Boeing & Airbus Case Study

Topics: Boeing, Strategic management, Airbus Pages: 4 (1033 words) Published: January 28, 2011
Boeing & Airbus: Strategies to Manage Competition

December 26, 2010
Leo Welch
Strategic Management
Professor Brad Bridges

Background
The aerospace industry is dominated by two major competitors, Boeing and Airbus. Boeing has long been the dominant market share leader, however, recently Airbus has gained significant market share and surpassed Boeings position as the market leader. The aerospace industry is built on long-term engagements. It is typical for the development of a new plane to take several years before the model even begins production. Thus, the research and development costs are extremely high. Manufacturers usually do not break even until a large number of units have been sold. The market is further complicated by the fact that it can take 10 to 15 years before a final product is produced. As a result, entering the market can be very difficult, requiring a very large capital investment with little guarantee of success. Boeing Airplane Company

Boeing was established by William Boeing in 1916. The Boeing Airplane Company established itself as a major US manufacturer after obtaining business contracts with the US Military during World War I and continuing that relationship through World War II. Boeing was able to establish it dominance as a result of the military ordering numerous B-17 Bombers. After the war many of the Bomber orders were canceled so the firm had to look to the commercial market. “By 1945, Boeing was the US leader in commercial jet manufacturing with its 707 that had a capacity for 156 passengers.”(Hill, page 50) By 2003, Boeing was surpassed as industry leader by the European manufacturer, Airbus. Airbus

Airbus was formed in 1970 as a European consortium of French, Spanish, British and German companies (parent company EADS). The consortium became a single fully integrated company in 2001 and by 2003 Airbus surpassed its main rival as the market leader. “Airbus was able to establish a significant market share and a brand...

References: Hitt, M., Hoskisson, R., & Ireland, D. (2009). Strategic management: Competitiveness and Globalization. Mason: South Western
South University: “Online Lectures” 2010.Strategic Management. Accessed January 21, 2011 from http://myeclassonline.com/re/DotNextLaunch.asp?courseid=4620444
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