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2.0 Strategic Situation Analysis

In order to understand the nature of aircraft manufacture at Boeing, it is important to have a clear vision of how outsourcing plays into the manufacture of aircraft. Let us use the example of Boeing's Dreamliner. The following illustration explains how outsourcing plays a key role in Boeing's business strategy. These represent TIER 1 suppliers.

Figure 1.

Source http://seekingalpha.com/article/17727-boeing-s-outsourcing-for-the-787-dreamliner

From here, the parts go to the plant in Everett and are assembled by TIER 2 suppliers as follows:

Source: http://seekingalpha.com/article/17727-boeing-s-outsourcing-for-the-787-dreamliner

These two illustrations clearly help to develop an understanding of the relationship between TIER 1 and TIER 2 suppliers at Boeing.

2.1 SWOT Analysis:

SWOT analysis is a planning method used to evaluate a company's strengths, weaknesses, opportunities and threats. In a business analysis, all of these factors are analyzed for the company under study and their competitors. This analysis allows the researcher to see both favourable and unfavourable factors that influence the chances for a project or new business venture's success

. In order for SWOT analysis to be effective, the objectives of the business must be clear (Mooney, p. 1). In this case, the business objective is to gain Boeing as a major customer. SWOT analysis is one of the most important planning models.

SWOT analysis is divided into two major sections: internal analysis and external analysis

. Internal analysis includes strengths and weaknesses. Strengths refer the characteristics of the business that give it a decided advantage over its competition. Weaknesses are those characteristics that place them at a disadvantage as compared to their competitors. External analysis refers to those factors that are beyond the company's control, but that can have an effect on their success. External analysis explores a company's opportunities and threats. Opportunities are factors that influence the company's ability to increase sales or profits. Threats are external elements that could create difficulty in the business's ability to reach their goals. Strengths and weaknesses are generally regarded as things that the businesses can control, whereas opportunities and threats are generally considered to be elements that the business cannot control

These are the basic principles of SWOT analysis and the theory behind this categorization process. This process will help the business to determine if the goals and objectives of the project are obtainable. This is only one analysis methods and should be taken into consideration with other analysis techniques. The following will explore SWOT analysis factors for Premium AEROTEC and their major competitors.

2.1.1 INTERNAL Analysis: Premium AEROTEC and Competitors

2.1.1.1 Premium AEROTEC -- Strengths.

Premium AEROTEC is already a world leader in the commercial and military aircraft structures manufacturing segment. It is known as a leader in the industrial sector for the development and application of new materials and technologies. Even though it is a new company, Premium AEROTEC is already gaining a reputation in the aerospace industry as a producer of quality components

. The there is no room for error in the aerospace business and trust is paramount to the success of the company. Premium AEROTEC is already becoming known as a product of that can be trusted for providing aircraft components that meet safety standards and that provide the greatest amount of trust among passengers.

Premium AEROTEC has certifications and approvals that meet EN9100-2001, ISO 9001-2000, and the technical equivalent of as 9100 and JHSQ9100

. It also has a BWB certificate to handle aeronautical equipment for the German Armed Forces. These high-level certifications are a key strength and allow it to gain a reputation in diversified areas of the market.

Premium AEROTEC as a small company compared to others in the industry. However, it is one of few that makes the specialized products that it offers. In terms of being a TIER I supplier, it is relatively small, but in terms of the products that it produces, it is unique. Premium AEROTEC makes one of the most critical components of the airplane and one that is high profile to every customer down the value chain. The painting on their products is clearly visible to those on the ground. Their products are highly visible not only to the end producer, but to the customer that will choose to board them. The fusilage must be able to withstand extreme stresses and pressures. It must be able to carry the required load and it must be able to withstand an impact should it occur. Premium AEROTEC's fuselages are the known for their ability to meet these specifications and to provide a sense of safety among their end customers, whether civilian or military.

Another key strength of Premium AEROTEC is that it offers a wide product line that serves the needs of both private and military sectors. This will be an essential marketing factor in the ability to the obtain a contract with Boeing. Boeing specializes in both private and military applications. Boeing produces a wide array of products and must have suppliers that are diversified enough to do the same. Premium AEROTEC's already wide product offering will give it a key strength in the ability to meet Boeing's demands and to attract Boeing as a customer.

2.1.1.2 Premium AEROTEC -- Weaknesses

Perhaps the greatest weakness that Premium AEROTEC has is that it is a new company. It is still of establishing its reputation, although to date, it has managed to the rise of the top quickly. Being a new company has several weaknesses. First is financial and the need to eliminate as much long-term debt as possible. Thus far, it has managed to build a good relationship with its customers and to establish considerable brand equity. However, it does not have the advantage of being a company that is been in the business for a long time. It still needs to establish itself as a quality producer of the components for the long haul. It can only do this with the passage of time and continued production of quality products. Building an established name requires time and effort. This will not happen overnight. At current time, Premium AEROTEC is on its way to achieving this goal, but it will be many years before it is known as a quality producer of TIER I components in the industry. In order to remain at the top, it must make certain that it avoids accidents caused by its products at all costs.

Another key weakness in the company is that it only four operating plants on a global basis. Boeingis a large company and has a much wider product offering and scope. The ability to meet Boeing's needs in terms of capacity of may be a key weakness in the ability to overcome the competition and to attract Boeing as a major customer. In order to build significant capacity, the company may have to take financial risks that it is not ready to take ar the current time, especially as it is a new company. Expanding is a capital intensive process and the company may not be able to obtain financing, or to be able to take the risks that will be needed in order to build the capacity expected by Boeing.

Premium AEROTEC is a major supplier in Europe and for the German Air Force, but it is not yet established in the United States. Several major competitors already have established brand recognition and a strong reputation in the United States. The presence of these suppliers in the United States is a key weakness in the establishment of a U.S. market. Premium AEROTEC might have a difficult time entering the United States market as it will not only have to establish itself as a supplier of the needed aircraft parts, it will have to unseat the competition. This competition has a strong hold and a good reputation already. It is not expected that price will be a key basis for competition, as safety and quality are more important. This weakness will be a key determining factor in the ability of the company to establish itself in the United States and to gain Boeing as a major customer.

Competition in the United States is well established and Premium AEROTEC is not listed among these competitors. Its main competitors in the United States are Spirit AeroSystems, Inc., Vought Aircraft Industries, and Goodrich. These companies are considered key competitors in the U.S. market and it will be difficult to break their oligopolisitc hold on the market. Premium AEROTEC have to break into this oligopoly and become one of the major suppliers in order to enter the market. Suppliers at this level of the industry are much like a cartel, even though such as prohibited on the U.S. And international market. However, among TIER I suppliers of in the United States, this is the type of market structure that exists. Although Premium AEROTEC has an excellent reputation in Europe, it is virtually unknown in the United States. Premium AEROTEC's competitors in the United States are a key weakness in its ability to…