Aerospace Business Research Paper

  • Length: 8 pages
  • Sources: 10
  • Subject: Business
  • Type: Research Paper
  • Paper: #14323476

Excerpt from Research Paper :

Airbus is one of the leading producers of commercial and military aircraft in the world. The company has been successful because of the commitment it has to excellence and a global vision. The purpose of this discussion is to focus on the ways and which Airbus functions in various parts of the world given the differing cultures, political, economic and trade issues that differ from country to country. The research will also focus on the ways in which Airbus can deal more effectively with these issues as they arise.

Company information: summary, products, size, etc. Note: (no history)

Airbus is Headquartered in Toulouse, France. The company is owned by European Aeronautic Defense and Space Company (EADS). At the current time the company employs 52,500 people and has many fully owned subsidiaries throughout the world. These subsidiaries are located in the China, United States, Japan and in the Middle East. In addition there are spare parts centers located in cities throughout the world including but not limited to Washington, Dubai, Beijing and Hamburg. Airbus also has training centers in Beijing, Toulouse, Hamburg Miami, and in addition to 150 field service offices in various locations throughout the globe. Additionally Airbus has an industrial network that has expanded throughout the years to include a regional design office in North America, a joint venture engineering centre in Russia. Engineering centers are also present in India and china. The company also relies has industrial co-operations and partnerships with sever many different companies throughout the world and there are 1500 suppliers.

Airbus is the industry leader in the production of a family of various aircraft that range from 107 to 525 seats. These airplanes include the following four families of aircraft.

1. A320 Family- the cornerstone product for this family is the A320, the aircraft holds 150 passengers utilizing the conventional two-class arrangement. This aircraft can also accommodate as many as 180 passengers when high density seating is used ("A320 Family").

2. A330/A340 Family. According to airbus aircraft in this family utilizes "the same basic fuselage and wing as Airbus' twin-engine A330, the A340 shares similar airframe structures, components and systems -- providing a true aircraft family with different versions to meet operators' varied requirements. This commonality is shared across the Airbus product line of wide-body and single-aisle aircraft through the use of fly-by-wire controls and cockpits with similar layouts (A330/A340 Family)."

3. A350 XWB Family- this is the company's jetliner family of aircraft. There are three planes that belong to this family the A350-800, the A350-900 and the A350-1000. The A350-800 can seat 270, the A350-900 seats 314 and the A350-900 accommodates 350 passengers. "This enables airlines to best match their A350 XWB fleets to route capacity demands, guaranteeing optimum revenue potential and excellent operating efficiency. The aircraft family concept, proven by Airbus with its other jetliners, also ensures optimal efficiency through the A350 XWB's commonality in engines, systems and spare parts, while also enabling pilots to fly all three versions with a single type rating ("A350 XWB Family")."

4. A380 Family. These planes are of the ultra long-range variety. This family is unique because it includes double-decker planes. The A380 is the largest commercial aircraft and it has a capacity of 525 passengers. The plane also offers lower emissions rates than its predecessors ("A380 Family").

In addition airbus continues to diversify its product range and is now appealing to the military market and hopes to offer its expertise in this particular market. The company has also entered the freighter carrier market which has also proven to be quite profitable. Boeing, an American aircraft manufacturer is Airbus' only true competitor as this particular industry has high and significant entry barriers (Irwin, and Pavcnik 2004).

Political and economic systems of the foreign country(s)

The presence of Airbus in other parts of the world dictates that there are certain political and economic systems that the company must adhere to. As with most Global corporations, Airbus must understand the policy and economic policy of its home country (France) while also understanding the political and economic systems that exists in the countries in which it operates. The political and economic issues facing a country can be both beneficial and disadvantageous for airbus. For example in 2008 the political and economic climate in Libya was beneficial to Airbus because the difficulties associated with ordering aircraft from Boeing caused Libya to order aircraft from Airbus. The difficulties existing in the country involved years of embargos that Libya faced. As a result of the embargo the nation's civil aviation fleet was greatly diminished. However in the midst of Libya's economic recovery and introduction unto the world economic stage, the company was able to purchase several aircraft from airbus.

In addition to the issue that took place with Libya, Airbus must always be mindful of the political conditions that are present in a country. Political instability can be a major impediment to properly conducting business. When the political environment is unstable economic conditions in a country can deteriorate quickly. As such political strife or turmoil in a country must be examined prior to doing business with a company or engaging in foreign direct investment.

Exchange rate misalignment is also an issue that Airbus must contend with as it operates in many different countries. According to exchange rate fluctuations are the primary reason for misalignment. In the aircraft industry such misalignment is likely to occur and can be extremely detrimental for Airbus. According to Benassy-Quere et al. (2011) "exchange-rate misalignments have a particularly stark effect on this industry. This is due to the fact that the industry is a duopoly where prices are mostly set in dollar but one competitor, namely Airbus, has costs that are to a large extent denominated in euro. Airbus thus bears the full brunt of euro/dollar fluctuations. By contrast, the other firm, Boeing, is almost completely protected from exchange-rate movements because its costs are mostly in dollar." Obviously this gives a competitive advantage to Boeing as it relates to potential profitability.

Cultural aspects of doing business in the country(s)

Global companies have a responsibility to adapt to the cultural norms of societies in which it operates. Failure to do so can lead to serious problems and impeded upon the ability of the company to succeed. Airbus understands the importance of respecting different cultures. As such the company has adopted a policy which focuses on thinking globally while acting locally. This philosophy simply implies that the company has a clear strategy for internalization that allows for company expansion. However, the company also recognizes the need to involve the local population in the expansion process. One aspect of this is to respect the customs and cultural traditions of the country. Airbus explains that

"The company thrives on the mix of ideas, vision and knowledge such a combination of cultures creates. At the same time, Airbus encourages its employees to develop individual talents and to be proud of their heritage. Diversity is the essence of Airbus. With its global presence growing Airbus is now an even bigger international family. For an Airbus employee it is usual to work side by side with people from a range of cultures. Career advancement within the company can take an employee not just to another floor or another building -- but to another country. Airbus takes pride in the diversity of its employees, valuing the special experience and expertise people from different backgrounds bring to the industry. The company thrives on the mix of ideas, vision and knowledge such a combination of cultures creates. At the same time, it encourages employees to develop their individual talents and experience and to be proud of their roots ("People and Culture")."

This dedication to diversity and acknowledging cultural differences has allowed the company to be successful in many different markets throughout the world. The goal of the company is to embrace the various norms so that Airbus can build long-lasting and trustworthy relationships with airlines throughout the world. The company's commitment to diversity and cultural acceptance can also be seen in the care that the company takes in discovering the needs of customers as it pertains to the type of aircraft that is to be built. For instance regional airline customers in Dubai may have different expectations of an aircraftsammenties than someone in Germany. Airbus, therefore has a responsibility to build aircraft that speaks to these needs of customers in various areas of the world. To assist in this effort the company employs a diverse workforce that reflects the various cultures that Airbus serves / These employees act as liaisons and demonstrate to airbus the cultural differences that need to be addressed as it relates to customs, traditions and expectations.

Foreign Direct Investment policies in the country(s)

Foreign direct Investment policies differ from country to country. Currently Airbus has a final aircraft assembly line in Tianjin, China. It is the first of its sort to operate outside of Europe. As an aspect of having state-level development zone Tianjin Airport…

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"Aerospace Business" (2011, June 25) Retrieved January 19, 2017, from
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