Essay about Boeing/Airbus Case Analysis

Barrier to entry: - High barriers to entry, to a certain extent help understand the risks involved in operating in the aircraft industry.

Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.

• Propensity of buyer to switch to other alternatives is low because cost like - pilot training cost + mechanics + engineers +maintenance cost are also high.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

Airbus predicts that there would be demand for more than 1500 super jumbos over the next 20 years that would generate sales in excess of $350 billion. And they could sell as many as 750 over jumbos over the next 20 years with a break even on undiscounted cash flow basis with the sales of only 250 planes. There is a huge profit in this business if Airbus succeeds in the industrial launch of A3XX jumbo jets.

Dominating the commercial aircraft market for decades, Boeing is considered to be the most highly competitive U.S aerospace industry. “U.S. firms manufacture a wide variety of products for civil and defense purposes and, in 2010, the value of aerospace industry shipments was estimated at $171 billion, of which civil aircraft and aircraft parts accounted for over half of all U.S. aerospace shipments. The U.S. aerospace industry exported nearly $78 billion in products in 2010, of which $67 billion (or 86% of total exports) were civil aircraft, engines, equipment, and parts” (Harrison, 2011). However, its position of influence has lessened in recent years. This is due to its main competitor, Airbus, who in recent years has made significant

The following analysis discusses the suppliers, buyers, industry competition, threats to entry, and substitutes that exist within the large commercial aircraft industry. Additionally, the analysis identifies the pressure that each of these groups applies on the industry and estimates the impact this pressure has on potential industry profits. Each group is identified using a high, medium, or low-pressure classification. A high-pressure classification indicates the group reduces industry profit potential and vice versa.

This is a case about three different companies dedicated to the manufacturing of aircrafts. Those three major companies are: Boeing, Airbus Industry and McDonnell Douglas; each of one was struggling to produce enough aircraft to satisfy a seemingly unquenchable need for passenger and freight transport around the world, developed in this form many kinds of aircrafts in different models and styles.

The main objective of Boeing's strategy is to analyze the commercial aircraft industry, to understand the demand that is present, and to formulate a solution that will fulfill that segment. Currently, there are only two major players in the global market: Boeing and Airbus. Boeing is widely known as the "free market" champion, while Airbus represents the "not-so-free" approach of the European Union's organized and government subsidized

The supplier power in airlines is dominated by the world’s two largest aircraft manufacturers are Airbus and Boeing. The competition between the two manufacturers is neck to neck but that would prove to be a boon for Emirates as the prices would not rocket through the ceiling. A study shows that Emirates holds 93 Boeing aircrafts and 83 Airbus units (Planespotters, 2009). In 2007, Emirates purchased 81 Airbus flights, to extend it services- however, they chose Airbus over Boeing as the latter failed to deliver its latest aircrafts on time and moreover, Airbus had quoted a good price (Barryl, 2007). The changing oil prices also have an adverse effect on the aviation industry. In a nutshell, the bargaining power of suppliers is high.

Aircraft industry has only small suppliers while the customers are all over the world. As above mentioned the industry requires large complex cooperate alliances in its hierarchy, only few countries having high tech industry basis are able to

The five forces of Porter’s model are an exceptional tool that can help Virgin to understand the level of competition in the airline industry. Some of Virgin competitors are Qatar, British Airways etc. The managers at Virgin Atlantic can create strategies that are more successful to tackle competition and to improve Virgin competitive strengths by using this tool.

The goal of the following report is to provide a detailed analysis of Airbus using the following analytical tools: PESTEL, Stakeholder, SWOT, Porters Five Forces, VRINE, and Porters model of competitive advantage. In this report I will describe how each analysis supports the decisions of Airbus and helps identify any problems or issues facing Airbus based on the outcome of each analysis. This report will show that the analytical tools used will support Airbus’s direction and their growth in the aerospace industry, and their mission of competing against Boeing for more global market share.

Unfortunately, Boeing jets were involved in four fatal air accidents from December 1988 to March 1989, and the company missed its first delivery deadline in two decades when the 747-400 experienced production delays. These internal problems were exacerbated by increased competition from Airbus, which was heavily subsidized by a consortium of European companies and governments. Furthermore, worldwide orders of all aircraft by the airliners declined from 1,662 in 1989 to 439 in 1991. Fortunately, in 1993 NASA selected Boeing as the prime contractor for the International Space Station, which was called the largest international science and technology endeavor ever undertaken. Boeing was also becoming increasingly involved in commercial space projects and in December 1995 ten commercial space satellites were produced and launched from a floating platform at sea.

In 2000, Airbus was considering launching a super jumbo jet that they called A3XX. This aircraft could seat 550 – 900 passengers, which classifies it as a type of “Very Large Aircraft.” The defining feature for Very Large Aircraft (VLA) was that it could hold more than 400 passengers (or carry more than 80 tons of freight). Boeing was a monopolist in the VLA market, since the only other VLA available for purchase was their 747 aircraft. For Airbus, the question of deciding whether to launch A3XX was a question of whether they (a potential entrant) should attempt to break into the market of an incumbent monopolist (Boeing).