Competition in a Mixed Duopoly Term Paper

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Rather, it is clear Toyota management became too arrogant for its own good, often side-stepping the most critical parts of the TPS quality management initiatives in order to make the production schedules that sent between 40,000 to 60,000 Camry autos to the U.S. For sale every month (Potter, 2010). The TPS today is actually the source of greater knowledge about how to solve their brake and recall problems. The current problems aside, the TPS has proven to be a knowledge sharing network that is very effective for competing in a market duopoly where intelligence not costs are the main differentiator (Dyer, Nobeoka, 2000).

Lean manufacturing concepts from the foundation of competitive strength of the two dominant companies that form the market duopoly. While each share this common foundation, their respective approaches to manufacturing execution vary significantly. Airbus deliberately created their organizational structure to support more of an engineer-to-order supply chain, as the decentralization of component production and R&D would reduce overall time-to-market, leading to products getting on the market sooner (Gosling, Naim, 2009). Airbus has successfully created an entire supply chain that reflects their unique approach to engineer-to-order and build-to-order manufacturing strategies, which has helped the company complete the massive A380 development project in the process (Kumar, Wellbrock, 2009). The depth of systems integration and supplier coordination across the Airbus supply chain exemplifies what industry analysts consider a best practice of turning knowledge and integration expertise into a competitive advantage (Columbus, 2003).

In a duopoly the ability to respond quickly to customer demands is highly dependent on knowledge sharing throughout the production process. This is especially true in the highly competitive 60 -- 99 seat market segments that every manufacturer globally is focused on today. For Boeing, the necessity of changing their production process began with a greater reliance on CAD-based design and collaborative development and continues today to a more modular, build-to-order process, which is shown in Figure 4.

Figure 4:

ETO Production Operations of the 787 Dreamliner

Source: Boeing 787 Website

This is a departure from the previous-generation approaches within Boeing of constructing the entire aircraft through global teams (Auch, Smyth, 2010). Boeing is relying on build-to-order supply chains and production techniques to lessen the time-to-market for their 787 commercial airliners. As a major competitor in a duopoly, the company is challenged to create a more effective approach to manufacturing to stay in step with both customer demands and the increasing efficiencies of Airbus as well. Both Airbus and Boeing also are very focused on how to transform their supply chains and make them more build-to-order to create greater barriers to entry to Bombardier And the Chinese consortium of companies pursuing the regional jet market globally.

The NPDI Process Is Critical To Global Competitiveness

The most critical event for any commercial jet manufacturer is the NPDI process as this process area supports new product launch selling efforts, where companies often generate 60% of their revenue or more (Haque, Moore, 2002). The more engrained the competition in a duality, the more intense the competition is between companies in this process area. For Bombardier and the Chinese consortium of manufacturers, this strategic area will be where they succeed or fail as competitors for the lucrative mid-tier marketplace. Figure 5, Commercial Aircraft NPDI process illustrates the steps and roles in this process area.

Figure 5:

Commercial Aircraft NPDI Process Source: based on analysis of (Haque, Moore, 2002) (MIT Lean Advancement Initiative, 2010)

Conclusion

In a market duopoly, knowledge often replaces costs and pricing as the primary competitive advantage. This can be seen in the examples shown of how the TPS revolutionized the supply chains for autos, and how Airbus and Boeing are using built-to-order integration with their supply chains to gain competitive advantage. Using the lean manufacturing concepts and years of experience in streamlining their production cycles, Airbus and Boeing will continue to perpetuate a market duopoly. The challengers in the mid-tier of the market including Bombardier and Chinese manufacturers will redefine the value chains of the industry through more efficient use of global partnerships. All competitors in this market will be focused on how to reduce the time it takes to build, test, deliver and support the very profitable mid-range jets that will dominate commercial aviation for the next decade.

References

Francesca Auch, & Hedley Smyth. (2010). The cultural heterogeny of project firms and project teams. International Journal of Managing Projects in Business, 3(3), 443-461.

Columbus, AMR Research (2003). Configuration is at the heart of fulfillment for complex manufacturers. AMR Research Report. March 31, 2003. Boston, MA.

Stephen Corbett. (2007). Beyond manufacturing: The evolution of lean production. The McKinsey Quarterly,(3), 94-96.

Jeffrey H. Dyer, & Kentaro Nobeoka. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal: Special Issue: Strategic Networks, 21(3), 345-367.

Gosling, J., & Naim, M.. (2009). Engineer-to-order supply chain management: A literature review and research agenda. International Journal of Production Economics, 122(2), 741.

Hicks, C., & McGovern, T.. (2009). Product life cycle management in engineer-to-order industries. International Journal of Technology Management, 48(2), 153.

Badr Haque, Michael James Moore. (2002). Characteristics of lean product introduction. International Journal of Automotive Technology and Management, 2(3,4), 378-401.

Kumar, S., & Wellbrock, J.. (2009). Improved new product development through enhanced design architecture for engineer-to-order companies. International Journal of Production Research, 47(15), 4235.

Matthew May. (2005). Lean Thinking for Knowledge Work. Quality Progress, 38(6), 33-39.

MIT Lean Advancement Initiative, (2010). Lean Supply Chain Now Concept Initiative . Lean Supply Chain Working Paper,…[continue]

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