Assignment Brief: Compare and Contrast the Strategies of Boeing and Airbus in the Civil Aviation Industry.

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1.0 Introduction

This final assignment in the Strategic Management module is going to focus on the strategic approaches taken by Boeing and Airbus. The assignment will first present a brief overview of the organisations respective histories along with an overview into both businesses’ current position in the civil aviation industry. Next there will be an examination of how the two companies are structured, along with their position in the market and how their presence affects the industry they have chosen to operate in. Attention will also be paid to both organisations’ Primary and Secondary activities, along with an examination of their respective support functions. The organisations respective strategies will then be analysed in detail through the use of a SWOT and PESTEL analysis. Other theory relating to strategy (such as the strategy lenses, the strategy clock, game theory) will also be presented as and where necessary. This assignment will then summarise all the main points of interest that have been presented during the course of this report in the form of a conclusion.

1.1 Background to companies

1.1.1 Airbus SAS

Airbus was formed in 1970 as Airbus Industrie, a consortium of France’s Aerospatilae and Deutsche Airbus (a grouping of leading German aircraft manufacturing firms) . It was then that the companies first decided to build their first twin-engine wide body airliner - the A300. The A300 made its maiden flight in 1972, but it was not until 1974 that the first production model, the A300B2 went into active service. This model was not a particular success for Airbus, with only 81 aircraft in service by 1979, at which point both the Spanish and British aerospace industries joined forces with Airbus. It was not until 1981 and the introduction of the A320 that Airbus was able to cement their place as a major manufacturer in the civil aviation industry. This model was a great success; with over 400 orders being placed while it was still in the design and production phase. The companies preferred strategy since its inception was to produce medium haul passenger planes for use in the commercial market. In 2001, Airbus became a single fully integrated company. The European Aeronautic Defence and Space Company (EADS), a merger of the French, German and Spanish interests, acquired 80 per cent of the shares and BAE Systems, the successor to British Aerospace, 20 percent. In 2004 Airbus took the place of Boeing as the leading manufacturer in the civil aviation market. In January 2005, Airbus made a deviation from their traditional strategy and introduced the Airbus A380, the world’s largest and most advanced passenger aircraft. This aircraft was designed to compete with the Boeing 747, then the world’ largest passenger plane. However the A380 has been dogged by design faults, wiring problems, cost overruns and project delays. In October 2006, BAE Systems finally sold their 20% stake in Airbus to EADS for £1.87 billion after a protracted and controversial sale.

1.1.2 Boeing

Boeing has been in existence ever since 1916 when William E. Boeing made the decision to found the company after a brief but successful period working in the timber industry . From their relatively humble roots as Pacific Aero Products Co, Boeing went on to manufacture several types of passenger plane, the most notable early success being the Boeing 247 in 1933, which is viewed by many industry experts as being the first truly modern airliner, capable of carrying more passengers than its rivals with considerable more safety, thanks to its ability to operate on only one engine – a feature not available among any of its competitors at the time. More innovation followed when in 1938 Boeing introduced the 307 Stratoliner, the world’s first pressurised aircraft, which as a result was able to fly much higher than previous aircraft (up to 20,000 feet), thereby enabling it to avoid most bad weather systems. Commercial production was then...
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