Subject category:
Strategy and General Management
Published by:
RSM Case Development Centre
Length: 30 pages
Data source: Generalised experience
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Abstract
The global civil aerospace industry, especially in the 110 seat-plus market segment, is a duopoly between Boeing and Airbus SAS, with a high degree of competitive rivalry. Whilst both Boeing and Airbus forecast future global demand to be within the range of 4.5% to 4.6%, there are fundamental differences in how each company strategically views the nature of that growth. Boeing forecasts growth to arise through network fragmentation and the rise of point-to-point traffic, whilst in contrast Airbus forecasts growth to arise from network consolidation and hub-to-spoke traffic. The point-to-point model favours the development of smaller capacity aircraft flying to final destination, and the hub-to-spoke model favors the development of larger capacity aircraft flying less frequently between hubs in which passengers are fed into spokes on smaller capacity aircraft. Boeing is positioning itself in the fragmented market with the B-7E7, and Airbus in the consolidated market with the A-380. Students are asked to consider the strategic moves that Boeing should take in order to: (1) achieve profit stability within the global civil aerospace industry; (2) increase its market share; and (3) align its global strategy with its global structure.
Location:
Industry:
Size:
Large, USD35 billion revenue
Other setting(s):
2000-2005
About
Abstract
The global civil aerospace industry, especially in the 110 seat-plus market segment, is a duopoly between Boeing and Airbus SAS, with a high degree of competitive rivalry. Whilst both Boeing and Airbus forecast future global demand to be within the range of 4.5% to 4.6%, there are fundamental differences in how each company strategically views the nature of that growth. Boeing forecasts growth to arise through network fragmentation and the rise of point-to-point traffic, whilst in contrast Airbus forecasts growth to arise from network consolidation and hub-to-spoke traffic. The point-to-point model favours the development of smaller capacity aircraft flying to final destination, and the hub-to-spoke model favors the development of larger capacity aircraft flying less frequently between hubs in which passengers are fed into spokes on smaller capacity aircraft. Boeing is positioning itself in the fragmented market with the B-7E7, and Airbus in the consolidated market with the A-380. Students are asked to consider the strategic moves that Boeing should take in order to: (1) achieve profit stability within the global civil aerospace industry; (2) increase its market share; and (3) align its global strategy with its global structure.
Settings
Location:
Industry:
Size:
Large, USD35 billion revenue
Other setting(s):
2000-2005