Subsidy Dogfight

Only available on StudyMode
  • Download(s) : 125
  • Published : July 17, 2010
Open Document
Text Preview
Farzyn Hakimyser

Subsidy dogfight – Boeing versus Airbus

In this case some status of the Boeing is described. Air bus is one of the biggest manufacturers of the Aircrafts in the world, and applies for getting aid for A350, direct competitor to 787 and Dispute now before WTO as to the legality of the various subsidies. A long history of development subsided in the commercial aerospace industry, in 1992 agreement between Boeing and Airbus limited the state aid either company can get from their respective governments. A problem underlies here; that this mentioned company cannot use subsidies for their new project. Here a solution is introduced; Boeing can take several partners to help design and build the 787. There are trios of three Japanese companies that have asked the Japanese government for help with the 787 projects. Questions:

Question number 1
-------------------------------------------------
Using Boeing's 767, 777 and 787 as examples, argue that the incentives for Boeing's commercial outsourcing to Japan are to access the market, spread risk, gain access to capital and lower U.S. spending on R&D. These contracts have allowed the Japanese to develop new capabilities in terms of production capacity, tooling, design and final assembly. Ultimately, these capabilities imply that Japan will eventually enter the market as a fully-fledged producer of commercial aircraft.

Question number 2
This is apparent gaining a higher market share will result in higher benefit and as a result more earning. And company will go stronger. Of course subsidies go less as a company gets stronger. And if they are earning more market share, then they are getting stronger. So, their subsidies will be lessening. And these subsidies could eventually become nothing. But, they gained market shares. And the government thought that it would be good for the economy and for efficiency of fuel, money. -------------------------------------------------

Even on new plans or to...
tracking img