Group 6:

Deepali Rai (09FN-064)

Parvesh Bansal (09FN-

074)
Rohit Sharda (09FN-
093)
Sahil Pabby (09FN-096)
Boeing-Background
• Founded by William E.Boeing & George Conrad Westervelt on 15th July 1916.
• Became the largest aircraft manufacturer, HQ in Chicago, Illinois (US).
• Initially named “B & W” then named to “Pacific Aero Products” and finally
“Boeing Airplane Co.”
• In 1927 a new airline service, BOEING AIRPLANE TRANSPORT ,later merged with
its earlier company.
• First aircraft – Boeing 314 Clipper in June 1938.
• Manufactured B707 in 1958 -- US first commercial jet airliner.
• Introduced a twin engine 737 in 1967 -- A short & medium range airliner.
• As passenger traffic increased, competition became tougher hence Boeing
introduced new aircrafts-757,767,737,777.
• In mid- 1990, introduced Next Generation 737 or 737NG.
• Merged with Mc-Donnell Douglas in 1997 due to which MD-95 renamed to 717-
200.
• The Boeing 787 or the Dreamliner is under development and is scheduled to
enter services in 2008.

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 2
Airbus-Background
• Formerly known as Airbus Industry.
• Jointly owned by EADS(80%) and BAE(20%).
• In 1967, MOU signed among British, French & German govt. to develop
A300(with 300 seating capacity).
• In 1972, A300 touched the skies for the first time.
• Launch of A320 in 1981 helped Airbus emerge as a major player in
aircraft market, had over 400 orders before its launch.
• In 2003, Airbus delivered more jet-powered airliner then Boeing for the
first time in its 33 year history.
• On April 27, 2005, the A380 successfully completed its first flight from
Toulouse to France with seat capacity of 555 passengers & would be
world’s largest commercial passenger jet.

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 3
Airbus v/s Boeing
Airbus Boeing
Entity An EADS Subsidiary Public
Founded 1970 (Airbus Industries) 1916 (Seattle, WA)
2001 (Airbus S.A.S.)
Headquarter Toulouse, France Chicago, Il, USA
Key People Thomas Enders, CEO W. James McNerney, Jr.
CEO
Industry Aerospace Aerospace & Defense
Products Commercial airliners Commercial airliners
Revenue €23.5 billion (2005) $61.5 billion (FY 2006)
Employees 55,000-57,000 153,000 (2006)
Slogan Setting the standards Forever New Frontiers
Boeing: Redefining Strategies to Manage
November 6, 2010 the Competitive Market 4
 1.Compare the two
competitor's strategies.
Based on your knowledge of
the industry, what conclusions
can you draw?
Boeing: Redefining Strategies to Manage
November 6, 2010 the Competitive Market 5
Industry Analysis
Industry Analysis
Industry Analysis
Industry Analysis
Q2 : Outlining a rough competitor
analysis, what does the level of
interdependence between the
rivals reveal about competitive
behavior that can be expected
from Airbus?

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November 6, 2010 the Competitive Market 12
A Framework of Competitor Analysis
Low High

High
Market Commonality

Airbus & Boeing

Low

Resource Similarity
Orders and Deliveries
Analysis
 Airbus has steadily increased Orders (Nos)
its market share and became 1600
Airbus Boeing
1400
the largest manufacturer in 1200
2003 1000
800
600
 Airbus overtook Boeing in 400

number of order in 1998 200

0
2000 2001 2002 2003 2004 2005 2006 2007

 Boeing received greater Deliveries (Nos)

number of orders in 2006 600
1600
Airbus
Airbus Boeing
1400
500
sue to delays in Airbus A-380 1200
400
project 1000
300
800
200
600
100
400
0
200
Boeing: Redefining Strategies to Manage
0 2000 2001 2002 2003 2004 2005 2006 2007
November 6, 2010 the Competitive Market 2000 2001 2002 2003 2004 2005 2006 14
2007
Implications of
interdependence
 An oligopoly can result into a cooperative or a non-cooperative
oligopoly in the following manner:
 Cooperative oligopoly: Formation of cartels that can give the two
companies high artificial profits
 Non-Cooperative oligopoly: The two players are trying to outdo and
outthink each other and hence due to fierce competition, margins get
squeezed
 Boeing and Airbus in 1992 decided to do a joint study on the
prospects of a super-jumbo. The study did not result in any alliance
between the two as they both reached different conclusions
 Successful product of a competitor may be imitated in order to not
lose the existing customer base
 Airbus A-350 is a response to Boeing 787 Dreamliner
 A successful strategy of one player is quickly adopted by another
player.

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 15
Q4 : Review Boeing's cooperative
strategy. What are the risks of its
partnership arrangements?

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 16
Offset Agreement – An
example
Boeing has entered into many strategic
partnerships globally in an effort to reduce
costs and perhaps generate sales.

E.g. : Offset Agreement where they obtain

aircraft sales in return for manufacturing
work.

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 17
Benefits - Strategic
Partnerships
Entry into fastest growing Asian markets.
Distribution of operating risks.
Concentration in two most important areas
– marketing and supplier relationships.
Indirect benefit from the subsidies that
partners in other countries got from their
respective governments.

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 18
Risks - Strategic Partnerships
Employee insecurity.
Transfer of knowledge considered vital to
US defence.
Encouraging competition globally.
Ultimately benefits from US subsidies
transferred abroad.
Japanese risk of becoming an Aero power.

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November 6, 2010 the Competitive Market 19
 Q5 : In what ways can Boeing's
international strategy be
improved?

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 20
Boeing’s International
Strategy
 Boeing’s off-set agreement is paying rich dividends to the company

Going forward
 The Company should keep focusing on the offset agreements as it
gives them access to growing markets and cost advantages too
 While increasing the offset agreements, they should look at ways in
which they can prohibit the local manufacturers from giving them
competition in the future (eg. Non-compete agreement)
 The Company should also look at partnering with its customers across
the globe, trying to understand their requirements and coming out with
a product suitable to their requirements. This would increase customer
loyalty
 Boeing can promote its latest offerings through simulators to give a
real feel of the product

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 21
 Q6 : What are some of the
near term and long term
prospects you anticipate in
the airplane production
industry?

Boeing: Redefining Strategies to Manage

November 6, 2010 the Competitive Market 22
Near Term Prospects
Loss of goodwill and consequently orders to Airbus.
Airbus becoming less competitive financially.
Airbus will continue with the production of A-380 to
breakeven on the investment.
Boeing will regain its dominant position in the airplane
manufacturing industry.
Boeing will be able to deliver its order of 787
Dreamliners with not much delay.
With the help of accumulated orders of 787, Boeing will
be able to maintain the descent growth rate of 10-15%
in its net earnings.

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November 6, 2010 the Competitive Market 23
Long Term prospects
Increase in demand of big planes like A-380 and
Boeing 747.
Infrastructure development necessary take longer
than expected as most of the countries are already
running large fiscal deficits.
Other countries will become more competitive.
Airbus will be able to recoup its lost position latest
by 2010.
Competition will be more intense.

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November 6, 2010 the Competitive Market 24
Boeing - SWOT
Thank You