a) Provide a historic perspective regarding how the rivalry Between the US and the Soviet Union unfolded.
It started in the early 1990s. The Soviet Union made regulations to control over many aircraft manufactures. Many brands and companies were merged. During the years past the collapse of the Eastern Bloc, large airline manufactures left the market because of bad sales. Therefore, only Boeing and Airbus stayed on this market. We call this situation duopoly. In past ten years, the competition was very tight. At first, Boeing had advantages over Airbus in orders. However, in past years, Airbus received more orders than Boeing. In addition, Airbus is the winner in the number of the aircraft delivered, but Boeing is not far behind.
b) Identify at least three (3) distinct factors that provided Boeing and Airbus with a competitive advantage over each other, and three distinctive missteps by each firm that caused it to lose a competitive advantage.
Boeing
Three distinct factors:
Technology. Boeing 787 is made of composites that reducing fuel burn to some extent Even though Airbus improved its technology, the technique of Boeing is more advance.
Strong outsourcing capability: Boeing has maintained a long and outstanding relationship with Japanese suppliers who provide high quality components and efficient assemble line.
Historical prestige: Boeing has a long history to provide trusted services and a good public image.
Three distinctive missteps:
Battery issues: It is about electricity problems that cause several safety incidents such as fires accidents. Battery issues result in side effect of Boeing’s public image. Supply chain: Boeing lacks of experience in managing a multitier supply chain, which results in that Boeing cann...
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Reference:
1. Parimucha, J. (2010, November 3). Airbus vs Boeing: The history in short.WhichAirline.com. Retrieved April 25, 2014, from http://www.whichairline.com/news/airbus-vs-boeing-the-history-in-short
2. SUBSIDY DOGFIGHT – BOEING VERSUS AIRBUS. (n.d.). Global Trade and Logistics. Retrieved April 25, 2014, from http://www.globaltradeandlogistics.net/?p=39
3. Competitive factors in the Aircraft Manufacturing Industry (Airbus: Challenger to Market Leader). (2011, March 17). Competitive factors in the Aircraft Manufacturing Industry (Airbus: Challenger to Market Leader). Retrieved , from http://assignmenthelpseries14.blogspot.com/
4. How Your Competition Affects Your Strategic Plan. (2011, November 5). Corporate Strategy Consulting. Retrieved , from http://www.methodframeworks.com/blog/2011/how-your-competition-affects-your-strategic-plan/index.html
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.
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue. Since Qantas and Virgin are the only two Airlines supplying domestically in Australia, they account for all of the profits in the market and consequently they are in direct competition with each other. Because only two firms are competing, each firm must carefully consider how its actions will affect the other, and how its rival is likely to react. Thus, strategic considerations regarding the behaviour of competitors in this duopoly are essential in order for Qantas and Virgin to set prices.
...gainst all odds, it has become the companies greatest asset. In order to protect their asset, Boeing is not becoming complacent, and is instead striving to make a wide variety of aerodynamic improvements.This has cemented the 737 as a market leader, and it will retain its lead for decades to come.
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/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 industry was formed as the conglomeration of western European countries which included Britain, Germany, and Spain and was led by France. During that period, Boeing was the largest manufacturer of the commercial aircrafts and held the monopoly in the market, which brought the aviation industry of the European nations into their senses. This led to the formation of France led Airbus. Now, Airbus is one of the leading manufacturers of aircrafts and has a product line of aircrafts which range from economy to luxury and from 150 to 850 carrying capacity. It also captures almost half the market. The factories of Airbus are all over Europe, headquarters being at France and have fully owned subsidiaries, spare and service parts centers spread
Michael, D. (2010, June 9).Emirate Airline Orders More Airbus Planes, Challenging Germany’s Lufthansa. The Wall Street Journal, p.B1.
The main threats to the industry over the next five years are the rise in oil prices, legislation, the TSA, and labor costs. Each of these threats affects the scheduled air transportation industry, not only endangers Delta Airlines, but the entire industry. As the price of labor increases for ground operations and pilots, this creates a burden on the industry by causing them to spend more to satisfy their labor requirements. The price of fuel increasing leads to the price of fuel increasing, which not only affects a single airline, but every airline. With each time that the crude oil price rises, the prices associated with the costs of refining the jet fuel as well as transporting it.
Additionally, deregulation and liberalization has accompanied the globalization of the airline industry, so that companies have had to compete against each other in new markets, as well as to gain entry into new territories. The rise of low cost local and regional airlines has made the competitive environment difficult to maneuver for large, formerly-state-subsidized national carriers. This has resulted in the need for strategic alliances between airlines in order to attempt to protect market shares and profits (Friehe and Curti, n.d.).
... Airbus pretend to accomplished their missions and goals by using strong strategies such as competing with the highest standards of quality and safety.
When an airline does not have a sustainable competitive advantage, it does not have any properties of differences from there competitor and turns to a dangerous price war. The sustainable ...
A standout amongst the most noteworthy vital choices Boeing made in the 787 undertaking identified with out-sourcing. Truly Boeing had both composed and fabricated the vast majority of the parts for their airplane. For the 787 undertaking a choice was made to move further towards a frameworks joining model. In the combination model Boeing might band together with outsider suppliers around the globe who might help plan, produce and supply segments for the airplane. Those parts might be transported to Boeing production lines in the USA and gathered into the last item. On paper the choice to go about as a "frameworks integrator" instead of maker had bid. It spreads the danger and moves expenses to the suppliers while lessening the venture required by Boeing....
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.