1. Meeting Dossier – The Boeing Company

2. Global Aerospace and Defense (A&D) Industry Snapshot
Table of Content
Page
Global Aerospace and Defense (A&D) Industry Snapshot 3
Boeing - Profile 4
Business Overview
Business Segments
SWOT Analysis
Financials
Business Strategy
IT Strategy & Opportunities for ABC
Conclusion 14

3. Industry Snapshot

4. Global Aerospace and Defense (A&D) Industry Snapshot
Industry Structure
A&D Industry Segments
Commercial Aerospace
Regional Jet
General Aviation
Helicopter
Defense
Space
Key Industry Matrices – Revenue Vs. Operating Margin ( )
Market Share by Top Players
Company
Revenue
Share
Boeing
90.6
12.4%
Airbus
80.7
11.1%
Lockheed Martin 
45.6
6.3%
United Technologies
35.8
4.9%
GE Aviation
24.0
3.3%
Northrop Grumman 
Raytheon
22.8
3.1%
Others
405.5
55.6%
Global Aerospace and defense industry reported solid performance in FY 2014,with revenues of $729 billion and operating margin of 10.1%
The industry has shown consistent growth in revenue and profit during the last five years and expected to experience similar growth in near future
The industry is driven by increasing demand of commercial aircrafts in emerging nations of Asia-Pacific , Middle East and Africa
Source: PwC, Deloitte, KPMG Reports and News Articles

5. The Boeing Company - Profile

6. Geographic Revenue Split (2014)
Business Overview
Key Facts
Business Description
Founded In
Headquarter
Employees
Revenue
Net Income
CEO
1916
Chicago, Illinois
165,500
$90.8 billion
$5.4 billion
Dennis Muilenburg
Headquartered in Chicago Illinois, The Boeing Company (Boeing) is one of the leading aerospace firms in the world
The company manufactures and distributes commercial as well as defense aircrafts and also provides networking and intelligence solutions for defense industry
Boeing offers its products through three segments, namely Commercial Airplanes; Defense Space and Security (BDS) and Boeing Capital (BCC)
BDS segment operates through three sub-segments, namely Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S)
In FY 2014, Commercial Airplanes segment accounted for 65.7% of the company’s total revenue followed by BDS (33.8%) and BCC (0.5%) segments
Boeing has wide geographic presence. It offers its products in the US, Asia Pacific, the Middle East, Africa, Oceania, Latin America and Canada
In FY 2014, Boeing’s 42% revenue came from the US followed by Asia (13%), Europe (13%), China (12%), Middle East (10%), Latin America (3%), Africa (3%), Oceania (2%) and Canada (2%)
In October 2015, Boeing acquired Germany-based pilot-training software provider Peters Software GmbH
In September 2015, the company opened an advanced manufacturing research center in South Carolina, the US
Geographic Revenue Split (2014)
Source: Company Annual Report, Company Website, News Articles

7. Business Segments Boeing Corporation Commercial Airplanes
Corporate Structure
Boeing Corporation
Commercial Airplanes
Defense, Space & Security (BDS)
Boeing Capital (BCC)
Boeing Military Aircraft (BMA)
Network & Space Systems (N&SS)
Global Services & Support (GS&S)
Commercial Airplanes
The segment offers commercial jet aircraft and provides related support services, primarily to the commercial airline industry worldwide
BDS
The segment is involved in research, manufacturing and distribution of platforms and systems for defense and space industries
The segment operates through three sub-segments, namely BMA, N&SS and GS&S
Approximately 65% of the segment’s revenue came from U.S. Department of Defense in FY 2014
BCC
The segment arranges or provides finance for customers of Boeing products
Revenue Split by Segment (2014)
Source: Company Annual Report, Company Website, News Articles

8. SWOT Analysis Strengths Weaknesses
Research and Development Capabilities:
The company focuses on its efforts in the area of research and development in order to drive industry leading innovation
Boeing invested $3.0 billion, $3.1 billion and $3.3 billion in research and development activities in 2014, 2013 and 2012 respectively
In September 2015,it opened its research and technology center in South Carolina, the US
The company’s focused R&D initiatives could help it stay ahead of the competition
Global Presence:
Boeing has wide geographic presence. It offers products and services to customers in 150 countries
In the Commercial Aircraft segment nearly 70% of its revenue comes from outside the US
The company’s global presence mitigate the risk of overdependence on a single economy
Limitation in the Boeing 787 Dreamliner Project:
Production delays due to repeated technical issues faced in the company’s 787 Dreamliner project resulted in significant cash outflow
In May 2015, Boeing faced a challenge from software glitches that might result in the shut down of the Aircraft’s engine while flying
Previously Boeing also faced issues related to battery used in the aircraft
Delay and further cash outflow could impact the company’s bottom-line
Opportunities
Threats
Rising Demand in Emerging Markets:
Aerospace and defense industry presents growth opportunities in emerging nations in Asia-Pacific, Middle East and Africa
Rising popularity of low cost airlines, specially in China and India is expected to drive the demand for Boeing products in near future
In September 2015, Boeing secured orders worth $38 billion from China
Boeing could leverage such trend to expand its operations
Strong Order Growth:
Boeing’s strong backlog is expected to keep it busy in the coming years. As of December 2014 backlog was $502 billion.
Boeing’s strong order growth in 2014 is expected to continue in 2015 and beyond. Boeing expects to see ongoing demand for 22,000 aircraft in the next 20 years
Stiff Competition:
The company face stiff competitions from a number of international and domestic players
Some of the key competitors of the company include Airbus Group, Lockheed Martin Corporation, Northrop Grumman Corporation and Raytheon Company among others
Reduction in U.S. Defense Budget:
The Budget Control Act formed in 2011 posted several limits on defense spending
The US Government decided to reduce defense spending by $490 billion between 2012 and 2021
Boeing’s 65% of the revenue in its BDS segment comes from US Defense Ministry. As a result, the budget cut is expected to impact Boeing’s revenue in coming years
Source: Company Annual Report, Company Website, News Articles

9. Financials Annual Revenue, 2010-2014 ($billion) Key Insights
CAGR( ) = 7.1%
In FY 2014, Boeing reported solid financial performance with record revenue and strong bottom-line
The company’s revenue was $90.8 billion, up 4.8% Y-o-Y. The company revenue grew at a CAGR of 7.1% during
Boeing reported strong operating margin of 8.2%, increased from 7.6% previous year
It reported net income margin of 6.0%, as compared to 5.3% a year back
Operating Margin, ($billion)
Net Income Margin, ($billion)
Source: Company Annual Report, Company Website, News Articles

10. Segment Financials – Commercial Airlines and BDS
Commercial Airline – Revenue Vs. Operating Earnings,
$ billion
BDS – Revenue Vs. Operating Earnings,
$ billion
Financial Challenge
How ABC can help
Decreased Revenue and Operating Profit in the BDS Segment:
In 2014, the Defense, Space and Security (BDS) segment reported 7% decline in its revenue in 2014
According to a forecast by Boeing, the segment is not expected to report growth in revenues till the end of the decade, owing to budget cut in the US defense sector
The segment’s operating margin decreased to $3.1 billion in 2014, from $3.2 billon in 2013
ABC could help in building a solid ERP infrastructure that will keep Boeing updated about all the supply chain and CRM related information
This will help Boeing aggressively compete for all defense related orders
Design an advanced analytics platform that will help Boeing asses the profitable customers and focus on them
Use of advanced analytics will also help the company avoid unnecessary cost at every step of the value chain
Source: Company Annual Report, Company Website, News Articles

11. Business Strategy Focus Background and Initiatives Boeing - Strategy
Compete aggressively for new US military contracts
Due to US military budget cut, Boeing changed its strategic focus in its Defense segment
From July 2014 onwards the company focuses on aggressively compete for new US military contracts that could provide growth after 2020
Boeing now focuses on winning US contracts for a next generation long-range bomber and a trainer jet for the air force, and a surveillance drone for the navy that will fly off aircraft carriers
Boeing - Strategy
Focus on Emerging Markets to Drive Growth
Boeing aims to focus on emerging markets for driving growth in its commercial airline business
The company believes 48% of global air traffic in the future will come from the Asia-Pacific region driven by low cost airline
It reengineered 737 MAX, which will come to the market in 2017 with 14% more fuel efficiency
In the wide-body segment, Boeing’s strategy relies on its 787 Dreamliner, 777, and 777X aircraft
Invest on R&D to lead innovation
Boeing focuses on investing in its R&D efforts to enhance current and next-generation technology development
In 2015, the company opened its new research and technology center in South Carolina, the US
The new center will lead the company's research and development efforts in areas of advanced manufacturing
Source: Company Annual Report, Company Website, News Articles

12. Boeing’s IT Strategy and Opportunities for ABC
Boeing’s Two-pronged IT Strategy 1 2
Focus on building strong IT Operational Foundation
Invest in new generation technologies
The company’s long term IT goal is to build a solid operational foundation
Areas that Boeing is taking initiatives include ERP, corporate intranets and mobile technology among other
The company’s support division, Boeing Engineering, Operations and Technology ensures technology reediness of the company
Boeing’s IT strategy focuses on investing in modern generation technologies such as advanced analytics, additive manufacturing, cloud, 3D printing, internet of things and others
In May 2015, Boeing Defense, Space & Security is started a new data analytics organization to provide customers with new and advanced offerings for leveraging information technologies across its products and services.
Recent Industry Technologies
Internet of Things
Advanced Analytics
SMAC
3D Printing
Additive Manufacturing
Building SMAC* Environment
SMAC creates an ecosystem that helps a business to improve its operations and get closer to the customer
As an IT consulting firm, ABC can help Boeing set up its SMAC infrastructure
Areas where ABC can pitch
Other New-generation Technologies
ABC could help Boeing incorporate new generation technologies such as Internet of things, 3D printing, Advanced analytics and others
Note: * Social, mobile, analytics and cloud
Source: Company Annual Report, Company Website, News Articles

13. Conclusion

14. Conclusion
Boeing being one of the leaders in the A&D industry thrives to maintain state of the art technology infrastructure. The company’s Boeing Engineering, Operations and Technology division ensures that the company is in pace with the modern trends in the information technology space
ABC being a IT consulting firm could help the company in setting up an IT organization that could help Boeing beat the competition
Source: Company Annual Report, Company Website, News Articles