The Boeing Business Strategy Model Explained

You’ve probably heard of Boeing but how familiar are you with the company’s business strategy model? The company seems to have a basic business plan. Boeing designs planes then sells them. This seems like a very basic model. However, it’s important to look closer at the company’s business strategy model to learn why it’s achieved success. In particular Boeing has had strong sales cycles due to some aircraft selling well for many decades. This is a “virtual cycle” and part of its business strategy model.

A virtuous cycle is a group of decisions that result in a company being able to compete with rival companies. In the case of Boeing it only has one main competitor. This has made it easier to use a quality virtuous cycle.

Boeing’s 747 aircraft has allowed it to have a virtual monopoly on the passenger transport market. In fact, up to 70 cents of each dollar that Boeing has earned since the 1969 unveiling of the aircraft has originated from the 747 plane. This is key to the company’s business strategy model.

The virtuous cycle can help companies to achieve success that’s been present in Boeing’s business model. When a company uses an effective virtuous cycle the other competing companies can be put into a cycle. The result is higher profits that are experiencing virtuousness.

It’s important to know the virtuous cycle to figure out Boeing’s business strategy model. The part of the cycle is built to promote an environment that’s more efficient. The result is each cycle is usually lower product costs via improved manufacturing methods. It’s common to see jobs cut as profits increase. That’s because fewer workers are required to produce the same products.

There are actually 6 steps of a virtual cycle. They include higher production efficiency, lower costs, lower prices, higher outputs, learning curve, and economy of scale changes. You can do some reading about the specifics of these changes.

It’s important to know how Boeing keeps its virtuous cycles continuing. This also helps to understand the company’s business strategy model. Boeing is always reviewing innovation, manufacturing methods, and new markets to boost profits.

Boeing makes money in markets other than passenger airlines. That includes a spacecraft division, startup airline consulting, etc. There’s a virtuous cycle for each niche industry.

There should be enough flexibility in order to adjust to changes in conditions. For example, when Airbus unveiled the 380 aircraft, it weakened Boeing’s virtuous cycle for the 747. Boeing then focused on other cycles that could be boosted such as the 787 Dreamliner or mid-size aircrafts. Adding strength when there’s a weakness will help to keep the company strong.

Boeing uses multiple cycles at one time. That creates profits with every feedback loop that’s completed. Boeing has figured out that the same cycles are able to spin within employees and produce better services/quality products.

Improved training results in more empowerment. That results in improved services. Better services can result in happy customers and higher customer loyalty levels.

This is how Boeing has used an effective business strategy model over the years.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s