Case Write-Up: Global Aircraft ManufacturingThe global wide-body aircraft manufacturing industry faced a unique balance of forces contributing to therivalry between Airbus and Boeing – the two industry players. Industry Rivalry (Relatively high)The wide-body aircraft manufacturing industry featured relatively high rivalry. On one hand, the industrywas comprised of only two key players – Boeing and Airbus. This fact, however, is outweighed by threekey factors driving industry rivalry:Wide-body aircraft sales contracts are, by nature, infrequent but immensely valuable. Airlinecustomers make fleet investments in phases spread out by multiple years if not decades and withten or more aircraft purchased. As a result, an individual sale totals hundreds of millions (if notbillions) of dollars. This “lumpy” nature drives rivalry as an individual sale represents a significantamount of the manufacturer’s total annual revenue – a sum worth competing to capture.Adding to the importance of an individual sale is the factor of network efficiencies. An individualsale to one manufacturer presents long-term efficiencies (via consolidated maintenance, parts,training, and flight crews) in continuing to invest within that platform. This reduces rivalry ascertain airlines may be “locked-in” to either an Airbus or Boeing fleet, but dramatically increasesrivalry when an airline seeks to upgrade an entire segment of their fleet causing eachmanufacturer to compete not only for the immediate sale, but also for the promise of future salesto come.The public nature of sale announcements furthers this pressure by driving publicity and credibilityfor the victor. In the case of Iberia, a decision to invest in one Boeing aircraft instead of an entirelyAirbus fleet would come as a market indictment of Airbus.Supplier Power (Relatively low)Suppliers have very limited power relative to either Boeing or Airbus, but key changes to the approachemployed for the A380 and 787 Dreamliner reveal interesting dynamics at play.
GROUP CASE ANALYSIS 2: GLOBAL AIRCRAFT MANUFACTURINGProblems summaryThere are three problems with global aircraft manufacturing. First, In the Asian-Pacific region, the emerging economies created the market for air travel. It means that it created opportunities for aircraft manufacturing companies. However, these opportunitiesnot only provided for Boeing or Airbus, but also for Bombardier, Embraer, the Commercial Aircraft Corporation of China, and other new entrants, which will compete against the market leaders like Boeing and Airbus. Second, Boeing and Airbus were always missing deadlines for presenting finishedaircraft to the airlines. This created an opportunity for Bombardier, the third largest globalaircraft manufacturer, compete to these manufacturer by delivering planes to airlines on time. Third, global aircraft manufacturing industry had trouble with source of supplier power, which is labor union. Both Boeing and Airbus had affected the production capabilities of work stoppages. Recently, Boeing faced a labor union strike in 2008 while Airbus experienced a labor union strike in 2007.In the twenty-first century, Boeing and Airbus are two leading manufacturers in aircraft industry. They had a battle about the prices for the new planes in market share. In the same period of time, these two giant manufacturers started to develop new aircraft families for future market demand. They competed to each other. While airbus created A380 in 2007, which could carry more passengers than others, Boeing created Boeing 787, which lauched the point-to-point network service. Analysis 4