This paper discusses the external economic factors affecting the strategic decision of airline industry and how this decision in turn, affect the market forecast of the aircraft manufacturing industry. Various business issues affect airlines operation either directly and indirectly, and these issues affect the strategic decision of the airline industry. The present economic crisis, instability in aviation fuel price, and environmental factors (such as the recent volcanic ashes and snow) has further shrunk business in the airline industry and thereby increasing competitive rivalry. Although the future projected growth by the airline industry look promising, factors affecting airline businesses can make it daunting. Strategic decisions however, will help the airlines to maximize this positive forecast. To make these decisions, it is vital for the origination to understand the macro-economic environment affecting the airline industry. [...]
Table of Contents
Part A: External Economic Factors Affecting Airline Industry
Introduction
Airline Industry
Current Business Issues and Trends in Airline Industry
Understanding the External Environment
Analysis of the External Environment of Airline Industry – Using PESTEL Framework
Porter’s Five Forces Model of Competition in Airline Industry
PART B: Boeing VS Airbus
Introduction
Current Market Position
Current Aircraft Market as it Affects Boeing and Airbus
Future Airline Industry Outlook
PESTEL Analysis of Boeing and Airbus Strategic Direction
Porter’s Five Forces Model Analysis of Boeing and Airbus Strategy Direction
Proposed Aircraft by Boeing and Airbus
Airbus A380 Super Jumbo
Boeing B787 Dreamliner
Analysis of Boeing and Airbus Strategic Direction
Conclusion
Objectives & Themes
This paper examines how macroeconomic external factors shape the strategic decisions within the airline industry and, consequently, influence the market trajectories and competitive strategies of the major aircraft manufacturers, Boeing and Airbus.
- Analysis of the airline industry's operating environment using the PESTEL framework.
- Application of Porter’s Five Forces model to evaluate competitive pressures.
- Investigation of Boeing’s and Airbus’s divergent strategic responses to market forecasts.
- Comparative study of product differentiation strategies through the B787 and A380 aircraft.
- Evaluation of how political and economic factors affect manufacturing competition.
Excerpt from the Book
Boeing B787 Dreamliner
B787 Dreamliner is designed with passengers who prefer speed, frequency and direct point-to-point connection in mind. The B787 is built with lightweight carbon composites and it very fuel efficient, swift and can reach a cruising speed of Mach 0.85 which equivalent to 289.2465 m / s. because of its small size, B787 can access small regional airport with a range that can extend to 16, 000km with a carrying capacity of about 280 passengers. The B787 is pressurized for low altitude and with a high cabin humidity, passengers are assured of arriving their destination unruffled (Verghese, 2010).
Summary of Chapters
Part A: External Economic Factors Affecting Airline Industry: This section provides an introduction to the evolution of the global airline industry and identifies critical PESTEL and Porter's Five Forces factors that influence industry stability.
PART B: Boeing VS Airbus: This chapter analyzes the competitive duopoly between Boeing and Airbus, focusing on their distinct market positioning, future outlooks, and the specific strategic responses to environmental and technological shifts.
Conclusion: The final section synthesizes how macro-environmental analysis and Porter's models facilitate strategic decision-making, allowing manufacturers to navigate global competition effectively.
Keywords
Aviation Industry, Boeing, Airbus, PESTEL, Porter’s Five Forces, Strategic Management, B787 Dreamliner, A380, Macro-environment, Market Differentiation, Globalization, Aircraft Manufacturing, Competition, Economic Crisis, Point-to-point Travel.
Frequently Asked Questions
What is the primary focus of this research?
The paper focuses on analyzing the external macroeconomic environment and its impact on the strategic decision-making processes of the global airline industry and the two main aircraft manufacturers, Boeing and Airbus.
Which analytical frameworks are utilized in this study?
The study employs the PESTEL framework (Political, Economical, Social, Technological, Environmental, Legal) and Porter’s Five Forces model to assess industry-wide challenges and competitive dynamics.
What is the core objective of the research?
The primary objective is to carry out a comprehensive analysis of the operating environment of the airline industry to understand how external factors affect business operations and force strategic shifts in aircraft manufacturing.
What scientific methodology is applied?
The research adopts a qualitative case study methodology, utilizing industry reports, frameworks for environmental analysis, and comparative market data to evaluate strategic directions.
What topics are covered in the main section?
The main sections cover the current business issues in airlines, the comparative market positions of Boeing and Airbus, their responses to global economic fluctuations, and detailed strategic analyses of their flagship aircraft designs.
What defines the core research keywords?
The keywords reflect the intersection of strategic management, aviation economics, industry-specific analytical models (PESTEL, Five Forces), and the competitive duopoly of Boeing and Airbus.
How does the Airbus A380 strategy differ from Boeing's B787 approach?
Airbus focuses on mass transportation between major hubs with the A380 to address airport capacity constraints, while Boeing prioritizes the B787 for speed, fuel efficiency, and direct point-to-point travel between smaller regional airports.
What role do government subsidies play in the competition between these manufacturers?
The study discusses the political and legal tensions surrounding "launch aid" provided by the European Union to Airbus and the countervailing government support for Boeing, which have led to significant trade disputes at the World Trade Organization.
- Quote paper
- BA Christian Uwagwuna (Author), 2011, How the Macroeconomic Environment of the Airline Industry Affects the Strategic Decision of Boing Vs Airbus, Munich, GRIN Verlag, https://www.grin.com/document/170506
