Airbus Analysis

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Strategic Management

Airbus Analysis

 

Executive Summary

The goal of the following report is to provide a detailed analysis of Airbus using the following analytical tools: PESTEL, Stakeholder, SWOT, Porters Five Forces, VRINE, and Porters model of competitive advantage. In this report I will describe how each analysis supports the decisions of Airbus and helps identify any problems or issues facing Airbus based on the outcome of each analysis. This report will show that the analytical tools used will support Airbus’s direction and their growth in the aerospace industry, and their mission of competing against Boeing for more global market share.

Introduction

Airbus was created as an attempt to combat Boeing and the American dominance in the airline industry. A consortium of European governments provided the financial backing necessary to start the company. Airbus has manufacturing plants throughout Europe with each providing their expertise to the manufacturing process. With a workforce of 45,000 employees a lean and productive manufacturing process, Airbus has positioned itself to take on Boeing as the market leader.

Airbus History

Airbus began back in 1960’s when French, German and British governments announce plans to build a European aircraft. The aim of this group is to combat the American dominance in the aviation industry (Airbus.com). Eventually in 1967 Britain quit the project due to differences with French and Germany, and in 1971 Spain joined.

Airbus first produced the A-300 a wide body twin jet engine plane with a capacity of 226 passengers, and then the A-300-B2 with a capacity of 250 (Carpenter, M. A., & Sanders pg. 613). These two models allowed Airbus to receive their first large orders and helped them achieve a market share of 10% by 1975. These models and the introduction of the A-310 helped Airbus achieve a market share of 26% by 1978. In 1979 the British rejoined the consortium.

Along with the new models and the technological advantages Airbus continued to gain market share in the aerospace industry. By 1985-86 Boeing’s market share had decreased to 46%, from a high of 70% in the mid 1970’s. Because of this decrease Boeing started accusing Airbus of unfair trade practices because of their financial backing of the European governing partners (Carpenter, M. A., & Sanders pg. 613). These accusations eventually led to the US government filing a complaint against Airbus at the General Agreement on Trade and Tariffs, which eventually led to a 1992 bilateral agreement between the US and the European that limited the financial help that could be given to Airbus to help develop any new model to 33% of the total development cost and required Airbus to payback the financial aid with interest (Carpenter, M. A., & Sanders pg. 613).

In 2001, Airbus was incorporated into an integrated company with EADS (European Aeronautic Defense and Space Company) and BAE (British Aerospace Systems) employing 45,000 employees with manufacturing plants spread all over Europe (Carpenter, M. A., & Sanders pg. 614). Airbus' mission is to meet the needs of airlines and operators by producing the most modern and comprehensive aircraft family on the market, complemented by the highest standard of product support (Airbus.com)

SWOT Analysis
Strengths
Airbus has multiple strengths over Boeing which provides them the competitive advantage. Airbus has a flexible, non-union, workforce of 45,000 employees and has the benefits of financial backing of European governments to allow for faster cash flow for plane development. Because of the backing of the European countries, it provided Airbus the ability to produce their jets at a low cost by splitting the designing, development, and production activities allowing Airbus to tap into each of the individual strengths. Airbus’s first lines of jets, the A-300, were the first to the market as a wide body...
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