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Boeing vs Airbus

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Sabrina Nawrowski

on 27 October 2014

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Transcript of Boeing vs Airbus

vs
Outline
Introduction of Boeing and Airbus
Role of government
External factors of the business environment
Strategies of diversification
Future strategic moves

Dr. Bernd Mann
International Management; winter semester 2014/15
By: Steven Cleves, Clémence Debarle, Andreas Hildebrandt, Alexander Krebs, Sabrina Nawrowski, Kristina Neebe, Amoa Kassi

1. Introduction of Boeing
and Airbus
2. Which role did government support play related to the success of the companies?
3. How did the companies cope with external factors of the business environment?
4. How did both companies diversify their strategy way?
5. What could be future strategic moves?
Airbus
The Challenger
Boeing
The Defender & Global Leader
Bibliography
Airbus vs Boeing
global financial crisis
S. Tamer Cavusgil, Gary Knight, John R. Riesenberger, "International Business, Global Edition, 3rd Edition", p. 244 f.; Pearson, 2013
www.boeing.com
www.airbus.com
http://fortune.com/2013/03/19/boeing-vs-airbus-cant-we-all-just-get-along/
http://www.airbushelicopters.com/site/en/ref/home.html
http://english.comac.cc/products/ca/pi/
http://centreforaviation.com/analysis/boeing-airbus-share-honours-in-2013-ordersdeliveries-race---but-its-not-about-winners-and-losers-147949
http://www.academia.edu/4626722/Boeing_Strategic_Anlaysis
Boeing

Founded 1916/ Headquarter Chicago, Illionois, US
CEO James Nerney, Jr.
Commercial and military aircrafts, satellites, helicopters
>170.000 employees in more than 70 countries
Revenue 2013: 62,2 billion Euro




Airbus S.A.S

Founded 1970/ Headquarter in Toulouse
Alliance formed by France, Germany, Spain and Great Britain
CEO Fabrice Brégier
Commercial and military aircrafts, helicopters
>63.000 employees in 4 countries
Revenue 2013: 59,3 billion Euro
Airbus vs. Boeing
World market share
Boeing vs. Airbus
Commercial aircraft deliveries
reduced output
laid off thousands of workers
many airlines reversed or slid
on orders

External
Environment
PEST Analysis
Political
Social
PEST Analysis
External
Environment
Political
Social
Technological

Boeing vs Airbus
Economic
Largest growth in air traffic is seen in Asian region -> Tension between Middle East and US
->
Airbus is preferred
Dispute of unfair subsidies between Boeing and Airbus
US opening its military contract deals to companies across its borders
Social Mobility has increased and so the demand for air travel
Higher technological advancements -> reduces CO2 emission and noise generation
High rivalry with Boeing --> commercial airplane marketplace is a duopoly market
High substitutes for short distances
,
but no alternatives for long distance journeys
In Europe Airbus is more often used for short hauls
Terrorist attacks, wars, oil price, changes in interests and value of currency affect demand
Boeing
Environment
Army
Values
Integrity
Quality
Safety
Diversity and inclusions
Trust and respect
Corporate citizenship
Boeing capital Corp
Operating leases
Finances leases
Leveraged leasing
Sale/leasebacks
Freighter conversion finance
Long and short term financing
Secured loans-- senior and subordinated
Try to improve their performances:

Operations
Products
Services
Boeing P8 Poseidon
Naval market conception
Contractor for the US Army
Long Term Mine
Reconnaissance System (LMRS)
Combat Aviation
Frontier system
A160 Hummingbird
Airbus
Standardization
Industry standard
Pilot licence (CCQ)
Similar systems
Management expertise
2000 managers worldwide
1500 suppliers
3600 aircrafts
Expert career path
Lot of responsibilities, difficult decisions
New production in managing industrial activities.
Helicopter
New technologies
CAD/CAM
A380: glare material
Synthesis
Deep rivalry between Boeing and Airbus
Same concepts (military, helicopter, environmental, technological concepts)
Brutal price war to access emerging markets.
Operating around the world
2562 patents
International networks
Fly faster, more passengers and comfort
Environment preocupation
Thales A350 xwb
2012
Big year for Boeing
Conclusion
High rivalry
Makes small design changes and install more efficient engines
Produce new models
Maintain their reputation for quality and services

The Future?
New commercial aircraft corporation:
Comac
Smallest constructors:
Embraer, Bombardier, Fokker...
alliance with Japan's Mitsubishi, Kawasaki and Fuji to build the 787 Dreamliner
Restriction of selling products to particular countries due to retain sufficient security

changing needs and demands of customers
anti-US policy
-> negative for Boeing because of image and sales
Expanding into new market
Slashing costs, downsizing the organization and outsourcing for efficiency and innovation

Facing delays of delivery
Negotiate new Contracts
M&A of Suppliers to get more control
Improve Supplier Relationship
Expanding into new market
Reorganizing its global operations, outsourcing more manufacturing, producing aircrafts in the U.S.
Forerunner in technical stuff (fully autopilot, CIDS, ...) -> High(er) Investments
Carbon Fiber to be used in Construction of the body (Eg: A350 XWB with 50% carbon fiber body)
Reaction to B747 -> A380
Economic
dispute of unfair subsidies between Boeing and Airbus
increased fuel costs
environmental regulations and restrictions
high security equipment
global recession impacts
-> crease aircraft prices by 20%

Technological
computerized technology
-> but they lay more value on the skills of the workers
using new technology (i.e. composite material)
using lighter materials
-> commercial planes
-> reaction to A380 is the Dreamliner 787
http://catch4all.com/positive/2011/Boeing/WTO/index77.htm
GOVERNMENT SUPPORT
EU vs. US Government
EU Governments are socialist-oriented
US Government is more conservative

EU Government has strong role in economy
US Government believes in private-property

Both governments have a huge influence on company policies

EU Government support to Airbus
Receive direct support
Subsidies & soft loans -> tens of billions
Founded by Great Britain, Germany, France and Spain
Repay the loans -> depends on profitability
Provided huge equity infusions
Jointly owned stock-held company
Job generator -> 53.000 employees

US Government support to Boeing
Receive indirect support
massive defense contracts -> paid via tax dollars
$23 billion for R&D funding
Incentives -> tax breaks, infrastructure support
Cooperation with Mitsubishi, Kawasaki & Fuji to build 787
Japanese provided soft loans -> repay only in case of success
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