Airbus Vs Boeing|
This document is an essay on the Duopoly Market Structure existing in the Aircraft Manufacturing Sector. This is meant purely for information purposes.|
Order and Deliveries3
Competition by Product3
Airbus Strategy – Driven by the Ticket Price:4
Boeing strategy - Passenger demand for fast nonstop flights will drive airplane selection:4
Strategic objectives for Boeing / Airbus Pricing –5
Price Elasticity - An important indicator of market structure is the price elasticity of demand:5
A situation in which two companies own all or nearly all of the market for a given product or service. A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies. Duopoly can have the same impact on the market as a monopoly if the two players collude on prices or output. Characteristics of Duopoly
1. The number of sellers in this market structure is only two. 2. The decision of the sellers is not independent of each other. 3. The change in price and output by one seller affects the other seller who reacts to the change. 4. The product can be homogenous or differentiated.
5. The decision variables include price, product differentiation, selling expenses, etc. but the decisions depend upon the strategies of the competitor. 6. Product differentiation is the entry barrier and also the firm dominating the market can pose as an entry barrier. Two kinds of Duopolies
1. Cournot duopoly: If competition between the two companies is based on the quantity of products supplied. The duopoly members essentially agree to split the market. The price each company receives for the product is based on the quantity of items produced, and the two companies react to each other's production changes until equilibrium is achieved.
2. Bertrand duopoly: The two companies compete on price. Because consumers will purchase the cheaper of two identical products, this leads to a zero-profit price as the two competitors attempt to attract more customers (and thus more profit) through price cuts Airbus and Boeing
* 1970: Airbus was formed as European consortium of French and German companies’ Spain companies joined the consortium * 1979:
* British Aerospace joined Airbus Industry.
* Each of the four partners operated as national companies * Airbus developed a deserved reputation
•2001: Airbus became a single fully integrated company
* company had overtaken its main rival .In January 2005 the world’s largest and most advanced * passenger aircraft appeared, the A380
* Airbus is one of the world’s leading aircraftmanufacturers
• It was established by William Boeingand the most successful company of U.S.
•1916: built their first plane
•1917: the Boeing Airplane Company arose.During World War I, the Navy needed training airplanes.Boeing leading designer of military aircraft.
•1927: Boeing created an airline, named Boeing AirTransport (BAT)
•1958: The US became a leader in commercial jetmanufacture.
•2001: Boeing is focused on 787 Dreamliner. Boeing lost ground to Europe’s Airbus and lost its
position as market leader in 2003.
• 2006: sets another new Boeing record fortotal commercial orders in a single year.
The Battle of Skies
Why is the aircraft manufacturing industry
dominated by only two companies?