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The paper examines the extent to which Airbus has recognized and succeeded in meeting the critical success factors defined by the industry as well as industry analysts prior to 2005. In addition, Porter’s generic strategies model will be used to assess the choices that the Airbus management team and Board made, and whether these choices succeeded in giving Airbus a competitive advantage. This analysis compares the performance of Airbus over the past five years to its major industry competitors, Boeing and Embraer. The paper concludes with a discussion of the feasibility and sustainability of the company’s strategic direction over the next five years.
As early as the mid1990s, industry analysts such as R.W. Mann and Company identified several factors that were seen as critical for companies hoping to succeed in the aircraft manufacturing industry (www.rwmann.com). In their strategic planning documents and in annual reports to shareholders, the companies also recognized that rapidly changing market factors would require that they adapt their business strategies to address these emerging challenges.
Birnbaum (2004) defines a critical success factor as a strategic area where successful performance must be achieved to accomplish the business goal. The phrase “must be achieved” is highlighted because as the analysis will show, Airbus either misread the critical success factors that were identified at the time, or they simply were unable to implement strategies to achieve their strategic goals. My review of the industry analysts’ predictions as well as my review of the company websites for Airbus, Boeing and Embraer, have identified the following five common critical success factors for the aircraft manufacturing industry back in 2005:
1. Companies must expand into international markets. The number of new airlines is projected to grow through 2010 to meet increased demand for passenger travel. This growth was projected to take place
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The paper is about a case study on the aircraft manufacturing industry. When Boeing planned to launch its 747, with the capacity of 550 passengers, the management did not feel that the plane would be profitable in the long run for the company therefore they rejected the development of this plane. However, Airbus management felt that the jumbo sized plane could give them competitive advantage.
There are few substitutes for the aircrafts that they produce and so customers’ choices are limited. The suppliers to the industry have moderate levels of power and are not solely dependent on the commercial aircraft industry for their business. The rivalry in the industry is strong as both companies are trying to control the market.
Firm Growth Boeing Over the years, Boeing has taken advantage of its history and early entry into the market (since 1958) to become leaders in manufacturing commercial aircrafts. In 1958, Boeing introduced 707, the United States' first commercial jet airliner.
The aircrafts include those for commercial airlines, aircrafts built to military specifications and space systems. Some of the companies in this industry based in the US include Boeing, Gulfstream and Textron to name a few. However, internationally, there are other companies dealing in the same and these include but not limited to Airbus (Europe), Embraer (Brazil) and Bombardier (Canada).
The jet first flew on 27 July 1949, when it was tested for the first time at its headquarters in Hatfield, Hertfordshire, UK. The design features of the Comets included an aerodynamically clean designs fitted with four de Havilland Ghost turbojet engines fitted below the wings (Montagu-Pollock 2012).
(Mintel, Aerospace Industry Report, August 2001). The only two competitors in the large commercial aircraft market is Europe's AIC (Airbus Integrated Company) and the US Boeing Co.
Airbus can be defined as a trademark for a large passenger jet aircraft manufactured by aerospace companies from different European countries working together.
The importance of the market structure is that it determines how the company's within it operate, its performance and behaviour. The degree of competition within the market determines how the pricing will affect the consumer. Indices of market structure developed over time offer us an approximate measure how much of an industry is concentrated in the hands of a small group of companies.
One goal of the travel management project was to create one central travel management organization and define a single Airbus travel policy for all employees in all countries.
With growing business need including the decision to build the world's largest commercial aircraft, the A380 Airbus's travel costs began to grow exponentially at the start of 21st century.