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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) and international markets have significantly influenced their market estimations and subsequent strategic decisions. In today's airline production industry, market share is the major determinant of success.
Each company attempts to develop its products to match forecasted market demand by producing airplanes that offer the appropriate size, range, fuel efficiency, and technology.

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