Introduction
In recent years, the aircraft business has been on the rise, and manufacturing companies have also continued to emerge as the industry grows. The air transport industry is one of the sectors that have been rapidly growing, and this has created a competitive environment over the different companies in this industry. As much as different companies continue to offer the same products with various features, most of the pilots, as well as clients, are seen to prefer different choices in regards to what they are traveling in. This growth and increase in transportation needs is the one that has led the companies to develop products that are unique and in the aim of outdoing the other in this competitive industry. This essay will analyze the similarities as well as the differences in product strategies of two different companies in the airline industry. The two companies that will be examined are Airbus and Boeing Companies.
Product Summary
Starting with Airbus Company, it is a European company that was acknowledged as one of the most prominent aerospace and Defense Company in the year 2018. This well-branded aerospace corporation is operated in various parts of the world although it is formally registered in the Netherlands. It is known for manufacturing and selling civil as well as military aerospace products all over the world which are being manufactured in various parts of the world. On the first note, the company has been well divided with three huge operational divisions, which include commercial aircraft, defense, and space, as well as helicopters. The helicopter division is the largest in the company in regards to its revenues and deliveries from helicopter turbines. However, the company's main aero-plane business is positioned and operated in Blagnac, France. The facilities for performing the duties of production and manufacturing are mostly located in the European Union, but they have gone ahead to branch to other countries such as China and the United States of America (Airbus S.A.S, 2019). The company is led by Guillaume Faury who serves as the CEO with the main headquarters located in Leiden in the Netherlands but the main office in Toulouse in France.
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On the other hand, Boeing is also another that is not only big but also the one that has been dominating this airline industry for a while. Boeing is also a multinational corporation that is based in America and is specifically specialized in designing, manufacturing, as well as selling airplanes, rotorcraft, satellites, and rockets in a worldwide market. The fact that makes it outstanding is the fact that it also provides leasing services, as well as products, support services to its clients all over the world. This company is ranked among the biggest aerospace manufactures and the 5th largest in defense contractors division in a report that was released in 2017. It was additionally ranked as the world largest exporter in the US as measured in dollar value. The company was started in the year 1916 in Seattle, Washington DC, by William Boeing, who was the principal founder hence the name Boeing (Boeing, 2019). The company is headed by Dennis Muilenburg, who serves the position of the CEO. The city of Chicago in Illinois is the location of the company's corporate headquarters.
Comparison between Airbus' strategy and Boeing
Their product development strategy is a unique one since each one of them has a story to tell. For instance, Airbus started with Airbus 300, which was their first aircraft ever to be developed by the company. The plane dabbed as the Airbus A300 was later upgraded and designed in a new way to form the A300B which was aimed at increasing the number of passengers it was initially capable of holding. It was now designed to hold more than 300 passengers (Irwin & Pavcnik, 2004). To try and outdo the steep competition that was slowly developing, the company designed and developed the aircraft to A380 in the year1988 and since then it has always been trying to modify its products to fit in the current market.
On the other hand, Boeing was started by an entrepreneur who was initially working in the timber industry and used the money from the business to start the aircraft company. The company started in the air transport business, and later on, in 1933, the first aircraft named Boeing 247, was created (Newhouse, 2007). The plane was the best in the market at that particular time. However, the company was later split by the federal government with claims that they were not allowed to operate as both an airline company and manufacturing company at the same time.
Airbus has since then developed to be one of the biggest rivals for Boeing. They seem almost to have developed in the same way. However, there are some similarities as well as differences in their strategy and approach to business. Airbus has always used techniques that are not only creative but also innovative such as employing lightweight composite materials as their strategy of countering competition. Both companies are favored by the political climate in their respective countries (Newhouse, 2007). In regards to technological factors, both have been enabled by the increase in technology and science to manufacturing different and suitable products as the market is demanding. They both make their products in their respective countries. The significant difference among the two is that Boeing is big and old when compared to Airbus which was introduced later.
Who else is competing for the high-speed jetliner?
For a long time now, both Boeing and Airbus have been dominating the airline industry for the longest time possible. However, this trend seems to be changing as time goes by due to the new entrants who are now developing as new rivals, especially from China, Japan, and Russia. The companies that are competing for this profitable industry are Embraer and Bombardier. Embraer, which is growing at a rapid pace, developed its first-ever next-generation E-jet E2 airliners to Norwegian regions (Newhouse, 2007). This company was first seen to be the most probable rival for smaller aircraft in Boeing and Airbus. Both of these companies are the ones that seem to be more interested in the airline industry set to compete with the two giants namely Airbus and Boeing.
How can Airbus spread some of the risks inherent in their ventures?
Airbus is a company that is surrounded by various risks. Most of these risks are mostly revolved around the internal structure of the company. The major risk that Airbus is exposed to is price risk, such as foreign exchange rate in addition to interest rate risks. If this challenge is not well addressed may negatively affect its profits. The other problem is with regards to counterparty credit. The company is on the other hand exposed to credit risk which is exceeding to the point of non-performance particularly by its counterparties in regards to financial instruments, for example, cash investments as well as hedging instruments (Irwin, & Pavcnik, 2004). These two are the main risks that the company might be faced with and spread if not well addressed on a quick note.
Conclusion
It is clear that the aircraft industry is one of the competitive industries in the world, particularly in the international market. Companies like Boeing and Airbus which are amongst the earliest companies have continued to exist in the industry through innovative strategies in order to maintain a competitive nature. It is also clear that the companies have been able to survive through the utilization of technology to create and develop new products as the market is changing. Finally, differentiation in products is the main characteristic for the survival in the aircraft industry.
References
Airbus S.A.S. (2019). Company's website . Retrieved from http://www.airbus.com/
Boeing. (2019). Company's website . Retrieved from http://www.boeing.com/
Irwin, D. A., & Pavcnik, N. (2004). Airbus versus Boeing revisited: international competition in the aircraft market. Journal of International Economics, 64 (2), 223-245.
Newhouse, J. (2007). Boeing versus Airbus . Vintage.
