Question

Prepare a short PESTEL Analysis for Boeing. Please analyze the macro issues with the lens of Boeing.

Answer 1

1. Political Factors-----------Political factors play a significant role in determining the factors that can impact The Boeing Company's long term profitability in a certain country or market. The Boeing Company is operating in Aerospace/Defense Products & Services in more than dozen countries and expose itself to different types of political environment and political system risks.

• The level of political stability that the country has in recent years.
• The integrity of the politicians and their likelihood to take part in acts of corruption, as the resulting repercussions may lead to possible impeachments or resignations of high level government employees.
• The laws that the country enforces, especially with regards to business, such as contract law, as they dictate what The Boeing Company is and is not allowed to do. Some countries, for example, prohibit alcohol or have certain conditions that must be fulfilled, while some government systems have inefficient amounts of red tape that discourage business.
• Whether or not a company’s intellectual property (IP) is protected. For example, a country that has no policies for IP protection would mean that entrepreneurs may find it too risky to invest in The Boeing Company
• The trade barriers that the host country has would protect The Boeing Company; however, trade barriers that countries with potential trade partners would harm companies by preventing potential exports.
• A high level of taxation would demotivate companies like The Boeing Company from maximizing their profits.
• The risk of military invasion by hostile countries may cause divestment from ventures.
• A low minimum wage would mean higher profits and, thus, higher chances of survival for The Boeing Company

2. Economic Factors---------Economic factors are all those that pertain to the economy of the country that The Boeing Company, such as changes in the inflation rate, the foreign exchange rate, the interest rate, the gross domestic product, and the current stage of the economic cycle.

• The economic system that is currently operational in the sector in question- whether it is a monopoly, an oligopoly, or something similar to a perfect competition economic system.
• The rate of GDP growth in the country will affect how fast The Boeing Company is expected to grow in the near future.
• The interest rates in the country would affect how much individuals are willing to borrow and invest. Higher rates would result in greater investments that would mean more growth for The Boeing Company
• However efficiently the financial markets operate also impact how well The Boeing Company can raise capital at a fair price, keeping in mind the demand and supply.
• The exchange rate of the country The Boeing Company operates in would impact the profitability of The Boeing Company, particularly if The Boeing Company engages in international trade. The stability of the currency is also important- an unstable currency discourages international investors.
• A high level of unemployment in the country would mean there is a greater supply of jobs than demand, meaning people would be willing to work for a lower wage, which would lower the costs of The Boeing Company.

3. Social Factors------------

• The demographics of the population, meaning their respective ages and genders, vastly impact whether or not a certain product may be marketed to them. Makeup is mostly catered to women, so targeting a majority male population would be less population than targeting a population that is mostly female.
• The class distribution among the population is of paramount importance: The Boeing Company would be unable to promote a premium product to the general public if the majority of the population was a lower class; rather, they would have to rely on very niche marketing.
• To some extent, the differences in educational background between the marketers and the target market may make it difficult to relate to and draw in the target market effectively. The Boeing Company should be very careful not to lose the connection to the target market's interests and priorities.
• The Boeing Company needs to be fully aware of what level of health standards, reactions to harassment claims and importance of environmental protection prevail in the industry as a whole, and thus are expected from any company as they are seen as the norm.

4..Technological Factors--------Technology is fast disrupting various industries across the board. Transportation industry is a good case to illustrate this point. Over the last 5 years the industry has been transforming really fast, not even giving chance to the established players to cope with the changes. Taxi industry is now dominated by players like Uber and Lyft. Car industry is fast moving toward automation led by technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at which technology disrupts that industry. Slow speed will give more time while fast speed of technological disruption may give a firm little time to cope and be profitable. Technology analysis involves understanding the following impacts -

• Recent technological developments by The Boeing Company competitors
• Technology's impact on product offering
• Impact on cost structure in Aerospace/Defense Products & Services industry
• Impact on value chain structure in Industrial Goods sector
• Rate of technological diffusion

5. economic factor------------

• The current weather conditions may significantly impact the ability of The Boeing Company to manage the transportation of both the resources and the finished product. This, in turn, would affect the delivery dates of the final product in the case of, say, an unexpected monsoon.
• Climate change would also render some products useless. For example, in the case of textiles, in countries where the winter has become very mild due to Global Warming, warm winter clothes have much less of a market.
• Those companies that produce extremely large amounts of waste may be required by law to manage their environmental habits. This may include pollution fines and quotas, which may place a financial strain on The Boeing Company
• If The Boeing Company should (knowingly or unknowingly) contribute to the further endangerment of an already endangered species may face not only the consequences from the law but also face a backlash from the general public who may then boycott The Boeing Company in retaliation.
• While relying, in any percentage, on renewable energy may be expensive, it often receives support not only from the government but also from its customer base, who may be willing to pay a premium price for the products that The Boeing Company may produce.

6. legal factor------ the legal framework and institutions are not robust enough to protect the intellectual property rights of an organization. A firm should carefully evaluate before entering such markets as it can lead to theft of organization’s secret sauce thus the overall competitive edge. Some of the legal factors that The Boeing Company leadership should consider while entering a new market are -

• Anti-trust law in Aerospace/Defense Products & Services industry and overall in the country.
• Discrimination law
• Copyright, patents / Intellectual property law
• Consumer protection and e-commerce
• Employment law
• Health and safety law
• Data Protection