Review of the Boeing vs Airbus Case Study
In the market for large aircraft demand the emerging niche for very large aircraft (VLCT aircraft seating more than 400 passengers) saw only two competitors: Boeing and Airbus. Even though both competitors’ moves were clearly marked by technology enhancements, and different target markets but both exhibited strategic interdependence.
Option with Boeing:
Boeing being the market leader for almost a decade as a manufacturer of large commercial aircraft and had also reached economies of scale, the need to sustain its market share it presumed that “customers might demand for new”. Any potential growth was only through taking super leap and making VLCT jumbo aircraft which needed huge …show more content…
DEGREE OF RIVALRY (LOW)
The competition is similar to ‘ Cournot Duopoly Market ‘-“given rivals output what best I can produce”. Not a Bertrand competition as there is no price war between the two. Also not monopolistic competition as product differentiation does not matter and not much advertising difference.
Value proposition in commonality > value of proposition in product differentiation
• Boeing and Airbus both into up end as VLCT assembly smanufacturers (compared to buyer suppliers low bargaining power) and not on downstream supplier of aircraft parts side. All the parts of airlines sourced from outside through suppliers.
• The target market is different:
➢ Boeing serves international market (62% outside U.S.) Where commonality is the most important factor for demand.
➢ Airbus is servicing for European home market where customer still look for little differentiation.
• The target segment is also different:
➢ Boeing aiming at point to point secondary hub market. Boeing was targeting second hand market too at the same time.
➢ Airbus aiming at point to point Mega hub market
5. BARGAINING POWER OF SUPPLIERS (HIGH)
• Forms the core business in the aircraft industry. Supplier is not an option for aircraft but a reason for their business
• Bargaining power highest due to strength of distribution. Most of sources ex: