Airbus VS Boeing

Case FactsOngoing Battle between Airbus & BoeingEuropean government supported Airbus while Boeing

was backed by USA380 is a direct competitor to Boeing’s profitable 747

model lineBoeing spent a reported $5 billion developing and

tooling up to produce the 777 wide-bodied jetliner that it introduced in 1994

Enormous development cost.Different perception of customers for different modelsVolatile demand along with volatile marketBoth the Aircrafts had their pros & cons

SWOT of AirbusStrengths:- Backed by the country of Origin (Subsidies)- Wide range of models

Weakness:-High development cost- Delay in Delivery

Opportunities:- Change in Technology- Considerable rise in Global demand (People prefer airways to other modes as it saves time)

Threats:-Volatile Market- Susceptible Market (Credit Crunch, Airline Disasters, Terrorism, etc)- Increase in Oil prices- Competitive Market

SWOT of BoeingStrengths:- Diverse Portfolio- Engineering Driven company & not Financially Driven

Weakness:- Dependent on subsidies

Opportunities:- Change in Technology- Considerable rise in Global demand (People prefer airways to other modes as it saves time)

Threats:-Volatile Market- Susceptible Market (Credit Crunch, Airline Disasters, Terrorism, etc)- Increase in Oil prices- Competitive Market

Airline Industry being dominated

Only few competitors can exist in this market:- High Development costs involved in

manufacturing aircrafts- Levels of breakeven that amount to a considerable

proportion of global demand- Considerable familiarity of level curve necessary

for corporations to reach point of breakeven levels and turnovers

- Unstable demands due to factors like fuel pricing, inflation, etc.

Barriers to EntryThreat of New Entrance: Low - Need to invest

large financial resources.Substitutes: Low - Price-performance

substitution in is not attractive.Bargaining Power of Suppliers: Low to

Moderate – Fragmented suppliers group Bargaining Power of Customers: High -

Relatively few buyers of large commercial aircraft. Price sensitive  Competitive Rivalry: High - Intense competition

in the large passenger jet aircraft market.

Wise decision by Airbus to enter the Super Jumbo MarketWorld’s largest passenger planeA symbol of economic strength and technical

innovationDemand for large planes offering cheaper

seats between the world's major citiesThe A380 is 35% larger than the 747Combination of increased capacity and

reduced operating costs provides superior economics.

Prospective customers were more than expected

Marketing strategy for AirbusAdhere to Time Limit for Delivery of AircraftsAdaptation of new technologyRe-establish relationships with their suppliersDownsize their operationsFeasible way costs could be cutWell trained employeesCompetitive prices