According to Porter’s five force model, we can notice that airline industry has high rivalry mainly because commercial airplane marketplace is duopoly market, largely Boeing and Airbus. And the threat of potential entrant is low due to high entry barriers. Bargaining power of the suppliers and bargaining power of buyers is also low. The main reason for that is they have power to negotiate the price of supplies due to global economics of scale and for many years Boeing has been the leading aviation manufacture in industry. Now we can consider how its current position addressed in company’s innovation strategy.
Due to its large and complex organizational structure Boeing Company has different set of innovation strategies for their main units. In this section we discuss their current innovation strategy in general. Industries which are highly driven with innovations have innovation strategies which are integrated to overall strategy. Article “Focused on the future” published by Boeing Company in November 2011, explains their current innovation strategy.
The first key strategy is Research & Development (R&D) approach. Boeing Company invests billions in R&D to create Boeing’s product and services. As an example, Boeing's total R&D expenditures for 2013 are $3.1 billion. They invest throughout the company in multiple organizations and locations around the world. That will ensure that company gets the maximum results from its sources of innovation. They use an enterprise technology to strength Boeing’s ability to innovate and compete. Boeing has research collaborations with public research institutions and universities. Therefore they can get the greatest yield from their technology investments. They use an enterprise approach which is stepping back and taking a high-altitude view of what’s going on in all facets of Boeing’s businesses. This approach helps them to look at all of their activities and figure out how to optimize technologies, critical capabilities. At the same time it will enhance the productivity of their R&D teams which keep an active lookout for disruptive technologies, and increase the yield of Boeing’s R&D investment.
The next strategy is working together.