The purpose of this report is to provide a Strategic Management Report with detailed strategic analyses of the dominant civil aircraft manufacturers Airbus and Boeing. The discussion main part of this report is separated into internal and external analyses, which are reasoned in greater detail and supported with reasonable graphs and tables in the attached Appendices. Finally, conclusions are drawn as to which is the more strategic savvy and which company has the more sustainable enterprise; and there is a recommendation given in which company a potential investor should rather invest in.
Airbus and Boeing are having a neck-and-neck race in the aircraft industry for jets over 100 seats between Airbus and Boeing about the market leadership. After Airbus overtook its rival the first time in 2001 in terms of aircraft order and delivery, it stayed in front the last years until Boeing got back on top in 2006. The aircraft manufacturing industry is constantly growing, a global market and had a size of US$ 63 billion revenues in 2006. It is characterized by high entry barriers and investment in R&D and by a duopoly with Airbus and Boeing having a market share of 86% for aircrafts over 100 seats.
At the moment Airbus is in weaker financial position than its competitor. Boeing had an average year in 2006 with a moderate and good profitability, whereas Airbus is not in the red, but it is remarkable that the company had a bad year caused by the production and delivery problems with the A380, connecting with the delay compensations. In general, both Airbus and Boeing experience a strong support by the parent companies, whereas Boeing’s outstanding and tightened military division strongly keeps the commercial airplane division on the ground and gives it an edge.
In terms of product strategy the strength of the one is the weakness of the other: Boeing found no real answer on the A380 as mega-jumbo, but is highly successful with its B787 in the mid-size, long-range segment, where Airbus is lagging behind with its try to catch up through the A350. The market opportunities for both companies and strategies exist with increasing air traffic, especially in Asia with its upcoming markets China and India. On the other side increasing prices for raw materials or indirectly oil price fluctuations, and the risk of a new external shocks are threatening the performance.
Table of Contents
1 Introduction – Company Background
1.1 Airbus
1.2 Boeing
2 Internal analysis
2.1 Vision and Mission Statements, Goals and Objectives
2.1.1 Airbus
2.1.2 Boeing
2.2 Management philosophy and attitudes, Culture and Leadership
2.2.1 Airbus
2.2.2 Boeing
2.3 Strategic Levels
2.3.1 Airbus
Airbus’ Differentiation Strategy – ‘Hub-and-Spoke-concept’:
2.3.2 Boeing
Boeing’s Differentiation Strategy – ‘Direct Point-to-Point-Traffic’
2.4 Enhancements of efficiency, quality, innovation and customer responsiveness
2.4.1 Airbus
2.4.2 Boeing
2.5 Value Chain
2.6 Strategy Execution Process
2.7 Financial Analysis and Comparison of Airbus and Boeing
3 External Analysis
3.1 Key economics and business characteristics
3.2 PESTLE-Analysis
3.3 PORTER’s 5-Forces and Industry attractiveness
Strength of competitive pressure as an overview:
3.4 SWOT-Analysis
4 Conclusion
Objectives and Topics
The report provides a comprehensive strategic analysis of Airbus and Boeing, the two dominant civil aircraft manufacturers. It investigates their competitive positioning, internal operations, and external market influences to determine which company exhibits superior strategic viability and sustainability for potential investors.
- Internal analysis of corporate strategies, vision, and operational efficiency programs (Power 8 vs. Vision 2016).
- Evaluation of external factors through PESTLE and Porter’s Five Forces analyses of the global aviation industry.
- Comparative financial performance analysis and stock market trends of Airbus and Boeing.
- Assessment of distinct product strategies: the A380 "Hub-and-Spoke" model versus the B787 "Point-to-Point" strategy.
- Strategic recommendations for investment based on risk appetite and investment horizon.
Excerpt from the Book
SWOT-Analysis
The SWOT shown here is a result of the analysis and reasoning presented in Appendix 3:
Strengths (O): Airbus: Leading position, Strong support from parent EADS, A380 as “new” Jumbo. Boeing: Leadership position, Supported by a steady defense business, B787 with high demand in mid-size market.
Weaknesses (O): Airbus: Delays in A380 deliveries, Lagging behind Boeing in the mid-size, long-range segment. Boeing: Losing market share to Airbus, Declining revenues from the key geographic segments, B747/8-relaunch as imperfect competitor to the A380.
Opportunities (O): Airbus & Boeing: Increasing air traffic and expanding large civil aircraft market, Upcoming markets China and India.
Threats (T): Airbus & Boeing: Increasing prices of titanium and aluminum, Risk of a “new” occasion like the events of 9/11, external shocks.
Summary of Chapters
Introduction – Company Background: Introduces the two dominant aircraft manufacturers, Airbus and Boeing, and outlines the purpose of the report to perform a detailed strategic analysis within the context of their duopolistic market.
Internal analysis: Examines the vision, management philosophies, strategic levels, and efficiency programs of both companies, highlighting their divergent approaches to market competition.
External Analysis: Investigates the broader economic, political, and industry-specific forces influencing the aircraft manufacturing market, including competitive pressures and macroeconomic trends.
Conclusion: Synthesizes the analysis of both manufacturers, evaluates their respective strategic paths (Hub-and-Spoke vs. Point-to-Point), and offers investment recommendations based on their financial stability and risk profiles.
Keywords
Airbus, Boeing, Strategic Management, Aircraft Manufacturing, Duopoly, A380, B787, Hub-and-Spoke, Point-to-Point, Financial Analysis, SWOT, PESTLE, Market Leadership, Aerospace, Investment Strategy
Frequently Asked Questions
What is the primary focus of this strategic management report?
The report focuses on a comparative strategic analysis of the two dominant global civil aircraft manufacturers, Airbus and Boeing, to evaluate their competitive standing and financial sustainability.
What are the core thematic fields covered?
The core themes include internal strategic management (vision, efficiency, value chain), external environmental factors (PESTLE, Porter's Five Forces), and product-specific differentiation strategies.
What is the central research question?
The primary objective is to determine which company is more strategically savvy and sustainable, and to provide actionable investment recommendations based on these findings.
Which scientific methods are utilized in this work?
The author employs a structured strategic management framework including SWOT analysis, PESTLE analysis, Porter’s Five Forces model, and comparative financial ratio analysis based on annual report data.
What content is discussed in the main body of the report?
The main body systematically contrasts the organizational structures, strategic orientations (Hub-and-Spoke vs. Point-to-Point), internal efficiency programs, and financial performance of both corporations.
What are the key terms that define this work?
Key terms include aerospace, market leadership, strategic diversification, operational efficiency, and long-term industry growth trends.
How do Airbus and Boeing differ in their long-term strategic approach?
Airbus focuses on mass transportation between major hubs with very large aircraft like the A380, whereas Boeing prioritizes the forecasted shift toward point-to-point traffic using mid-size, fuel-efficient long-range jets like the B787.
Which role does the financial analysis play in the final investment recommendation?
The financial analysis highlights the current stability and debt positions of the companies, serving as the basis for suggesting Boeing as the safer long-term investment, while viewing Airbus as a higher-risk, potentially high-reward short-term option.
- Quote paper
- Sascha Mayer (Author), 2007, Airbus versus Boeing. Strategic Management Report, Munich, GRIN Verlag, https://www.grin.com/document/87814
