Boeing Corporation overview and operations

Boeing NYSE:BA) is one of the world's leading manufacturers of commercial and defense-related jets, space, security and; logistical systems and platforms globally. At the close of their latest fiscal year, Boeing generated $64.3B in revenue, earning $3.3B in Net Income. The company has an outstanding reputation with institutional investors globally, with an astounding 73% of its stock institutionally owned and a market cap as of July, 2011 of $51B. During its latest full fiscal year (FY 2010) the company won 530 net orders for new commercial airliners, beating out Airbus and other global competitors (Donnini, 2010). Boeing continues to aggressively invest in quality management and operational efficiency programs to increase production, leading to 462 commercial aircraft delivered in 2010 (Parks, Connor, 2011). Most impressive regarding the company's ability to trim costs and increase profitability is the sustained backlog of 3,443 commercial aircraft valued at $256B (Benassy-Quere, Fontagne, Raff, 2011). In FY 2010 Boeing also delivered 115 military jets and associated aircraft to governments globally, two space launch vehicles and four satellites. This data is from the company's filings with the Securities and Exchange Commission (SEC) through 10Qs and 10Ks. At the close of FY2010 according to the filings with the SEC, Boeing as a $65B backlog for its Aerospace and defense-related systems and platforms. The intent of this analysis is to evaluate how Boeing is performing today including an analysis of their strengths and weaknesses, and where they need to take their product strategy in the future.

Analysis of Boeing Performance including Strengths and Weaknesses

Boeing continues to aggressively pursue any competitive advantage it can against its primary competitors including Airbus, BAE Systems PLC (UK-based company), Lockheed Martin Corporation, Northrop Grumman Corporation, Raytheon Company, EADS and General Dynamics Corporation (Donnini, 2010). Each of these companies averages Net Profit Margin and Operating Margin below 10%, which translates into a highly competitive industry in terms of project costing, timeframes for delivery of products and quality management (Parks, Connor, 2011). Over time Boeing's business model has become quite complex as it operates in six business segments, each having its own pricing and foreign exchange profitability issues to contend with (Benassy-Quere, Fontagne, Raff, 2011). The greatest competitive strength Boeing has today is its strong market position, supported by technological leadership in six key business segments. These segments include the following with percentage of revenue in percent: commercial airplanes (49.3%); military aircraft (22.1%); network and space systems (14.6%); global services and support (12.8%); Boeing capital corporation (1%); ancillary businesses (0.2%). Across all six business units the company generated a Return on Assets (ROA) of 4.8%, Return on Equity (119.7%) and Return on Investment (ROI) of 23%. In addition, corporate-wide profits were significantly up for the latest fiscal year, with Pretax Profit Margin up to 7% from 2.9% the previous year, and Net Profit Margin up to 5.1% from 1.9% the previous fiscal year. For all full financial analysis of the last five years of Boeing's financial history, please see the Appendix for The Boeing Company Ratio Analysis. While the company continues to excel at profitability, the areas of improvement include Days-to-Sell Inventory, which grew to 147 days in FY201, and Operating Cycle (time from taking an order to fulfilling it and getting paid) increased from 138 days to 180 days in FY2010. These financial results underscore how critical it for the company to continually invest in improving operational performance to overcome slow sales in certain business segments

(Joiner, 2009). Heavy investments in quality management and compliance are necessary to reduce these costs over the long-term as well (Parks, Connor, 2011).

The greatest strengths of Boeing include its strong market position in the commercial aircraft market (Donnini, 2010), high percentage of spending on R&D, which led the industry in FY 2010 with $4.1B spent on primary research (Parks, Connor, 2011) and continued spending on agile product development and operational efficiency programs including Six Sigma and lean manufacturing (Joiner, 2009). The greatest weaknesses include past delays in commercial aircraft development impacting the current backlog, costing nearly $25M in lost orders to competitors (Donnini, 2010) (Benassy-Quere, Fontagne, Raff, 2011) and continued labor relations costs and conflict (Donnini, 2010).

Conclusion and Future Strategy