PROGRAMME TITLE: Top-Up Bachelor (Pre-Elite-Course

)
UNIT Number: BBM-02-2014

ASSIGNMENT NAME: Strategic Position and Implementation of
Strategies at Airbus Company.
Student name: Zan Lin Aung
Student ID:
Issue Date: 29.09.2014
Submission Date: 27.10.2014

Zan Lin Aung (BBM) Airbus Company

Functional Level ……………………………………………...6 SWOT Analysis …………………………………………………………………………………………………. P.4 PESTLE Analysis ………………………………………………………………………………………………. SITUATIONAL ANALYSIS …………………………………………………………………. P. COMPANY PROFILE ………………………………………………………………………. Conclusion ……………………………………………………………………………………… P. Business Level. P.6 to 7 3. P. ……………………………………………………. 10 Pg.8 to 9 Corporate Level.3 Company’s Vision.P. Implementation of Strategies at Airbus …………………………………………. Mission and Objectives . Strategies Adoption ……………………………………………………………………….. P.CONTENTS 1.4 to 5 Five Forces Analysis ………………………………………………………………………………………….. P.9 6. P.3 to 4 2.2 . References ……………………………………………………………………………………….9 5. P..8 4. P.

technological leadership and manufacturing efficiency. Airbus is a division of airbus group (formerly European Aeronautic Defense and Space Company). Airbus is an EADS company headquartered in Toulouse.100 aircrafts to more than 430 customers. France (Airbus. Airbus strives to be a truly eco-efficient enterprise. Vision Vision statement is concerned with what the organization aspires to be (Johnson and Scholes. 2008). complemented by the highest standard of product support. As an industry leader. operators and has delivered over 6. The company also tries to expand its market and service range by producing military aircraft. 2008). A321). Airbus today consistently captures about half of all commercial airliners orders.3 . commercial know-how.Airbus Company Airbus is a leading aircraft manufacturing company whose care customer focus. A319.600 aircraft since it entered first service in 1974. Airbus long-term strategic purpose is “ Creating the best and safest aircraft “for the entire world. 2012) Airbus has sold over 10. Airbus is the first aeronautics company in the world to have earned the ISO 14001(Environmental Certification) for all production sites and products for the entire life cycle. A320. Mission Mission statement aims to provide employees and stakeholders with clarity about the overall purpose of the organization (Johnson and Scholes. 2012). (Airbus. Airbus highly successful product line is A320 family (A318. Objectives Pg. delivering economic value while minimizing its environmental impact. These successful aircrafts are ranging from 107 to 525 seats. the wide-body long-range A330 and the all-new next generation A350XWB family and the double decker A380 family. Airbus ensures that air transport continues to be an eco-efficient means of transport. To be the fist aircraft manufacture and supply the needs of airlines and operators by producing the most modern and comprehensive aircraft family on the market.

continuously adapting and improving . administrative and support organization. This is a commitment to uncompromising values and conduct . we can only remain competitive by continuously refining and expanding our technical capability. Commitment to integrity Integrity. including those with our customers. Organization Development We structure Our operations to ensure that we work as efficiently as possible. Employment We are socially responsible employer. Technical excellence In a world of fast-challenging technology. These objectives will fulfill Airbus’s mission and try to achieve goals too.4 . employees are expected to set standards of excellence in their areas of expertise and to support the company’s actions in managing the evolution of its core business Health and safety An integral part of our role as a socially responsible business is our commitment to provide all who work in or visit our locations with an environment that is always healthy and safe. In return. we strive to assure long-term employment of our workforce through the anticipation of cyclical industry changes.Objectives are statements of specific outcomes that are to be achieved (Johnson and Scholes. in the broadest sense.We favor a matrix approach that is both transnational and cross-functional supported by streamlined business processes and local leadership. must pervade our actions in all relationships. Improvements in quality of products and processes Our business strategy is try to improve our products and processes in long-term. 2008). Situational Analysis PESTLE Analysis Political Pg. manufacturing.It includes compliance with all laws and regulations. we must work to continuously improve the overall quality of our design. In order to attain steady and long-term improvement. suppliers and each other.

Boeing is regularly awarded tax breaks by the US government too. customers. it recently received a $3. the companies will continue receiving these political grants as they have huge economic influence on the respective economies they operate in. Both companies have accused each other following these regular financial aids by arguing that each enjoys unnecessary favoritism from the two respective governments. It is expected.Both Airbus and Boeing enjoy political patronage from the European Union and the United States government respectively. These are all attempts to offer low-cost services to a clientele that is more concerned on the cost of air tickets than the quality of services offered by airlines.8 and 5. Economic Analysts foresee a growth in revenue-per-passenger growth of between 4. 2011). Airbus for instance.3 percent in 20 years as a result of increase consumer purchasing power in upcoming economies such as China and India. The recent success registered by low-cost carriers is a testimony to this argument – even business class travel has dwindled in the recent years. encourages innovation that is based on freethinking while Boeing encourages a global teamwork and collaboration. 2011). suppliers. They both accuse each other of engaging in unethical business practices that stifle competition and they have escalated the issue to the World Trade Organization for arbitration (Uwagwuna. A total of 16. employees. 2011). tax breaks and R&D grants from the EU to boast its activities. Both Airbus and Boeing have entered into operational partnerships with their stakeholders (governments. Technological Pg. Social The shrinking of the global economy has made large aerospace companies to revisit their corporate strategies.5 . For example. It is expected that Airbus and Boeing will continue to receive more economic support from their respective governments in order to flex their activities particularly in risky projects such as the manufacture of super freighters. and competitors) in a bid to reduce social costs. Airbus was given a hefty “launch aid” by the EU when it started and continuously receives loans. The cargo sector is also expected to grow tremendously during this period due to increased business activities (Szymanski. Both low-cost such as Ryan air and legacy carriers such as British Airlines are expected to experienced increase customer numbers.2 tax relief by the State of Washington (Uwagwuna.000 new aircrafts worth about of two trillion dollars will be required to accommodate this growth according to analysts.

6 . say. Jet repulsion technology has led to the manufacture of all-weather aircrafts that can navigate through bad weather. Threats of Substitute Products Airbus faces low threat of substitute products as clients find it difficult to replace air transport with other forms of transport because of its costs. Technological advancements such as computer aided designing and automated assembly lines have made aircraft manufacturing more easy and cheaper. in a new design platform. cheaper and faster and hence the most preferred form of transport in the world when travelling overseas. SWOT Analysis Pg. This makes Airbus more vulnerable. Airbus and Boeing need not cancel orders due to lack of engineers as they can easily “staff” their assembly lines using modern technology such as computer modeling software (Mayer. Competitor Rivalry Airbus operates in a highly competitive world where large players such as Boeing and small players such as Euro-copter can easily takeover its market share especially during a weak dollar like now. A large number of households in Europe and America have access to the Internet from their homes and can easily make transport arrangements easily. Five Forces Analysis Threats of New Entrants There are huge barriers to entry of new players. speed and reliability. This makes air transport efficient.The influx of the Internet technology has made it easy for passengers to embrace air transport due to the ease of establishing cheap deals and booking flights. Modern aircrafts are bigger and can undertake long-range flights at faster speed while consuming fuel efficiently. 2008). This is because of the huge capital required to make any meaningful investment. Bargaining Power The company faces a strong buyer bargaining power as the few buyers can cancels orders and make fresh new orders from Boeing.

and employees’ opinions form a critical in making critical innovation decisions. governments. The company thrives in a culture of innovation and partnership where customers. it has done very little in cutting Boeing dominance in this segment. Airlines that suffered the delays demanded hefty compensations (Gow. Airbus stands to gain enormously. Weakness: Delays in delivering the Jumbo A380 – Airbus started the A380 project many years back but the airline was not able to deliver the aircraft until 2007 – in between. Strong business strategy – as a 100 percent EADS subsidiary. Opportunities: Increase demand for air transport and demand for large aircrafts – the growth in air traffic in major hubs has led to industry players consider utilising large aircrafts that carry many passengers over long distances as a strategy to reduce congestions.Strengths: Strong leadership philosophy – Airbus enjoys a leadership position in the commercial aircraft manufacturing. Lagging behind on mid-size and long-distance aircraft ranges – the over concentration on large. suppliers.size aircrafts has cost Airbus a significant market segment for the mid-size and long range segment.concept” a critical solution to the chronic traffic problem in major hubs and limited taxiing slots in these hubs. a conglomerate with the largest share of the global aerospace and defence markets. Though the company launched the A350. Pg. This allows Airbus to pursue diversification strategy without the fear of incurring losses or prohibitive capital outlay demands as it is easy to venture into markets where EADS has dominance. and shortage of production space following the collapse of acquisition deals. 2008). This leadership position is buoyed by the customer-oriented organizational philosophy where customers’ opinions are taken into account when developing new or modifying existing aircraft models. Being the only aircraft builder making the A380. It achieves this by producing super carriers such as the Jumbo A380 that can stay in the air for longer period of time while utilising less fuel. switch to automated production lines. Strong differentiation capability – airbus encourages airlines to utilise the “Hub-and-Spoke. Airbus corporate strategy matters are handled by EADS. Boeing has market dominance in this segment especially through its popular Dreeamliner 787.7 . it announced many delays which it pointed out to the shortage of engineers.

Ultimately. The company boasts of having solid plans that are laid in good time to reflect a long-term strategic direction of its key people. employees. There have been many cases of flight cancellation every time an airline reports a potential terrorist act (Uwagwuna. government agencies. Analysts predict a 4. and their economic capabilities Pg.8 . there is need to deliver comfortable aircrafts to its customers. 2011). the ways of lives. customers. Air transport in these markets is becoming increasingly popular as characterised by the number of flights handled in major local hubs. the company gives its key people the opportunity to make contributions regarding aircraft designs or even organisational strategy. Depletion of titanium and aluminium mines as well as conflict in producing countries has led to increase their prices in the international market forcing aircraft builders to look for more expensive and unsustainable alternatives.Growth in demand for business aircrafts – wealthy businessmen are lining on aircraft builders order books for business aircrafts that they can use to criss-cross the globe when undertaking business trips.8 and 5.3 in revenue-per-passenger growth in the next 20 years (Uwagwuna. Strategies Adopted by the Company Corporate Level Airbus adopts a futuristic and people-oriented corporate strategy. Threats: Increases in the prices of key raw materials – aircraft manufacturers have lately incurred huge production costs following the scarcity key raw materials such as titanium and aluminium. Emergence of new markets in China and India – there is growth in air transport in upcoming markets such as China and India where consumer income has increased tremendously over the years. the needs of its global partners. the company has adopted an internationalization and globalization stance when addressing all corporate level issues by taking into consideration. 2011). It believes that though future market wars in the aerospace industry will be decided on cost factor. As such. Growth of terrorist activities – aircraft manufacturers incurs huge costs when airlines are forced to cancel orders due to reduced demand for air transport following terrorism scares such as the September 11 incident. and suppliers.

It believes in distributing its production facilities in several countries so as to tap the unique resources available in these countries. The company believes that mobility and security needs are crosscutting in nature and hence require cross-cutting leadership programme that encourages employees to be creative and dynamic. customer responsiveness. the company is in a position to deploy all its core resources into productive activities when it separates businesses and projects. 2010).(Szymanski. Spain. 2011). 2012). Business Level Airbus has decentralised business level strategy. This is a core competitive advantage for Airbus especially when compared to Boeing whose operations have until recently been limited to the US. and R&D should be guided by modern innovations where employees and customers are encouraged to come up with new ways of maximizing resource utilisation. As a matter of fact. there is an engineering unit in Moscow. India and the US that coordinate supply and development of critical resources and projects (Airbus. a procurement and supply network has helped the company to create and disseminate information easily (Szymanski. Consequently. Specifically. management. the company created the Energy 7 programme to champion for efficiency. Moreover. 2011). the company has acquired a competitive advantage over Boeing. marketing. quality. the company enjoys economies of scale and hence reduced production costs when it partners with major markets such as China (Norris & Wagner. Germany. UK.9 . How Airbus Implement the Strategies: Pg. as it can now deploy its culturally diverse workforce into meaningful organisational activities as well as maximise its core competencies such as manufacturing super carriers or fly-by-wire aircrafts. The company has 70 design and assembly facilities distributed in France. In addition. The EADS Global Innovation Networks. and innovation through partnerships. Functional Level Airbus functional level strategy is based on the need for the company to deliver the best aircrafts that utilise modern technology and that fulfil consumers’ mobility and security needs in a responsive and effective manner. The company believes that critical functional areas such as leadership. Russia as well as 35 global offices in various countries including China. and Belgium.

integration. The “Transformation” process. to achieve this. Pg. The company leads in innovative platforms such as fly-by-wire and super carriers courtesy of the corporate patronage it enjoys from EADS and the EU. and supply chain. production. the company experiences constant delays in delivering aircrafts as was the case of A380 super carriers. Airbus implements strategies by rolling out both behaviour and skill change among its workforce and suppliers. Conclusion Airbus enjoys market dominance in both the commercial and military aircraft aerospace segments. structuring. through the use of both the Transformation and Energy 7 Programmes.The implementation of strategies is done as per basic management guidelines such as planning. business and functional strategies to make them responsive to the changing mobility and military needs. Arguably. However. For instance. the company will have to shake-off competition posed by Boeing as well as upcoming aircraft builders such as Euro-copter. However. and internationalisation since programmes give stakeholders a clear picture of what is supposed to be done and who is supposed to do it. improvement. There are many opportunities that Airbus needs to exploit in order to maintain this market dominance – the company can partner with Chinese and Indian airlines which will most likely order more aircrafts due to the growing demand on air transport. a proprietary programme that consists of four “I’s” that seeks to encourage integration and innovation within EADS group through the improvement of the existing aircraft designs so as to venture into the international markets and effectively compete against its rivals.10 . Airbus will also be required to improve its corporate. the company has succeeded in encouraging innovation.

Germany: Grin Verlag. A.Availablefrom:http://www. and Scholes. (2010)Airbus a380: superjumbo of the 21st Century. D. Szymanski.G. 2008)Airbus customers face further delays for a380 superjumbo: TheGuardian. 2014]. Norris. 8th ed. C.References Airbus SAS (2012)Corporate social responsibility. (2008)Airbus versus boeing-strategic management report. England: Pearson Educatoion Ltd. 2014]. S. Germany: Grin Verlag. (14 May.K. [Online]. Uwagwuna. Mayer. Available from: http://www.guardian.uk/business/2008/ma y/14/eads.airbus.(2008) Exploring corporate strategy.co. G. M. Pg.11 . Zenith Press Publishers.theairlineindustry/ [accessed Oct 26. Germany: Grin Verlag Publishers. (2011)How the macroeconomic environment of the airline industry affects the strategic decision of Airbus vs Boeing.com/company/corporate-socialresponsibility/ [accessed Oct 26. Gow. [Online]. & Wagner. Johnson. (2011)The competitive analysis of the commercial aircraft industry.