Running head: THE BOEING CASE STUDY The Boeing Case Study Abstract This Chapter examines the stress of change and the effect stress may have on ethical practices in the areas of resource management- Pay, Product, and the Environment.
Citation is utilized from publically available information from The Boeing Company’s web site, Boeing’s 2007 Annual Report, Current Market Outlook 2009-2028, and the 2009 Environmental Report to examine internal and external factors, change, and current organizational practices related to The Boeing Company activities related to ethical author stipulated ethical practices in the areas of Pay, Product, and the Environment. Introduction
The Boeing Company is facing the economic complexities of a global recession, delivery of new technology to the market place, commercial aircraft models 747-8 and 787. This researcher contends The Boeing Company has an ethical responsibility to deliver safe products to the end-user with the corporate social responsibility to make ethical choices for the stakeholders- Product, Pay, and the environment to increase stakeholder confidence and add value to the organization by the ethical management of all resources.
Change is a constant in today’s global enterprises. Change is reputed to induce organizational stress and influence an organizations ability to make clear choices. Balance is required between labor costs, investment in technology, the environment, and capacity to deliver a product to market that will generate sufficient demand, to support sustainable production, distribution, and sale. Ethical actions and policies are required in the management of labor relations, (compensation and diversity), technology, product, and the environment.
Inevitability of Change New Directions in Systems Theory: Chaos and Complexity written by Warren, Franklin, and Streeter (1998), posit research starting as early as the 1940’s has been conducted with the purpose of constructing general principles applicable to ordered systems, theory of social behavior in systems or general systems theory. Warren, Franklin, and Streeter (1998) contend systems are dynamic, stable, but subject to change of two types, linear and non-linear.
Linear change / straight-line change: characterized as predictable, expected result, simple proportional cause and effect. Non- linear / random change: defined as chaotic, non-proportional, and unpredictable. Complexity Theory stipulates feedback from system components provide comprehension and reactive response to chaotic change, feedback loops create sensitivity to conditions that result in response. Individuals comprise components of social organizations, interdependent with the whole, and subject to change, Warren, Franklin, and Streeter (1998).
Warren, Franklin, and Streeter (1998) contend organizational reaction to change, the need to change to meet internal and external factors place stress on organizational components. It is this complex combination of change, the need to change, and stress associated with each that can influence the managerial decision making process. Ethical choices may not be as clear. Warren, Franklin, and Streeter (1998) contend organizational stress levels to be proportional to possible impact to ethical choices; the more stress the harder to make clear choices.
Change, as a factor, is further defined by The Nature and Design of Post- Industrial Organizations written by George Huber in 1984 and stipulates the nature of post-industrial society will impose demands on Post-industrial organizations of which change will be required to cope. Huber 1984 contends: decision-making, innovation, information acquisition, and distribution may be of use to organizations to equip managers with skills necessary to manage industrial organizations in relation to the changes in society (diversity for one) that effect the operational environment of which business operations are conducted.
Huber (1984): In summary, the following seem clear: (1) the anticipatable large increases in knowledge will lead to large increases in technological, economic, and social specialization and diversity; these increases may be facilitated by increases in the effective numerosity of societal components, and (2) these large increases in specialization and diversity will lead to large increases in societal interdependence; these latter increases may be aggravated by ncreases in the demand-supply ratio of certain physical resources. As a consequence of these arguments we can conclude that in post-industrial society both the level of complexity and its absolute growth rate will be significantly greater than in the past (p. 932). Summary of Internal Changes Beginning with The Boeing Company 2007 Annual Report, statements related to the value of personnel and innovation.
The 2009 Environmental Report, examples of Pioneering New Technologies to produce more fuel-efficient aircraft with lower noise and pollutive emissions, (787-747-8), concluding with D’Intino, Boyles, Neck & Hall (2008) four examples of previous Boeing achievements that have affected global aviation, a specific claim that Boeing advancements can change external activities is possible. External Change in Global Aviation According to Bedier, Vancauwenberghe, and Van Sintern (2008): To reduce commercial aircraft engine emissions of noise will require advances in technology.
Global aviation efforts are focused on efforts to reduce costs using the reduced labor costs of China, India, and Russia. “Boeing and Airbus have discovered, in developing their new aircraft, that involving suppliers from around the world creates complex management, coordination, and design integration challenges” (Par. 1). The Boeing Company (2008) Current Market Outlook 2009-2028 outlines customer concerns, market conditions, and The Boeing Company’s strategies to deliver.
The primary concerns outlined in the Current Market Outlook and the Boeing 2007 Annual Report, for commercial aircraft purchasers, are cost of operating and maintaining their fleets. Any reduction in these costs result in higher revenue per passenger kilometer traveled. The Current Market Outlook defines the need for global aviation operations to change from the current Spoke and Hub routing system to a more direct point-to-point routing and the 787 Dreamliner key to this predicted market change.
Pay, Product, and Environment Pay Fagerberg (1988) identifies labor costs, technical competitiveness, price competitiveness, and capacity as major drivers of import and export function. A country may have lower labor costs but not a labor pool with the technical abilities or equipment to produce a complex product of sufficient quality or quantity. Inversely sufficient technical abilities and equipment are available but labor costs associated eliminate price advantage but the finished product manufactured to specification.
Monetary investment can improve equipment, specialists retained for the most difficult manufacturing steps, then, Fagerberg (1988) posits, then capacity becomes the limiting factor. Fagerberg (1988) concludes the cost of labor, while contributory, not as influential to international competitiveness and growth but the combination of technical competitiveness and capacity to supply a quality product the primary drivers. Additionally Fagerberg (1988) highlights the ability of investment, as a mechanism for change, to these factors:
The results of this paper [Fagerberg’s] suggest that the main factors influencing differences in international competitiveness and growth across countries are technological competitiveness and the ability to compete on delivery. Regarding the latter, this paper especially points out the crucial role played by investments, and factors influencing investments; in creating new production capacity and exploiting the potential given by diffusion processes and growth in national technological competitiveness, (p. 371).
Corporations have the ethical and social responsibility to compensate workers adequately for their efforts. This reduces the margin of profit associated with the finished product. Fagerberg (1988) suggests “Cost-competitiveness does also affect competitiveness and growth to some extent, but less so than many seem to believe” (p. 371) but does not provide substantiation for this claim. Delivery of a product with the ability to compete in the market the desired objective, use of technology to ensure competitive is almost a certainty.
This is relevant to Organizational Behavior in that compensation, pay, is very important in many aspects of motivation in the organization. Product The Boeing Company has historically produced advancements in aviation technology that have revolutionized industry practices, D’Intino, Boyles, Neck & Hall (2008). D’Intino, Boyles, Neck & Hall (2008) contend the list of corporate failures due to unethical decisions and actions by leadership has greatly damaged the public perception of business executives and Board of Director Members.
The study author’s use historical information related to four Boeing aircraft designed, developed, and produced using innovative technologies central to The Boeing Company- innovation to produce a safer, more efficient product. The study concludes: What a study of the Boeing Company offers executives and board of director members in the early twenty-first century is a vision of people with intense pride in their company and their product.
In response to the ethical crises that often characterizes today’s business environment, which typically involves a myopic focus on creating executive wealth through profit maximization at any moral cost, the Boeing Company history presents an alternative approach that emphasizes a relentless focus on innovation and product quality resulting in long-term firm success. This pride in a company’s product can perhaps once again become integral to the integrity fabric of American business, D’Intino, Boyles, Neck & Hall (2008, para. 44).
Cited from the in the 2009 Environment Report: Pioneering New Technologies Boeing’s strength is its ability to pioneer new technologies to improve environmental performance and our dedication to changing our operations to reduce our impact on the ecosystem, (p. 13). Boeing has an ongoing legacy of integrating environmental performance improvements through technology advancements. Over the past 50 years, commercial jet carbon dioxide (CO2) emissions have been reduced by approximately 70 percent and the noise footprint area has been reduced by approximately 90 percent.
That legacy continues today with every airplane we design and build, (p. 13). Boeing’s newest airplanes, the 787 Dreamliner and the 747-8, highlight the company’s commitment to environmentally progressive design innovation. Incorporating four innovative technologies—new engines, increased use of lightweight composite materials, high-efficiency systems applications, and modern aerodynamics—the 787 is designed for the environment with an impressive 20 percent improvement in fuel use and an equivalent reduction in CO2 emissions compared to today’s similarly-sized airplanes.
The 747-8 offers a16 percent improvement in fuel use and CO2 emissions over the 747-400, (p. 13). Our approach to research and development combines the best ideas in aerodynamics, materials, propulsion and systems, which are brought together and then optimized to work together in the most thoughtful and integrated manner. The result is innovation, thought leadership and design principles that will help guide aviation going forward, (p. 28).
Translated: current airlines fly passenger and freight routes to major collection points, cities, to maximize passenger and airfreight loads- fill the plane. Boeing contends the use of the more fuel efficient aircraft, 787 / 747-8, offer the option to fly directly to and from more destinations without the requirement to make as many stops as possible along the way to fill the airplane. Many of us have always wondered why we have to start in Boston, fly to Dallas, and then land in Miami instead of flying directly to Miami. Corporate Social Responsibility as a Choice
Collier and Esteban (2007): Businesses themselves increasingly recognize that their future profitability and ‘license to operate’ depend on their willingness to assume responsibility for the social and environmental consequences of their global footprint. But as civil society’s awareness of the need for corporate social responsibility (CSR) increases, as regulators and auditors place increasing pressures on companies and as institutional shareholders become more pressing in their demands for adequate risk management, companies find themselves in urgent need of assistance, (p. 9). These quotes of Collier and Esteban (2007) indicate Corporate Social Responsibility activities are a requirement for successful business operations in today’s global economy and ultimately the daily activities of an individual the foundation to success of CSR. To summarize Collier and Esteban (2007): CSR activities are required for an organization to succeed. Individuals are the foundation to organizational CSR activities, motivation, and commitment of an individual essential. Employee work experiences are central to employee self-identification.
Taken as a whole- positive work experiences increase commitment and motivation, this creates more positive work experience, a cycle based on motivation and commitment of the individual to CSR. What if the individual’s concept of CSR is based on educational experiences that promote aggressive business tactics, a no holds barred approach? Environment Boeing Company has responded to public concern to stop wasting resources by establishing enterprise wide activities to reuse, reduce, and recycle.
These activities are benchmarked and future goals established in the 2009 Environmental Report, Boeing, (2008). Cited from the in the 2009 Environment Report: In 2008, Boeing committed publicly to five-year 25 percent environmental improvement targets for greenhouse gas emissions intensity, recycling, energy efficiency and hazardous waste that are aggressive and transparent, (p. 6). As I [Jim McNerney] promised in last year’s report, this year we expanded our focus on environmental performance across Boeing’s value chain—from suppliers to end of service.
On supply chain, we have developed and deployed a ‘collaboration and engagement’ strategy that builds on Boeing’s internal work on productivity improvements and waste elimination—a process we call ‘Lean+’, (p. 6). The idea is simple—we will work with our suppliers on opportunities for footprint reduction—and cost reduction. We will also make clear to suppliers that our strategy is to prefer environmentally progressive materials and services. We’re sharing where we’re going and helping them understand how to come with us—and in some cases, we are learning from and with them, (p. ). Our customers are increasingly demanding improved environmental performance from our products[ external factor]. Boeing is incorporating elements of design that will improve environmental performance earlier into our product lifecycles as well as providing new technology that can improve existing products, (p. 8). Boeing is working to a clear five-year environmental performance plan at our operations, building on the significant reductions in energy consumption and hazardous waste we have already achieved.
In 2008, we established aggressive targets to improve energy efficiency, greenhouse gas emissions intensity and recycling rates 25 percent by 2012 at our major manufacturing facilities, with a comparable goal for hazardous waste reduction. This equates to an absolute 1 percent reduction in greenhouse gas emissions, hazardous waste and energy use and an improvement in recycling rates from about 60 percent to 75 percent of solid waste. While aggressive, these targets are achievable and will ensure that we hold down waste and emissions, (p. 2). Boeing reduced absolute energy consumption in 2008, and has reduced energy consumption on a revenue-adjusted basis by 23. 8 percent since 2002. * From 2002 to 2008, we conducted 54 Lean energy events at sites across the United States, identifying potential energy savings of approximately 957,000 MMBtus. We sponsor internal energy awards to document and replicate best practices across the company; from 2003 to 2008, our sites submitted 152 projects that resulted in annual energy consumption reductions of over 1. 1 million MMBtus, (p. 9). Boeing reduced water usage in 2008 and has reduced water consumption by 40. 7 percent since 2002 by aggressively implementing improvements in our production processes and building systems equipment. * We chartered a Water Conservation team to lead our improvement efforts, implemented major water reduction projects ranging from total wastewater and steam condensate recycling to rinse water reduction, and outfitted our newly constructed and renovated buildings with low-flow toilets, faucet aerators and auto-off faucets, (p. 50).
Boeing is aggressively pursuing reductions in hazardous waste across the value stream, from better coordination with our suppliers to reduce unused chemicals to replacing hazardous materials with more environmentally progressive solutions, (p. 51) We will boost our recycling rates to 75 percent by 2012 through a number of different initiatives, including the maturing of office recycling programs to reduce cans, bottles and paper from landfills, (p. 52) Discussion Change is inevitable. Stress associated with internal and external factors are reputed to effect ethical decision making.
Boeing reputes to be making ethical changes to compensate employees, embrace diversity, and allocate resources to deliver a superior product that is more efficient to maintain for the customer and product less pollution. Individual ethical and moral beliefs are necessary from all levels of an organization. Global complexities require skill sets that have an understanding of the responsibilities required of today’s organizations. Education / awareness is only one path to helping with this understanding. As today’s business environment evolves, local actions have the ability to become global.
Aircraft that use less fuel, and require less maintenance will allow airlines to convert to point-to-point flying without adding waste. Boeing contends point-to-point flying will not add waste and the increase in connivance, scheduling and reduced airfares, to the flying public will fill the planes. Airlines May change their activities to offer the public a better service related to the use of Boeing products and point-to-point flying. It is this author’s speculation: The Boeing Company currently tacks trends in global perception related to reduce, reuse, and recycle-2009 Environmental Report.
Additionally Boeing tracks changes the aviation industry, demonstrated by the Current Market Outlook. Pioneering New Technology, using the 787 and 747-8 aircraft, arguably is a risky in terms of cost and product salability. The Boeing Company appears to embrace the concept of change and plans for market conditions, Current Market Outlook 2009-2028. Quoting Boeing reports, reduce, reuse, and recycle is actively practiced. This researcher recommends The Boeing Company continue to study market conditions and strategically manage its personal to strategically align organizational efforts to product the products of tomorrow.
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