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BCG Matrix Boeing Case Solution

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Boeing is one of the largest aerospace companies in the world. It is a leading manufacturer of commercial airplanes, security systems, defense, and spacecraft. It also offers customized product development for its customers which are major airlines and governments of more than 150 countries. It focuses on business growth with ever-expanding subsidiaries to cater to customer needs with its products as well as services (Boeing, 2019). 

The BCG Matrix assesses business segments on the basis of market share and market growth. It is a useful tool for strategic planning of business investments according to high yielding businesses (Enz, 2010).

Following questions are answered in this case study solution

  1. Introduction

  2. Boeing Business Segments

  3. BCG Matrix

  4. Analysis

  5. Appendix

Case Analysis for BCG Matrix Boeing

Boeing’s business is characterized by innovation and global operations according to its annual report (Boeing, 2018). However, the company claims will be assessed in this report where the business segments of Boeing will be charted onto the BCG Matrix on the basis of an analysis of the market share that each segment holds and the growth opportunity. 

2. Boeing Business Segments

Boeing has 282 subsidiaries in several locations worldwide. These locations include the United Kingdom, Germany, Australia, West Indies, France, and Korea (SEC, 2018). 162 out of the 282 subsidiaries are located in the state of Delaware, the USA where Boeing has been incorporated since 1934 (Boeing, 2016). According to Boeing’s annual report, the company is not in search of a new market. This is because existing market opportunities and growth rate of the demand are so high that in the next twenty years, Boeing has forecasted that it will double its existing commercial airplane fleet. Furthermore, Boeing stated that it has the objective to increase its share in the services industry (Boeing, 2018). 

Boeing’s subsidiaries are classified into four business segments which are:

  1. Commercial Airplanes

  2. Defense, Space, and Security

  3. Global Services

  4. Boeing Capital (Boeing, 2018)

These business segments will be assessed in detail and then classified into the BCG Matrix. 

Commercial Airplanes

Boeing is the market share leader in the commercial airplanes industry since the last seven years. Furthermore, Boeing has forecasted that over the next twenty years, the market growth of the industry will result in the fleet of commercial airplanes increasing to almost double the current fleet of airplanes (Boeing, 2018). This shows that the market share of commercial airplanes is high and the growing demand of the commercial airplane fleet shows that the market growth rate is also in elevation. 

However, the recent 737 MAX 8 crashes have resulted in China as well as ten other countries to ground the MAX airplane (The Washington Post, 2019). As a result, the second-quarter results of 2019 show reduced commercial airplane deliveries and about 66% reduction in revenues in the commercial airplane sector. However, Boeing is focusing on taking measures to assure that its planes once again join the fleet of operating aircrafts by partnering with the Federal Aviation Administration which certifies Boeing’s planes for airworthiness (Boeing, 2019a). The following table shows the comparison of the first half and the second-quarter results of 2018 and 2019 for commercial airplanes. 

Defense, Space, and Security

Boeing’s defense, space, and security business unit is the world’s second-largest defense company. It has a diverse portfolio of products which includes missile systems, surveillance, and vertical lift. Among these products, Boeing is the world’s largest satellite manufacturer with 60 years of expertise in space exploration (Boeing, 2019b). Lockheed Martin is the top manufacturer of defense systems in terms of sales of $44.9 billion. There is a wide gap between the sales of Lockheed Martin, and Boeing, the second top defense company. In terms of sales, Boeing stands at $26.9 billion (Macias, 2019). 

The defense market is rapidly growing with its value forecasted to exceed $10.5 billion by 2023. Whereas, its value in 2014 was around $6 billion (Global Market Insights, 2019). The space market is forecasted to grow at a rapid rate because of technological innovations. It is forecasted to double in value by 2030 from $400 billion today to $805 billion in valuation by 2030. This is because ideas such as long-haul space travel, and space tourism will be realized by then. Long-haul space travel is also predicted to cannibalize current long-distance flights using commercial airplanes (Sheetz, 2019).

Global Services

Boeing’s global services business unit comprises of the world’s largest supply chain which assures that delivery is agile, cost and time-efficient. Boeing gathers and analyses data in order to assure that the delivery is prompt and cost-efficient. This is done by matching and effectively analyzing crew schedules. Boeing states that it saves $1 billion per year with effective data analytics. Its global solutions unit also consists of maintenance and engineering services present in over 65 countries. It also delivers training solutions in 30 countries. Furthermore, Boeing states that it delivers solutions regardless of the manufacturer to governments worldwide. Boeing’s global services is an after-sales solution for its customers. This is for both commercial and defense customers and increases the product life-cycle in a cost-efficient way (Boeing, 2019c). 

In 2018, Boeing Global Services completed one year of its operation and reported a growth of 17%. It won new contracts of maintenance and modifications of the existing fleet of the US Navy (Boeing, 2018). 

With the aviation industry expanding rapidly, the market growth rate of maintenance services has also grown. As a result, in the past few years, airplane manufacturers have begun in-house maintenance, repair, and overhaul services (MRO) which was formerly assigned to third parties. Because of changes in technology, MRO service expenses have increased. In-house MRO services will enable top quality services (Cooper, Prentice, & Stewart, 2019).

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