The Rise of Airbus, 1970 - 2005

Team Members

Joe Ebiston Johny Arul Joseph A.J Josephine Monisha Judith Arockiamary

Kattampalil Tess Kane Ajith Thayil Kiran Paul Manasi Anand

Introduction
A journey from Infancy to Growth to Maturity Historical Journey
Problems of 1970s Strategies of Bernard Lathiere (1975 1985) Strategies of Jean Pearson (1985 1998) Strategies of Noel Forgeard (1998 2005) Current Problems

Commercial Aircraft Industry

Enormous risks 1980s four companies (Boeing, McDonnell Douglas, Airbus and Lockheed) 1990s Duopoly (Boeing and Airbus) High Development costs (at least 300 to 400 planes) Complex technology Material innovations Need of Government support Deregulation (allowing smaller short distance aircrafts)

Problems of 1970s
After WWII Coming together of Governments Development of A300 Decline of Sales (Total no of planes ordered for 4 years 20) Establishing Consortium
Spain's CASA 5%

Germany's Deutsche Airbus 48%

France's Aerospatiale 48%

Airbus in BCG Matrix - 1970

LOW

Airbus Industry Growth Rate

Cash Cows Dogs

Stars
HIGH

Question Marks

Relative Market Share

LOW

Infancy Bernard Lathiere (1975 1985)

Low Sales (only 1 in 1975) Lathieres winning Strategy 3 Pillars
Family of Planes Technological Leadership and Decentralized Production Global Sales Strategy

Downside of Lathieres Strategies

Airbus in BCG Matrix - 1985

LOW

Industry Growth Rate

Cash Cows

Dogs

Airbus
Stars
HIGH

Question mark

Relative Market Share

LOW

Growth Jean Pierson (1985 1998)

Internal Measures
Product Development Cost Cutting (Lean Manufacturing)

External Measures
Sales Strategy (American Rivalry) Subsidies (Bilateral agreement with Boeing)

37% Market Share

Airbus in BCG Matrix - 1998

LOW

Airbus Industry Growth Rate

Cash Cows Dogs

Stars
HIGH

Question mark

Relative Market Share

LOW

Maturity Noel Forgeard (1998 2005)

Restructuring Airbus Ownership
Consortium to Company
Spain's CASA 4% British Aerospace 20% France's Aerospatiale 48%

Diversification in defense products Globalization (Supply Chain) Marketing Strategies (53% Market Share) Favourable Financial Performance

Germany's Deutsche Airbus 48%

Airbus in BCG Matrix - 1998

LOW

Industry Growth Rate

Cash Cows

Dogs

Airbus
Stars
HIGH

Question mark

Relative Market Share

LOW

Current Problems Porters Five Forces Analysis

No supplier pressure

Competition No close Substitutes

1. Boeings B-787 Dreamliner 2. Boeings case with the WTO on Government Loans

No new entrants

Buyers power Deregulation in market Reduced demand for Jumbo carriers

SWOT Analysis
Strengths
Technology Leadership Lean Manufacturing (Global Supply Chain) Ownership of company Diverse products Strategic Alliances Strong Marketing support

Weakness
Lack of adaptability to changing environment (failure of A350)

SWOT Analysis (Contd.)

Opportunities
Low cost mid sized planes segment

Threats
Stiff competition from Boeing (B787 Dreamliner) Political Lobbying by Boeing (case in WTO and Airbus Accord in US Govt) High development cost Decline in the value of Dollar Decline in demand for Jumbo Carriers Increase in Fuel Prices Recession and decline in use of air travel Decline in Competitive edge in Airbus

Questions to be answered
Should Airbus implement its past CEOs strategy in order to increase its competitive position? Should some earlier policies and strategies be revised and modified? Should new strategies be formed to tackle this downturn and Boeings competition to stay in Star position? If yes, what are they?

Our Solution