The aerospace industry is one of the most capital intense industries in the world. US manufacturing had enjoyed a distinct technological and financial advantage over its European competitors from the period after the Second World War (Carpenter, 2009). In 2002 however, to the surprise of many Airbus an aircraft manufacturing subsidiary of the European Aeronautic Defense and Space Company N. V. was able not on to gain global market share but take the lead. Their ability to forecast the markets need along with their innovative approach helped them accomplish the gain in global market share.
After the initial shock wore off many experts questioned if Airbus could sustain their market share and continue to compete against Boeing. In this case analysis it became apparent that Airbus had indeed done many things correctly in their business strategy. However, using analytical tools which included the PESTEL Analysis, Stakeholder Analysis, SWOT Analysis, Porter’s Five Forces, Porter’s model of competitive advantage and a VRINE Analysis I was able to identify some problems and critical issues Airbus faces with regard to their sustainability along with their causes.
In this analysis my goal was to identify Airbus’ current strategy and highlight its strengths and weaknesses along with recommending my own strategy to assist Airbus in attaining future growth. History of Airbus Airbus is one of the world’s leading manufacturers of commercial jetliners and military airlifters. In 2009 Airbus celebrated its 40th anniversary of its first aircraft launch (Airbus, 2011). Airbus was born as a consortium between firms as a desperate attempt by the European government to end the American manufacturers’ monopoly in the aerospace industry (Carpenter, 2009).
Initially the countries included in the consortium were France and Germany with Spain and Britain joining the consortium further down the line. Each country represented in the consortium was responsible for certain parts of the manufacturing. They acted as both shareholders and suppliers. Lack of regulations made it so that none of them had to disclose any of their financial information and many times they acted in their own self-interest making it tough for Airbus as a whole to make decisions easily (Carpenter, 2009).
In the late 1990’s the need for their business structure to change was realized and Airbus decided that they had to streamline itself “from an unwieldy, four-partner consortium into one for-profit company (Carpenter, 2009). ” The newly integrated company began its operation in July, 2000 under the name Airbus S. A. S. (Airbus, 2011). In December of that year Airbus launched the A380 know to Airbus as the “flagship of the 21st century” (Airbus, 2011).
The increased passenger capability and lower fuel cost of the Airbus A320 Family of aircrafts along with their marked quality and reliability allowed Airbus to continue to win orders during the economic turndown of the new millennium and during the aftermath of the September 11th attacks. Airbus operates under the following mission, “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, 2011). Its goal is to deliver the aircrafts on time, on cost and on quality – getting it right the first time. Safety is the number one priority in the design, building and performance of its aircraft (Airbus, 2011). The company sets high standards for themselves and they are well aware that the Airbus customer expects quality in the aircrafts they buy (Airbus, 2011). Although their market share changes frequently in 2010, Airbus’s global market share was 52% (Chiu, 2011).
While to date Airbus has used their strengths and opportunities to help them gain success in the years to come they will have to examine their potential threats and weaknesses to ensure future success. Barriers to Sustainability The aircraft industry is enormous in the United States and globally. In 2008 large civil aircraft exports generated $31. 3 billion dollars making it the largest category of manufactured products in the US (Anderson, 2009).
Since 2007 the global market for large civil aircrafts has been a duopoly shared by Airbus and its competitor Boeing (Anderson, 2009). Although using Porter’s Five Forces the threat of new entrants into this market should be low the sustainability of Airbus’ has now come into question as three new competitors have announced their plans to enter into the large civil aircraft market posing direct competition. These competitors include Commercial Aircraft Company of China, Sukhoi Civil Aircraft Company from Russia and Bombardier from Canada (Anderson, 2009).
While it is expected that they will not be able to launch their plans for another ten to fifteen years Airbus stated that they may not be able to roll out their new version until 2020 giving the competitors an advantage (Anderson, 2009). Another barrier to sustainability is the increasing costs of jet fuel. There have been warnings that turmoil in Libya and rising oil prices could add significant enough costs to the production and usage of aircrafts which would result in airlines decreasing the demand on their orders while increasing the cost to make an aircraft.
Cite this Airbus: Executive Summary
Airbus: Executive Summary. (2017, Mar 17). Retrieved from https://graduateway.com/airbus-executive-summary/