Strategic Management: Boeing 737 Max Case Study for Algorithm SAL

This case study examines the strategic implications of the Boeing 737 Max crashes, focusing on how Algorithm SAL, an Australian pharmaceutical company, can learn from Boeing's experience. The analysis covers the leadership problems, reduction of customer trust, and concerns about automation technologies that arose from the incidents. It explores how Algorithm SAL can apply these lessons to its own context, emphasizing the importance of thorough research and development, strong leadership, and maintaining customer trust through product safety. The study also reflects on second-level impacts, such as increased regulatory pressure, employee layoffs, and loss in market position, and how these can be mitigated through effective change management strategies. Ultimately, the case study highlights the need for proactive risk management and continuous improvement to ensure organizational resilience and maintain a competitive edge.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Part 1: Analysis of a recent focal strategic issue within a nominated organization...............3
Part 2: Application of the focal strategic issue to own organizational context......................4
Part 3: Reflection and analysis of possible second level impacts from the focal strategic
issue........................................................................................................................................6
Part 4: Research and application of theoretical frameworks to focal strategic issue.............8
Conclusion:..............................................................................................................................10
References:...............................................................................................................................12

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Introduction:
Corporate strategy can be understood as a scope of management that includes the
development and implementation of important objectives and initiatives taken by the Top
management of the business on behalf of the owners or Board of Directors (Noe et al. 2017).
It is the highest strategic plan made by the business through which the goals and objectives
are clearly defined within the strategic management process. Ideally, the corporate strategies
can be made using tools such as SWOT and PELTLE and a balance score card can be used
for its implementation. Moreover, corporate strategy should also include several important
aspects such as the product portfolio, company resources as well as partial strategic
documents on which the organizational model can be developed. Several organizations still
face strategic issues that put the fundamental policies and long term objectives of the business
at risk thereby adversely affecting the organizational performance, its mandates, values and
missions, management process as well as the products and services (Moutinho and Vargas-
Sanchez 2018). The strategic issues therefore need to be addressed through the business
strategies to mitigate the risk and improve preparedness for such issues in the future (Ansoff
et al. 2018; Wheelen et al. 2017).
Currently I am working with Algorithm SAL that is an Australian pharmaceutical company
in Melbourne. The company produces originated drugs and is the leader in the local market at
2nd position after Himca which is a Lebanon based drug manufacturing company. My
organization employees more than 1200 employees, with 18% CAGR (algorithm-lb.com.
2019)
The aim the study is to analyze a recent strategic incident within an international organization
and evaluate its application within the strategic focus of my organization and how the issue

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can have second level impacts on the organization I work in. Additionally, theoretical
frameworks would also be researched and applied to the strategic issue selected for the study.
Discussion:
Part 1: Analysis of a recent focal strategic issue within a nominated organization
In March 10th, 2019, the Ethiopian Airlines, flight 302 crashed resulting in the death of 125
passengers and another crash also occurred in the Lion air flight 610 in October 29th, 2010 in
Indonesia causing the death of 189 people. Both these flights were using the same model of
Boeing 737 Max. The incidents raised significant concerns on the safety of the Boeing
aircrafts and affected the customers’ trust on the company. After the report of the two crashes
authorities at Boeing, including the CEO Dennis Muilenberg initiate an immediate
investigation into the design and security of the Boeing 737 flights to understand the reason
of the accidents and how such incidents can be prevented through the design of the plane
(Nowacki and Olejniczak 2018). The organization acknowledges that it has the highest
responsibility to assure the safety of the passengers as well as the employees working on the
flight and eliminating the probability of any accidents related to Maneuvering Characteristics
Augmentation System (MCAS). The MCAS is a system that helps airplanes to improve the
pitch stability and thereby helps in automated flights. This system is activated during
abnormal situations where the pitch of the flight goes out of control and this system can be
activated to stabilize the airplane. The analysis of the crashes of the two Boeing 737 Max
airplanes showed that a faulty MCAS flight control law that was designed for the 737
airplanes in order to increase the Angle of Attack (AOA) caused a faulty pitch in the plane
due to which the stability of the aircraft was compromised mid-air leading to its crash
(Arumugham 2019).

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The strategic issue that becomes evident in this scenario for Boeing is many which include
the following:
 Leadership problem: due to the crashes in Indonesia as well as Ethiopia the reputation
of the company was significantly tarnished that created a challenge for the leadership
to show the consumer market that Boeing is as focused as ever on the maintenance of
safety for the customers and upholding the trust.
 Reduction of trust among customers: the incidents also reduced the levels of trust
among the customers as they do not feel safe to travel in Boeing 737 Max airplanes
due to the recent accidents. Moreover, the report on faulty MCAS also increased the
level of distrust on the airplane.
 Concerns about airplane automation technologies: the management and executives
have also shown concerns over the automation technology and its efficiency to control
the plane effectively. Due to this the organization also halted the operation of all the
Boeing 737 Max planes.
 Performance loss due to grounded flights: since the Boeing 737 flights has been
grounded as a precautionary measure, to prevent further incidents, this caused
significant performance loss to the airlines companies as they could no longer operate
this aircraft.
 Stress and resentment in workforce: since several of the aircrafts were grounded it
caused loss of employment for a significant part of the workforce. Moreover, the risks
of the accidents also resulted in a stress among the flight attendants who felt they are
taking life risk in the line of work.
 Lack of effective research, development and testing: due to the lack of effective
research a development and testing the fault with the MCAS system could not be

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identified on time due to this these issues remained unresolved and caused the two
aircraft accidents.
(Frynas and Mellahi 2015; Morschett et al. 2015)
Part 2: Application of the focal strategic issue to own organizational context
The incidents of multiple airplane crashes for Being 737 Max showed an important focal
strategic issue of the inability of the management to foresee this incident and prevent its
occurrence. Considering the significant loss of life as well as the erosion of trust that occurred
due to this incident implies an immediate action from the organization’s leadership to address
the concerns of the people as well as the employees.
Within the organization where I work for (Algorithm SAL) this [articular focal issue implies
that to maintain the focus of the organization towards its mission and goal of helping patients
or service users to improve their own health, the organization should focus on thorough
research and development and testing of its products and services rigorously before being
made available for the consumers. Effective research and development on medications can
help to understand and mitigate certain risks and side-effects associated with some
medications as an approach to prevent any adverse effects caused from the medicine.
Algorithm SAL has a wide variety of health care products and services that it disperses for its
customers. Many of these medications are critical and important for the treatment of several
serious health conditions due to which it is important that those products are properly tested
as well as given before the expiry date. Furthermore, the research and development using
clinical trials can help to understand how the drug functions and the possible effects that can
occur due to interactions with other drugs. This in turn can improve a sense of clarity among
the customers or patients helping them to understand the best methods or strategies to use the

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medications to prevent or mitigate its adverse effects as much as possible (Meyer et al. 2017;
Hill 2017).
SAL should also involve a strong leadership that can guide the organization through
situations of untoward incidents, as seen in case of Boeing crashes in order to prepare the
organization to step-up and take decisive actions within a shorter amount of time thereby
showing a sense of pro-activeness and accountability among the leadership for such incidents
(Arumugham 2019). The leadership is responsible to provide a strategic direction for the
organization, support better engagement among the employees and guide them through a
shared vision. Within Algorithm SAL an effective and strong leadership can provide a better
direction to the organization in how to ensure safety of the products and services through
better design process and setting up of standards of practices within the organization
(algorithm-lb.com 2019).
Addressing the reduction of trust from the customers is also an important point of focus for
Algorithm SAL because it can significantly affect the market position of the organization and
lose its competitive advantage over other businesses. As seen with Boeing, the crashes which
have significantly reduced the performance of the organization in terms of flight bookings, it
can also be implied that a lack of safety within the health care products can also cause a loss
of profitability for SAL due to an erosion of trust among customers. It can also be pointed out
that SAL should focus on the mitigation of adverse effects from its products and thereby
increase its safety and maintain the trust of the customers. The company can additionally
show a high-level of concern about the health and safety of its patients through its proactive
approach of identifying, addressing and reducing risks of faulty products (Ginter et al. 2018).
Part 3: Reflection and analysis of possible second level impacts from the focal strategic
issue

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The second level impact that can occur due to the two crashes of Boeing 737 includes the
following:
 Increased regulatory pressure from governing bodies: due to the recent incidents of
plane crashes restrictions of the governing bodies that are responsible for the safety of
the flights and the passengers have increased significantly as the authorities have
increased their focus on Boeing due to these incidents. Within the given organization
SAL a failure to maintain the safety of the medicines can also cause similar increase
in regulatory stress from the governing bodies.
 Layoffs of employees: the incidents of crashes of the two Boeing planes have also
resulted in layoffs for several employees due to complaints of their infectivity or
inability to take the right actions thus showing a lack of competency. The employee
layoffs can further increase resentment among the workforce, create disengagement
and thereby affect performance. This aspect is focused by the management of SAL
while taking any corrective actions on adverse incidents.
 Loss in market position: the market position of Boeing has been critically damaged
because of these accidents even though the organization has been able to maintain a
good reputation and high levels of flight safety standards before the incidents.
Competitors within the same sector who has lesser market success thereby gained a
market advantage as their flights did not suffer the same casualties and accidents.
Within Algorithm SAL, a loss in the market position can occur if the products results
in adverse effect or harm to the patient. Due to this its position from the 2nd biggest
leader in pharmacy can be challenged.
 Implication of change management: the issue also has a significant implication on
change management as the organization needs to overcome the problems and
challenges that adversely affect its performance as well as reputation by implementing

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change management strategies through which an organization wide change can be
implemented to improve its products and service.
 Callback of faulty models: another second level impact that can occur due to such
accidents is the call back of the models which are feared to have problems to prevent
it reoccurrence. This increases the number of grounded flights even though those
flights might not be entirely faulty. On a similar context problems with the medication
safety of SAL can reduce in several of its products remaining stagnant or being
removed from the shelf thereby causing a loss for the business.
 Additional expenses to address a mitigate the problem: in order to prevent or mitigate
the issue of the faulty product organization has to spend additional resources on
research and development in order to redesign and thus mitigate the problem with the
product and overcome its risks.
 Lawsuit: the incidents can also lead to lawsuits from customers, consumers,
employees and even concerned stake holders. Considering that the products of SAL
are important for the health and wellbeing of the patients, products that are not
adequately tested and that can increase health risks can lead to lawsuits and legal
actions taken against the company.
(Moutinho and Vargas-Sanchez 2018; Hill 2017)
Part 4: Research and application of theoretical frameworks to focal strategic issue
Theoretical framework provides businesses with a strategy and a structured approach to plan
and manage performance so as to optimize the organizational processes through which the
performance productivity, efficiency, competency and skills of the employees or workforce
can be improved. Theoretical frameworks and application of research can therefore be used

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by SAL in order to improve its performance as well as safeguard the organization and the
consumers from untoward incidents (Noe et al. 2017).
The theoretical framework that can be used by both Boing as well as SAL to ensure optimum
standards of its products and services in terms of safety and quality can be ensured by
facilitating a change in its environment through both strategic management as well as
innovation management. Through strategic management, using open and close strategy, a
strategy model can be developed for the business to ensure better product and service quality.
The innovation management on the other hand can be used to develop and innovation model
through which new approaches can be developed to further enhance fault tolerance and
resilience in the product. The strategy model and the innovation model can thereby be used
to improve the utilization of resource and capabilities and in the strategic management of the
model and process of innovation within the organization. This approach in turn can increase
the competitive advantage for the business and help it to develop or create value for the
customers and capture value for the products. SAL can utilize this theoretical framework to
bring about a positive change in the organizational environment through both strategic as
well as innovative focuses (Ginter et al. 2018).

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Figure: Theoretical framework for management logic. Source: Ginter et al. 2018
In order to improve the supply chain management system and make it more sustainable, the
theoretical framework for SCM can be used to divide the operations into three segments
namely, contextualizing, analysis and development and application. In order to contextualize
both the external and external context needs to be understood. For effective analysis and
development, the scope of application informed by sustainability definitions and
implementation ideas are utilized to develop a case analysis. Finally, for the application of the
products and services, leadership, innovation, integration, improvement and compliance
should be focused on by the organization. This approach would allow optimizing the supply
chain management system and thereby adding more value for the customers (Ansoff et al.
2018; Wheelen et al. 2017).

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Figure: Theoretical framework for the Supply Chain for Algorithm. Source: Ansoff et al.
2018
Conclusion:
From the study above it can be understood that the Boeing crashes that occurred in Ethiopia
and Indonesia causing a lot of casualties and also eroded the image of the company, was of
significant strategic important for both Boeing as well as any other organization in the service
r the manufacturing sector. This incident helps to impress upon the fact that effective testing
an research on products and services in necessary to ensure its safety and prevent the risks of
accidents or undesirable results in performance. Within health care this is also an important
aspect as effective product testing and trails are necessary to ensure that the products do not
cause any adverse health effect on the customers. Effective leadership and a focus on the
organizational culture and environment can be an important theoretical approach by which
strategic innovative ideas can be implemented within the business process in order to mitigate
such risks.