Case Study Airbus Corporate Strategy Marketing Essay

Airbus believes in the future of aircraft is in jumbo size airliners, which they in their opinion will help relieve congestion of so many airplanes operating in and out of airports by economically ferrying more passengers between major hubs. The company is following an expansion strategy as it takes it proven expertise in civil aircraft industry and it put to use in the military sector with the A400M program

To secure profitability, Airbus started to outsource major elements of their newest project, the A380 with nearly a third of the project being outsourced, on a risk-sharing basis. The company uses only mature and long tested technology and chooses long-term suppliers to guarantee quality. An important part of Airbus’ strategy is the use of synergies between all its airplanes, which offers operators a much shorter training time for pilots and engineers, significant savings through streamlined maintenance procedures, and reduced spare parts inventory. The result is economics of time and money for Airbus operators, which translate to real competitive advantage for them.

Airbus operates on the principles of thinking ahead and listening to their customers, passengers, and employees in building constantly more comfortable and efficient aircrafts.

These principles are seen as fundamental to the company’s future success. The three main points of Airbus’ corporate culture are innovation, creativity, and freethinking with the focus of internationalization and globalization. Diversity of culture and languages is considered a competitive advantage for the company. Through the creation of effective teams with different nationalities, backgrounds and skills, Airbus’ growth, and development can be secured. English is the working language, unifying about 80 different nationalities speaking over 20 languages. Although different cultures and nationalities in may cause problems of communication and understanding, it also makes it possible to reach customers all over the world in knowing their culture and speaking their language.

http://www.ainonline.com/news/single-news-page/article/airbus-examines-strategy-as-new-markets-emerge-25408/

Boeing:

Boeing is a major maker of commercial jets and the leading aerospace company and offers related support services. Boeing’s 2004 sales were $52.5 billion from customers in 145 countries with 30% coming from international sales. Boeing has more than 159,000 employees in 48 states in the U.S. and 67 countries. Their future success is based on a three-pronged strategy of running healthy core businesses, leveraging strengths into new products and services, and opening new frontiers. Boeing has decided to take a different approach by focusing its strategy on the development of smaller, midsize aircrafts since they believe that airlines want the flexibility of using smaller airports and travel longer distances. Their future success is depended on the 787 Dreamliner. However, Boeing considers the introduction of the A350 as a sign of lost confidence in the A380 .

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Boeing changed the classification of the 7E7 to the 787 to stay within tradition. However, the change could have made because of Chinese associating the number 8 with luck. In addition, the sound of number 8 is very similar to the sound for the word for money in Japanese. This has work to their advantage since 140 787s have been sold to China and Japan in past few months.

Boeing’s principal activities offer products and services in the aerospace industry. It operates in six segments: Commercial Airplanes, Aircraft and Weapon Systems, Network Systems, Support Systems, Launch and Orbital Systems, the Boeing Capital Corporation (BCC) and other. Commercial Airplane develops, produces and markets commercial jet aircraft. The Aircraft and Weapon Systems, Network Systems, Support Systems and Launch and Orbital Systems are known as Integrated Defense Systems (IDS). IDS is into research, development, production and support of military aircraft, fighters, transport and attack aircraft, helicopters, missiles, space systems, missile defense systems, satellites and satellite launching vehicles, rocket engines, and information and management systems. The BCC finances commercial and private aircraft, and commercial equipment.

Internally, Boeing has invested heavily in new facilities, test equipment, and methods for aero-acoustics research and noise control. Research projects have been planned with a long-term focus that addresses the challenge of transition of new basic technology to production. Major research projects are staffed with multi-disciplinary teams to address cross-functional design, manufacturability, maintainability, durability, and cost, all obstacles to implementation of new technology.

Externally, Boeing has held leadership positions in NASA’s Advanced Subsonic Technology (AST) Program since its inception in 1993, and has strongly supported organizations that promote research in aero-acoustics, such as the AIAA Aero-acoustics Technical Committee. As a NASA contractor, Boeing has provided substantial cost sharing in the form of private databases brought into the AST program, and in direct labor and test hardware fabrication support to NASA test programs. Boeing has also provided direct support to aero-acoustics research programs at several universities, including Stanford, Florida State, Florida Atlantic, Boston University, MIT, VPI, LSU, and Arizona. Boeing’s broad approach to aero-acoustics research is an indication of the difficulty of finding solutions to commercial aircraft community noise issues. Participation in the OAI Aero-acoustics Consortium is a unique opportunity to help bring together distinguished researchers to collaborate on problems of extraordinary difficulty and vital importance to the aviation industry. Boeing is committed to this Objective.

Adding strength

http://www.speea.org/new_temp_items/SPEEA_Challenge_in_Aerospace_Leadership.pdf

Airbus Forecast

Some 25,000 new passenger and freighter aircraft valued at US$3.1 trillion will be delivered from 2009 to 2028, according to Airbus’ latest Global Market Forecast.

Emerging economies, evolving airline networks, expansion of low cost carriers and the increasing number of mega-cities as well as traffic growth and the replacement of older less efficient aircraft with more eco-efficient airliners are factors driving the demand for new aircraft.

In 2009, a decline in Revenue Passenger Kilometres (RPK’s) of 2% is expected to be followed by a rise of 4.6% in 2010.

The forecast anticipates that in the next 20 years, passenger traffic RPK’s will remain resilient to the cyclical effects of the sector and increase by 4.7% per year or double in the next 15 years. This will require a demand for almost 24,100 new passenger aircraft valued at US$2.9 trillion. With the replacement of some 10,000 older passenger aircraft, the world’s passenger aircraft fleet of 100 seats or more will double from some 14,000 today.

Airfreight tonne kilometres (FTKs) is forecast to increasing annually by 5.2%. Combined with fleet renewal, this creates a demand for some 3,440 freighters. More than 850 of these are new aircraft valued at US$210 billion, with the remainder converted from passenger aircraft.

“Air transportation is a growth industry, and an essential ingredient in the world economy,” said Airbus Chief Operating Officer Customers John Leahy. “Technology and innovation are key drivers for an eco-efficient aviation sector, and Airbus is at the forefront of both.”

Aviation also benefits individuals in every region of the world, with the number growing as aviation prospers. Oxford Economics predicts that in 20 years time, air transport will directly employ 8.5 million people worldwide and contribute US$1 trillion annually to world GDP. Tourism and indirect benefits are even bigger.

The greatest demand for passenger aircraft will be from airlines in Asia Pacific and emerging markets. The region that includes the People’s Republic of China and India accounts for 31% of the total, followed by Europe (25%) and North America (23%). In terms of domestic passenger markets, India (10%) and China (7.9%) will have the fastest growth over the next 20 years. The largest by volume of traffic, will remain domestic US.

Air traffic growth, increased frequencies, cost reduction, environmental responsibilities and airport congestion are increasingly influencing airlines to capitalise on the benefits of larger aircraft, particularly within aircraft families by minimising training and maintenance costs.

For example, in the US in 2007, airlines wasted 740 million gallons of fuel in congestion delays, equivalent to 32,000 London to New York flights. Bigger aircraft with reduced CO2 emissions are a solution. In the last 10 years aircraft have increased in size by 3% and Airbus predicts that by 2028, the average aircraft will be 26% bigger than today.

Not surprisingly, Airbus also foresees demand for Very Large Aircraft (VLA) seating more than 400 passengers, like the A380, at above 1,700. Valued at US$571 billion, this represents 19% by value of passenger and freighter aircraft deliveries, or 7% of aircraft units. Of these, nearly 1,318 will be needed to link the world’s most dynamic destination ‘mega’ cities, which are steadily increasing in number and size. This inevitably leads to a greater concentration of traffic. More than 50% of the world’s VLA’s will be operated by airlines in the Asia Pacific region.

In the twin-aisle aircraft segment (seating from 250 to 400 passengers), some 6,250 new passenger and freighter aircraft will be delivered in the next 20 years, valued at some US$1,300 billion, or 42% by value, 25% by units. Of these, 4,240 aircraft will be small twin-aisle (250 to 300 seater) and about 2,010 intermediate twin aisles (350 to 400 seater). These segments are covered by the A330/A340 family. From 2013, the A350 XWB family will cover the entire spectrum of twin aisle market requirements.

In the single-aisle segment, almost 17,000 aircraft worth some US$1,200 billion or 39% by value, 68% by units, will be delivered in the next 20 years. This is an increase over previous forecasts due to the emergence of low-cost carriers and increased route liberalisation and an accelerating demand for single aisle aircraft in Asia.

Boeing Forecast

Worldwide economic activity, reflected in the global gross domestic product (GDP), is the most powerful driver of growth in commercial air services and the resultant demand for airplanes.

The global GDP is projected to grow at an average of 3.2 percent per year for the next 20 years. Reflecting the economic growth, worldwide passenger traffic will average 5.3 percent growth

and cargo traffic will average 5.9 percent growth over the forecast period. The passenger and cargo traffic growth rates are higher than prior years’ forecasts due to traffic declines of 2009. Calculating

a 20-year growth rate based on a lower base year traffic figure yields a higher rate. If we neglect the low starting point, it is anticipated that passenger traffic will grow at a rate of 4.9 percent

per year and cargo traffic will grow at 5.4 percent per year. To meet the demand for commercial aviation services, the number of airplanes in the worldwide fleet will grow at an annual

rate of 3.2 percent, nearly doubling from around 19,000 airplanes today to over 36,000 airplanes in 2029. Airplane deliveries, for fleet growth and replacement of aging airplanes, will total 30,900

over the next 20 years, with a value of US$3.6 trillion.

Diverse demand for air services

Air transport throughout the world continues to change in response to market opportunities and challenges. New airline business models and the dynamic growth of air travel in the

emerging economies throughout the world are diversifying the demand for airplanes. As global air travel declined in 2009, there were still many markets and business models that experienced

growth. Over the next 20 years, 77 percent of demand for new airplanes will come from outside North America, with about 34 percent of deliveries going to the Asia Pacific region.

The Boeing forecast continues to predict that the greatest demand for new aircraft, by market value, will come from the United States, followed by China. Remarkably, the United Arab Emirates-with a population of less than 5 million, yet home to several highly competitive airlines-will be thairlines-will be the third largest market by value.