This Boeing PESTLE analysis examines the external factors affecting the airline's performance, such as political, legal, and environmental ones.
Hello readers, welcome onboard! Fasten your seat belts since we are about to take off. You must be feeling as if you are sitting in a plane that is about to take off. Well, that's how you feel while sitting in one of the world's biggest Aeroplanes, the Boeing 747.
When you hear the name Boeing, the first thought that enters your mind would be that the company is a large-scale manufacturing company that manufactures Aeroplanes.
This thought is partly correct since Boeing manufactures Aeroplanes, but not just the Aeroplanes. Boeing is divided into four divisions. One of the famous divisions is Boeing Commercial Airplanes which manufactures commercial Aeroplanes.
Besides the obvious, its other division, Boeing Defense, Space, and Security, is one of the world's biggest defense contractors. It manufactures missiles, military aircraft, satellites, and space launch vehicles.
Other than providing Aero products, Boeing also provides aftermarket services such as maintenance to customers under Boeing Global Services. These services are provided to customers who purchase products from its other two divisions.
Last but not least, one of its subsidiaries, Boeing Capital, operates in a completely different field. This subsidiary offers financial services such as loans and leases to its clients.
After looking at such a diverse portfolio of Boeing, we decided to conduct a Boeing PESTLE analysis to investigate the external factors that affect such a huge corporation.
Some of you guys who are not familiar with this term must be thinking about what PESTLE analysis is. Don't worry, as we will proceed further you will get to know everything.
PESTLE analysis is a business tool used to identify some of the external factors such as political, economic, social, technological, legal, and environmental factors that affect an organization's operations.
Before we proceed with the PESTLE analysis, let's look at the history of Boeing and its current status in the market.
The Boeing Company was created in 1916 by William E. Boeing, an American lumber industrialist. Initially, It began as Aero Products company in Seattle, US. Later, the company moved into aircraft production.
Currently, Boeing is considered the number one Aerospace and defense company globally in terms of revenue. In 2021, Boeing managed to generate revenue of $62,286 million. The company operates in more than 65 countries while providing jobs to more than 140,000 employees in the US.
Now, after you've learned about Boeing's history and current operations, this is an excellent time to proceed with our PESTLE analysis.
Political Factors
Many political factors impact a company's long-term profitability and sustainability.
Since Boeing operates in more than 65 countries, exposing itself to different political environments and systems, it should keep a close eye on the political factors that could impact the smoothness of its operation overseas.
Political stability is an essential element in the quest for business success. It provides a stable and friendly environment, which will help businesses conduct their operations smoothly and efficiently.
Political chaos and abrupt changes in aviation policies can damage Boeing immensely.
For example, the European Union has banned several airlines from operating in the EU. Due to such disruptions, Boeing may face a fall in demand for its aircraft, which will lead to a drop in its revenues.
Moreover, due to the recent Russia-Ukraine conflict, Boeing stopped buying Titanium from Russia. Boeing relied 35% on Russian Titanium, this self-imposed ban could lead to disruption in its supply chain and could harm the operations of Boeing.
Another political factor that plays a vital role in smooth business operations is transparency and good governance.
Corruption and bad governance negatively influence the business environment. Companies that operate in countries with high corruption and weak law enforcement face additional challenges for their business.
Operations of Boeing can get affected due to corrupt business practices. Moreover, fake lawsuits and controversies can damage the reputation of Boeing internationally.
Economic Factors
This section of the PESTLE analysis highlights some of the economic factors that significantly impact businesses.
Like any other organization, economic factors have a significant impact on Boeing. For example, if the foreign exchange rate is down, it will impact its operations and, consequently, its profitability. Similarly, any rise in interest rates can adversely affect airlines that rely heavily on debt financing.
The economic condition has a significant impact on an organization's operations. Emerging economies provide an excellent opportunity for Boeing to tap the undiscovered markets.
The expansion of Boeing's operations will help the Aerospace company to generate significant revenues and increase its clients.
As a global manufacturing and service provider, Boeing relies on macroeconomic factors to determine its growth strategies.
GDP growth rate and exchange rate can influence Boeing's long-term growth strategies, whereas the interest rate can either help or hinder Boeing's future profitability.
Countries with high GDP growth rates indicate that people consume more in the economy. Therefore, increased consumption can be really beneficial for Boeing since this can increase the demand for its products. As a result, Boeing's revenue will increase.
Another critical economic factor that has affected every business is high global inflation. A high rate of inflation is being observed all across the globe after economies are trying to make up for the losses they incurred during COVID-19.
This global inflation has increased the cost of operations of businesses. Looking at how inflation is increasing day by day, Boeing may increase the price of its products and services to fight off the increase in the price of its inputs.
Social Factors
Social factors are important determinants of human behavior, and they represent the norms, values, and customs of a society.
To run a business successfully in any country, companies need to know the socio-cultural factors that can impact their operations.
An important social factor that is under discussion nowadays is gender roles. Gender roles vary from society to society. Before entering a market, Boeing should analyze what sort of roles are assigned to what gender to make HR and marketing strategies accordingly.
Moreover, different societies have different practices and norms. For example, China has the highest percentage of salaries spent online. In such countries, opening a physical store might not be that effective. Boeing should think of making its online store available to countries that shop online mostly.
Furthermore, each society has different power distance and equality levels within organizations. Therefore, before starting its operations in any society, Boeing should really look at these factors to make organizational policies accordingly.
Besides the factors discussed earlier, the demography of societies varies so much. Due to these demographic changes, consumer behavior also differs from one country to another.
Studying consumer behavior to predict the response of the customers is very important. Boeing should analyze this behavior before entering the market to see whether its products and services will be consumed in a particular society.
Technological Factors
Technological factors are considered the fourth segment of the PESTLE analysis. As a new wave of technology is being witnessed around the globe, the influence of technological factors on businesses has increased.
Boeing should pay attention to the new technological developments in order to gain a competitive edge over its competitors.
Lately, information and communication technologies have led to innovation in marketing techniques to enhance collaboration with customers. Social media has become a standard tool for modern business environments.
Boeing can avail of this opportunity to use social media for its marketing campaign to get feedback from its customers. This is a very effective marketing strategy and helps increase Boeing's revenue.
Moreover, Boeing should pay close attention to technological innovations in the future. You guys must have heard people saying, "There's a bright future ahead." Trust me, guys, keeping 5G in mind, they were right.
The 5G technology is the most important innovation in the wireless industry. It can improve the user experience, increase data speed, and deliver broader access to Boeing's products and services. If Boeing makes the most of this 5G technology, no one will be able to compete with it.
Where technology provides so many opportunities to Boeing, it has damaged Boeing's operations to some extent.
Development of new products takes time. However, the development cycle has shortened to such an extent that companies can no longer afford to take their time. This trend puts pressure on Boeing to increase the number of new products.
Legal Factors
Legal factors are considered among the top factors that could impact a company. When a country operates in several countries, it has to be very careful since the laws of every country vary.
To stay out of trouble, Boeing needs to abide by the laws of the countries where it operates.
In recent times, employee protection laws are considered very sensitive. However, Boeing must follow employee health and safety laws to stay out of trouble as a large organization.
Some countries, like Australia, have strict regulations to ensure labor safety. Boeing must provide a secure working environment for the workforce, which is Boeing's ethical and moral obligation.
Similarly, anti-discrimination laws like equal employment opportunity also need to be carefully studied when developing human resource practices as discriminatory suits against employers harm the organizational image.
Another law that is considered very sensitive is the data protection law. Boeing needs to protect customer data from attacks and violations by hackers, or else heavy fines or even bans can be imposed, similar to Facebook.
Boeing must study data protection regulations to ensure customer privacy and security. Moreover, there are laws to set the maximum price, guarantee a certain quality standard, and protect consumers from fraudulent marketing claims. Therefore, Boeing must consider these factors to ensure compliance with consumer protection laws.
Environmental Factors
This last segment of PESTLE highlights environmental factors that affect an organization's operations.
Environmental laws and standards vary from country to country. However, since Boeing operates in many countries, it should know what environmental factors will impact its business.
Airlines emit 11% of the total greenhouse gases. Boeing should take notice to find ways to mitigate the emission of greenhouse gases. This will help the entire world fight the war against global warming. It'll also create a positive image of the company.
Boeing also has an opportunity to apply green innovation to its products and services. As Boeing continues to innovate, it must consider all applicable environmental regulations. Stakeholders are beginning to place a greater emphasis on developing eco-friendly products.
There is a growing trend towards the use of green/eco-friendly products. The environmental management provisions demand that Boeing integrate sustainable development practices into their manufacturing processes, product design, and delivery of services processes to comply with government mandates.
Boeing PESTLE Analysis: Final Thoughts
We started off this article by giving you an insight into Boeing and its operations. After you guys got to know about the history of Boeing and what it has achieved till now, we moved on towards the PESTLE analysis of Boeing.
We then conducted a PESTLE analysis of Boeing to see the external factors that impact its operations.
Through the PESTLE analysis framework, we learned about the political, economic, social, technological, legal, and environmental factors affecting Boeing.
Although this PESTLE analysis has highlighted all the external factors that impact Boeing, if you're curious to know both the external and internal factors affecting Boeing, then look at the Boeing SWOT analysis.
With the help of this article, we hope you got the information about Boeing and learn about PESTLE analysis. To get more clarity about PESTLE analysis, go through some of PESTLE analysis examples.
