Airbus's global operations and international business strategies

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.

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 Economic Area (TAEA). This area has been the target of a great deal of foreign direct investment in recent years. In fact China Daily reports that

"The city attracted a record $10.8 billion foreign direct investment in 2010, up 20.3% compared with the previous year. "Tianjin maintains strong momentum in attracting foreign investment, as investors with real strength prefer business efficiency, better services and high-level labor resources to preferential policies," Yang said in an interview during the three-day China-Europe High-level Political Parties Forum. The city is also making efforts in building a low-carbon economy and has accordingly raised standards on project selection for investors. In addition to high energy-consuming and high-polluting projects, low-end processing projects, largely relying on cheap labor costs, are no longer welcomed by the city (Lan, 2011)."

Additionally the strategy that will be in use for the next five years has been revamped. For instance the revamped strategy is designed to place a greater emphasis on the needs of investors (Lan, 2011). Additionally the strategy is designed to be conducive with sustainable growth that will be beneficial to business and the local economy.

Government's strategy for influencing or intervening in trade

For Airbus one of the most utilized strategies for influencing or intervening in trade can be found in trade embargos. In some instance individual nations prohibit trade with other nations whose political or human rights practices are viewed as questionable or cruel. These embargos can prevent airlines from being able to purchase planes from Airbus. Tariffs are also a major issue that Airbus must often confront when engaging in international trade.

The company's expansion strategy

The company has embraced strategies that will allow the company to continue to expand in the years to come. Although the company already has a global presence the company still aims to continue expansion. A great deal of the success that Airbus has realized is associated with its ability to create new and innovative types of aircraft. This can be seen today through the development of the double-decker aircraft. Such aircraft provide the customers with a new and exciting flight experience ("Expansion"). This type of expansion is also important because it forces the competition to also expand the type of commercial aircraft that it produces.

The company's marketing philosophy

Over the years the company has utilized several unique marketing strategies. One of the first strategies involved flying an Airbus 300 over North America to show American airline companies what they were missing having not yet purchased an Airbus built airplane ("A Market Breakthrough"). Early on in its existence the company also used a marketing strategy of allowing airlines to lease aircraft for several months at a time before committing to purchase such aircraft. Today the company has embraced a philosophy of producing the most innovative aircraft to appeal to airlines and their passengers. The company wants the quality of the aircraft it produces to speak for itself. Because the company's products are established as some of the most well-made-in the world, the company has been able to gain brand loyalty and brand recognition.

Recommendations

The primary recommendation for Airbus is to adapt a long-range plan that will allow the company to remain successful while the global economy continues to shift and change. This would entail ensuring that the company's global expansion is sustainable over the long run. At the current time the company has a great deal of the market share for aircraft. However, this may change In the future as Boeing continues to expand and many fleets are relatively young reducing the likelihood that airlines will continues to purchase planes in the quantities that they have over the last decade. With these things in mind the company might want to consider diversification as it has already embraced the production of military aircraft. This type of continued product diversification is absolutely necessary to maintaining the success of the company.