...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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...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...
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...Analysis of Boeing 787: The Dreamliner Boeing announced the launch of a new jetliner called the Dreamliner (Boeing 787) and hoped to regain its leadership role in the commercial airline industry. I will apply the theories of competitive forces model and the macro-environment to analyze the Boeing case in the following exploration, and then give my suggestions. According to the competitive force model, the first point of the risk of entry by potential competitors is neither high nor low because a new company produces on a small scale even can’t cover the multiple-billions R&D, and Boeing already have accumulated experience, patents, or trade secrets that they are more effective than new companies (Hill & Jones, 2012); while the new“global systems integrator” strategy tends to create potential competitors such as China and Japan. Secondly, the commercial airline industry is a consolidated industry that the launch of A380 from Airbus directly affect the market share of Boeing in 2003, and the fixed costs in this industry is very high; thus, the rivalry among established companies is intensive. Thirdly, A380, A350 etc. are the substitutes with similar basic needs, which are threats to Boeing 787 and leads to the operation risk. On the macro-environment, the economy of developing countries grows very fast that both Boeing and Airbus believed “the passenger traffic in China would surge over 8.0% annually” (Nolan & Kotha, 2005), which tends to ease competitive pressures...
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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)...
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...Boeing: Redefining Strategies to Manage the Competitive Market CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production...
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...CASE ASSIGNMENT As the industry watches to see how Boeing's strategy performs against Airbus's strategy, management at Boeing is anxiously monitoring market signs to determine its next competitive move. It has underestimated Airbus in the past, and despite the fact that with billions of dollars invested and strategies that cannot be easily abandoned, Boeing needs to be prepared to respond to changing industry needs as quickly as they are detected. You've been asked to join a strategic planning discussion, and hoping to contribute to the meeting, you decide to take one more look at Boeing's situation to see if you can formulate some insight that could give the company an edge against Airbus. Your analysis includes the following elements: 1. Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can you draw? 2. Outlining a rough competitor analysis, what does the level of interdependence between the rivals reveal about competitive behavior that can be expected from Airbus? 3. Evaluate the pros and cons of Boeing's outsourcing strategy. Do you agree with the company's decision to "offload" parts production? 4. Review Boeing's cooperative strategy. What are the risks of its partnership arrangements? 5. In what ways can Boeing's international strategy be improved? 6. What are some of the near-term results you anticipate in the airplane production industry? Long-term results? STRATEGIC ACTIONS: STRATEGY...
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...Structural analysis of an industry is a valuable tool that can be used as a primary determinant of a firm's long-term profitability. Understanding the dynamics of competitive forces can provide insight into the attractiveness of an industry and the potential for returns on capital. Michael Porter, a Harvard Business School professor, has developed a framework for understanding an industry's structure. Porter's analysis is widely taught in business schools and commonly used by analysts. Porter's book, Competitive Strategy, provides an excellent, readable resource for understanding the impact of competitive forces on an industry. According to Porter, the five competitive forces affecting an industry are: threat of entry, competitive rivalry, bargaining power of suppliers, threat of substitutes, and the bargaining power of buyers. Let's use the airline industry as an example of how an analyst may interpret the competitive forces that affect an industry. Threat of Entry The threat of new entrants presents the possibility that new firms will enter the industry and diminish industry returns by passing along value to buyers in the form of lower prices and raising the cost of competition. Factors that determine the threat of entry include capital requirements, economies of scale, switching costs, and brand value. In the airline industry, access to capital is plentiful. Banks extend credit to airline carriers, and the debt and equity markets provide alternatives for raising funds...
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...aerospace manufacturer and the challenges the company must face to stay on top of this competitive market. Abstract Take a look inside the world’s leading aerospace manufacturer and the challenges the company must face to stay on top of this competitive market. the Boeing Company Business Model and Competitive Strategies the Boeing Company Business Model and Competitive Strategies Alexandra Accardi CS 782 IT Strategy and Management Alexandra Accardi CS 782 IT Strategy and Management Contents Introduction 2 Business Model 2 Boeing Commercial Airplanes (BCA) BCA is the division that deals with manufacturing commercial jetliners for more than 40 years. More than 10,000 Boeing planes are currently in service around the world which is 48% of the world fleet (boeing.com). There are a few different families in the commercial space: The 737, 747, 767, 777, and the 787 family. 2 Boeing Defense, Space & Security (BDS) 2 Boeing Capital Corporation (BCC) 2 Engineering, Operations & Technology (EO&T) \ 2 Shared Services Group (SSG) 3 Employee and Revenue Data 3 Market-Oriented Model 3 Financial-Oriented Model 4 Competitive Forces and Challenges 5 The Rivalry of Competitors 5 The Threat of New Entrants 5 The Bargaining Power of Buyers and Suppliers 6 Competitive Strategies 6 Business Model Evolution 6 Best IT-Supported Proposal 7 References 8 Introduction Boeing is a manufacturing company that produces products and services such as commercial...
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...Limited. The strategic analysis contains investigation of certain key business areas of Virgin Atlantic, such as: defining whom the Virgin Atlantic customer is; understanding of the external environment issues of the airline industry; competitor analysis, and analysis of the Human Resources within the organization. Through the analysis of Virgin Atlantic Airways Limited, some issues for the company were uncovered. Especially two main issues should be considered as potential problems for Virgin Atlantic’s business unit and so action needs to be taken within these areas: 1. Lacking economy of scale (size of the company). 2. Increasing environmental awareness among customers. 1. Virgin Atlantic lacks economy of scale because of the size of the company and limited routes available. To be able to compete effectively and gain greater profits through economy of scale, Virgin Atlantic has to expand by opening new routes. The implementation of this will require strategic financial planning and adjustment of the company structure. It is likely that this process will take several years; however, this change is necessary to increase Virgin Atlantic’s competitiveness. 2. With the increased concern about the environment among customers, bio-fuel has been tested by Boeing for a few years in order to lower carbon emission caused by airplanes. Virgin Atlantic can be the first company to use bio-fuel aircrafts as the company is currently using an environmentally friendly strategy. This strategy...
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...Five –Forces Model of Competition It is important to analyze the competitive forces in an industry’s environment in order to identify the opportunities and threats confronting a company. The competitive forces operating in a company’s industry are never the same for one industry to another. The most powerful and widely used tool for systematically diagnosing the principal competitive forces in a market and assessing the strength and importance of each is the ‘five forces model of competition’. Rivalry among competing firms: Medium pressure There are many competitors. Easy jet, Air Berlin and German wings those company are strongest competitor of Ryanair because they follow same strategy low cost. Weakest competitor are Monarch Airlines and Tita. There are another some company like British Airways, Lufthansa and Air France this types companies run by government and they have enjoy lots of facilities . Bargaining power of suppliers: Low Boeing is the main suppliers of Ryanair. There are two suppliers are Boeing and Airbus. Switching costs from one supplier to the other is high because all mechanics and pilots would have to be retrained. Fuel price increasing and this sector is not control. Entry of new competitors: Low The threat of new entrants is low for Ryanair due to the significant entry barriers associated with entering airline sector that include economies of scale capital requirements, access to distribution channels etc. Some barriers are: 1. Commission for...
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...Executive Summary This report was produced for British Airways for the purpose of providing strong competitive edge in Airline industries. BA is a leader in airline operators in UK which face a lot of competition in the last decade. This report will analysis, identify and evaluate strategic choices that BA could pursue both internal and external environment forces. Some of the strategic will includes the strategy gap of BA. Through this strategic, we have recommended that BA should focus on their communication, planning, forecasting and strategy formulation to restore their competitive advantage within the industry. Table of contents Table of contents 1.1 Report objectives 1.2 Company overview 1.3 Strategy gap 1.4 Current strategies 2.0 External Analysis 2.1 PESTEL Analysis 2.2 Porters’ five forces 3.0 Internal Analysis 3.1 Resource based view 3.2 Value Chain 4.0 Key strategic Issues 5.0 Strategy formulation 6.0 Conclusions 7.0 Recommendations 1.1 Report Objectives The main objective of this report is to recommendation a good strategy for BA. This report will consist of sections which includes the followings: To found out the current strategic position of BA, Analysing the internal and external environment forces of BA, recommend strategic options using the internal and external analysis, evaluate strategic choices that BA could pursue and discuss the implementation. 1.2 Company Overview ...
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...various commercial aircraft for regional, low-cost, and mainline airlines and its defense and security segment provides a range of integrated solutions for the defense and security market. The company’s executive aviation segment develops a line of executive jets for fractional ownership companies, charter companies, and high-net-worth individuals. Its aviation services segment offers after-sales customer support services. This segment also provides spare parts, sales, inventory pooling programs, customer training, and other product support services. It has strategic alliances with European Aerospace and Defense Group, AEL Systems, AVIC (China), and Boeing. Within the global air craft industry there are few major competitors. Among them, the large commercial jet aviation market is a duopoly shared by the U.S. aircraft manufacturer Boeing and the European aircraft maker Airbus, with fierce competition between these two companies. The regional jet market which...
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...including the Emirates, Qatar airways and Etihad airways, and the low cost competitors such as Air Asia and Jetstar to the well-established carriers such as Cathy Pacific and Singapore airlines, the organizations have enacted strategic changes to position itself on the global air transport market. The wakeup call came in 2005 when the airline experienced its worst experience. The Malaysia Airline System achieved success in two years and braced the impact of the financial meltdown that rocked the world at around that time. The underlying success factor behind its swift recovery attributes to the strategic and competitive strategies implemented, and effective decisions made that have since sustained its competitive advantage over other airlines (Alamdari & Fagan, 2005). It is not for any organization, let alone an airline industry to undergo such a dramatic turn within two years and beat established...
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...COMPANY BACKGROUND The Boeing Corporation is amongst the most significant companies on the globe. Rivaled only simply by European huge Airbus from the aerospace industry, Boeing can be a head in study, design as well as manufacture connected with industrial aircraft airliners, with regard to industrial, commercial as well as military services shoppers. Irrespective of taking pleasure in immense accomplishment in it is marketplace as well as owning an industry that entirely understands design fineness, it is crucial with regard to Boeing to guarantee carried on expansion through reliable method ingredients as well as setup avoiding dropping at the rear of in marketplace share to help shut as well as returning competitors. STRATEGY ANALYSIS AND CHOICE The main objective of Boeing's method would be to review your industrial jet industry, to be aware of your requirement which is provide, and also to produce a remedy that may match that segment. Currently, you'll find only two key people from the worldwide marketplace: Boeing as well as Airbus. Boeing will be well known because "free market" safe bet, whilst Airbus signifies your "not-so-free" approach from the European Union's sorted as well as authorities backed competitors in so-called proper markets" (Boeing Businesses Evaluation Paper). As a result, it will be important that administrators evaluation your strategy's setup, help to make concurrent modifications as well as continue being over technical developments so as to take...
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... Threat of new entrants (High – 7/10) In 1987, the European airlines industry has started to experience a major changes in the air traffic regulation when the European Commission announced a vast deregulation in the industry. Indeed, packages of deregulation measures have included (Mintel, 2008): To limit the right of governments, for example, to prevent the introduction of new fares, and gave some flexibility to airlines concerning seat capacity sharing; To open up the market further, allowing the right to carry passengers from one’s own country to another and the right to carry passengers from another country to one’s own to all EU carriers and offering greater flexibility for the setting of fares and capacity sharing. To give all EU carriers the right to take an unlimited number of passengers or cargo between their home country and another EU country; To introduce the freedom to offer services within the EU and the right to practise the transport of passengers and goods within the national boundaries of another member state; To allow airlines the full freedom to set competitive fares, as airlines were no longer required to submit their fares to national authorities for approval. This liberalised market prepared the ground for the emergence of low-cost airlines, and thus making the barriers to entry lower and the threat of new entrants high. Moreover, the access to the industry distribution channel has become easy throughout the use of internet (booking...
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