Group 6:Deepali Rai (09FN-064)

Parvesh Bansal (09FN-

074)Rohit Sharda (09FN-

093)Sahil Pabby (09FN-096)Sampada Atri (09FN-

098)

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.

April 8, 2023Boeing: Redefining Strategies to Manage 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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 3

Airbus v/s BoeingAirbus Boeing

Entity An EADS Subsidiary Public

Founded1970 (Airbus Industries)2001 (Airbus S.A.S.)

1916 (Seattle, WA)

Headquarter Toulouse, France Chicago, Il, USA

Key People Thomas Enders, CEOW. 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

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 4

1.Compare the two competitor's strategies. Based on your knowledge of the industry, what conclusions can

you draw?

April 8, 2023Boeing: Redefining Strategies to Manage 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?

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 12

A Framework of Competitor AnalysisM

ark

et

Com

mon

alit

y

Resource Similarity

Low

Hig

h

Low High

Airbus & Boeing

Orders and Deliveries AnalysisAirbus has steadily

increased its market share and became the largest manufacturer in 2003

Airbus overtook Boeing in number of order in 1998

Boeing received greater number of orders in 2006 sue to delays in Airbus A-380 project

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 14

Orders (Nos)

Deliveries (Nos)

0

200

400

600

800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005 2006 2007

Airbus Boeing

0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007

Airbus

0

200

400

600

800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005 2006 2007

Airbus Boeing

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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 15

Q4 : Review Boeing's cooperative strategy. What are the risks of its partnership

arrangements?

April 8, 2023Boeing: Redefining Strategies to Manage 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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 17

Benefits - Strategic PartnershipsEntry 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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 18

Risks - Strategic PartnershipsEmployee 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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 19

Q5 : In what ways can Boeing's international strategy be improved?

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 20

Boeing’s International StrategyBoeing’s off-set agreement is paying rich dividends to the

company

Going forwardThe Company should keep focusing on the offset agreements as it

gives them access to growing markets and cost advantages tooWhile 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

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 21

Q6 : What are some of the near term and long term prospects you

anticipate in the airplane production industry?

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 22

Near Term ProspectsLoss 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.

April 8, 2023Boeing: Redefining Strategies to Manage the Competitive Market 23

Long Term prospectsIncrease 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.April 8, 2023

Boeing: Redefining Strategies to Manage the Competitive Market 24

Boeing - SWOT

Thank You