsourcing on USA economy has been examined. Discussion: Benefits of outsourcing manufacturing of components: Being is an aircraft designing and manufacturing company, Boeing has realized the operational dilemma and excessive burden at the early age of business, because of zero to hundred manufacturing process without letting any additional outsourcing from suppliers. Henceforth in their current manufacturing lifecycle,Boeing depends on international outsourcing for inbound logistics in order to gain many operational advantages.
3GLOBALIZATION OF BUSINESS One of the major advantages of this current outsourcing inbound logistics is time efficiency due to the parallel manufacturing system.Outsourcing for aircraft body parts allows the company focusing only on the particular production line. Currently, Boeing is internally producing the Fuselage,Wing to body fairing and the Tailfin while the suppliers are producing the other interior and exterior parts like vertical and horizontal stabiliser, flaps and spoiler hydraulics connection, interior designs, modularly components and other simultaneously (Bean 2013). Therefore, it reduces the overall time consumption for manufacturing of an entire aircraft. Only transportation and assembly times are additionally required, which is significantly lower than the self-depended manufacturing time consumption. Another essential benefit of outsourcing is cost efficiency. To maintain the manufacturing process for all the aircraft components would require significant amount of development and managementexpenses including land takeover and additionalpayroll. By the partnership contracts with various international supplier Boeing can invest a stipulated amount of revenue for production (Denning 2013). Apart from that, the operational maintenance cost of all the production system under the suppliers, do not influence the main outbound cashflow of Bowing. Potential cost and risks of outsourcing: Boeing has faced many operational dilemmas throughout the history of their globalised business.Several consequences have shown that excessive dependency on “snap together” philosophy can cause declination of brand equity, poor competence and performance issues.As an example, the delivery date of a particular jet aircraft was delayed four years because of the inefficiency of one of their core supplier (Gilley and Rasheed, A., 2015). As a result, Boeing had
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4GLOBALIZATION OF BUSINESS to bare million dollars penalties for late delivery. Therefore, the partnership contracts with many multinational companies ware also hindered. Themaincauseofthisoperationaldilemmawasseveralcoresupplypartnersofthe manufacturing company ware unable to fulfil theBoeing’s delivery schedules. In somenations, the manufacturing companies have to arrangemultipleseparately operational manufacturing units. As an example, in Italy, the suppliers wereunable to deliver on time.Some suppliers did not able to meet the quality standards set bythe company, as a result,the core manufacturer company was unable to get the quality product on timewhile losing the brand reputation as well as consumer loyalty. Higher dependency on inbound logistics can also reduce the overall quality control efficiency of any manufacturing company. Apart from that, distribution of functional integrity of a manufacturing company can make the whole business operation risky as well as market sensitive where the bargaining power of the suppliers can be extremely higher than usual (PritchardandMacPherson2014).Therefore,thisconditioncanalsoinducethemarket competition while making the way out narrow and difficult. The potential gainer and looser for outsourcing: A globalised business has significant influence over the national and international economy that regulates the additional regulatory power of the business in both national and international social and cultural field.At the same time, the labour market is highly dependent on the overseas activities of any global organisation.In order to analyse the potential benefit from the organisational operation and outsourcing of Boeing, the labour market should be considered as the chiefly effected factor (Jain and Swarup 2011). The national labour market can have wider
5GLOBALIZATION OF BUSINESS opportunity to expand the potential workforce to the global market and earn foreign money. On the other hand, from the individual aspect, the job opportunity and national employment rate would be the major modifier because of the outsourcing business operation of Boeing. Similar as national labour market, the international labour market will also affected by anybusinessdecisionmakingregardingtheoutsourcingbusiness.Variousmultinational suppliers like Mitsubishi, Kawasaki, Rolls-Royce, KAA and other company and their national and global labour market also depend on the outsourcing business operation of Boeing.Not only the potential employment, the social and cultural interaction and internationalisation will also be affected because of any changes in outsourcing operation of Boeing (Allworth 2013). As long as the outsourcing and other globalised business operations are functional, the cultural and social diversity would increase. Therefore the international employment, labour market, social and cultural mixing will be the major sufferer of any global operation like outsourcing of Boeing. Effect on community, employee and company is the absence of outsourcing: It will bewrong to statethat outsourcingoperation let only the job exportationoverseas. The national and global economic balance also depends on this outsourcing activity of a company. Every national or global level business organisation alwayswants to make the profit and wants to give the most acclaimed and appreciated product and services to their client. In this process, some employment opportunities havebeen exported to the other countriesthat regulate the economical and social interaction of both of the country (Sodhi and Tang 2012).In today’s internationalised world, it issignificantly difficult for any business organisation under the regulation and legislative environment of acountry to remaincompletelyisolated while making sufficientprofits.
6GLOBALIZATION OF BUSINESS Apart from the occupational and cultural exploration, the potential operational efficiency of a business organisation can be highly boosted by sincere globalised partnership management and trading relationship.On the other hand, the expansion of thebusinessof beingin other parts ofGlobe can influence the work ethics and operational performance of a considerable number of employees.Less global expansion or external dependency can reduce the employment level economical alliance and industrial integrity.Even lack of business communication between Boeing and the partner companies, whoare located in the other countries to provide an adequate supply and job opportunityto US citizens,can influence the brand reputation as well as the corporate social responsibility of the Bowing (Varadarajan 2011). Is the outsourcing of Boeing good for American Economy: Boeing is able to regulate the excessive cost, time, maintenance, workforce and from other many operational burdens of the American economy through outsourcing supply system. On the other hand, being an aircraft manufacturer, Boeing does not need to maintain the product quality and workflow procedure because of external manufacturing and inbound logistical dependency.Additionally, it also allows the social environment of the country to minimize the risk factors associated with the isolated economy, malfunctioned monetary cycle, scattered labour market and vulnerable labour control and safety policies.The more isolated and complex the organizational operation is the more burden and risk factors will be relevant to the company as well as the home country (Elahi, Sheikhzadeh and Lamba 2014).Therefore, depending more on outbound logistics and global supplier is beneficial for the company and the social, cultural and economical factors of America from various aspects.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7GLOBALIZATION OF BUSINESS In order tostop,therepetitionof these types of operational failure and risky brand equity, thecompany should carry out detailedmarket research globally forfinding out the most appropriate and efficientcomponentsmanufacturer and suppliers of aircraft. On the other hand, this operation also needs additional observation systemin each manufacturing unit that can give real time production report from the suppliers to themanagement of Boeing regarding the situational progress of the parallel manufacturing. In case of any operational discrepancy or malfunction,themanagement of the core manufacturing company can take effectiveaction, within time. Conclusion: AftertheexpiringofcorporatecontractwithAirbus,Boeinghasannouncedthe intervention of “snap together” manufacturing policy, which is more cost efficient and time efficient as well.From the above discussion, it can be said that, in their current manufacturing lifecycle, Boeing depends on international outsourcing for inbound logistics in order to gain many operational advantages. Outsourcing for aircraft body parts allows the company focusing only on the particular production line. By the partnership contracts with various international suppliers, Boeing can invest a stipulated amount of revenue for production.In this process, some employment opportunities havebeen exported to the other countriesthat regulate the economic and social interaction of both of the nations.In order toprevent theoperational failure and risky brand equity,thecompany should carry out detailedmarket research globally forfinding out the most appropriate and efficientcomponentsmanufacturer and suppliers of aircraft.
8GLOBALIZATION OF BUSINESS References: Allworth, J., 2013. The 787’s problems run deeper than outsourcing.Harv. Bus. Rev. Available at https://hbr. org/2013/01/the-787s-problems-run-deeper-t. Bean, L., 2013. The profits and perils of international outsourcing.Journal of Corporate Accounting & Finance,14(6), pp.3-10. Denning, S., 2013. What went wrong at Boeing.Strategy & Leadership,41(3), pp.36-41. Elahi, E., Sheikhzadeh, M. and Lamba, N., 2014. An integrated outsourcing framework: AnalyzingBoeing'soutsourcingprogramforDreamliner(B787).KnowledgeandProcess Management,21(1), pp.13-28. Gilley, K.M. and Rasheed, A., 2015. Making more by doing less: an analysis of outsourcing and its effects on firm performance.Journal of management,26(4), pp.763-790. Jain, S. and Swarup, K., 2011. Offshore Outsourcing: A Strategic Approach towards Maximizing Organization Value.Synergy (0973-8819),9(2). Peterson, K., 2011. A wing and a prayer: Outsourcing at Boeing.Rep. Everett: Reuters. Pritchard, D. and MacPherson, A., 2014. Outsourcing US commercial aircraft technology and innovation: implications for the industry’s long term design and build capability.United States Trade Center, Department of Geography, Buffalo, NY. Sodhi, M.S. and Tang, C.S., 2012. Application: Mitigating New Product Development Risks— The Case of the Boeing 787 Dreamliner. InManaging Supply Chain Risk(pp. 161-179). Springer, Boston, MA.
9GLOBALIZATION OF BUSINESS Tang,C.S.,Zimmerman,J.D.andNelson,J.I.,2012,January.Managingnewproduct development and supply chain risks: The Boeing 787 case. InSupply Chain Forum: An International Journal(Vol. 10, No. 2, pp. 74-86). Taylor & Francis. Varadarajan,R.,2011.Outsourcing:Thinkmoreexpansively.Journalofbusiness research,62(11), pp.1165-1172.