Airbus Case Analysis

Topics: Airbus, Airline, Boeing Pages: 5 (1671 words) Published: July 20, 2010
Until 1980, the American manufacturers in the aerospace industry enjoyed an exclusive control of the aerospace industry despite the entry of the European-based Airbus industry in the late 1960s. The American manufacturers dominated the industry at the time that it was difficult for the European manufacturers to compete, but just like all industries resources and capabilities are fundamental building blocks for a firm’s strategy. Some business organizations especially those in the airline industry must face situations whereby to succeed depends on both internal and external factors. Boeing enjoyed the global market leadership of the aerospace industry for several decades. As it is common for most market leaders, Boeing fell victim of organizational inertia. The company failed to improve its production processes and come up with new and creative products. Although Airbus faced challenges at its entry, within two decades it became a major competitor of Boeing. As a new company, Airbus never rested but continually introduced different innovations in its planes. It seems that in the head to head competition, Airbus presently has the upper hand over Boeing. SITUATION ANALYSIS

I performed a macro analysis, using tools like VRINE, PESTEL and Porters five forces to analyse the external environment. I performed an analysis of the industry environment and the firm including its financial situation. The Industry

The commercial aircraft industry is dominated by two heavyweights, Boeing and Airbus. The aerospace industry is one of the most capital-intensive industry in the world. It faces both internal and external factors such as rivalry. One important characteristics of this industry is the high entry barrier of heavy capital investment required and a lot of government involvement. In the late 1990s and early 2000s, the September 11 attack affected the aerospace industry as they were hurting from a worldwide economic recession. Macro Environmental Forces

The macro environmental forces that impacted Airbus and its competitors in the aerospace industry include the worldwide economic slowdown as stated earlier and the sharp decline in air travel resulting from the terrorist attack in USA. The worldwide fall of the airline industry resulted in most airline industry cancelling orders for new aircraft creating loss of revenues and intensified the competition between Boeing and Airbus, the only two companies in the commercial aircraft market. Consumers/Stakeholders

In every industry success is determined by the response of the consumers. It was determined that EAD and BAE, airbus executive committee and partners were the most power stakeholders owning 80% and 20% respectively and the ones to be most affected by a new strategy. Level of competition

Using the five forces analysis, one of the five forces that pose the most serious challenge is rivalry. Airbus and Boeing are competing against each other for consumers and best prices. The rivalry is intense and there is a serious fight to dominate market share. The power of buyer also increases competition in the industry. The threat of new entrants is generally weak mostly because of the high entry barrier and there is limited information provided on the threat of substitutes. Airbus found a niche in the US market for smaller aircrafts. The company was innovative in its design and introduced new products to the market. Boeing was not as successful as Airbus in designing new products. Another challenge would be the bargaining power of the buyers. Buyers would focus on the product that is more cost sensitive. Airbus is also in a position to charge lower prices than does Boeing because of its comparatively leaner manufacturing system. Boeing Strategy

Boeing dominated the world market with its 747 jumbo jet family of aircraft. In the 1970s, it was allowed to fly any number of flights therefore there was increased number of flights on popular routes. Airlines found that the use of...
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