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Published by:
ESSEC Business School (2006)
Version:
1 Aug 2007
Length:
18 pages
Data source:
Published sources

Abstract

Boeing was the leader in the aircraft industry. In the late 1990s, Airbus could catch up with Boeing. Today the two companies fight fiercely and hold about 50 percent of the global market. Slowly, the battle space between these giants is being focused in China. Leadership challenge in China, in the next decade would be crucial for gaining market share in the global arena, as China''s airspace will be the second largest in the world. Airbus was the first entrant in the Chinese market and followed a strategy of co-operation whereas Boeing chose a late-entrant strategy. Both the first and the late-entrant strategy had its pros and cons and especially so because of the risk of technology transfer. On the one hand, companies preferred protecting their innovations and technology through intellectual property rights (IPR) laws but it faced a huge risk in China where IPR laws were not yet well established. Also the Chinese State dealt with foreign direct investments (FDIs) to maximise the knowledge and transfer of technology to its state owned enterprises (SOEs) for the betterment of its domestic labour. On the other hand China was a market that could not be ignored due to its opportunities and growth potential. The case highlights and provides a point where two leading manufacturers of aircrafts followed two seemingly divergent strategies in the past decade. The case discusses: (1) the evolution of Boeing and Airbus in the China market; (2) the innovation and adaptation in their product offerings; (3) maintaining their supply chain; (4) the demand created by the specific of the Chinese; and (5) their divergent strategies vis-a-vis technology transfer.

Topics

Strategy; Competition; Demand and supply; Transfer; Risk; Technology; Hub-to-hub; Point-to-point; Guanxi; Bargaining; Role of the state; Planes; Key success factors; Negotiation; China
Location:
Size:
Global leaders
Other setting(s):
2006

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