Boeing and Airbus- Case

Boeing and Airbus : A Global Competitive Battle over Supremacy in Producing Commercial Aircraft Boeing has historically been a global leader in manufacturing commercial airplanes . However , in 2001 , Airbus had more orders than Boeing for the first time in their competitive history . But , in 2006 , Boeing regained its supremacy with 1,044 versus 790 orders for commercial aircraft . The main turnaround in this battle for competitor orders has been most visible in the super jumbo category with A
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  Boeing  and Airbus  : A Global  Competitive Battle overSupremacy   in Producing Commercial Aircraft Boeing  has historically  been a global  leader  in manufacturing commercialairplanes . However , in 2001 , Airbus had more orders than Boeing for the firsttime in their competitive history  .  But  , in 2006 ,  Boeing regained  its supremacywith 1,044 versus 790 orders for commercial aircraft   . The main turnaround in thisbattle for competitor orders   has been most visible  in the super jumbo categorywith Airbus’s A – 380  versus Boeing’s 787 .Apparently  in 1992 , Boeing and Airbus’s parent  EADS  agreed to a joint study  onprospects   for a super  jumbo aircraft . The impetus  for the study was the growingtraffic in China and India . However , Airbus and Boeing reached differentconclusions concerning the market trends , and the joint effort was  disbanded .Boeing’s 787  Dreamliner   design focused  on long – range efficient flight  , capableof transporting 250 passengers , where as Airbus’s strategy  focused on long - haulflights with the A-380 offering 550-Plus seats . In their diverging strategies ,  Airbusfocused on flying to larger  airports  that use the hub – and – spoke system , whereasBoeing concentrated  more on a point to point system in which smaller airports aremore abundant .  In reality , the Airbus A – 380 aircraft , on the other hand , canland at many more airports  around the world and the number is growing inemerging economies , such as throughout Eastern Europe  where smaller airportsdesire international connections .Airbus won the competitor battle that occurred between 201 and 2005 because itfocused on the midsized market as well , using the A-320 strategy , which competeswith Boeing’s  737 and 757  aircraft .  The A – 320 was more efficient  than theaircraft  used by Boeing , and Boeing did not respond to customer demands tocreate new , efficient aircraft . In fact , it had slowed  its innovation process inregard to  new models .  Besides the lack of new models  , the commercial aircraftbusiness was sluggish  : new orders significantly ebbed due to the complications of the terrorist attacks and the subsequent recession . It was a bleak time for Boeingrelative to Airbus  .More recently  , Boeing’s strategy in regard to  overall design with 787 Dreamlineris winning the day , as far as the battle goes . It has realized success by implementinga different strategy  in regard  to the production process . It has been able to  speedup the process   by creating an efficient global  supply chain that involves  manypotential  customers  around the world . , including Japan , China , and others .Moreover , Airbus is behind in its schedule to produce the A 380 and its midsizedplane , the A – 350 , has also had redesign issues . The midsized  plane , the A -350 ,has also had redesign issues . The midsized  A – 350 , has also had redesign  issues .  The midsized   A-350  , compared to  the Boeing 787 is behind schedule  and  Airbushas had to provide  significant incentive discounts  to increase future orders .Also  , Airbus  has been forced  to produce of its plane parts in European countriesbecause governments have significant  ownership  and provide   subsidies toAirbus  . Accordingly , these governments – Spain , France , Germany , and theUnited Kingdom – want to maintain  employment levels in these countries   , andthus Airbus must continue to produce primarily in European countries . “ Boeingoutsources 85 percent of the work for its 787  ‘ Dreamliner ‘  aircraft . Thecorresponding figure for Airbus’s  A 380 is 15 per cent . “ As a result of the designand development delays , Airbus’s development costs for the  A-380  have risen  to$14 billion versus the $8 billion invested by Boeing for the 787 .In making its decision to move ahead with the 787  Dreamliner  versus a morejumbo aircraft  comparable to the A-380 . Boeing made a more concerted effort  inconnecting and getting input from its airline customers , as well as the ultimatecustomers , the passengers . Overwhelmingly the passengers in particular , andthereby the airlines , preferred smaller aircraft  which would enable them to getsmaller airports quickly , without as many transfers  on a point – to – point system .Additionally , Boeing followed up with the ultimate creditors , the leasing agents ,asked what they would prefer as far as risks were concerned . Again , the leasingagents preferred a smaller aircraft which would reduce their risks in financingversus the large super jumbo A-380 . These business level strategies have created  anobvious advantage  in the near-term for Boeing .Interestingly , Boeing only receives 50 per cent of its revenue from the commercialaircraft  division as a result of its diversification strategy . the other 50 per cent of itsrevenue comes from military  contracts , as well as  business from space satellitelaunching . Some crossover  takes place in the technology used between militaryaircraft and commercial aircraft , which indirectly contributes to lower commercialaircraft development costs . This argument is used  by Airbus when Boeingconfronts it regarding the subsidies   from local European governments . theultimate battle  will continue between these firms , but currently Boeing has thewinning edge and it looks like that will continue . Boeing’s orders are now soplentiful , it will not be able to deliver all that are ordered in 2007  until the 2012 – 2013 range . 1. During  which period , Boeing was second to  Airbus ? How it happened ?2. Which of the emerging markets were studied by  leading manufacturers of aircrafts ? What  are their major strategies  to capture those markets ?

Section 6

Nov 22, 2017
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