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Airbus Airliner Case Study

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INTRODUCTION

The Journal speaks about the role Airbus plays in the EADS’s business. EADS announced to the media about the upcoming changes to its shareholding structure and governance after its success in reducing governmental influence on its management. However, the firm does continue to face problems and challenges that has to be taken into consideration. Their goal of becoming the world’s biggest aerospace and defense company was delayed due to failed merger with BAE systems.
The journal also specifically mentions the problems faced by EADS. Airbus contributes to two-thirds of the company’s revenue in the past year, functioning as the EAD’s primary source of success. Unfortunately, the firm’s high dependency on that revenue seemed to increase the impact on itself, due to the current result from the production at Airbus. Other factors that contribute towards the current fail scenario is the production and quality issues at Eurocopter and also the the current corruption investigation which was casting a shadow over the defense industry.
EADS has four major companies: Airbus, Astrium, Cassidian and Eurocopter; that has enabled the company to be active in the fields of aeronautics, space defense and security.

LIMITATIONS AND OTHER OBSERVATIONS

To be brief about the companies , Airbus was formed in 1970 to compete with the large aircraft manufacturers, such as Boeing and Lockheed Martin. Aircraft development and manufacture was a money – consuming business. The involvement of different companies and countries; conflicts led to the inefficiencies and delays in the company’s production process. The involved governments faced unemployment issues and had to reduce spending in the companies. Situation was simplified by the formation of EADS. The merger allowed EADS to own 80% of Airbus. There were a lot of issues faced during the production of the A380 model, pointing to issues with wiring and software used by the production facilities, causing a 2 year delay for the delivery of the first aircraft.
Astrium resulted in May 2000. It has 3 main fields of Activity: Astrium Space Transportation, Astrium Satellites and Astrium Services. The key profit drivers are service growth and cost efficiencies.
Cassidian is a defense and security division of EADS, offering solutions for armed forces an private securities. The key growth drivers of the Cassidian division is its focus on profitable products and further cost reductions.
Eurocopter is the world’s leading helicopter manufacturer in the civil sector. It was formed in 1992. Although, there has been a steady growth over the past few years, they have been recently been facing issues such as cracks in the rotors of specific helicopters and has also been facing safety issues regarding its civilian helicopers. The key growth drivers are commercial demand and services; whereas the key profit drivers are production ramp- up and services. Emerging markets not only simulated the economy but they could also lead to increased competition. Competition would increase in the fields of aircraft manufacturing as these markets build up their local industries; their only entry barrier being capital intensiveness and essential technology. In the defense market, as in the commercial market, entry barriers scare away new entrants into the industry. However, a tough competition can be seen between competitiors. The space industry is strongly driven by national interests and institutional activities. Future development would be highly dependen on both fuel prices and development of U.S GDP. Due to China’s explosive growth, its aviation market has evolved into an important market not only for Sales but also for production. However, this market will not be able to high demand on its own.

CONCLUSION After a thorough read, we can safely say that to improve the business scenario of EADS, it could focus mainly on geographical pillars such as Europe, North America and other emerging markets. When moving into the emerging market, market entrants need to consider the extensive rules and regulation to be followed. Having said that, the companies world wide should also keep in notice of the regulations on emission. EADS’s VISION 2020 is a very well thought step towards improving the current scenario of the market. They have also represented 80% reduction in water discharge and a 50% discount on CO2 as well as other reductions in other volatile organic compound emissions.

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