...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
...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...
Words: 492 - Pages: 2
...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...
Words: 710 - Pages: 3
...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...
Words: 21672 - Pages: 87
...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...
Words: 3041 - Pages: 13
...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...
Words: 9792 - Pages: 40
...Review of the Boeing VS Airbus Case Study Introduction In the market for large aircraft demand the emerging niche for very large aircraft (VLCT aircraft seating more than 400 passengers) saw only two competitors: Boeing and Airbus. Even though both competitors’ moves were clearly marked by technology enhancements, and different target markets but both exhibited strategic interdependence. Option with Boeing: Boeing being the market leader for almost a decade as a manufacturer of large commercial aircraft and had also reached economies of scale, the need to sustain its market share it presumed that “customers might demand for new”. Any potential growth was only through taking super leap and making VLCT jumbo aircraft which needed huge investment beyond Boeing’s financial reach (that too for an uncertain future market) Boeing had the technology advantage over airbus because Boeing had already tested and launched Boeing 747 (a large passenger carrier). Only stretch of design was needed to build up “jumbo dream line VLCT aircraft”. But being a private firm and not state run the kind of investment required to develop new carrier and also the uncertainty of the future market were problems. It had the option to continue to manufacture famous “Boeing 747” and not go for VLCT Jumbo. But the VLCT superjumbo was a strategic commitment of more than average interest because of its sheer size, irreversibility and potential impact on industry structure if nothing goes bad. VLCT...
Words: 1399 - Pages: 6
...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...
Words: 1091 - Pages: 5
...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...
Words: 1163 - Pages: 5
...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...
Words: 2434 - Pages: 10
...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
...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
...homepage: www.elsevier.com/locate/techsoc The politics of airplane production: The emergence of two technological frames in the competition between Boeing and Airbus Alexander Z. Ibsen* University of Arizona, Department of Sociology, P.O. Box 210027, Tucson, AZ 85721-0027,United States a b s t r a c t Keywords: Airplanes Boeing Airbus Two-party democracy Frames Technological philosophy Economic models of technological innovation, as well as modern sociological approaches to the study of organizations, predict that two-actor markets will eventually evolve into one dominant technological logic. Why is it, then, that the only two global manufacturers of large commercial airplanes have developed diametrically opposed technological philosophies? Based on secondary historical sources, this article employs a theory of twoparty democracies from political science and the theory of sociotechnical frames to explain why Boeing pilots are allowed ultimate command of their aircraft whereas Airbus confers this authority to the flight computer. Ó 2009 Elsevier Ltd. All rights reserved. 1. Introduction For anyone who has ever flown on a large airplane owned by an airline based in an affluent country, the chances are almost exactly 50% that the plane will be made by Boeing Commercial Airplanes, and 50% that it will be made by Airbus S.A.S. At the same time, it is 100% certain that it will not be made by anyone else. Most passengers probably cannot tell the difference, nor will they...
Words: 7006 - Pages: 29
...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...
Words: 2755 - Pages: 12
...BusinessWeek Exchange ------------------------------------------------- Top of Form Bottom of Form Boeing vs. Airbus: It's Getting Ugly The two plane makers are raising the volume of their spat over subsidies. Will the dispute go to the WTO? What's Airbus up to now? On Sept. 6, Chief Executive Noel Forgeard hinted that the European plane maker may soon unveil plans for yet another new aircraft even before the double decker A380 takes its first test flight early next year. Studies on a new plane could start within weeks, Forgeard said, with industrial agreements signed by early 2006. "Airbus is bubbling over with new projects," he said. Forgeard's comments followed weeks of rumors that Airbus is set to revamp its A330, a midsize widebody jet, to counter Boeing Co.'s (BA ) superefficient 7E7 Dreamliner, a brand new 215-seater that's scheduled to get airborne in 2008. Boeing is banking on the 7E7, its first new model since the Boeing 777's launch in 1990, to help regain the lead from Airbus in the global commercial-jet duopoly. A revamped A330 would probably use lighter-weight composite materials and next-generation engines developed by Rolls-Royce PLC (RYCEY ) and General Electric Co. (GE ) for the 7E7. Most analysts reckon such a plane could get onto the market before the 7E7's scheduled debut. And the startup would probably cost no more than $2 billion, which Airbus could pay out of cash flow even as it wraps up the $13 billion A380 project. But will this idea ever...
Words: 1135 - Pages: 5
