Strategic Management

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© Don Hammond/Design Pics/Corbis

Strategic Management Inputs

Strategic Management and Strategic Competitiveness, 2

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis, 32

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages, 68

Strategic Management and Strategic Competitiveness

Studying this chapter should provide you with the strategic management knowledge needed to: 1. Define strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process. 2. Describe the competitive landscape and explain how globalization and technological changes shape it. 3. Use the industrial organization (I/O) model to explain how firms can earn aboveaverage returns. 4. Use the resource-based model to explain how firms can earn above-average returns. 5. Describe vision and mission and discuss their value. 6. Define stakeholders and describe their ability to influence organizations. 7. Describe the work of strategic leaders. © Don Hammond/Design Pics/Corbis

8. Explain the strategic management process.

Boeing and Airbus: A Global Competitive Battle over Supremacy in Producing Commercial Aircraft

right: © AP Photo/Boeing, left: © AP Photo/Oliver Fantitsch

Boeing has historically been a global leader in manufacturing commercial airplanes. However, in 2001, Airbus had more orders than Boeing for the first time in their competitive history. But, in 2006, Boeing regained its supremacy with 1,044 versus 790 orders for commercial aircraft. The main turnaround in this battle for competitor orders has been most visible in the super jumbo category with Airbus’s A-380 versus Boeing’s 787 . Apparently in 1992, Boeing and Airbus’s parent EADS agreed to a joint study on prospects for a super jumbo aircraft. The impetus for the study was the growing traffic in China and India. However, Airbus and Boeing reached different conclusions concerning the market trends, and the joint effort was disbanded. Boeing’s 787 Dreamliner design focused on long-range efficient flight, capable of transporting 250 passengers, whereas Airbus’s strategy focused on long-haul flights with the A-380 offering 550-plus seats. In their diverging strategies, Airbus focused on flying to larger airports that use the hub-and-spoke system, whereas Boeing concentrated more on a point-to-point system in which smaller airports are more abundant. In reality, the Airbus A-380 aircraft, because of its size and weight, is currently able to land at approximately only 35 airports. The Boeing aircraft, on the other hand, can land at many more airports around the world and the number is growing in

emerging economies, such as throughout Eastern Europe where smaller airports desire international connections. Airbus won the competitor battle that occurred between 2001 and 2005 because it focused on the midsized market as well, using the A-320 strategy, which competes with Boeing’s 737 and 757 aircraft. The A-320 was more efficient than the aircraft used by Boeing, and Boeing did not respond to customer demands to create new, efficient aircraft. In fact, it had slowed its innovation process in regard to new models. Besides the lack of new models, the commercial aircraft business was sluggish; new orders significantly ebbed due to the complications of the terrorist attacks and the subsequent recession. It was a bleak time for Boeing relative to Airbus. More recently, Boeing’s strategy in regard to overall design with the 787 Dreamliner is winning the day, as far as the order battle goes. It has also realized success by implementing a different strategy in regard to the production process. It has been able to speed up the process by creating an efficient global supply chain that involves many potential customers around the world, including Japan, China, and others. Moreover, Airbus is behind in its schedule to...
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