Boeing in Russia

Tiffany Chau Chantz Fleck Petra Vadelova

Sara Walde James Williams

12:30 12:35 12:50 1:05 1:10 1:15

Boeing+ Airbus:An overview

Russia:Situation analysis

Statement of Opportunity

AlternativesFinal recommendation

Question+ Answers

The largest aerospace company in the world

75%

8% more efficient (20% less fuel)

50% composite materials

Advanced monitoring

Over 159,000 employees worldwide

RUSSIA

Democracy Market economy Middle class

0

17.5

35

52.5

70

Power distance Uncertainty avoidance Invdividualism Masuclinity

The largest pool of scientists and engineers in the world

Labour market

Social unrest Corruption

Foreign firm policies

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$2.1 trillion USDGross Domestic Product (ppp)

TiTitanium47.867

22 28

102

Light weight

High strength

Heat resistant

Load / crack resistant

Non-corrosive

Ural Boeing Manufacturing

World’s largest titanium producer

World’s largest aerospace company

TITANIUM VALLEY

Beautifulness may vary

“To utilize Russia’s rich natural and labour resources, through Boeing’s existing connections, towards creating an efficient engine component

production facility in Russia.”

Statement of Opportunity

Alternatives for consideration

Contract manufacturing

Joint-venture

Strategic alliance

ContractManufacturingBoeing takes advantage of Russia’s natural and labour resources by contracting a Russian firm to produce the

engine component of their 787 Dreamliner

Advantages Disadvantages

‣Reduced labour costs, raw material and overhead costs‣Potential improve cash flows‣Shorter operating cycle

‣ Internal unrest‣Supplier unreliability‣ Increasing host country competition‣Reliance on presence of a willing and

capable engine manufacturer

JointVentureBoeing further develops its Russian relationships in

establishing a formal joint venture in the production of 787 Dreamliner engine components

Advantages Disadvantages

‣Creation of a Russian separate entity‣Allows Boeing to focus on those

areas in which it has a competitive advantage‣Protection of intellectual property‣Tax advantages‣ Improved Russian relations

‣Not focused on long-term goals‣High start-up costs‣Potential inter-firm conflicts due to

misaligned goals‣Subject to intense bureaucracy

StrategicAlliance

Advantages Disadvantages

‣Boeing has the ability to produce titanium far more economically‣Reduced costs‣ Increased efficiency‣Allows each company to focus on

their own strengths: competitive advantage

‣Potential for future misalignment of goals and motives

Boeing expands their relationship with Rolls Royce, using it’s existing joint venture with VSMPO-avisma to

manufacture titanium engine components

Strategic alliance

Existing joint-venture

World’s largest producer of Titanium

Largest pool of scientists and engineers in the world

Increasingly open attitude towards foreign investment

Enhanced relationship and identity with Russian nationalism

“What we haven’t been doing in Russia is manufacturing, engineering, supply chain and

R&D and that is the area that I think we are interested in exploring. A development of new

technologies for gas turbines; new forms of engines.”

—Michael Shipster, International Director

“The world is ready for some new development”