I’m working on a business discussion question and need support to help me learn.
After reading the article “Boeing’s Secret” and watching the video “How a Boeing 787 Dreamliner is Built,” discuss if you believe Boeing is labor intensive, capital intensive, or both. Has Boeing established the “network effect” for their product?
R1: Following the lecture, I decided that Boeing’s processes are capital-intensive rather than labor-intensive. Boeing is one of the airlines that confront economic issues, tragedies, and risks but has been profitable with its robust strategy and management plans (Zhang, 2016). The corporation battled silently through accounting fraud and protected the integrity of its business with a large amount of investment engagement. In 1997, Boeing experienced a production issue that led to a catastrophic decrease in its share and turbulence by many initiatives to trigger numerous internal adjustments that may revitalize the corporation (Bloomberg, 2002).
Boeing is both capital-intensive and labor-intensive concerning the issue. Its manufacturing relies substantially on work as a corporation that is labor demanding. It was compelled to limit its work to decrease labor costs and expenses but used the available work intensively to optimize its productivity. Boeing works to enhance its monthly performance to avoid crises in recent years, owing to the current worldwide rivalry (Chui, 2018). In order to assist resolve many of the financial problems that have affected the stability of its economy, the corporation has employed both an intense capital strategy and an intense labor strategy.
In brief, Boeing had to use these methods to adapt its strategy to business and manufacturing to contend with the severe rivalry of business competitors (Aboulafia, 2015). It is worth mentioning that the corporation deliberately initiated alterations and used intensive labor and capital as a strategic approach to decrease high operating costs, but that in the longer term, doubling production will facilitate it to realize additional revenues that will end up making it survive corporate risks and recuperate wherever a crisis occurs (CNN, 2020).
R2: McGuigan, Moyer, & Harris (2017) introduced the concept of production function. The function illustrates the combination of inputs yielding a given level of output. The producers require raw materials and labor to produce their commodities. They can consume both fixed and variable types of input (McGuigan et al., 2017). In the case of fixed inputs, the cost of input does not depend on the units produced.
Chui’s (2018) video shows that Boeing company uses both labor and capital in its operations. For instance, it imports the Dreamlifter OPS’s materials from different regions. The regions include South Carolina, North Charleston, Japan, and Italy. This shows the application of capital. The assembly of the aircraft occurs in eight regions. Thus, there are supervisors and controllers to ensure efficiency in each stage. The employees form part of labor required in the firm (Chui, 2018). They also assist in wiring the aircraft, where the company requires many employees if the aircraft has to be completed fast.
The management also require capital, in the form of machinery to transport the aircraft parts from one assembly point to the other. The machinery also undertakes some automated tasks like joinery and painting (Chui, 2018). Therefore, the company is labor and capital intensive. Production efficiency relies on the joint efforts of machines and humans (Chui, 2018). The management cannot effectively replace one form of input with the other.
Chui (2018) also illustrates that the management benefits from network effects. The assembly plant has eight positions, starting from zero to seven. The tasks undertaken in position zero is utilized by position one up to position seven. Therefore, the management is able to deliver value from the initial operations (Jorgenson, 2015). Alternatively, it imports assembled parts from different regions. The parts become more valuable after being incorporated into the aircraft.
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