...easy for the aircraft manufacturers to switch suppliers. However, some parts require a high degree of specialized knowledge and are differentiated from others (like the engine), thus increasing bargaining power of this group. 4. Bargaining Power of Customers: High. There are relatively few buyers of large commercial aircraft. In addition, the airlines that purchase aircraft earn low profits thus making them more price sensitive. Also, each customer represents a large portion of the manufacturer’s orders. 5. Competitive Rivalry: High. Boeing and Airbus compete intensely in the large passenger jet aircraft market. Boeing was the market leader for many decades, but recently Airbus has challenged its position. Since industry growth is slow, both companies fight for market share. Issues the 787 will address: Bargaining power of the airlines that place huge orders and the competitive rivalry between Boeing and Airbus have the largest...
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...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...
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...Airbus vs Boeing !1 Jon Martin-Vegue Professor: Capt J. Green AVSC 2150 January 16, 2016 Airbus vs Boeing Good economic times is accompanied by an excess of wealth. This excess wealth will be used in a variety of ways for enjoyment that will allow people to travel places they would not normally go. Excess wealth is exactly what the airline industry profits from. Airbus’s new A380 aircraft will thrive in this environment because of how large the aircraft capacity is. It will provide the additional capacity needed to increase airline revenues during good economic times. The 550 seat capacity will allow for lower ticket prices giving more passengers the opportunity to visit places all around the globe. While airlines will be paying quite a steep price for the A380, for as long as the good economic times continue there should be no problem being able to fill the seats which in turn will fill the pockets for the airline. During poor economic times people are less likely to spend money and tend to save as much as possible. Job security is always a fear that is holding people back form excess spending. During these hard times the airlines are hit hard because of the lower amount of travelers. Airlines that own aircraft such as the A380 will have trouble filling all 550 seats due to the high prices. These “high prices” are mostly due to the drastic amount of fuel that this aircraft uses to fly form hub to hub (www.planes.axlegeeks.com). Airlines will be turning...
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...Boeing V. Airbus Mark Kenley Utah Valley University Airbus and Boeing are two of main aircraft manufacturers in the world. They are also each other’s competition. Good economies have an impact on the aviation world, as well as when the economy is poor. The function and constructions of the aircraft have a big impact on whether they succeed or do not. It also is a deciding factor on whether or not the aircraft will succeed in the future. If you are a part of the aviation world, you should be somewhat familiar with Boeing and Airbus, or at least recognize the name. Some of us, like myself, aspire to be left seat in either one of them someday. Although they are similar aircrafts and forms of transportation, they still are different in many ways. They are also each other’s main competition. The economy, whether it is bad or good, obviously has an effect on both The Boeing and The Airbus. But, when it comes to determining which will be more likely to succeed in the future, it is best to start doing some research. Boeing is the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. Boeing is also a major exporter and supplies customers and governments in over 150 countries. Although the aviation world immediately thinks of aircrafts only when they hear the word “Boeing,” they also have products manufactured like satellites, weapons, and even launch systems. Boeing was also founded nearly 100 years ago. July...
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...Harvard Business School Strategy Working Paper Series Working Paper Number: 02-061 Working Paper Date: February 2002 “Airbus vs. Boeing in Super Jumbos: A Case of Failed Preemption” Benjamin Esty (Harvard Business School) Pankaj Ghemawat (Harvard Business School This paper can be downloaded without charge from the Social Science Research Network electronic library at: http://ssrn.com/abstract_id=302452 Airbus vs. Boeing in Superjumbos: A Case of Failed Preemption* August 3, 2001 Rev. February 14, 2002 Benjamin C. Esty Morgan 381 Harvard Business School Boston, MA 02163 Tel: (617) 495-6159 e-mail: besty@hbs.edu Pankaj Ghemawat Morgan 227 Harvard Business School Boston, MA 02163 Tel: (617) 495-6270 e-mail: pghemawat@hbs.edu *Acknowledgements: Ramon Casadessus-Masanell, Bruno Cassiman, Richard Caves, Ken Corts, Tarun Khanna, Julio Rotemberg, Vicente Salas Fumas, Xavier Vives and seminar/workshop participants at Boston University, Copenhagen Business School, Harvard Business School, INSEAD, New York University and Universitat Autonoma de Barcelona provided helpful comments. So did senior executives at both Airbus (Adam Brown, John Leahy) and Boeing (Tim Meskill, Randy Baseler, and Jim Jessup), although their comments do not constitute an endorsement of the material in either the teaching case or this paper. We also gratefully acknowledge help from Ed Greenslet, Don Schenk, and The Airline Monitor in obtaining data and insights about the commercial jet aircraft industry...
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...Topic Paper – Week 3 Boeing Commercial Air versus Airbus Group Submitted by Cita Renee’ Reid Prepared for Professor Greg Gotches BUSN 6120, Managerial Economics Spring 1, 2015 Section OE Webster University 24 January 2015 CERTIFICATE OF AUTHORSHIP: I certify that I am the author. I have cited all sources from which I used data, ideas, or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Cita Renee Reid________________________24 January 2015 Signature Date Introduction For nearly four decades, Boeing Corporation and Airbus Group have battled for supreme dominancy of the large civil aircraft (LCA) market. In years past, U.S. held Boeing had dominated the commercial aircraft industry; however, between YY and 2013, European-owned Airbus, had slightly edged Boeing out as the top supplier. In 2014, the precarious balance was tipped once again, as Boeing delivered more aircraft to its customers; thereby, reestablishing itself as the number one manufacturer. This paper will explore the history of the companies, how they are alike and different (particularly their production process), how they approach the aircraft marketplace, where their rivalry will likely head and the most probable outcome of their ongoing competition. It will also give a brief history and overview of the World Trade Organization (WTO) 2012 ruling over the receipt of governmental subsidies...
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...INTERNATIONAL STRATEGY 601 DUE DATE : July 23 2007 TABLE OF CONTENTS INTRODUCTION OF BOEING AND AIRBUS 4 THE SIMILARIES BETWEEN AIRBUS AND BOEING 4 THE DRIVERS OF GLOBAL STRATEGY 4 COST DRIVERS 4 MARKET DRIVER 5 ALLIANCE STRATEGY 5 Exhibit 1. The Global Product Division Structure at European Aeronautic Defense & Space Company (EADS) 7 Exhibit 2. The 7E7 Structures Work Shares 8 Exhibit 3. The partners in producing the components of A380 project 8 Exhibit 4. The Partners in Producing The Components of Boeing 787 Project 9 TURN THE PROBLEMS OF AIRBUS INTO THE ADVANTAGES OF BOEING 11 Exhibit 5. The orders and delivery of Airbus and Boeing for five years 11 Exhibit 6. The Value Chain 12 STRATEGIC CHOICE IN A GLOBAL MARKET 13 ADAPTATION AND DIFFERENTIATION TO BE SUCCESSFUL 13 DEMAND CONDITION 13 Exhibit 7. Compare between Boeing 787 Dreamliner families and Airbus 14 CONCLUSION 16 APPENDICES 17 Appendix 1. The Airbus A380 Orders 17 Appendix 2. The Boeing 787 Orders 18 REFERENCES 19 INTRODUCTION OF BOEING AND AIRBUS “Boeing is the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military” (About Us: Boeing in Brief). It was established by William Boeing in 1916 in Seattle, Washington. Its international headquarters now...
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...Airbus vs. Boeing Stuart Taylor Chris Tillmanns November 13, 2002 The airline manufacturing industry consists of only two firms, Airbus in Toulouse, France and the Chicago-based Boeing. Two recent research and development moves at the two firms offer an insight into the positioning strategy that each is taking in the future market place. It seems the two firms are accenting two niche markets with a pair of flagship products, neither of which are in direct competition with each other. This will allow for the firms to stave off price competition in the short term by differentiating product lines, which is desirable given the recent increase in buyer power gained by lowcost airlines. Current Market Position Airbus Airbus controls 46% of the market. 1 It was formed in the 1970’s as a consortium of European aerospace firms, and was integrated into a single company in 2001. It was designed by European nations to compete with the large American manufacturers and received subsidies from the various European governments. Their product line extends from the single aisle A320 to the larger, twin aisle A340. Boeing Boeing, naturally, currently controls the other 54% of the market for commercial aircraft in terms of value delivered, and its commercial unit took in $30.1 billion in 2001.2 It introduced the 747 Jumbo Jet in 1966 which revolutionized the concept of air travel due to its large size, and ushered in the era of mass air travel. In addition, it produces a wide range...
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...Boeing Co. and EADS Airbus: Oligopolistic Competition and the Effects in the Managerial Decisions. Carlos Fermin Jahn Pace University Business 150 – Contemporary Business Practice Executive Summary……………………………………………………………..............………..3 Introduction………………………………………………………………………..............……...4 Definition of Market Structures……………………………………………….….............…….5 Competition…………………………………………………………….….............……..5 Oligopoly…………………………………………………………………..............……..5 Table 1. Differences between Competition and Oligopoly…………..............…….6 The Global Market Structure for Large Civil Aircraft Manufacturers…….............……..6 Figure 1. Flow of Large Civil Aircraft (LCA) Production…………............……..7 Figure 2. Large Civil Aircraft (LCA) Markets Distribution………............………7 Competitive Criteria: Airbus vs. Boeing Co…………………………………................…….8 A) Competition by Outsourcing……………………………………...…...................8 B) Competition by the Use of Technology……………………………….…..….…...8 B.1. Uses of Composite………………………………………………....…..…8 B.2. Fly-by-Wire………………………………………………………..………9 C) Competition in the Global Market…………………………………...…..….……9 Table 2. Orders by Company (2005-2011)……………………….....…….10 Table 3. Deliveries by Company (2005-2011)……………………..……..10 Graph 1. Deliveries and Orders Overly by Company (2005-2011)..…10 D) Effects of Competition in Currency...
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...Airbus Vs Boeing Nov 2014 1 I. Airbus Airbus has been created because the French, German and British governments wanted to launch a European aeronautics program to compete with American companies such as Boeing, McDonnell Douglas or Lockheed. In 1970, l’Aérospatiale and Deutsche Airbus make a consortium. In 1971, the Spanish C.A.S.A join them, followed in 1979 by British Aerospace. At that moment, the German and the French used to get 38% of the total benefice, 20% was for the British and 4% for the Spansih The first flight of an Airbus plane was on May 12th.1979 with Air France. The plane made a return trip Toulouse-Paris. The most famous plane was A320. There were 10,994 orders for this plane and only 6,285 of them are delivered for the moment. The last plane Airbus launched is the A350 XWB. There are already 750 orders from 39 customers worldwide Airbus usually sales its planes to normal flight companies like Air Austral, Air France, Amedeo, Asiana, Emirates; but also Jetliners and private owner (Arabic prince …) and the industry. II. Boeing The first plane of Boeing was a Seaplane, the Boeing Model I, on June 15th, 1916. The New-Zeland Flying School was the first company to pilot the plane with two crews at a maximum speed of 121 km/h. 2 The most famous plane of Boeing is the B-737. The first flight was in 1968 with Lufthansa Company. Nowadays, 8237 plane were sell and this plane is used by Southwest Airlines, Ryanair...
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...REV: SEPTEMBER 18, 2007 ERICH ALEXANDER VOIGT JORDAN MITCHELL Airbus vs. Boeing (A) Should Airbus go ahead and develop its own version of a super jumbo (the A3XX)? Should Boeing develop a larger version of the 747? What would Boeing and Airbus gain by teaming up? What could they lose? The answers to these questions would determine the future of both companies for many years to come. The Commercial Airline Industry Do The global aviation industry was sized at approximately $100 billion as of 1992. The single largest segment was the manufacture and sale of large commercial aircraft, which totaled $38.5 billion in 1991.1 The sale of large commercial aircraft was expected to grow to $40 billion by the end of 1992. The worldwide commercial aircraft fleet was made up of nearly 8,000 passenger and 1,200 cargo planes spread out over 450 airlines and operators. Large commercial aircraft were defined as airplanes with 100 or more seats. Large aircraft made up 90% of the fleet, while smaller airplanes accounted for the remaining 10%.2 The VLCT was defined as a plane over 400 seats or with the ____________________________________________________________ ____________________________________________________ Professor Ramon Casadesus-Masanell, Erich Alexander Voigt (Tiggeman Associates), and Research Associate Jordan Mitchell prepared this case. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are...
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...Boeing versus Airbus: The End Results becomes an Air Force Debacle Jason Bourne Park University November 17, 2009 Abstract This paper explores the highly controversial bid process and subsequently protest for the Air Force’s KC-X refueling tanker. The main participants for the new refueling tanker contract were Boeing and Northrop Grumman (NGC) as prime contractor through a joint venture with the European Aeronautic Defense and Space Company (EADS). The Boeing Corporation has been the standard in the aerial defense industry. Their challengers, NGC and EADS, the owner of the Airbus, comprised of two very formable entities capable of taking on the aerospace giant Boeing. There were a lot at stake. Boeing has considered in being the “pride of American aerospace” unseated from the top perch of the aerospace industry by losing military contract potentially worth about $100 billion dollars. (Herszenhorn and Bailey, 2008) Overall, Boeing was a heavy favorite to win the contract being that it has manufactured tankers in the past for the Air Force. Two weeks later after the announcement, Boeing filed an appeal through the General Accountability Office (GAO) to protest the Air Force’s decision. This paper will discuss the Boeing’s basis of appeal and contrast them with the GAO’s findings in their protest. The source selection of the aerial refueling tanker contract became one of the most controversial procurement process in the history of the United States. Boeing versus...
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...Caso: Boeing versus Airbus: Dos décadas de disputas comerciales. 1. No creo que fuera una subsidiaria competitiva ya no iba a tener el mismo poder que tiene al recibir subsidios de cuatro países importantes estos son: Gran Bretaña, Francia, Alemania y España. Al recibir subsidios se fortalece por que recibe ayuda extras que por lo general una empresa no recibe si opera sola. Con esto tiene la ventaja de reducir sus gastos y aumentar sus ganancias. Si no recibiera 13.5 millones de subsidios en préstamos por debajo de las tasas del mercado, no tuvieran la ventaja de poder financiar a sus clientes el 80% del costo en un término de 8 a 10 años a una tasa de interés anual de 7%.Con esta ventaja son superiores a Boeing por consiguiente sin las ayudas de estos a países no pudiera ofrecer una mejor oferta que Boeing. 2. Los cuatro gobiernos Europeos le dan subsidios a Airbus porque esto le daría una mayor ventaja competitiva en el mercado enfrentándose a su enemigo mayor Estados Unidos. Otro factor darle a Airbus el poder adquisitivo para enfrentar los atractivos ofrecidos a los clientes de su competidor. Querer que la nación Europea fuera el líder en el área de industria de aviones frente a la nación Estadounidense. 3. No la considero razonable eso siempre va a ser así las empresas multinacionales buscan siempre maximizar su ganancias a costa de lo que sea. No importando la política economía que tengan siempre las empresas van a querer obtener su beneficio del gobierno...
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...How might the repayable launch aid for Airbus change its decision making on launching a new aircraft? What are the potential consequences for (a) Boeing, (b) airlines, and (c) the profitability of both Boeing and Airbus? Boeing: • Launch aid • Government agencies Airlines: • Price per aircraft • Accommodating runways • Increase in costs The probability of both Boeing and Airbus is: Pull fundin When Airbus originally received government aid in the 1960’s, it was a new enterprise. Today it is the global market share leader in the commercial aerospace business. How do gains in market share affect the legitimacy of claims for subsidies? Over the life of Airbus, it has grown into the global market share leader in the commercial aircraft industry. Gains in market share affect the legitimacy of claims for subsidies and in Airbus’s case as they have gained a larger market share their subsidies have gone down. Eventually these subsidies will almost become nothing as is continues to grow. The government organization do benefit from these subsidies they lend. The space subsidies are repayable with interest so the subsidies are legitimate. Suppose the effect of the legitimacy of the claim for subsidies is going down when the company became stronger. The subsidies have to oppose as the company’s power because of the company become stronger, they do not need to get subsidies. Otherwise, if the company market share loses, subsidies must be increase. The company is a global...
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...Page |1 INTERIM REPORT ON COMMERCIAL AIRCRAFT MANUFACTURING INDUSTRY The world aircraft industry can be divided into 2 major segments: 1. Military and space aero-structure 2. Commercial Aircraft 1. Passenger aircraft – a. LCA (Large Civil Aircraft) and b. Small & medium sized aircraft 2. Cargo aircraft COMMERCIAL AIRCRAFT INDUSTRY Commercial aircraft manufacturing industry consists of very few players dominated by two big players namely Boeing and Airbus, yet it is very complex because of a number of suppliers at various levels (Tiers) creating the differences in the supply chain management of different players. The industry has undergone a steady growth and it is set to increase in the coming future due to strong demand forecast especially from emerging economies and huge backlog of orders from the major Airlines. Hence the industry continues to be profitable. But at the same time, being a capital and technology intensive industry, it poses severe challenges in front of potential players. INDUSTRY ANALYSIS- (PORTER’S FIVE FORCES) Threat of New Entrants-Low There are high entry barriers due to high R&D investment, sophisticated technology and difficulty in financing because of very high capital intensiveness. But positive economic growth and long range forecast in emerging economies are attracting new players to enter despite huge entry barriers. Cost efficient carriers from China and other economies like Mexico and Russia are trying to sabotage the duopoly. Threat of Substitutes-Low...
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