Competitive strategies in the aircraft manufacturing industry: Boeing and Airbus

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.

Airbus

According to its website, Airbus " is the world's leading aircraft manufacturer whose customer focus, commercial know-how, technological leadership and manufacturing efficiency have propelled it to the forefront of the industry. he company also continues to broaden its scope and product range by applying its expertise to the military market. It is as well extending its portfolio of freighter aircraft that will set new standards in the general and express freight market sectors. "

Boeing and Airbus are direct competitors, trying to gain a completive advantage over one another in this industry. Much like the Boeing strategy for development, the Airbus strategy is also multilayered. Airbus has grown at very quick rate and is now competing for global market share, requiring a redesigned strategy to accomplish this objective. In an effort to ensure its long-term economic advantage, Airbus has begun scaling back its production. Although uncertainties still exist with respect to the airline industry, Airbus projects that its growth will continue at a steady 4.9% per year. Unlike Boeing, Airbus has argued that massive layoffs are not necessary to save the organization.

Conclusions