Analysis of Boeing's Competitive Advantage: Porter's Five Forces

This report provides an in-depth analysis of the Boeing Company using Michael Porter's Five Forces framework. It examines the competitive dynamics within the Aerospace Products & Services industry, focusing on the impact of new entrants, supplier and buyer power, the threat of substitute products, and rivalry among existing competitors. The report highlights Boeing's strategies for maintaining a sustainable competitive advantage, including innovation, economies of scale, customer focus, supply chain management, and product differentiation. It concludes by emphasizing the importance of understanding these forces for strategic decision-making and adapting to changing industry trends. The analysis offers insights into how Boeing navigates challenges and exploits opportunities within its market, providing a comprehensive overview of its business environment and competitive positioning.

Running head: MANAGEMENT
Business
Name of the Student:
Name of the University:
Author Note:

MANAGEMENT 1
Table of Contents
Introduction:....................................................................................................................................3
Porter’s Five Forces Analysis and Industry Attractiveness:............................................................3
Conclusion:......................................................................................................................................5
References:......................................................................................................................................6

2MANAGEMENT
Introduction:
The objective of the report is to provide an overview of five forces and the
environmental trends with respect to Boeing Company (boeing.com 2020). Michael Porter made
an observation where the five forces have significant influence on the profitability of the firm
within industry. In recent times, the analysis of the five forces in the business world came to be
known as the Porter’s Five Forces analysis. It acts as the strategic management tool for analyzing
the industry and understanding the underlying levers of cost-effectiveness within the given
industry. The report therefore portrays on how Boeing Company is able to establish sustainable
competitive advantage within Aerospace Products & Services industry.
Porter’s Five Forces Analysis and Industry Attractiveness:
The Porter’s Five Forces represents a holistic strategic framework that portrayed certain
things more than simply analyzing the present competition (Dobbs 2014). The Boeing Company
has been a leading firm in the Aerospace Products and Services industry. Years of experience has
redefined ways in which the Boeing Company does business. The five forces of Porter that had
remarkable impact on the cost-effectiveness of the organization with the industry includes:
1. Threat of the New Entrants: The new entrants in the Aerospace Product & Service
industry leads to innovation and newer means for the implementation of things thereby creating
pressure on the Boeing Company to not only lower pricing strategy but also reduce cost and
value propositions to the customers(Gayle and Wu 2013). The company however, attempts in
managing the challenge and safeguarding the barriers to attain competitive advantage in the
following manner:
 By remaining committed towards the innovation of new products

3MANAGEMENT
 By building the economies of scale and keeping cost lower
 By remaining ahead of the competitors by anticipating and keeping a constant watch on
the needs of the consumers and spend enough money on the research and development.
2. Bargaining Power of the Suppliers: Firms buy its raw materials from various
suppliers (Tretheway and Markhvida 2014). The dominant position of the suppliers might
decrease margins of Boeing Company in the market. Powerful suppliers have been found to
utilize their power of negotiation in extracting higher prices from an organization. Boeing
Company is able to tackle this:
 By constructing an effective supply chain comprising of various suppliers
 Through experimentation with the different product designs such like when prices
increase then the company can move to the other suppliers
 Development of the dedicated suppliers whose business is dependent on the firm.
3. Bargaining Power of the Buyers: Buyers have been found to be quite in demand as
they seem to buy best the available offerings via payment of the minimum possible price
(Emboaba Moreira 2014). This creates burden on profitability of Boeing Company in long-run.
A smaller customer base results in higher bargaining power of customers along with an enhanced
ability for demanding more discounts and offers. The company is able to handle this and
maintain a sustainable competitive advantage through:
 Building huge base of the customers
 Ensure rapid innovation of the new products. This will lead to reduction in defection of
the existing customers to the customers.

4MANAGEMENT
4. Threat of the Substitute Products: When introduction of fresh product meet similar
requirements of customers in different manner then it causes then effectiveness of industry to
suffer. The threat of the substitute product remains greater when it puts across value proposition
that is unique to current offering of industry. The Boeing Company however handle the
challenge in the following manner:
 By remaining service oriented instead of just remaining product-oriented
 By understanding the core needs of customer instead of concentrating on what they
purchase
 By enhancing the switching cost of clients.
5. Rivalry amongst Existing Competitors: Intense rivalry between existing players
within industry will help in driving prices down thereby reducing profitability of the company
within the industry (Shaw 2016). Boeing Company however operate within competitive industry.
This competition however takes immense toll on long-term profitability of a firm. The company
however handles the intense competition amongst through:
 Ensuring sustainable differentiation
 Structuring the scale such that it is able to ensure better competition
 Think of collaboration with the competitors for increasing market size instead of
undertaking competition for a smaller market.
Conclusion:
In conclusion, it can be said that through the analysis of the Porter’s five forces, the
strategist of the Boeing Company is able to gain complete picture of the influence of profitability
within the industry. Besides, they are also able to overview the changing trends quite early and

5MANAGEMENT
respond faster for exploiting emerging opportunity. The understanding of Porter’s Five Forces
also allows the managers to shape the forces on their favor.

6MANAGEMENT
References:
boeing.com, 2020. [Online]. Available at
https://www.boeing.com/company/general-info/index.page#/overview [accessed Mar 26, 2020]
Dobbs, M.E., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review.
Emboaba Moreira, M., 2014. An analytical model for the assessment of airline expansion
strategies. Journal of Airline and Airport Management, 4(1), pp.48-77.
Gayle, P.G. and Wu, C.Y., 2013. A re-examination of incumbents’ response to the threat of
entry: Evidence from the airline industry. Economics of Transportation, 2(4), pp.119-130.
Shaw, S., 2016. Airline marketing and management. Routledge.
Tretheway, M.W. and Markhvida, K., 2014. The aviation value chain: Economic returns and
policy issues. Journal of Air Transport Management, 41, pp.3-16.