airbus case analysis

7/29/2019 Airbus Case Analysis

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The Rise of

Airbus

Prepared by:

Mark Carlo Pabustan

Submitted to:

Mr. Alex Andales


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I. Summary

The history of Airbus dates back to the late 1960s, when Britain, France

and Germany launched the Airbus project. In July 1967, Britain quit the

project, and in 1970 the Airbus project was reorganized and named Airbus

Industrie, a Franco-German Company. Headquarter set in 1971 at Paris later

shifted to Toulouse, France in 1975. Each partner in the consortium was

assigned specific production and assembly tasks.

The aerospace industry is a multi-billion dollar industry and basically it has

got two big players in the industry that has been competing against each

other for such a long time. The case discusses how Europes Airbus rose

from a challenger to be the leader against US Boeing. It analyses the natureof competition between the two companies and the differentiating strategies

Airbus adopted as against more conventional approach of Boeing which

led to its downfall. Also this case looks at the structure of the aerospace

industry as a whole, and the current strategic positioning of the two

companies is also discussed. Towards the end a brief assessment is

furnished on the possibility of a leadership style that makes one of the

company leading in the market. The Airbus long term strategic plan and

fundamental values by their vision and mission statement helped them

achieve the lead now. The discussion of the case analyzes the external

environment the aircraft industry as a whole and then focuses in on Airbuss

internal environment.

In 2003-2004, for the first time in the history of commercial aircraft

manufacturing, Airbus delivered a larger number of planes than Boeing, and

since 2000 Airbus managed to obtain a larger number of aircraft orders than

Boeing. The case looks at Airbuss competitive position relative to Boeing,

first in the commercial industry, and second, in the military aircraft industry

where EADS Airbuss parent company has become a formidable rival to

Boeing and other defense contractors. In analyzing Airbuss competitive

advantage, the case distinguishes between four strategic elements:


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technological leadership, cost control, product development, and families of

planes. The case moves on to explore the challenges Airbus faces today

(2005), and its vulnerability to a likely Boeing comeback. All in all, the case

provides an analytical and thorough examination of Airbuss performance

from the day it sold its first plane until June 2005

II. Statement of the Problem

Macro:

- How can Airbus sustain its leadership in aircraft industry?

Micro:

- Too high production cost

III. Alternatives

a. Adoption of latest technology

b. Subsidies from European Government

c. Innovation of products

IV. Pros and Cons of Alternatives

a. Adoption of latest technology

Augmenting the jet planes and other aircraft products with the trending

and latest technology would give the Airbus a wider advantage against

Boeing. Applying new technology has been the tenure advantage of

Airbus already and they are known for it and therefore they should not

stop injecting those technologies to improve their products. This perhaps

would not give them a lower cost in production since technology would be

new.

b. Subsidies from European Government

Seeking help from the Britain, France, Germany, and Spain would cause

an enormous financial help for Airbus. With the cheaper loans that these


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four countries extend to the consortium, it would definitely give them a

boost to use the money for production while not worrying for the

repayment of the loan that stressfully.

c. Innovation of Products

You cannot compete with the dominant player if you do not offer

something different a quote by Roger Beteille, one of Airbus co founders.

To persuade the major airlines to switch to a new supplier, Airbus had to

differentiate itself from Boeing by incorporating the most innovative parts

in to the plane. Being upfront and a trendsetter to the aircraft industry, the

airlines would definitely look for what is new for their customers to be

satisfied.

V. Recommendations

Airbus needs to apply and consider all of the alternatives for them to stay

on top. Adoption of latest technology, Subsidies from European Government,

and the Innovation of products all offer a great advantage for Airbus in order

for the consortium to obstruct any Boeing comeback. If Airbus would consider

all of the alternatives, they would certainly lower their production cost

especially alternative B. using Alternatives A and C, Airbus will get a hold on

to the top spot for quite sometime because the market always want

something new.

VI. Conclusion

In concluding the analysis, it can be said that the dominant position held

by both Airbus and Boeing will continue to create barriers for new entrants to

the market but there is a possibility of competitors emerging as market

challenges in the long term.

airbus case analysis

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