AIRBUS

Airbus is an aircraft manufacturing subsidiary of EADS, a European

aerospace company.

Based in Blagnac, France, near Toulouse and with significant activity across
Europe, the company produces around half of the world's jet airliners.

Airbus was founded in 1970 as a consortium of four European aircraft
manufacturers

British (20%), France (37.9%), Germany (37.9%), Spain (4.2%)

The company offers a range of single aisle and wide body aircrafts that carry
between 110 and 555 passengers, a sign for strong diversification.

Airbus is known as the innovation leader by using new technologies for
reducing operating costs, fuel burn, noise and emissions, and simultaneously
increasing range.

BOEING

Boeing is the worlds leading aerospace company and the largest
manufacturer of commercial jetliners and military.

It was established by William Boeing in 1916 in Seattle, Washington.

Its international headquarters now has been located in Chicago, Illinois.

The major products are commercial airliners, military aircrafts, munitions,
space systems and computer services.

With respect to its commercial airplanes, this company has launched into
the world market such these models: 737, 747, 767, 777, and the latest
one is 787 Dreamliner (Commercial Airplanes).

Boeings strategy


Technology
Non- stop flight
Globalization in production.


Airbuss strategy


Technology
Adoption of risk bearing
contracts.
Creation of Jumbo Jets.


Similarities between Airbus and Boeing
The drivers of global strategy
Cost drivers
Global market.
R&D activity and production.
Rapid development of technology.
Minimum distribution channel and
centralized in purchasing and supplying its
products.
Market drivers
Their domestic markets are nearly
saturated; hence, cannot provide many
opportunities for their growth and be not
large enough for the local business to
achieve all possible economies of scale
and scope.
In the meanwhile, the emerging markets
progressively become their big and
potential customers.
These companies do not need to base
absolutely on the local responsiveness in
producing the products.
Additionally, the brand names-Airbus and
Boeing-have been well-recognized by the
whole world.
BOEING VERSUS AIRBUS
Boeing spent a reported $5 billion developing and tooling up the 777 wide-bodied
jetliner that it introduced in 1994.

The development cost of the Airbus A380 super-jumbo cost between a reported
$10 billion and $15 billion.

A direct competitor to Boeing's profitable 747.

In terms of pricing, the A380s list price is significantly higher than the 747s list
price, $220 million vs. $185 million, yet Airbus claims the combination of increased
capacity and reduced operating costs provides superior economics. According to
company documents, the operating cost per flight will be 12% more than the 747s
cost, but given the planes 35% greater capacity, it will provide almost 25% more
volume for free.


5
BOEING VERSUS AIRBUS
The greater competition leads to more efficiency in the production of planes and more
innovative ideas in relation to the speed of travel, capacity of planes and also ways of
reducing pollution. The greater capacity of the Airbus will inevitably lead to less flights
per day as planes are able to carry more travelers therefore reducing the amount of
flights to preferred destinations each day.

Until the 1980s the U.S manufacturing firm had a virtual monopoly accounting for two-
thirds of the world market share after the buyout of McDonnel Douglas.

Boeing with their supreme world market share were able to sell a lower quantity of
goods at a higher price than would firms under healthy competition.

Improved price discrimination allows a monopolist to gain more profit by charging more
to those who want or need the product more or who have a higher ability to pay.

The healthy competition now faced by Boeing has reduced the possibility of them
becoming complacent giants. Boeing has dominated the market for so long with no
worthy competitors that it creates the uncertainty of whether they will continue to be
innovative and progressive, however, Airbuss entry into the market ensures that Boeing
faces stern competition.