Airbus Mini-Case Study

Business manager's problem:

Airbus has a “good” problem to have. The company has, along with Boeing in the US, operated in an effective duopoly in the Large Commercial Aircraft market, selling aircraft to various airlines worldwide. Airbus has had a stranglehold on existing European markets, while Boeing effectively controls North American markets. Outside of these two markets, where the primary objective is retain market share through regular fleet renewal, there is a massive opportunity to expand sales of commercial aircraft emerging in the Asian, Latin American and Middle Eastern markets, where growth is feverish and expected to continue over the next 20 years.

Airbus is coming off a highly successful 2015, where they dominated Boeing in respect to orders received and have the momentum to take more market share from Boeing in the coming years. Furthermore, very recent reports have surfaced which lead to questions about some of Boeing’s accounting practices, which could lead to investor relations problems and open the door for Airbus to capitalize while Boeing works through their issues. But there are risks inherent in the industry, due to a long development cycle and a strategic business plan that is susceptible to external factors such as regional protectionism, global and regional economic conditions, interest rates, and oil prices. Currently Airbus is slightly smaller than Boeing. How do they strike while the iron is hot, effectively turn the corner to take that decided competitive edge over Boeing and move into the sole position in their customer’s minds as the dominant and most innovative manufacturer of commercial aircraft?

Background on industry and firm

Airbus Group is headquartered in Toulouse, France, and has expanded upon on its strong European roots to move forward on an international scale with fully-owned subsidiaries in the United States, China, Japan, India and in the Middle East; spare parts centers in Hamburg, Frankfurt, Washington, Beijing, Dubai and Singapore; engineering and training centers in Toulouse, Miami, Wichita, Hamburg, Bangalore and Beijing; and more than 150 field service offices around the world. Airbus also is actively developing engineering, manufacturing and service capabilities in Europe, China, India, Russia, the Middle East, Singapore and the U.S. Overall, the company has a workforce of over 55,000 and a market capitalization of over $51 billion. (Airbus Website http://www.airbusgroup.com)

Airbus operates in diverse aerospace markets, including but not limited to, defense contracting, helicopter manufacturer, military aircraft, and commercial aircraft manufacture. The commercial aircraft manufacturing portion of their business accounts for the majority of Airbus global business. Within this broad industry category, which includes developing aircraft prototypes, manufacturer repair