Professional management skills, Boeing, case study, strategic moves, civil aerospace industry, global strategy, global structure, duopolistic market, Asian market, U.S. market, Latin America market, European market, long-cycle sector
This case is about the civil aerospace industry which have a duopolistic market in the 110 seat-plus, where the two actors are Boeing and Airbus. It is showing us that Boeing was always the leader on each market: 70.7% of the Asian market, 67.2% of the U.S. market, 56.9% of the Latin America market, and 39.3% of the European market. While its competitor Airbus only had 23.4% of the Asian market, 23.3% of the U.S. market, 16.6% of the Latin America market, and 29.9% of the European market.
But lots of changes had occurs during the last years and Airbus is starting to gain market share in each part of the globe. And if Boeing is not developing as much as its competitor it will lose shares in the next years. That is why the Boeing company should revised its strategy if it wants to be competitive against Airbus like it was before.
After analysing the documents and after making some research on both companies and the global civil aerospace market, I will try to answer to the following questions on how to achieve stability within the global civil aerospace industry, increase its market share and align its global strategy with its global structure?
[...] After two significant upturn cycles in the 1980's and the 1990's, manufacturers compete in a current one. Indeed, forecasts indicate that aircraft deliveries will rise again in 2007. And there is a need to have more control between the pilots and the aircrafts controls, which makes better utilization, and lower training costs for its airline costumers. We can conclude by saying that Boeing needs to make the difference between its competitor Airbus which is taking market shares. If Boeing wants to do so, it will have to invest more on research and development and have less suppliers to reduce cost. [...]
[...] This is define as a long-cycle sector. By looking at the airline profits, which is the time of the early stage of recovery phase, the manufacturers can see and makes prevision of how many orders there will be. Because, aircraft orders only increase when the airline profitability is sustainable. Today we are in the beginning of the recovery phase and there will be no rise of the aircraft deliveries until 2007. The upturn cycle is forecast only in 2010 or 2010 and will be for the aircraft deliveries only of 64%. [...]
[...] Controlling is very important in the industry. And the company has to keep in mind that everything will be their responsibility, but the exception is the suppliers that manage the performances of their subcontractors. We can ad that Boeing has a Defense department, America is a very big defense market and thanks to his nationality, Boeing will have a lot of orders from the US Army. We can conclude that if Boeing wants to be more competitive, it should come back to its core business and let specialized suppliers doing the “sub-works”. [...]
[...] Also because Embraer is already using the manufacturing concept of Boeing, i.e. that the company is a real assembler and as partnership with tiers suppliers. So, Boeing can bring the experience in this system. We can conclude by saying that if Boeing wants to increase its market share it should make the best choice in its strategy. And it should focus on each area of the world and takes actions by not letting its competitor Airbus or Ambraer getting bigger in the market. [...]
[...] That is one of the reason why Airbus is getting more attractive. By consequence, if Boeing wants to be also more attractive to its customers, it needs to invest more on because it help to cut costs. There is a good solution for Boeing to take some market share, especially in Europe where Airbus is getting bigger. Boeing should make some partnership with European Low Cost companies, like Airbus did with Easyjet. It could do it with a company like Rayainer, but for this Boeing has to get cheaper and smaller aircrafts. [...]
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