Airbus A3XX Case Study Analysis
Introduction of Boeing and Airbus
In the United States, Boeing was the primary civil aviation manufacturer for over half a century. Using manufacturing and defense techniques, it soon became the world’s top producer of commercial aircraft. Of their fleet consisting of fourteen models (five families), their forerunner was the 747-400. When they first produced the 747 in 1965, their decision was criticized and called a gamble. Nonetheless, Boeing announced an initial order of 25 planes which, as a result, caused their stock prices to increase 5.1%. In spite of an initial potential failure, Boeing’s demand for the 747 aircraft continued to stay strong with 47 planes delivered in 1999 and 74 more in their backlog.
In competition with American aircraft companies, such as Boeing and McDonnell Douglas, Airbus was formed in 1970 as an association with “principal aerospace companies of Germany (Deutsche Aerospace …), France (Aerospatiale Matra), England (Britain’s Hawker Siddeley, later BAE Systems), and Spain (Construcciones Aeronauticas, CASA)” (pg 3). The company primarily focused on creating a highly competitive line of commercial aircrafts. Though, overtime, the partnership between the four countries became unmanageable and three of them formed a new company known as European Aeronautic Defense and Space Company (EADS). Airbus, one of the leading divisions in this new company, had a fleet of nine models by 1999 and “employed ‘fly-by-wire’ technology that substituted computerized control for mechanical linkages between the pilot and the aircraft’s control surfaces” (pg 3).
The A3XX
Boeing held the monopoly in the very large aircraft (VLA) market with their 747 airplanes. Airbus made a de...
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...gy to make it more powerful and attractive than the Airbus A3XX. With the potential for this project to take some time, Boeing may have to work quickly to catch up to Airbus.
Airbus’ Commitment
The decision for Airbus to commit to the project is a tough one to make. On one hand, it is possible that all of the early investors may receive discounts thus causing Airbus to lose money. However, on the other hand, it’s possible that Airbus would make even more money than they ever imagined by designing an aircraft that attracts passengers worldwide due to the greater amount of space, details, and comfort provided in each model. Furthermore, because the VLA market is expanding quickly, Airbus is able to enter that market at an early period. If the company continues creating new aircraft and strategizing well against others in the market, they may soon become a leader.
It's expected that in the first few years, Boeing will incur more expenses than income. Revenues will come at a later date when the 7E7 planes are delivered. The project will have to be evaluated periodically and management will have to make changes to ensure that the company is profitable based on current and future conditions. The board's prerogative is not to give Airbus a profit sanctuary' by not accepting the project, but rather to maintain or increase its market in the industry even if it's not profitable in the short-run. Boeing has deep pockets and should be willing to challenge its competitors.
Overall the Boeing Company has stayed strong in the aircraft field and with record profits for the past two years it looks like they are achieving their goals. Boeing has had to change their business direction over the past 100 years in order to stay a top of the aircraft industry. To maintain a good successful business they must have used a system similar to this SWOT analysis to see where Boeing needed to be to capitalize the market. Before Boeing decided that outsourcing was the way to go, a group of Boeing peers got around a table and weighed out the pros and cons. In their business analysis they saw a way to change one of their weaknesses, in-house work overload, into a potential strength. Major business decisions like this are much easier to commit too, with the use of a SWOT analysis.
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
From the perspective of Ryanair, the major issue facing the firm is its valuation in the long-term, known as its economic value. Although the firm maintains a bullish outlook, there are diverging opinions regarding the valuation of the firm among investors. The valuations of the firm vary widely, with stock price estimates ranging from 3.05 to 7.57. This range reflects discrepancies on whether Ryanair has solid business model and fundamentals as well as numerous issues that plague not only Ryanair, but the airline industry as a whole. These issues are as follows:
These have four major firms (Boeing, Airbus, Embraer, and Bombardier) in the aircraft manufacturing industry. They are separated from two parts. Boeing and Airbus hold most volume of commercial jet deals in the markets. They have a lot of competitive advantages in this market. Embraer and Bombardier pay their attention to in the regional jet market. They are dominant in this market.
When the war ended, the military’s demand for airplanes ceased. Even civilian planes met limited demand. Boeing Airplane Co. was competing with war-surplus airplanes. In order to survive, the company began building furniture and sea sleds. Although Boeing received limit...
Boeing 787 Dreamliner was first announced to the public in January 2003 with approximated costs of five billion dollars , since the sales of the aircraft were high it was supposed to enter commercial service during 2008 but the building up of aircraft seemed more anticipated than expected , since the management decided to use composite materials as an alternative for traditional metals as composite materials are lighter , stronger , cheaper and also resistance to wild variety of chemical agents including acid rain and salt spray as these are the conditions under which metals suffer , Boeing also shared their views in development of air craft with suppliers which effected in a project significantly more anticipated than expected . More than three years later after the project exceeded the estimated budget at last 787 entered commercial service in September 2011.
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
Even with its more recent founding in 1970, Airbus still has a roughly even market share of aircraft as Boeing, which was founded in 1916. Each aircraft manufacturer each has their perks and they both have their disadvantages. Boeing and Airbus each have a similar safety record within the past six years. Comparing each aircraft manufacturer in its entirety does not accurately represent the safety information of Airbus or Boeing. To be able to differentiate each aircraft manufacturer, we need to compare similar aircraft from each company. For our purposes we will compare the flagship plane of Boeing and Airbus, the 747 and A320, with Airbus being the latter.
Airbus and Boeing have developed similar capabilities, and an intense competition to be the number one in aviation. The market is a duopoly market, resulting in a low profit margin for both companies. There is slow industry growth in the aviation industry, and no clear market leader. The barrier to exit is high, which leads to intense rivalry between Airbus and Boeing.
Boeing has looked at everything from the design of the anti-collision lights, to the reduction of small gaps in the airfoil. This has created an aircraft that is extremely aerodynamic and efficient at any task it performs. The 737 was originally created on May 11, 1964, however it wasn’t until November 9, 1964 that production was officially approved. On February 19th 1965 Lufthansa placed its first order for the 737-100, and on the 9th of April 1967 the 737 flew for the first time. In 1970, Boeing had less than 35 orders for the 737 and considered canceling the program.
Boeing/Airbus Case Analysis Competition in the Commercial Aircraft Business. 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. Figure 1: Porter’s Five Forces Applied to Aircraft Industry. Barrier to entry: - High barriers to entry, to a certain extent, help understand the risks involved in operating in the aircraft industry.
Airbus A380: How the Airlines Compare." Busineesstraveller.com. Panacea Publishing, 31 Aug. 2013. Web. 1 Dec. 2013.
In 1990 Boeing was set to introduce the 777, the world’s largest and longest haul twin-bodied jet at the time. The 777 would serve the medium and long haul markets like the expanding Asian market. Boeing’s main competitors, Airbus Industries and McDonnell Douglas, had already announced plans to produce airliners that would compete directly with the 777. Analysts believed that the intense competition between the manufacturers would serve to depress prices for the airliners. Lower prices for aircraft would mean lower earnings.
Boeing was founded in 1916 in Seattle, Washington by William E. Boeing. The company is regarded as one of the world’s leading manufacturer of commercial and military aircrafts; it controls more than half of the passenger aircrafts’ market in addition to military jets and helicopters. The company also has other contributions in space technology and projectile systems (Amir, 2013). This report will analyze Boeing Company’s latest marketing strategy that the company has been dealing with for the past five years whilst the production of its much anticipated 787 aircraft. Throughout the report the aircraft will be referred to as the 787, the ’87, or the ‘Dreamliner’. Mainly, this failed strategy affected the company's negatively in terms of both sales and reputation.