VALUE CHAIN

Human Capital Value Chain in a Petroleum Trading Company

Human Capital Value Chain in a Petroleum Trading Company

I. Introduction

"Boeing has long talked about expanding into the services area...." Does it make sense? This is the question that we will try to answer in this paper by analyzing the market conditions, the customer needs, and Boeing's core capabilities.

Within the commercial aircraft industry, Boeing's focus for value-added service relates primarily to the transport airplane segment, which is expected to grow in the following years. The author discusses the business strategy of Boeing using Porter's value chain model and competitive forces model. She goes on to discuss the relationship of knowledge management to the Boeing Company and the Airbus Company. (Norris 2001:47-85)

Porter's Value Chain and Competitive Forces Model helps managers to make decisions based on the external environment through an internal analysis. Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strengths of the organization. Therefore, it evaluates the value each particular activity adds to the organizations products or services. The Value Chain Model and Competitive Forces Model is especially useful in helping managers to develop and implement long term strategies for business, in order to maintain or build a competitive advantage.

entrants in this market need to be mindful of the money it takes to maintain such a venture, the set of laws that govern the field, and the skilled workers needed. The technical know how is important as well and the capabilities involved along with a proven history in the field are definitely key barriers for new entrants.

Boeing assumes full market risk every time they develop a new airplane. Airbus does not. Boeing has to pay back every dime it borrows on time and with interest whether an airplane program is successful or not. Even though Airbus is supposed to repay its launch aid, it has to do so only if the subsidized program is successful. (Miller 2005:35-59)

Over the years, Airbus has received some $15 billion in launch aid, which has been influential in omitting some of the barriers that existed as a new entrant. It has not repaid most of that aid. In fact, if Airbus had borrowed that money on commercial terms, its parent companies-European Aeronautic Defense and Space and BAE Systems-would have an additional $35 billion in debt on their books today. As a result of these very generous government subsidies, Airbus has grown to full maturity, developed an entire product line in record time, and reached market share parity with Boeing. Yet it continues to receive massive government support. (Capaccio 2008:15-20)

The most important driver for the commercial aircraft market is the trend in airline passenger traffic, which is mainly influenced by: (Norris 2001:47-85)

Economic growth

Political stability

Other factors such as, industry profitability, environmental constraints, technology, price, among others

Boeing projects the total commercial aircraft market over the next 20 years at more than $1,000 billion, based on global economic growth projections, increased utilization levels of worldwide aircraft, and requirements to replace ...