Airbus and Boeing Case

Executive Summary

Activities in the commercial aeroplane manufacturing industry have been outshined by the competition involving the European owned Airbus and the USA owned Boeing. These two companies exist as a duopoly at the top end of the commercial aeroplane manufacturing industry that covers the development of airplanes with a capability of more than 200 persons. Other aeroplane manufacturers also exist but at the lower end of the industry, these smaller firms mainly develop low capacity airplanes that basically convey less than 150 persons.

Boeing is a United States of America based company which was founded by William Edward in 1916, the firm has been dominating the industry since its inception while on the other hand Airbus was founded in 1970 by the European Aeronautic and Space Co. (EADS) with its headquarters in Toulouse, France in other to challenge the monopoly thus far enjoyed by Boeing. The trade disputes or disagreements involving the European Union (EU) as well as the United States (US) take precedence in the rivalry or fight between this two firms. Whilst Airbus receives subsidies in the form of launch aid from the European Union while at the same time Boeing is granted right to use the United States military’s Research and development technology.

Owing to the soaring operating fund as well as long product break even time associated in the airplane manufacturing industry, it can be reasonably debated or argued that it will be somehow difficult for each of these firms to carry on or survive without a little support in a way from their respective Governments. Nevertheless, these subsidization programmes dangers precedence for new Government sponsored companies incoming to the industry. In broad, the ultimate winners or beneficiaries in the Airbus-Boeing competition or rivalry are basically the customers who are clever to select airplanes from range or variety of options. It can be said that this two companies distinguish their products mainly by capacity as well as technology. Boeing and airbus tend to operate a head to head based rivalry or competition involving particular products, for instance the Boeing 787 vs Airbus A350 series.

Furthermore, from Michael E. Porter’s theory on the competitive benefit of nations, the factors that have mainly assisted the US and EU to attain competitiveness in the area of airplanes manufacturing can be pointed to a firms strategy, structure and rivalry, factor conditions, related and supporting industries as well as demand conditions (Porter, 1990). After analysing the aircraft manufacturing industry based on this reason or factor, it was realized that government support considerably decreases the hurdle or difficulty to entry into any section of the industry. Owing to the level of support that is being provided to Boeing as well as Airbus by the United States (US) and the European Union (EU) correspondingly, there is no doubt that they will stay put in the market as a duopoly. Conversely, the activities of airplane manufacturing companies supported by Russia, Japan, China as well as Brazil convey a sounding signal that it might not be long before the Boeing-Airbus duopoly is broken which will result to a formation of new company which will become part of their market segment.