Strategic Management Scanning the Environment

Question: Discuss about the Strategic Management for Scanning the Environment. Answer: Analysis of best strategy The Boeing Company started to lose market share since 1990s. European Aeronautic Space Company was a rival company, which captured the market through increasing profit. The later company gained competitive advantage over the Boeing Company in the ground of low manufacturing cost. The Boeing Company lost the market share due to having high cost structure and capacity constraint. The airline passengers generally prefer comfort in journey and low fare. Therefore, in order to regain the market, strategy of capacity maximisation is optimum strategy. Decline in sales reduced the revenue of the Boeing Company. Higher cost led to the higher fare, which discouraged the passengers to avail service. Hence, the primary concern of the firm was cost reduction. It took short run decision to regain market share. Use of low cost fuel and low operating cost were short run strategies of the Boeing Company. Production of medium size jet is profitable in short run. However, the decision of the firm woul d be implemented after two years of delivery of the A380. Now, the EADS had planned to change its strategy of making cost efficient aircraft. According to the market report, the airports in Asia, Europe and Middle East were becoming congested due to huge demand of aircraft. In order to resolve this problem, the long term strategy would be producing larger aircraft compared to middle rage. In long term the problem in the market would be different. If the Boeing Company took the short term strategy, in long run, it had to face another problem of capacity constraint. The management might have to change the strategy again. The decision further would have additional cost creating burden upon the companys financial structure. Hence, the strategy of Boeing Company was correct in short term. However, for sustainability in market, EADs strategy had greater chances of succeed.