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In conjunction with the PMO organizational structure, there are contract management process workflows that ensure airlines meet the specifications of customers. This is comparable to the engineer-to-order set of processes at Airbus yet more quickly executed to customers' specific requirements (Berman, 2004). This product development process concentrates on the PMO also coordinating next -- generation product strategies as well, with Boeing choosing energy efficiency over larger, more expensive yet more profitable planes to build.
Strategies compared: Airbus and Boeing
From the highly collaborative approach of Airbus to the project-driven strategies of Boeing, each is ideally suited for any given product strategy. Airbus ironically has created product development strategies that align perfectly with the needs of lower-cost, more energy-efficient commercial jets, yet is stressing their product development process with the behemoth A380. Contrary to their product development strategy is Boeing, which is orientated and based on a centralized PMO strategy, Airbus relies on an engineer-to-order strategy that works for component-based manufacturing. The challenge for each is the scalability of their new product development processes to support their future product strategies. For Boeing, their concentration on using CAD-based applications including standardizing the entire Model 777 development on Dassualt Software is a caser in point. The role of the PMO office and contract management, in conjunction with Engineering Change orders (ECO) is critical to their future product strategy. Boeing is more adept with its internal processes to create an A380 while Airbus excels at interlinking processes for supporting lower-end commercial jet production, which has historically been their strongest market strategy (Anderson, Sedatole, 1998).
Competition in high-speed jet liners
The competition for commercial jet airliners is in a mature stage of its product lifecycle, and estimates of the market contracting (Holmes, 2007) have been reported by a variety of research firms in the industry. Despite the slow-down in this industry, Airbus still leads the market with 29.6% followed by Boeing with 25.3% (Holmes (a), 2007). Table 1 provides the worldwide market shares of commercial jet manufacturers.
Table 1: Worldwide Market Share of Commercial Jet Manufacturers
Market Share Range
European Aeronautic Defence and Space Company EADS N.V.
The Boeing Company
United Technologies Corporation
Honeywell International Inc.
Embraer-Empresa Brasileira de Aeronautica S.A.
How Airbus can spread some of the risks inherent in its ventures
As Airbus is in a consortium-based business model they can alleviate or spread risks by taking the following strategies. First, concentrating on making their product strategy align more with their innate strengths and allowing suppliers to manage interrelationships between themselves more. This will greatly reduce confusion and increase shared knowledge throughout their supply chains. Second, Airbus needs to standardize on components interfaces and subassembly standards, which it has not yet done across all subsidiaries, to support greater coordination across its entire supplier base. Third, the financing and capitalization of Airbus needs to be structured more as a Joint Venture and less as a subsidiary-based model, as it is today. The reliance on European Aeronautic Defence and Space Company EADS N.V. has proven to be problematic and not capable of absorbing all the risk of this unique manufacturing consortium to this point.
Shannon W. Anderson, Karen Sedatole. (1998). Designing quality into products: The use of accounting data in new product development. Accounting Horizons, 12(3), 213-233. Retrieved September 23, 2008, from ABI/INFORM Global database. (Document ID: 34653543).
Phyllis Berman (2004, February). Beating Boeing. Forbes, 173(3), 129. Retrieved September 21, 2008, from ABI/INFORM Global database. (Document ID: 576816811).
Business: The super-jumbo of all gambles; Airbus vs. Boeing. (2005, January). The Economist, 374(8410), 55-56. Retrieved September 21, 2008, from ABI/INFORM Global database. (Document ID: 782135091).
Stanley Holmes (2007, January). The Secret Weapon at Boeing. Business Week,(4016), 34. Retrieved September 24, 2008, from ABI/INFORM Global database. (Document ID: 1189394571).
Stanley Holmes (2007, February). The Battle for Air Supremacy Business Week, (4020), 102. Retrieved September 25, 2008, from ABI/INFORM Global database. (Document ID: 1211414321).
Douglas a Irwin, Nina Pavcnik. (2004). Airbus vs. Boeing revisited: international competition in the aircraft market. Journal of International Economics, 4(2), 223-245. Retrieved September 25, 2008, from ABI/INFORM Global database. (Document ID: 710579571).
Max Kingsley-Jones, Guy Norris. (2005, November). Enhanced A340 set to take on…[continue]
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