Boeing V Airbus

With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces.

As the two largest producers in the commercial aircraft industry, Boeing and Airbus have been in a long rivalry for over two decades. Because of its huge research and development cost and a volatile market demand situation, the large commercial aircraft industry has only a few viable producers that can successfully operate in this industry. At the end of 1996, there were three competitors in the industry – Airbus, Boeing, and McDonnell Douglas (MDC). When Boeing announced in December 1996 the merger between Boeing and McDonnell Douglas, the dispute has again started between Boeing and Airbus. The merger was expected to go under

The only competition the merged firm would face in some areas is OfficeMax. Even though many other retailers sell office supplies, none of them offer the same variety and one-stop shopping convenience as office superstores do. The situation is unlikely to change over time due to high barriers of entry into the market, which will give the merged firm an opportunity to raise its prices annually and still keep customers coming back.

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

When companies combine/merge the whole objective is to gain new opportunities, gain market share, grow the business, to become more innovative and to improve product offerings, utilizing/sharing the existing resources and data. From the case

• No substitutes- High perceived level of technology and economies of scale ,easy substitutes difficult to find. Boeing being market leader because of Boeing 747 fuel efficient long range jets .Airbus having total power in Europe no easy substitute as government involvement and support.

Morever, these potential new entrants could be deterred from entering the industry as the development of aircrafts can take very long lead times. It can take about 15 – 20 years to develop a next-generation commercial aircraft and production may stretch out for decades, depending on the no. of units ordered. This may act as a barrier of entry for potential new entrants.

2. What are the differences among horizontal, vertical, and conglomerate mergers? Provide real-world examples of each type of merger. What policy do you think the US should follow toward mergers? Why?

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

Airbus operates in this industry by building airplanes with seating capacities ranging from 100 to 350 seats. Over the past few years, Airbus has been extremely successful developing airplanes in this size range, increasing its industry market share to approximately 33%. However, quantifying Airbus ' past financial success is difficult because prior to its 1999 1.6 billion euro IPO, Airbus was a private partnership. As a result, very little past financial information is available.

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

In today's marketplace, distinct differences in the way competitive products work have become increasingly rare. But functional product differentiation is exactly what the rivalry between the Airbus A380 and the Boeing 787 Dreamliner is all about: Two companies with fundamentally different products, based on diametrically opposite visions of the future, engaged in a Hatfields versus McCoys battle with billions of dollars at stake.

As of December of this year, a complete report has been announced via The United States International Trade Commission (USITC) affirming damages to U.S. steel manufacturers from imports abroad. Because of additional broad domestic concerns, including bankruptcies with domestic steel manufacturers, immediate multifaceted relief is necessary. Domestically, early in this same year, imports have increased and have been negatively coupled with slowed industrial growth. Abroad, foreign firms may attempt to retaliate against U.S. exports or seek other detrimental concessions. Because of the divisiveness between these entities, it is necessary to find

5. Was the Commerce Department right to establish a new minimum floor price, rather than scrap the agreement and file an antidumping suit against Mexican tomato producers? Who would have suffered?

For years the commercial aircraft industry has been an American success story. Until 1980, U.S. manufacturers held a virtual monopoly. Despite the rise of the European-based Airbus Industrie, this persisted through the mid-1990s, when two U.S. firms, Boeing and McDonnell Douglas, accounted for over two-thirds of world market share. In late 1996, many analysts thought that U.S. dominance in this industry would be further strengthened when Boeing announced a decision to acquire Mc-Donnell Douglas for $13.3 billion, creating an aerospace behemoth nearly twice the size of its nearest competitor.