Airbus and Boeing Case Study

Airbus is one of the world's leading aircraft manufacturers, and it consistently captures approximately half or more of all orders for airliners with more than 100 seats. Airbus was formed in 1970 by a consortium of France's Aerospatiale, Germany's Deutsch Airbus and Spain's CASA. Its main business is to design and manufacture civil transports. The companies first decided to build their first twin-engine wide body airliner - the A300. However, at that time, Boeing, which is its biggest competitor in following decades, enjoyed most market dominance with its various airplane products. Therefore, in the infancy stages of Airbus, A300 was not a particular success. It was not until 1981 and the introduction of the A320 made Airbus become a major manufacturer in the civil aviation industry. This model was a great success because it adopted a computerized system of flight controls - fly-by-wire technology. Airbus' mission is to "meet the needs of airlines and operators by producing the most modern and comprehensive aircraft family on the market, complemented by the highest standard of product support." Airbus develops a clear vision "creating the best and safest aircraft", focusing on the importance of quality and performance. (Airbus S.A.S., 2010)

Basing its technological leadership, Airbus used the family concept to satisfy different airline customers' needs. For expanding marketing and sales, Airbus's early strategy was at aiming the small airline in Asia and the Middle East. The increasing sales made Airbus gain worldwide recognition. In 1978, it successfully broke into the American market. After that, Airbus focused on developing new models, increasing sales, and cutting costs. Since then, the sharp rival between Airbus and Boeing never ceased. In the recent years Airbus has regularly delivered more aircraft's than its rival and consistently booked at least half of all new orders. It also captured the imagination of the world with A380- the biggest airline ever built and which is setting new standards in the aviation Industry. As Airbus succeeded in making its way into many of Boeing's markets, Boeing believed that Airbus was benefiting from 'unfair' subsidies. Competition in the aircraft industry attracted attention because of the market's unusual structure, in which economies of scale are enormous relative to demand market.

Boeing was founded in 1916 by William E. Boeing, and after its expansion through its success, it merged with Michael Douglass in 1997. It is the largest aerospace company and leading manufacturer of commercial jetliners and defense, space, and security systems. It is a U.S exporter supporting airlines and allied government customers in 150 countries. The company continues to expand its product line to meet and satisfy customers' needs. It has commercial airplanes, Defense, space, and security as well as operations and technology across the enterprise. Shared services group allow for profitable growth by providing services required to run their global operations. This is turn delivers great value.

Commonality has been part of the Airbus vision from the very beginning. As early as the mid-1970s, Airbus has planned a series of derivatives of the original A300 to build a full family of airplanes- short haul, medium haul and long haul. The Airbus strategy was very straightforward and the objectives were very simple. Airbus wanted to offer the airlines a full line of products presenting the most extensive commonality possible in order to make training, operations and maintenance easier and less expensive for customers. Airbus has several particular internal strengths relies on commonality which includes: strong quality, good reputation, cost advantage, Innovation. Airbus as an organization has many strengths, their main strength is the strong quality. For building the Strong Quality, Airbus focuses on safety, reliability, and comfort. Their mission states that they want to create the best and safest aircraft. They have an operational reliability control program for their aircraft which focused on ways to implement a streamlined reliability program within an organization of maintenance and engineering (Airbus S.A.S., 2008). The protection included in the fly-by-wire system is a factor in enhancing the safety. Passenger comfort is very essential to sell those seats and have returning customers. That is why when they are designing and building these aircrafts their top priority is cabin comfort. In addition, the strong quality leads Airbus gains a worldwide reputation. In 1998, Airbus has 29 worldwide market share, Boeing has 71%; but in 2003, Airbus's market share growth to 52%, it's the first time over the half share. The second strength is its cost advantage. Because of the recession which intensified competition among aircraft makers, partly as a result of the weakening of the dollar which made Airbus exports more expensive on the global markets, Airbus sought to reduce costs through deep cuts in jobs, the streamlining of the production process, and the speed up of deliveries. Compare the differences between Airbus and Boeing, Airbus used 20-30 percent less labor hours and cost to produce a jetliner. Also, after the reorganization, Airbus's central office bought the materials consumed by the firm annually at a 10% discount, saving 1.2 billion Euros a year. Another strength Airbus has is their superior R&D skills and innovation leadership, which along with manufacturing competence has led to them being able to build planes more economically (Strategic Direction, 2006). A380 has improved fuel efficiency and reduced drag with the latest innovations in aerodynamics. The efficiency improvement comes from the drastic reduction of training times. On average, an airline pilot changes aircraft every five years. During the last five weeks transition phase, the airplane is not plying commonality. But now, Airbus have been able to reduce training time by taking into account the previous flown to prepare for the new aircraft to be flown. It takes two weeks to replace the old airplane.

Boeing has many strong competitive advantages and internal resources that help define its core value. The main source of its competitive advantages is its core competencies, which help develop Boeing's resources into strong competitive advantages in the airline manufacturing industry. Its core competencies are unique, as they retain value and it has made repeated efforts to meet the customers demands and needs (Core competencies-Boeing.com). One of its unique structures is to design the product according to what customers want, and this in itself builds a strong competitive advantage. It also has unique contracts and agreements with NASA and the United States Airforce. Both these strategic partnerships paved way for Boeing to become the