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Airbus and boeing case study
Airbus and boeing case
Airbus and boeing case study
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BOOK REPORT BOEING VS AIRBUS BY JOHN NEWHOUSE
This book by John Newhouse provides an exhilarating account of the competitive battle between the world's dominant commercial aircraft manufacturers. In the Aviation Industry, there have always been various airframe producers which where competing against each other. Throughout the years, two of them gained the majority of the market share. It encompasses two of the biggest companies in the world, going to extremes to finalize sales, and more importantly, to gain a higher percentage of the market share and outmaneuver the other. Airbus and Boeing are seen as national symbols that receive massive subsidies, benefits, contracts from the EU and the American government. This book gives a review of both Airbus and Boeing’s objections and future market outlooks in relation to the new A380 and Boeing 787 “Dreamliner”. This report outlines some of the key factors in John Newhouse’s Boeing Vs Airbus thriller.
BACKGROUND INFORMATION OF AIRBUS AND BOEING
Airbus has been in business for a little over 30 years and is jointly owned by European Aeronautic Defense and Space Company-EADS (80%) and BAE systems (20%) which are two of the largest defense contractors. Airbus now a single company, headquartered in Toulouse France, began as a French-German consortium in 1970 that was soon joined by Spain and later Britain. (Company Website) It is an aircraft manufacturing company, which develops, manufactures, and sells aircrafts. “The Airbus product line comprises 14 aircraft models, from the 100-seat single-aisle A318 jetliner to the 525-seat A380 - which is the largest civil airliner in service”. (Company Website) Today, Airbus produces around half of the world’s jet airliners.
The Boeing Company is a major aerospace and defense corporation, originally founded by William E. Boeing. Its international headquarters is in Chicago, Illinois, USA. By revenue, Boeing is the largest global aircraft manufacturer, by orders and deliveries, and the second-largest aerospace and defense contractor in the world. (Company Website).Boeing has long been one of the world’s largest civil aircraft companies. In 2006, it took 55% of global commercial aircraft orders for the first time since 2000. The largest exporter in the United States, Boeing’s stock is a component of the Dow Jones Industrial Average. (Company Website).
AIRBUS VS BOEING COMPETITION
Airbus is benefiting from a broad-based customer focus as well as highly innovative designs. Its emphasis on environmental issues for its aircraft is one of the most telling aspects of its internationalism.
American Airlines and US Airways are in the aviation industry. Both companies provide air transportation services for passengers and freight. Together they have formed American Airlines Group, Inc., the world’s largest airline, as measured by revenue passenger miles (RPMs) and available seat miles (ASMs). In 2012 the U.S. airline industry was worth approximately $195billion in operating revenue, up from $154billion in 2009, including an operating fleet of 3,451 aircraft.1
Boeing is a very interesting company. Boeing may only be one company but they compete in two different markets: commercial airlines and the defense industry. The main competition in the commercial airline market is Airbus. Airbus and Boeing seem to have the commercial airline industry in a chokehold basically having no other competitors. Since the industry has high barriers to entry they will not see much competition anytime soon. Boeing is the American leader in commercial airplanes and Airbus is the European leader, which means they are constantly battling. Their competing aircrafts are the Airbus A380 and the Boeing 747. Both companies have many variations of their respected aircraft and according to Business Insider, Airbus’ A380 outranks
Right now these are just small threats to Boeing. But as things advance, there is no telling what the new market trends will be and what new directions a company like Boeing must take. It is important to continually perform SWOT analysis and stay nimble. Overall, the Boeing Company has stayed strong in the aircraft field and with record profits for the past two years it looks like they are achieving their goals. Boeing has had to change their business direction over the past 100 years in order to stay on top of the aircraft industry.
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.
Before we discuss government intervention and its affect on an industry’s competition we must first seek to understand the five forces framework. The theory, discussed in 1979 by Micheal Porter seeks to evaluate the attractiveness of an industry. Throughout this essay I will explore the theory and then relate government action and its well-documented affects on the airline industry.
United Airlines is one of the largest airlines in the United States and worldwide. Also, it is ranked as the oldest commercial airline that was founded by Walter Varney. United Airlines started as an Air Mail Service and then extended its services to be an Air Carrier. In 1927, William Boeing started his own airline, Boeing Air Transport, and started buying any other air mail companies, which included the Varney’s Air Mail Company. After a while, Boeing started manufacturing aircraft and parts, which allowed him to extend his company to a bigger organization. Also, within Boeing’s company, he bought several airports to expand his organization. In 1929, Boeing’s company has changed its name to be United Aircraft and Transport Corp. (UATC).
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
Boeing has looked at everything from the design of the anti-collision lights, to the reduction of small gaps in the airfoil. This has created an aircraft that is extremely aerodynamic and efficient at any task it performs. The 737 was originally created on May 11, 1964, however it wasn’t until November 9, 1964 that production was officially approved. On February 19th 1965 Lufthansa placed its first order for the 737-100, and on the 9th of April 1967 the 737 flew for the first time. In 1970, Boeing had less than 35 orders for the 737 and considered canceling the program.
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.
British Airways (BA) is the main and largest carrier airline of the United Kingdom. It’s headquarter is located in Waterside. The British Airways Group was established in 1972. It included British Overseas Airways Corporation (BOAC) and British European Airways (BEA). In 1974 British Airways was formed after the dissolution of BOAC and BEA (British Airways, 2015).
Yet amidst the storm, some regional airlines such as Jet Blue Airlines have managed to focus on specific markets and maintained or increased their profits. It is no doubt that Porter’s 5 forces of competition are at play in this industry. These forces are the Threat of Substitutes, Threat of New Entrants, Competitive Rivalry, Bargaining Power of Buyers and Bargaining Power of Suppliers. Threat of Substitutes The airline industry has been plagued by rising costs resulting in poor profits.
In particular, we will be considering Airbus. proposed launch of the A3XX, their entry into the intercontinental. jumbo jet segment, and Boeing's potential competitive responses to. this entry is a. We will attempt to answer the questions: Should Airbus? enter the jumbo jet segment?
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 ...
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.