Competitive strategies of Boeing and Airbus in aerospace

Boeing and Airbus

The airline industry is very large and complex but provides important services to the world economy which helps sustain development and provide connections to people across the globe. The purpose of this essay is to examine two corporations, Boeing and Airbus, and compare and contrast their competitive strategy within the airline industry. After discussing these approaches, this essay will suggest some alternative strategies that may be beneficial to both of these organizations.

Boeing

According to its website, Boeing "is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. Additionally, Boeing designs and manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. " Boeing plays a significant role in the security of our national interests as well. Boeing is a major service provider to NASA and is the prime contractor for the International Space Station. The company also provides numerous military and commercial airline support services. Boeing has customers in more than 90 countries around the world and is one of the largest U.S. exporters in terms of sales.

With a company structure as complex and widespread as Boeing, their corporate strategy must take into account the many variables that comprise this organization. For decades, Boeing maintained competitive advantage through technical performance of advanced aerospace products. Over the last 5 years, business strategy has shifted steadily in favor of financial performance through cost-cutting, shedding of assets, and increasing reliance on global suppliers.

unit costs for labor and capacity, leading to higher short-term margins.

This recent change for Boeing has caused serious problems. Denning (2013) suggested that Boeing's failures in recent times can be explained. He wrote that outsourcing has had much to do with the decline of Boeing's international status and "further aggravated these risks by adopting a new outsourcing model, along with the new technology. Unlike Boeing's earlier aircraft, in which Boeing played the traditional role of integrating and assembling different parts and subsystems produced by its suppliers." Something was lost in this transition and as a result Boeing is trying to regain some of the business momentum that has been lost in recent years.

Conclusions

Although current research on the strategies of both Airbus and Boeing clearly suggests that Airbus may be able to overtake Boeing and dominate this industry it is unlikely. In response to the drastic changes that have occurred in the airline industry, Boeing made the changes that were necessary to ensure the overall development of the organization. Although this process was challenging and painful for the organization at times, its actions appear to be paying off. Airbus, unfortunately, has made no significant changes, even though they airline industry has changed so notably in recent years. Given the fact that Boeing has made changes to respond to an evolving industry and Airbus has done relatively little, it seems reasonable to argue that, in the end, Boeing will ultimately be the winner. If Airbus had responded to the crisis with something more than just a "business as usual" attitude, it is possible that it may have been able to undercut Boeing's prices. At the present time, however, this just does not seem possible.

Focusing on solid business fundamentals and expecting change would serve both of these organizations in the best manner. Technology developments and a disturbed geopolitical landscape has made the airline industry very hard to predict and corporate strategies are no guarantee against market forces that cannot be presently understood. Keeping an open mind and using solid methods will help protect against this uncertainty and provide a solid frame on which to base the future of these companies upon.