A Comparison of the Overall Strategy and Especially the Operations Strategy of Boeing and Airbus - Assignment Example

Operations Management: A comparison of the overall Strategy and especially the Operations Strategy of Boeing and Airbus Subject code: Date of submission: Introduction In the last half a century, Airbus and Boeing Company have been the major player in the aircraft industry manufacturing. During this period, Boeing Company has undertaken major fundamental organizational transformation in an attempt to stamp its authority beyond just manufacturing to a major planning of a broadly outsourced supply chain. The process of transformation has been an uphill task and with its new role as a planner, the company met numerous challenges leading to general delays in the completion of its Boeing 787 Dream liner resulting into huge financial implications Strategies employed by Boeing include; Constant improvements in value of products and manufacturing processes: The Company’s commitment to sound and long-term perfection in their products and processes is at the core of their strategy. In order to achieve this, the company consistently works to improve the overall quality of their design, managerial, industrialized and support structures in place (Barnes, 2008). Highly proficient educated and motivated personnel: Human resource is the most significant resource at Boeing Company since it is the work force, who undertakes the immense task of building and designing products on offer to their clients. To achieve this, the company combines skills, communications, training, management and environment. This combination enables their employees to achieve the needed gains in productivity and quality in line with the company’s goals. The company as part of its strategy to help achieve long-range goals inculcates careful selection of managers, proper training and team spirit. Boeing- Airbus Competition between these manufacturers of long-range or large standard passenger aircrafts has recently reached at the highest level. Five years ago, Airbus overtook Boeing to be number one and this was because of its accomplishments in middle capacity Airbus A-330 as well as its shorter-range division like the A-340. , Boeing’s overall revenues in 2004 overtook of Airbus. This emanated from Boeing’s profit gains in supplementary activities that include among others; services rendered to defense, martial aerospace and space dealings. With Airbus Company launching A380, the market share is likely to be altered though; Boeing Company will salvage its market share from the new model of 7E7, Dream liner-taking competition to a completely new level (Mahadevan, 2009). Segmentation The Company employs geographic regions as its basis of segmentation. On this basis, Europe and North America are anticipated to experience growth and continuously increase in their airplane purchases resulting from the large economies of scales currently enjoyed in these regions. Asia pacific regions are equally expected to experience growth forecasted in Europe and North America. With the current popularity of single aisle airlines in shorter routes, Boeing has therefore taken into account demand prototypes in these short routes thereby projecting improved plane orders from airlines flying these short routes (Mahadevan, 2010). From this analysis of segmentation, it can be concluded that Boeing uses useful promotional probabilities to meet the diverse needs of these fragmented regions. Boeing’s Positioning and Targeting Strategy Positioning Several criteria apply to acquiring a new plane from Boeing. Two main criteria in play are; capacity and distance. These are at the heart of Boeing’s business buyers because for today’s airline industry, the options are a choice between; managing a short or long distance services and the viability of having high or low capacity flights.   Short distance and low capacity: After the analysis of ordering trends, Boeing believes that a significant fraction of purchases in the business division will emanate from airlines and other clients flying short distances with reduced carrying capacity. This conclusion has been arrived at after examining the amount of deliveries recently made with 737 taking lead at 4500 planes in the past few years (Galloway, 1996). This therefore is evidence of a clear change in trend at Boeing with 737 showing great potential in the company’s product line. Focus and emphasis must therefore shift to reap optimal benefits from this segment.  Long distance and high capacity Major fraction of Boeing’s client base belongs to this area which is a direct opposite of the short distance and low capacity division. More orders are therefore expected from airlines providing long distance travel unless the market is resisted by airlines flying short distances. Transatlantic trips are however projected to grow resulting to a surge in plane demand for this segment. In this division therefore, products like Boeing’s 777 that t have bigger fuel loads intended for long distance travel and higher carrying capacity are to be increasingly ordered. The 777’s features include a carrying capacity of up to 451 passengers with and an optimal distance of 11,029Km, making the plane a leader in this segment within the Boeing product line (Shim, et, al 1999).  Long distance and Low capacity: Niche This is a unique segment at Boeing because it goes against the logic of high capacity planes for long distance travel for the main reason that is; operating costs. Niche however defies this logic and clients in this division chose to travel in optimal comfort over long distances. They are therefore, individuals who do not care about plane running costs making them an important client segment to Boeing. They include businessmen, corporate chiefs and top government officials who enjoy access to vast resources. Targeting Boeing has a rather partial targeting because there is rarely mass market for planes which is the case in buyer to customer markets. The buyer to buyer nature of this industry compels the company to provide utmost attention to its reachable customer that is the organization’s revenue pillars. These customers are properly knowledge on the happenings within the airline industru and on this basis; they comfortably negotiate trade discounts and reap from any possible benefits offered by the manufacturers. A strong relationship is therefore the end product between Boeing and its customer as a result of this knowledge based interaction (Mahadevan, 2010). The existing targeting strategy for Boeing as mentioned above is aimed at its regular clients, the company’s corporate shoppers that include governments, commercial airline companies and a select group of individuals with the most significant target being the commercial airline companies that form a majority of its customer base. Pricing strategy in the Boeing-Airbus duopoly Boeing pricing strategy is closely related to an environmental analysis. Saving money is key to the overall success as well as receptiveness customer needs. Boeing is resolute to grasping economies of scale from its processes of; acquisition of inputs, design and manufacturing establishing it as a major player in the establishment of great economies of scale (Shim, et, al 1999). Impact of duopoly on Boeing pricing policy The most significant elements of pricing strategy is related to the duopoly viable airplane structure. Duopoly increasingly means a possibility of inadequate competition where the two main companies Boeing and Airbus can manipulate prices of their products. In essence, the two companies are far from setting their own prices and customers, who are limited in option between these two manufacturers, have a considerable bargaining power, something that is ironical given there are only two major players in this industry. This irony is unique to the airline industries with other industries experiencing manufacturer control on pricing, especially where customers are limited in options. With smaller new plane manufacturers coming into the market especially from china as recently witnessed at the Paris air show, Boeing and airbus must remain strategic to keep their respective market shares. Bibliography BARNES, D. (2008). Operations management: an international perspective. London, Thomson. GALLOWAY, R. L. (1996). Operations management: the basics. London, International Thomson Business Press. MAHADEVAN, B. (2009). Operations management: theory and practice. New Delhi, Published by Dorling Kindersley (India), licensees of Pearson Education in South Asia. MAHADEVAN, B. (2010). Operations management: theory and practice. Upper Saddle River, Pearson. SHIM, J. K., & SIEGEL, J. G. (1999). Operations management. Hauppauge, NY, Barrons Educational Series. Read More