...STRATEGIC ACTIONS: STRATEGY FORMULATION 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? Strategy Comparison Boeing Airbus Growth platform Point-to-point Increased fragmentation in travel to solve problem of airport congestion Hub-and-Spoke Expecting growth in travel between major hubs, particularly in Asia Product development Functional product differentiation 787 - mid-size Objective to offer the passenger the most comfortable point-to-point travel experience with as few intermediate stops as possible - more standing room, larger windows and bathrooms, ambient light settings in the cabin to adjust to the time of day, and higher cabin humidity levels. A-380 - superjumbo Will be the largest in the world, holding 550 passengers - will allow 10 million additional passengers per year to fly between airports with no increase in flights - can be configured with bars and specialty boutiques Features Fuel efficiency, eco-friendly, significantly less costly than Airbus' comparable product, light-weight composite materials, simple to operate Commonality - saves airlines costs Estimated release date May, 2008 October, 2007 Supply chain logistics Moving up the value chain - outsourcing - integration and assembly Tighter control over shared knowledge - efficient JIT programs with alliance supply partners Investment in new models $8 billion $14 billion The competitors' views of domestic (regional)...
Words: 3138 - Pages: 13
...Airbus vs. Boeing Airbus and Boeing both compete in the highly competitive industry of manufacturing commercial aircraft. Over the years they have each controlled the market at differing times due to competitive advantages – an ability to create value through a company’s strategies and operations that its competitors cannot (ref – Strategic Management textbook , pg 22) Boeing, formed in 1916 by William Boeing and George Westervelt, dominated the industry until the 1970’s, when Airbus was organized through a collaboration between Britain, France and West Germany. Airbus began manufacturing the A-300 series which enabled them to capture 10% of the market share by 1975 (ref article), no small feat considering they were competing against the giant Boeing. Airbus’s ability to compete with Boeing and gain market share will be analyzed using the following business models: PESTEL Analysis, SWOT Analysis, Porter’s Five Forces, VRINE Analysis and Porter’s Model of Competitive Advantage. PESTEL ANALYSIS Political – Airbus was a product of a merger between three European countries; Britain, France and West Germany. In the 1970’s the political climates of all three were relatively stable. The three countries worked together in order to compete with the US. They did have to adhere to international trading policies and agreements (NAFTA, GATT). Economic – As they were competing largely in the US market, Airbus needed to constantly...
Words: 874 - Pages: 4
...Manufacturing Industry Analysis Manufacturing Industry Analysis Introduction Manufacturing industry refers to businesses that employ machines, tool, labors, chemical and biological processing to convert raw materials to finished goods on a relatively large scale. This industry makes up a sizable portion of the industrial production sector in developed nations. It also boosts the economic growth and creates jobs. In 2013, manufacturers contributed $2.8 trillion to the economy, up from $2.03 trillion in 2012. This was 12.5% of GDP. For every $1.00 spent in manufacturing, another $1.2 is added to the economy, the highest multiplier effect of any economic sector. Manufacturing promotes innovation, productivity and trade. Globally, manufacturing continues to grow. It now accounts for approximately 16% of global GDP and 14% of employment. The latest trend of manufacturing and industrial companies is that more and more of them are investing in emerging market to gain a foothold in future large market. Manufacturers expect about 40% of their global revenues to come from emerging market by 2017. General Environment Analysis General Environment Segment | Changes that may affect the industry | Level of Impact | Threat, Opportunity or Both? | What are companies in the industry doing about this trend? | Demographic | Education, sex, race | Moderate | Opportunity | More and more knowledgeable and skilled workers and expertise | Sociocultural | More women in workforceMore...
Words: 8727 - Pages: 35
...Boeing: Redefining Strategies to Manage the Competitive Market CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production...
Words: 3380 - Pages: 14
...CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production industry? Long-term results? STRATEGIC ACTIONS: STRATEGY...
Words: 3372 - Pages: 14
...Boeing |1 Boeing Strategic Analysis Report Professor Jiang Bus 189 Matt Fong Karolyn Vong Kenneth Wong Vivian Li Jae Woo Chae Joseph Eslao Boeing |2 Assessing the Industry Each year the strong economic growth of the U.S. has led to sustained high oil and fuel prices. Between 2003 and 2007, jet fuel expenses have increased dramatically by 15 percent to more than 30 percent of operating cost. Because of this, many airlines are demanding new aircraft that are fuel efficiency in order to help reduce their operational costs. The current trend of increasing fuel prices plays a key role in increasing the current demand for new aircraft or commercial airplanes that are more fuel-efficient. In addition, the rising fuel prices have taken a big effect on the economy. As fuel prices affect consumer goods and spending, leisure travel is expected to decrease, thus affecting the airline industry's bottom line. Furthermore, since the economy has gradually moved into a recession from the effects of rising fuel prices, many airlines that are struggling to stay out of bankruptcy, are looking for more ways to become cost effective. Thus, further fueling the demand for new commercial aircrafts to become more fuelefficient (2007 Annual Report). In order to save on costs so that Boeing can provide lower prices to its customers, Boeing and its competitor, Airbus, have both turned to outsourcing. Outsourcing has allowed Boeing to become more competitive. Furthermore...
Words: 9300 - Pages: 38
...Boeing |1 Boeing Strategic Analysis Report Professor Jiang Bus 189 Matt Fong Karolyn Vong Kenneth Wong Vivian Li Jae Woo Chae Joseph Eslao Boeing |2 Assessing the Industry Each year the strong economic growth of the U.S. has led to sustained high oil and fuel prices. Between 2003 and 2007, jet fuel expenses have increased dramatically by 15 percent to more than 30 percent of operating cost. Because of this, many airlines are demanding new aircraft that are fuel efficiency in order to help reduce their operational costs. The current trend of increasing fuel prices plays a key role in increasing the current demand for new aircraft or commercial airplanes that are more fuel-efficient. In addition, the rising fuel prices have taken a big effect on the economy. As fuel prices affect consumer goods and spending, leisure travel is expected to decrease, thus affecting the airline industry's bottom line. Furthermore, since the economy has gradually moved into a recession from the effects of rising fuel prices, many airlines that are struggling to stay out of bankruptcy, are looking for more ways to become cost effective. Thus, further fueling the demand for new commercial aircrafts to become more fuelefficient (2007 Annual Report). In order to save on costs so that Boeing can provide lower prices to its customers, Boeing and its competitor, Airbus, have both turned to outsourcing. Outsourcing has allowed Boeing to become more competitive. Furthermore, the option of outsourcing...
Words: 9300 - Pages: 38
...Table of Contents 1. Executive Summary 2 2. Reasons Boeing cancelled its development of the SuperJumbo 3 2.1. Boeing had an alternative to developing a new aircraft 3 2.2. Boeing already had market share 3 2.3. Boeings market analysis did not show sufficient demand 3 3. Strategic weaknesses in Airbus’s customer strategy 4 3.1. Strategic Analysis of Airbus 4 3.2. Analysing resources and capabilities of the organisation 5 3.3. Shaping the organisation through vision, mission and purpose 5 3.4. Customer strategy at Airbus 6 4. Is the Airbus strategy driven by customers? Or rather more by a sense of rivalry with Boeing? 6 5. Airbus’s demand estimates and implications for a customer driven strategy 7 6. Support for Airbus’s decision to proceed with the SuperJumbo 9 7. Conclusion 10 8. Bibliography 11 1. Executive Summary Boeing cancelled the development of the super jumbo after it had conducted a research. What informed this decision was the fact that there was no sufficient demand to justify the $7 billion investment. Instead of pursuing further the super jumbo development they decided to stretch their existing aircraft to cater for more passengers. They had no pressure to develop the super jumbo because they had the largest passenger aircratf at the time and had no competition at that segment of the market. This means that the segment of the market was monopolised by Boeing Airbus on the other hand wanted to penetrate the long range passenger...
Words: 3009 - Pages: 13
...Executive Summary Activities in the commercial aeroplane manufacturing industry have been outshined by the competition involving the European owned Airbus and the USA owned Boeing. These two companies exist as a duopoly at the top end of the commercial aeroplane manufacturing industry that covers the development of airplanes with a capability of more than 200 persons. Other aeroplane manufacturers also exist but at the lower end of the industry, these smaller firms mainly develop low capacity airplanes that basically convey less than 150 persons. Boeing is a United States of America based company which was founded by William Edward in 1916, the firm has been dominating the industry since its inception while on the other hand Airbus was founded in 1970 by the European Aeronautic and Space Co. (EADS) with its headquarters in Toulouse, France in other to challenge the monopoly thus far enjoyed by Boeing. The trade disputes or disagreements involving the European Union (EU) as well as the United States (US) take precedence in the rivalry or fight between this two firms. Whilst Airbus receives subsidies in the form of launch aid from the European Union while at the same time Boeing is granted right to use the United States military’s Research and development technology. Owing to the soaring operating fund as well as long product break even time associated in the airplane manufacturing industry, it can be reasonably debated or argued that it will be somehow difficult for each of...
Words: 7131 - Pages: 29
...1. How does e-Enabled create value for Boeing? In the “Essentials of information systems for managers”, Piccoli does not only define value creation as the genesis of worthwhile things that did not exist before (Pic, 214), but also explains the two major ways with which added value could be created (Pic, 222): either increasing customer willingness to pay by doing something of value for customers, or decreasing supplier opportunity cost by working with the firms’ suppliers on providing the needed resources for less money. The former (CWP) is defined as the maximum amount the customers are ready to spend on the firm’s product or service (Pic, 215), whereas the latter (SOC) is defined as the minimum amount of money the suppliers are willing to accept before providing the needed resources (Pic, 215). As far as Boeing is concerned, the new e-Enabled strategy focused on increasing the customer willingness to pay, and I quote from the case (LYN, 1): “Boeing unveiled a new strategy that executives believed would help its airline customers improve efficiency and profitability and also differentiate its products in the market place.” If we analyze this quoted statement, we will see that the way Boeing intended its customers to create added value from e-Enabled is twofold: First, from e-Enabled’s potential to reduce costs complexity, provide real-time situational awareness for both flight crews and airline operations centers, improve operational efficiency, enhance the travel experience...
Words: 1796 - Pages: 8
... Abstract The aircraft manufacturing industry is dominated by a few key players: Bombardier, Boeing, and Airbus being the most prominent. It is in a constant struggle to deliver ever more intricate machinery that are safe and reliable - while maintaining a competitive cost structure. With countries such as China and India becoming more commercialized, air travel will continue to grow at a consistent rate; however, steady growth is not without its challenges: rising fuel prices and mounting material costs have forced aircraft manufacturers to look for other ways of maintaining a competitive structure. One way of maintaining a competitive cost structure is through outsourcing of non-fundamental core jobs. This practice has become so prominent with some of the world’s major aircraft manufacturers that the parts used to build planes today come from all over the world. The airline industry is a fairly resilient industry, even with slow economic times the need for people to travel for business and pleasure is still present. Outsourcing of non-core jobs may be the answer for cost efficiencies but can have serious economic, political and societal consequences that must to be taken into consideration by all businesses in the aircraft manufacturing industry. Introduction Aircraft manufacturing is a competitive industry; by definition, this industry is an oligopoly. In this competitive structure sellers have significant influence over the buyer and therefore must respond to the demands...
Words: 3083 - Pages: 13
...------------------------------------------------- INTRODUCTION This case discusses the history of Boeing and salient forces affecting the global aircraft industry, along with the key strategic issues driving Boeing’s competitive strategies. Boeing and Airbus dominate the global aircraft industry, but have very different visions of the future of commercial air travel. Consequently, the strategies they have devised to manage the competitive environment are disparate. The case provides a unique opportunity to explore these differences, how functional strategies support the overall competitive strategy, and the critical decisions now faced by both competitors. The objective of the case study is to evaluate current industry conditions and to make corrective recommendations to improve Boeing’s strategy. The shortcomings of the company’s functional strategies should also be examined in search of measures to improve organizational performance. * Compare the two competitor's strategies. Based on the industry environment, what conclusions can be drawn? * Since Boeing made its decision to pursue a product strategy based on the point-to-point airline business model, what new market conditions have developed? What impact are they likely to have on the company’s success? * Evaluate the pros and cons of Boeing's outsourcing strategy. Is there adequate support for the company's decision to "offload" parts production? * Consider the status of commercial...
Words: 3175 - Pages: 13
...Case Study 39 Airbus vs. Boeing Prepared by Lisa Neumann Matthias Pernkopf Viktoria Scheidl Case study 39 Airbus vs. Boeing Contents: • • • • • 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. Question 1 Why is the aircraft manufacturing industry dominated by only two companies?Discuss the barriers...
Words: 779 - Pages: 4
...aerospace manufacturer and the challenges the company must face to stay on top of this competitive market. Abstract Take a look inside the world’s leading aerospace manufacturer and the challenges the company must face to stay on top of this competitive market. the Boeing Company Business Model and Competitive Strategies the Boeing Company Business Model and Competitive Strategies Alexandra Accardi CS 782 IT Strategy and Management Alexandra Accardi CS 782 IT Strategy and Management Contents Introduction 2 Business Model 2 Boeing Commercial Airplanes (BCA) BCA is the division that deals with manufacturing commercial jetliners for more than 40 years. More than 10,000 Boeing planes are currently in service around the world which is 48% of the world fleet (boeing.com). There are a few different families in the commercial space: The 737, 747, 767, 777, and the 787 family. 2 Boeing Defense, Space & Security (BDS) 2 Boeing Capital Corporation (BCC) 2 Engineering, Operations & Technology (EO&T) \ 2 Shared Services Group (SSG) 3 Employee and Revenue Data 3 Market-Oriented Model 3 Financial-Oriented Model 4 Competitive Forces and Challenges 5 The Rivalry of Competitors 5 The Threat of New Entrants 5 The Bargaining Power of Buyers and Suppliers 6 Competitive Strategies 6 Business Model Evolution 6 Best IT-Supported Proposal 7 References 8 Introduction Boeing is a manufacturing company that produces products and services such as commercial...
Words: 2295 - Pages: 10
...and carriers for their volatility (Strategic Direction, 2004) – there are so many strategic factors that can affect the financial bottom line. The last three decade we have seen such imponderables make in the battle between Airbus and Boeing even more fascinating. For Taylor (2003), the fight for supremacy between these two manufacturers puts such titanic confrontations as Ford versus Chevy and Nokia versus Motorola in the shade. This paper takes an empirical approach to examining international competition and marketing strategy adaptation in the wide-body aircraft market. The discussion topic will be organized into three sections, beginning with failure start of Airbus Industry GIC. Explaining in deep analysis of the reason behind the difficulties that Airbus faced when entering upon the civil aviation industry. While we continue on to the second part where Airbus have broken ground with a leading market share in the late 90s, what marketing strategy did Airbus initiate in order to achieve this enormous success when going against its sole competitor the mighty Boeing. Last but not least, the current market condition. The difference in strategy that each of the duopoly has apply, Airbus going for the large airliner in hub-and-spoke system and Boeing targeting at manageable size and fuel efficient in a point-to-point configuration. Airbus has come far and long, with a sizable success in gaining market share from its monopolistic competitor. But our supposition is whether Airbus...
Words: 2910 - Pages: 12
