This report examines Airbus, one of two major players in the global aircraft manufacturing industry. Recent findings indicate that Airbus might have showed
unethical business behavior in convincing customers to purchase its aircraft. After presenting and analyzing these allegations and updating potentially unethical conduct by Airbus to the present day, this report continues to discuss the topic of ethics in general. It is then elaborated how ethics are applied within the aircraft manufacturing industry by its two main players Boeing and Airbus. Following this, tools such as a PESTLE analysis and a SWOT analysis of Airbus are presented. Based on the findings of these analyses, recommendations for Airbus are formulated and examined with regard to practicability and feasibility aspects. Recommendations will be divided into short-, medium- and long-term strategies. Finally, this report will conclude by summarizing the findings and giving an outlook to Airbus’ position in the global marketplace.
Table of Contents
1. Introduction
2. Airbus – company profile
3. Case study “Ethics and Airbus” (Cateora & Graham, 2007)
4. Update of case study “Ethics and Airbus”
5. Ethics
5.1 Ethics and Airbus – present
5.2 Ethics and Boeing – past and present
5.3 Ethics in the aircraft manufacturing industry
6. PESTLE analysis
6.1 Political factors
6.2 Economic factors
6.3 Social factors
6.4 Technological factors
6.5 Legal factors
6.6 Environmental factors
7. SWOT Analysis
7.1 Strengths
7.1.1 High degree of innovation and technical leadership
7.1.2 Strong market position
7.1.3 Strong support from EADS and European governments
7.2 Weaknesses
7.2.1 Delay in the A380 delivery
7.2.2 No A380 customer in North America
7.2.3 Divided production and management locations
7.3 Opportunities
7.3.1 Expanding jetliner market
7.3.2 Growing demand in air travel in India and China
7.3.3 Restructuring plan (Power8)
7.4 Threats
7.4.1 Increases of raw material prices
7.4.2 US appeal against subsidies
7.4.3 Uncertainty with regard to business model of the future
7.4.4 Vulnerability in the case of externals shocks
7.4.5 Potential new market entrants
7.4.6 Currency fluctuations
7.4.7 Substitutes for air travel
8. Recommendations
8.1 Short-term recommendations (implementation within six months)
8.1.1 Rebrand Airbus to promote high ethical standards
8.1.2 Minimize the effect of disadvantageous currency exchange rates
8.1.3 Practicability and feasibility of short-term recommendations
8.2 Medium-term recommendations (implementation within three years)
8.2.1 Pool all available resources into the A380 and A350 projects
8.2.1 Concentrate sales efforts on boom regions
8.2.2 Restructuring of production
8.2.3 Increase R & D in environmental-friendly aircraft
8.2.4 Practicability and feasibility of medium-term recommendations
8.3 Long-term recommendations (implementation in more than three years)
8.3.1 Higher level of outsourcing
8.3.2 Prevent or minimize the effect of market entry
8.3.3 R & D – increase efficiency and alliances
8.3.4 Managing customer relations
8.3.5 Practicability and feasibility of long-term recommendations
9. Conclusion and outlook
Objectives & Core Topics
This report evaluates the business operations and ethical standing of Airbus within the global aircraft manufacturing industry. The primary objective is to analyze historical and recent allegations of unethical conduct, examine the company's external environment through strategic management tools, and formulate actionable recommendations to improve Airbus’ competitive positioning and long-term sustainability.
- Ethical standards and business practices in the aerospace industry.
- Comprehensive PESTLE and SWOT analysis of Airbus.
- Challenges associated with large-scale aircraft development, including the A380 program.
- Strategic restructuring and competitive responses to market rivals like Boeing.
- Long-term market outlook and future-proofing strategies.
Excerpt from the Book
3. Case study “Ethics and Airbus” (Cateora & Graham, 2007)
Having established that Airbus is a European success story today, the case study “Ethics and Airbus” highlights some methods used by the company to achieve orders from a handful of customers in the past. Admitting that the vast majority of aircraft are sold and bought in conventional ways without arising suspicion, the case study details the following examples in which Airbus might have made use of questionable methods to sell its aircraft:
• Sabena
The former Belgian state carrier collapsed in 2001 and investigations revealed that an order of 34 A320 has been a major cause for the collapse. Describing it a “fatal business decision” because the aircraft were not required, the case study continues to state that no proof for side-payments or bribes could be found but the suspicion of foul play could not be ruled out.
• Kuwait Airways Corporation (KAC)
The next example concerns Kuwait Airways Corporation that ordered aircraft valued at US$ 1.1 billion from Airbus, with another option worth US$ 900 million. A lower offer from Boeing was disregarded.
However, foul play became evident only after it was discovered that the Airbus’ Head of Sales in the Middle East was a well-paid part-time commercial advisor to KAC.
• Indian Airlines
In the early 1980s, Airbus has allegedly bribed Indian public servants to favor Airbus aircraft over Boeing. Airbus was able to sell 19 A320s although this model at this time had not been launched or flown. Airbus offered the A320 as a smaller and less expensive alternative to Boeing’s 737, with incomplete technical data in every field. Still, Airbus was successful and a better offer from Boeing was rejected on grounds that are still unclear today.
Summary of Chapters
1. Introduction: Outlines the scope of the report, focusing on Airbus' market position, ethical allegations, and the use of strategic analytical tools to formulate future recommendations.
2. Airbus – company profile: Provides an overview of Airbus’ formation as a European consortium and its development into a global industry leader competing with Boeing.
3. Case study “Ethics and Airbus” (Cateora & Graham, 2007): Examines specific historical allegations regarding unethical sales practices and potential bribery in various international markets.
4. Update of case study “Ethics and Airbus”: Discusses more recent incidents and legislative critiques involving Airbus’ sales methods, trade policies, and internal restructuring programs.
5. Ethics: Defines business ethics, explores the regulatory landscape of anti-bribery laws, and compares the ethical approaches of Airbus and Boeing.
6. PESTLE analysis: Performs a detailed external analysis of Airbus covering political, economic, social, technological, legal, and environmental factors.
7. SWOT Analysis: Evaluates internal strengths and weaknesses alongside external opportunities and threats to provide a holistic view of Airbus’ current state.
8. Recommendations: Proposes short-, medium-, and long-term strategies for Airbus to enhance its ethical standing, operational efficiency, and market competitiveness.
9. Conclusion and outlook: Summarizes the report's findings and offers a final perspective on Airbus’ ability to overcome challenges and maintain its market leadership.
Keywords
Airbus, Boeing, Business Ethics, Aerospace Industry, PESTLE Analysis, SWOT Analysis, Bribery, A380, Power8, Corporate Strategy, Aircraft Manufacturing, Global Market, Sustainable Development, Trade Policy, Currency Fluctuations.
Frequently Asked Questions
What is the primary focus of this report?
This report examines the global aircraft manufacturing industry, specifically focusing on Airbus’ business practices, ethical challenges, and competitive strategy in relation to its main rival, Boeing.
What are the central thematic areas covered?
The report centers on corporate ethics, strategic management, market analysis using the PESTLE and SWOT frameworks, and operational restructuring.
What is the core objective or research question of the work?
The core objective is to analyze historical and contemporary ethical allegations against Airbus and to propose strategic recommendations that ensure the company's long-term competitive advantage.
Which scientific methods are employed?
The report utilizes qualitative case study analysis, the PESTLE framework for environmental scanning, and the SWOT matrix for internal and external strategic evaluation.
What topics are explored in the main body?
The main body covers a comprehensive review of historical sales conduct, an in-depth PESTLE and SWOT analysis, and a structured set of short- to long-term strategic recommendations.
Which keywords best characterize this work?
Key terms include Airbus, business ethics, aerospace industry, PESTLE analysis, SWOT analysis, and corporate strategy.
What role does the Power8 program play for Airbus?
Power8 is identified as a critical restructuring and efficiency program designed to address major challenges like delivery delays and high competitive pressure.
Why is the Airbus A380 project considered a significant risk?
The A380 project represents a high-stakes, high-cost investment that has been hampered by industrial delays and shifting market demands, creating a financial burden for the company.
- Quote paper
- Peter Schulz (Author), 2007, Ethics and Airbus, Munich, GRIN Verlag, https://www.grin.com/document/113705
