Prepared by Lisa Neumann Matthias Pernkopf Viktoria Scheidl
Case study 39 Airbus vs. Boeing
• • • • • History of Airbus History of Boeing Question 1 Question 2 Question 3
History of Airbus
•1970: Airbus was formed as European consortium of French and German companies •Spain companies joined the consortium •1979: British Aerospace joined Airbus Industrie. •Each of the four partners operated as national companies •Airbus developed a deserved reputation •2001: Airbus became a single fully integrated company •2004: company had overtaken its main rival
•In January 2005 the world’s largest and most advanced passenger aircraft appeared, the A380 •Airbus is one of the world’s leading aircraft manufacturers
History of Boeing
• was established by William Boeing • the most successful company of U.S. •1916: built their first plane •1917: the Boeing Airplane Company arose. •During World War I, the Navy needed training airplanes. • Boeing leading designer of military aircraft. •1927: Boeing created an airline, named Boeing Air Transport (BAT)
•1958:The US became a leader in commercial jet manufacture. •2001: Boeing is focused on 787 Dreamliner
•Boeing lost ground to Europe’s Airbus and lost its position as market leader in 2003. • 2006 sets another new Boeing record for total commercial orders in a single year.
Why is the aircraft manufacturing industry dominated by only two companies?Discuss the barriers to entry that exist in the market.
The Porter model of competitive industy structure
Key entry barriers include: •Economies of scale •Capital requirements •Switching costs •Access to distribution •Expected retaliation
Only two companies
•Each consist of many small firms and represent the U.S. or Europe •Each have total power in their continent •No other company is able to compete •They are large firms which can generally produce goods at lower costs than small, inexperienced firms.