Airbus Company’s Strategic Management

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Strategic management involves an organization’s analysis of their objectives, formulating strategies that involve both internal and external situations, implementing and evaluating the strategies, and finally making adjustments as necessary to stay on track.

Strategic planning is a key discipline that organizations should not overlook especially in the present highly competitive business environment, budget-oriented or forecast-based planning methods are insufficient if a large firm has to prosper. Strategic management involves a number of steps which include: mission and objectives, environmental scanning, strategy formulation, strategy implementation, evaluation, and control. (Schonberg, R. 122)

Since an organization’s success can be described better by analyzing closely its internal and external strengths and weaknesses we shall take an example of the Airbus Company that began as a consortium of aerospace manufactures and with the purpose of strengthening European cooperation in the field of aviation technology and thereby promoting economic and technological progress in Europe, to take appropriate measures for the joint development and production of an airbus. Airbus Company has its objectives based on financial aspects which include: measuring sales and earnings growth. These objectives are related to the firm’s business position and reputation. (Hollinger, Peggy; Done, Kevin, page 1, 14)

To understand and analyze the strategic management we shall consider the internal analysis of the Airbus company to help in identifying a firm’s strengths and weaknesses and the external analysis reveals opportunities and threats. This analysis is referred to as the SWOT analysis. The strengths and weaknesses of Airbus Company can be analyzed with the help of the Internal and External Analysis Strategy tables (IFAS, EFAS, and SFAS) as shown in the tables below. (Bradford, Robert W., Duncan, Peter J p12-23)

Strategy formulation of Airbus Company is carried out by matching its strengths to the opportunities that it has identified while addressing its weaknesses and external threats, to attain superior profitability the firm seeks to develop a competitive advantage over its rivals (Michael Porter).

Airbus Company implements its strategy by means of programs, budget and procedures. Implementation considers the organizational goals, this involves management of the firm’s resources and motivating employees. Since Airbus is a large Company, those who formulate a strategy are different from those who implement it hence communication is an essential factor in this company.

Evaluation of the strategy must be carried out and it involves monitoring and making adjustments that may be needed. The company’s evaluation and control involve a number of steps: defining the parameters they are to measure, defining target values for those parameters perform measurements, comparing measured results to the pre-determined standards, and making necessary changes.

Table 1 Internal Factor Analyzing Summary.

Internal Factors (Strengths)	Priority Level	Comments
High Employee Morale	2	This rank is very important as only a motivated workforce achieves proper results.
Lower cost structure	2	After cutting down jobs and increasing mechanization, wages were reduced.
Total quality management	1	By ensuring quality, our products are in high demand.
Economies of scale	1	An increase in the number of exports improved revenue.
Weaknesses
Plant malfunctions	1	Mechanical problems have at times crippled production, reducing Revenue.
Product malfunctions	1	Malfunctions by some of our products have resulted in increased returns inwards.

Priority 1- Very important.

2- Fairly important

3 – Important

Table 2 External Factor Analysis Summary.

External factors (Strengths)	Priority Level	Comments
Local currency	3	The depreciation and weakening of the local currency has enabled improved exports
Decreased competitors	2	The dissolution of World travel company has put their previously loyal customers up for grabs
Modernization	3	The emergence of a phone as a must-have has increased sales.
Reduced Tariffs	1	The government has reduced taxes on repairs, enabling more buyers to buy our goods.
Weaknesses
Raw materials	1	The rise in the costs of raw materials has increased production costs
Transport costs	2	Increases in the cost of oil have resulted in greater transport costs.

Priority 1. – Very important

2. – fairly important

3. – Important

Table 3 Strategic Factor Analysis Summary.

Factor (Strengths)	Priority Level	Comments
Human Resources	1	The plan is to come up with a leaner more efficient workforce by next year.
Safety and Health	2	Safety measures against accidents were increased and occupation health lessons administered to the employees
Research	2	Funding for research activities aimed at ensuring quality and developing new products were increased.
Risk management	1	As the company aims to expand it takes more risks which it needs insurance for, thus increased insurance cover.
TQM	1	Measures will be put in place for ensuring standards of production are maintained
Government Policy	2	The governments move to reduce tariffs visas was a positive one an the attitude which we hope continues.

Priority 1. –Very important

2. – Fairly important

3. – Important.

References

Bradford, Robert W., Duncan, Peter J., Tarcy, Brian, Simplified Strategic Planning: A No-Nonsense Guide for Busy People Who Want Results Fast!

Drucker, Peter The Practice of Management, Harper and Row, New York, 1954.

Peters, T. and Waterman, R. In Search of Excellence, Harper Colllins, New york, 1982.

Schonberger, R. Japanese Manufacturing Techniques, The Free Press, 1982, New York.

Hollinger, Peggy; Done, Kevin, Sharp drop in orders at Airbus Financial Times Daily. 2006.

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Airbus Company’s Strategic Management

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