Discuss how Recent Globalization Trends Have Affected the Aerospace Industry - Research Paper Example

The aspect of globalization has affected every segment of the industry including the aviation and aerospace industry. The present study would analyze the effect of globalization on the business prospects of the aerospace industry. Effect of Globalization on Aerospace Industry The global aerospace industry consists of both airline companies that are engaged in the transportation of individuals from one point to another as well as the suppliers of aircrafts and parts such as Boeing and Airbus. The global defense and aerospace industry has been valued at 910 billion US dollars as of 2008 and the value is expected to grow by 6.

17 percent on a year on year basis, The industry is a very globalised outlook with consumers including organizations as well as governments who are essentially looking towards best deals for their money (Wipro, “Aerospace Industry”). . This has arguably increased the efficiency and profitability of the companies and has also generated greater transparencies in the functioning of these business organizations giving its win-win situation for all the stakeholders. On the other hand it has also augured the need for business organizations to generate greater organizational and operational aspects in order to remain afloat in the industry and maintain profitability and sustainability (AT Kearney, “Globalization”).

Aerospace industry is highly capital intensive with huge amounts of capital required for establishment of the industry. The industry has largely been influenced by globalization as about 80 percent of the manufacture of an aircraft is done through outsourcing. Globalization has immensely benefited the aspect of outsourcing with free trade and lifting of trade barriers helping the organizations in a major way. The designing and manufacture of the aircrafts is essentially a highly collaborative and global activity with suppliers and assemblers for any aircraft located across the globe.

Companies like Boeing and Airbus can be rightly termed as assembling units in which they only assemble the original equipments and create the final design and product. Globalization has also led to large scale integration of the supply chain management activities of the players of the aerospace market. Globalization has also enabled high end parts and processes being outsourced to destinations like India and China (Wipro, “Trends in Outsourcing”). Globalization has also led to greater cross border deals that include both the civilian aircraft as well as the military aircrafts.

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