Category: Airbus

Abstract

It has been more than a decade since first commercial flight and the Airbus A380has not experienced the success once thought it would. Many airlines have retired the A380 and opted for smaller planes for various reasons. However, it is unknown why the production of the plane has stopped. This research is conducted to find out the reasons behind the failure of the production of Airbus A380. Three methods of data collection, that is using documents and records from the company, survey and interview, were used. For the survey, one hundred and twenty participants agreed to be involved and three others for the interview. After analysing the data, some of the reasons behind the failure include inaccurate predictions, size, as well as its inefficiency. With the current situation of the fuel prices and reduced number of passengers, having a plane that uses four engines is not economical.

Introduction

Airbus Company decided to come up with a spacious plane model named Airbus A380. Throughout the entire world and among all aircrafts ever constructed, it is ranked as the largest. In 1990, with the intention of fighting for the market share with Boeing 747, the company announced its intentions of coming up with the plane. To start the process, it launched more than ten billion programme ten years later. The initial model was revealed in 2005 in Toulouse with its first flight in the same year. Issues with the electrical wiring resulted in a 2-year delay plus the development cost rose to eighteen billion pounds. The company received its certificate from EASA as well as the United States Federal Aviation Administration in 2006. The aircraft was delivered to Singapore Airlines as the first delivery in 2007 and started service a few days later after delivery. The production of the aircraft climaxed at thirty annually in 2012 as well as 2014. Nevertheless, the company admits that the twenty-five billion dollars it invested in the project cannot be recovered. Airbus announced in early 2019 that production of the aircraft would end in 2021 after last delivery to Emirates.

More than a decade after first air travel for commercial purposes, several airline companies have opted for stopping the use of the A380 plus its production is no longer going on. In spite of the plane being spoken so highly of as compared to others including the Boeing 747, it has remained unsuccessful in the market. Apart from focusing on the plane alone, it is essential to identify the issues that hinder the air travel sector and thus airlines. Understanding the issues can help in pinpointing the root cause behind the issue of Airbus A380. The air transport industry is huge and supports so many people working as staff of various airline companies. It also contributes a large portion to the world economy. Regardless of the many challenges until the COVID-19 pandemic emerged, it was on the path to success. It is correct to claim that even though the pandemic adversely affected the industry, it has started recovering from the impact left by the pandemic and may get back to where it was prior to the pandemic. This paper looks at the review of the problems facing the airline industry as a whole, the methodology used in the research, findings on the failure of A380 production and the analysis.

Narrative Body

Review of the Airline Industry

Almost fourteen years from the initial commercial flight, many airlines have retired the A380 and its production has stopped. Even though the aircraft is an engineering masterpiece, it was not successful in the market, as suggested by (Nelson, 2020). Apart from just focusing on the aircraft alone, it is important to understand the challenges that face airlines. The air transport industry is a universe in itself and encompasses a huge workforce plus contributes a major portion to the world economy (Arjomandi et al., 2018). It was set for significant growth, regardless of the many challenges until the COVID-19 pandemic emerged (Gupta et al., 2020). It is correct to claim that even though the pandemic adversely affected the industry, it has started recovering from the impact and may get back to where it was prior to the pandemic.

The air transport market has been on the rise and appeared to have success before the pandemic hit. In 2018, a study revealed that the world aviation market outlook had been positive within a few years earlier (Jackson, 2021). The study report shared that at that moment, the world air transport industry supported more than sixty five million jobs plus contributed more than two trillion dollars in global financial activity (Jackson, 2021). Moreover, it stated that a free-trade strategy would aid further the growth in the sector. It will also come to record more than five trillion dollars in financial activities by 2036 while also guaranteeing close to one hundred million job opportunities (Jackson, 2021). The sector plays a key role in the modern society but it is essential to point out that it has its own challenges. From struggling with recessions to governmental regulations as well as terrorism to labour shortage, such issues can lead to airline reducing or even stopping production.

Fuel efficiency is among the main challenges facing the airlines. Availability of fuel as well as costs remains a significant financial factor impacting the airline (Belhadi et al., 2021). High prices have a direct influence on the financial portfolio of airlines. With the increase of airline companies every year, the prices of fuel have skyrocketed which has resulted in a vicious cycle. Other alternatives for fuel have failed to be impactful and thus maintaining efficiency has remained a challenge for the industry.

The global economy is also a challenge for the sector and thus the airlines. The status of the global economy is a primary issue in the market. For instance, the 2008 economy crisis had a major effect on the sector. As the economy takes a hit, travel as well as fuel prices rise while the number of passengers reduces. The effect of the recession on other sectors such as tourism is also a critical factor impacting the sector. As the travel companies seek development in different nations plus explore new ways, they have to remember the market situation as well as volatility in the regions. Different nations have unique economic situations which airliners need to consider when they plan for global expansion.

The experience and comfort of a passenger while on a journey is also a challenge in the sector. The air transport sector is service-oriented and its success is reliant on how great the passengers feel, as suggested by (Ika et al., 2021). The reason why this is a challenge is because there is always a group of passengers who are not contented with the services. Nevertheless, this is something that has resulted in companies being seamless through the entire air travel. To accomplish a state whereby all passengers are satisfied with the services is difficult because no customer is alike. Surveys on customers and their feedbacks show that not every passenger has a great travel experience, as suggested by (Ika et al., 2021). For example, an IATA survey in 2017 showed that only about fifty-six per cent of North American customers were okay with the travel experience. This shows that companies will continue to struggle to impress all their customers at once.

Airline infrastructure is also a huge challenge for the airlines worldwide. Airports require consistent upgrade of its infrastructure such as terminals, runways, hotels, lounges, among others (Li et al., 2020). There is a significant competition in the area of infrastructure as it determines how even customers view a company. To sustain the image of an airline and stay ahead of others, onsite facilities like the aircraft ground handling systems will require regular renovation. While doing that a few times can be beneficial to a company and increase the number of customers, doing it regularly requires a huge financial investment (Ika et al., 2021). Even more crucial is the fact that an aircraft needs a regular upgrade and maintenance too. This is because the safety of the customer depends on the condition of an aircraft. Having faulty aircraft seating or doors is liable to get an airline sued. Infrastructure is among the most crucial challenges of the market as carriers are support to maintain available fleet plus also guarantee to buy the latest ones while ensuring lowering costs as well as fuel efficiency.

Worldwide congestion is also a major challenge facing airlines around the world and thus the sector. Several years ago, the air travel was a luxurious event, which a few rich people engaged in (Ika et al., 2021). It is no longer the same and more people are traveling using air transport which has resulted in overcrowding of many airports globally and flight delays. Majority of flights appear to be full, the terminals congested, and the skies overcrowded with the excessive number of aircrafts. Air traffic plus airport congestion are significant challenges facing the market which appears to lack the solutions. Carriers are still struggling to make seamless trips for customers and thus remain to be a viable problem.

Advancement in technology is among the challenges the airline sector is facing. Technology is a double-edged sword that in spite of the good it has brought to the world, the increase on its dependence has resulted in vulnerability of the sector. For example, if there is a software problem, the operations may remain crippled until resolution. If there is inadequate financing, upgrade of infrastructure like the communication system may prove impossible which might result in the failure if the whole system.

Terrorism which is a security issue is among the major challenges of the modern times. Tragedies from past times have resulted in fear of many passengers as well as staff (Woo et al., 2021). Even though, terrorist attacks have reduced recently, it still remains a threat as companies in the sector have to remain vigilant always. The rise in fear results in rigorous check-ins plus consequently longer lines as well as delays. It has in the past forced companies to develop highly secure screening methods as well as equipment (Woo et al., 2021). Even political conflicts between countries can be viewed as a major challenge of the industry. Irrational regulations by one nation because of conflict can make it hard for carriers to transport passengers conveniently as well as move cargo in the international territories. Lastly, without doubt, climate changes as well as environmental problems are issues that prove to be a challenge to airlines globally. It is something that has gone on for a long time spanning for more than three decades.

Methodology

In this research, the main research question is the reason behind the failure of the Airbus A380 production. Knowing this, it is important to find the right method of data collection that suits such a study. Studying about an aircraft involves much review of available data in documents and records as well as online surveys and interviews. I decided to contact the Airbus Company through email and ask for a chance to access some documents and records that would help in my study. After they agreed, it was a great opportunity as I analysed the data myself and therefore it was difficult to obtain incorrect information. The advantage of using documents in such a research is that it allows an individual to obtain consistent information so that analysing it becomes easy.

After studying the documents consisting of information of the plane, I decided to use survey method. Conducting a survey can be difficult and has its limitations especially if people one requires response from are far. Therefore, to counter this, I settled for the online survey which can accommodate anyone and from any distance. Through the use of mail services, I reached out to over one hundred individuals who work and those who worked for the air travel company to get their opinion on the issue. While sending the surveys to them, I also attached another document that explained how I had accessed their contact information and what the research is about as well as their information would not be revealed to anyone else. Ensuring that they do not have the fear of being exposed empowers them to give unbiased responses.

I collected and analysed the responses through the mail services too as nearly ninety-five per cent of participants submitted their responses. After the survey, it was important to interview a few managers of the company to get their opinion on the issue. Most of them declined as they cited their employment status as a concern. However, three executive managers accepted but in the condition it does not involve questions that would put their jobs at risk. After the interview, the information gathered was enough to come up with reasons why the production stopped.

Findings

The aircraft is among the largest commercial models with many claiming it as the largest one with the capacity to hold up to eight hundred and fifty-three passengers at once. Being the lone commercial aircraft to have more than full deck, it is considered an engineering masterpiece (Woo et al., 2021). Since the first flight more than a decade ago, it has two hundred and fifty one orders with one hundred and twenty-three belonging to the Emirates Airlines. Nevertheless, several airlines have already started retiring the aircraft and one of the reasons is the pandemic. Airbus has closed production plus it is testing last aircraft after fourteen years of production.

Among the reasons behind failure of its production is that the aircraft is too big. It is noteworthy to know that many companies did not order for the aircraft because of its massive size. With a wingspan that is bigger than several Boeing 737s, it proved impossible to fill the plane to full capacity on a trip to a particular route. Due to size, the aircraft could only land at particular airports which needed renovation including having wider gates that could accommodate the plane.

Another reason is that the aircraft was inefficient and that because of its size, more issues of inefficiency arose, as suggested by (GENG & BHATTACHARYA, 2021). The plane needed four engines to remain on air which is highly inefficient for companies because of the amount of fuel burning. The smaller Boeing 787 with two engines consumes five thousand and four hundred litres of fuel every hour while A380 consumes more than twice the amount every hour. After the tragedy in 2001, fuel costs skyrocketed which decreased the popularity of four engine aircrafts. Nevertheless, Airbus had already invested much in the study plus development of the model that it appeared too late.

Another reason is the Airbus company inaccurate predictions of the aviation market. At the start of the twenty-first century, the company projected that the future of aviation was going to be big size long-term airlines like the Boeing 747 (Ferreira et al., 2020). According to the company, smaller planes would utilize less preferred routes and airports to a hub airport plus fly to a second hub airport and then to another less preferred airport. Nonetheless, the trend did not last and the hub-and-spoke model as it was known no longer was popular. In addition to above reasons, it can also be said that the recent pandemic to hit the world, COVID-19, has resulted in a significant drop in air travel demand. The lockdown restrictions as they began to be implemented by different nations impacted the number of flights as well as passengers. As a result, many companies in the air travel industry began going back to smaller planes, for example, Airbus A220.

Conclusion

Nearly fourteen years from the initial commercial flight, many airlines have retired the A380 and its production has stopped. Despite being termed as an engineering masterpiece it has failed to be successful in the market. Apart from just focusing on the aircraft alone, it is important to understand the challenges that face airlines. For instance, terrorism, pandemics that lead to lockdown restrictions, high fuel prices as well as unsatisfied customers. The air transport industry is a universe in itself and encompasses a huge workforce plus contributes a major portion to the world economy.

It was set for significant growth, regardless of the many challenges until the COVID-19 pandemic emerged. It is correct to claim that even though the pandemic adversely affected the industry, it has started recovering from the impact and may get back to where it was prior to the pandemic. A shocking revelation in the research is that Advancement in technology is among the challenges facing the air travel sector. Technology is a double-edged sword that in spite of the good it has brought to the world, the increase on its dependence has resulted in vulnerability of the sector. For example, if there is a software problem, the operations may remain crippled until resolution. If there is inadequate financing, upgrade of infrastructure like the communication system may prove impossible which might result in the failure if the whole system.

References

Arjomandi, A., Dakpo, K. H., & Seufert, J. H. (2018). Have Asian airlines caught up with European Airlines? A by-production efficiency analysis.Transportation Research Part A: Policy and Practice, 116, 389-403. Web.

Belhadi, A., Kamble, S., Jabbour, C. J. C., Gunasekaran, A., Ndubisi, N. O., & Venkatesh, M. (2021). Manufacturing and service supply chain resilience to the COVID-19 outbreak: Lessons learned from the automobile and airline industries.Technological Forecasting and Social Change, 163, 120447. Web.

Ferreira, J. J., Fernandes, C. I., & Ferreira, F. A. (2020). Wearing failure as a path to innovation. Journal of business research, 120, 195-202. Web.

GENG, X., & BHATTACHARYA, L. (2021). The rise and demise of Airbus A380. Web.

Gupta, M., Abdelmaksoud, A., Jafferany, M., Lotti, T., Sadoughifar, R., & Goldust, M. (2020). COVID-19 and economy. Dermatologic therapy, 33(4), e13329-e13329. Web.

Ika, L., Couillard, J., & Garon, S. (2021). Coping with project complexity: The complexity based project management framework. PM World Journal, 10(5), 1-22. Web.

Jackson, R. (2021). Airbus A380. Airbus A380, 1-88. Web.

Li, X., Zhang, G., Zhao, X., Zhou, J., Du, G., & Chen, J. (2020). A conceptual air-lift reactor design for large scale animal cell cultivation in the context of in vitro meat production.Chemical Engineering Science, 211, 115269. Web.

Nelson, C. A. (2020). Investigating the Airbus A380: Was it a Success, Failure, or Combination?(Doctoral dissertation, University of Oregon). Web.

Woo, A., Park, B., Sung, H., Yong, H., Chae, J., & Choi, S. (2021). An Analysis of the Competitive Actions of Boeing and Airbus in the Aerospace Industry Based on the Competitive Dynamics Model. Journal of Open Innovation: Technology, Market, and Complexity, 7(3), 192. Web.

Executive Summary

The decision to stop A380’s production was reached after the Emirates decreased its latest order. It is believed that some of the factors that may have led to the failure of the Airbus A380 include limited route paths, environmental concerns and high operating costs. Many firms chose to cut their fleet as well as routes, which further reduced the demand for the aircraft. In order to recover, Airbus has considered some courses of action. For instance, modification of the A380, reduction of production, and marketing the model to new customers. The best course of action is finding new markets for the model A380. This can help a company to remain competitive and profitable, even in times of low demand. Innovation is a key factor, as entering new markets can encourage companies to innovate and develop new products or services to meet the needs of new customers, which can assist to differentiate the company from its competitors and increase demand for its products or services.

Introduction

The demise of the A380 can be linked to various issues, including a change in the market as well as reduced demand for the craft, that is regarded among the largest airplanes. Lack of incentives for companies to purchase and operate such immense planes means that it could be the end of their era. The decision to halt A380’s production was reached after the Emirates decreased its latest order. The last plane model was delivered in 2019 and Airbus declared, in 2021, that it would end making of the plane, citing reduction of demand as the main problem.

Nevertheless, many A380s still remain in service with airlines worldwide. Some companies have declared plans to continue operating the A380 for the near future. It is believed that some of the factors that may have led to the failure of the Airbus A380 include limited route paths, environmental concerns and high operating costs. Many firms chose to cut their fleet as well as routes, which further reduced the demand for the aircraft. In order to recover, Airbus has considered some courses of action. For instance, modification of the A380, reduction of production, and marketing the model to new customers. Apart from discussing the problems and the main challenge facing the aircraft manufacturer, the paper recommends the best course of action to deal with low demand of recovery of the A380.

Discussion

Most Important Facts of the Case Study

The Airbus A380 has recently not been in production as the last aircraft was delivered in 2019. The company stated that the reduced demand for its planes was the main challenge facing the firm (Brennan and Davidson, 2020, p. 869). The airplane is regarded among the biggest commercial passenger aircrafts worldwide, with a wingspan of eighty meters (Brennan and Davidson, 2020, p. 869). It was first flown in 2007 and delivered to customers in the same year (Bartlett and Beamish, 2010, p.752). It can accommodate a capacity of more than eight hundred passengers and has a range of around eight thousand nautical miles (Brennan and Davidson, 2020, p. 870). It contains two decks that stretch the length of a fuselage and powered by four engines (Brennan and Davidson, 2020, p. 871). As of two years ago, about two hundred and fifty-one A380 aircrafts have been produced (Brennan and Davidson, 2020, p. 871). Nevertheless, despite stopping A380’s production in 2021, Airbus is recovering.

The Key Problems and Issues

One of the key problems or issues affecting Airbus with regard to A380 are the high operating costs. This has had a major effect on the plane’s market success (Davidson and Brennan, 2019, p. 407). Due to the size of the aircraft and complexity, it needs more fuel, maintenance, and staff to operate than smaller planes. Many airlines describe these characteristics as being unattractive, particularly in the current economic climate where the firms are targeting to reduce expenditure and increase efficiency (Davidson and Brennan, 2019, p. 407). Among the main reasons behind the expenses is the restricted route options.

As a result of A380’s size, it can only operate from a limited number of airports that have been upgraded to accommodate it, which restricts the number of routes on which it can be utilized. This means that forms cannot use it on as many paths as they could other smaller airplanes, which limits its revenue generation potential (Davidson and Brennan, 2019, p. 407). Moreover, the high purchase price of the model and lack of economies of scale due to the low production numbers added to the cost for the airlines.

Another key problem that affected Airbus and led to failure of A380 is limited route options. The aircraft is large in size and thus, it can only operate from a restricted number of airports that have been upgraded to suit it. This means that firms cannot utilize the planes on as many routes as they desire, hence limiting the revenue generation potential (Davidson and Brennan, 2019, p. 408). The size as well makes it hard to operate from smaller airstrips (Davidson and Brennan, 2019, p. 408). Some of the airfields have not been improved to accommodate the A380 as a result of the fiscal constraints or dense populations in the surrounding areas.

The limited route options mean that the airplane is less flexible than smaller planes regarding the paths it can operate. For instance, the aircraft cannot manage shorter destinations with less traffic, meaning that the firms must thoroughly plan their schedules and routes to guarantee that they are making the most efficient utilization of the airplanes. This situation has been seen to be less appealing to companies in the aviation industry as they are required to prepare their networks carefully to ensure that they can suit A380s. Additionally, they are needed to use the airplanes on paths where they could produce most revenue (Davidson and Brennan, 2019, p. 408). All the mentioned issues with regard to route options result in low market potential and thus, low sales.

The third problem that has faced Airbus and resulted in stopping of A380’s production includes environmental concerns. These have had an effect on the market success of the airplane model. The aircraft is a large piece of engineering with four engines, which makes a target for criticism from environment activists. Analysts claim that it is not as eco-friendly or fuel-efficient as smaller airplanes (Davidson and Brennan, 2019, p. 409). They add that its size as well as number of engines lead to higher emissions of greenhouse gasses and noise pollution (Davidson and Brennan, 2019, p. 409). The high fuel consumption of the plane has been an issue as firms are under immense pressure to decrease their carbon footprint and meet emissions regulations.

The pressure felt by the airlines has made the Airbus A380 less attractive to the companies, particularly as newer and more fuel-efficient airplanes, including the Boeing 787 and Airbus A350 have entered the market. Moreover, the size of the A380 means that it produces more noise, which is disruptive for people near airfields (Davidson and Brennan, 2019, p. 410). This has resulted in criticism from local communities and environmental groups, and has made it harder for airports to cater to the A380. These concerns have led to the low sales quantity as firms are hesitant to buy the model as there is a negative perception linked to its environmental impact, which is among the main reasons behind stopping of the production.

The Main Problem or Challenge Facing Airbus

Despite there being various issues that affected production of the A380 model by Airbus, the main challenge that the manufacture faced is low demand. This is believed to have significantly impacted production in numerous ways. One major effect was on the fiscal performance of Airbus, the manufacturer. Normally, if the demand for an airplane model is limited, the maker may fail to sell as many units, which often results in reduced revenue and losses (Grimme, Maertens, and Bingemer, 2021, p. 76). Additionally, this can lead to less orders, which negatively influences the production schedule, resources, and staff.

Another effect of low demand was on the production procedure itself. In normal instances, if there is limited demand for a product in the market, the manufacturing company may have to reduce the quantity of aircrafts they produce. This can result in lower production rates, less efficient utilization of resources, and possibly even the closure of facilities. Airbus has reported that the situation impacted its supply chain, as the suppliers may had to adjust their production plans and volume to cater to the situation. What happened after include disruption in the chain and loss of supplier associations (Grimme, Maertens, and Bingemer, 2021, p. 76). In general, the issue can influence a firm’s ability to produce airplanes efficiently as well as profitably.

Alternative Courses of Action to Handle Low Demand

Regarding low demand of A380 aircrafts, the alternative courses of action include reduction of production, modification of the A380, and marketing the model to new customers. There are various ways decreasing production can help to handle the issue. For instance, it is the main factor that aids in lowering the costs of operation. By doing this, Airbus limits expenses incurred by not having to produce as many planes (Grimme, Maertens, and Bingemer, 2021, p. 78). This can assist to alleviate the losses linked with low demand. Another way that reducing production helps to deal with low demand is by improving efficiency. A decrease in production quantity means that the firm is able to concentrate on producing a smaller number of planes with greater quality and less defects. This can aid in enhancing efficiency and limiting the costs. Lastly, it is important to note that a company that restricts its manufacturing ensures that it matches the supply with available demand.

In order to deal with the low demand of the A380, Airbus can choose to modify the aircraft by making the design alterations to the model. Such include updating the inside cabin layout, integrating new materials to enhance fuel efficiency, and adding innovative technology (Grimme, Maertens, and Bingemer, 2021, p. 79). They can make modifications to the wing design to increase performance as well as range. Moreover, the company can check for ways to reduce the weight, thus lowering maintenance expenses to make the planes more appealing to customers. Additionally, limiting the number of engines could make the aircrafts more attractive to airlines, as it would lower the fuel consumption.

Finally, the third course of action is marketing the model to new customers. Through identifying new markets, the company can limit its dependence on a particular market and alleviate the effect of a downturn in demand for the aircraft in a specific marketplace. Additionally, this idea would provide Airbus the opportunity to find other firms who may be searching for a large capacity aircraft such as the one they produce (Grimme, Maertens, and Bingemer, 2021, p. 80). Thirdly, by entering another market, the manufacturer could capitalize on lower costs and economies of scale by boosting A380’s production capacity. It could as well encourage Airbus to innovate as well as develop novel products and services to cater to the needs of the new customers.

Discussion and Recommendation the Best Course of Action

The best course of action is finding new markets for the model A380. Regardless of industry, doing this can be an effective method of dealing with low demand in a business as it enables a firm to diversify its customer base and revenue streams. This can reduce the impact of a downturn in demand in any one market and provide new opportunities for growth and revenue. New markets can additionally provide the chance to search other clients who may be searching for products or services that are not available in their current market (Grimme, Maertens, and Bingemer, 2021, p. 82). This can increase the potential customer base and revenue for the firm.

Additionally, entering new markets can also provide cost savings through economies of scale and lower costs. This can help a company to remain competitive and profitable, even in times of low demand. Innovation is a key factor, as entering new markets can encourage companies to revolutionize and develop new products or services to meet the needs of new customers. This assists to differentiate the company from its competitors and increase demand for its products or services (Grimme, Maertens, and Bingemer, 2021, p. 82). Overall, finding new markets can aid an organization to mitigate the impact of low demand and result in novel opportunities for growth and success and thus, this is the recommended course of action.

Conclusion

The A380 has faced challenges due to market changes and decreased interest in such large aircraft. Factors such as limited routes, environmental concerns, and high operating costs have contributed to the decline of the A380. For instance, issues regarding have greatly influenced production of the aircrafts. The large size and four engines of the aircraft have made it a target for criticism from environmentalists who argue that it is not as environmentally friendly or efficient as smaller airplanes. The large emissions of greenhouse gasses and noise pollution caused by the aircraft’s size and number of engines have been an issue as companies are under pressure to decrease their carbon footprint and comply with emissions regulations.

Additionally, the high fuel consumption of the A380 has also been a concern for companies looking to decrease their environmental impact. To recover, Airbus has looked at options such as modifying the A380, reducing production, and targeting new customers. One solution is to explore new markets for the A380, which can help the company remain competitive and profitable, even during low demand. Additionally, entering new markets can also encourage innovation and the development of new products or services to meet the needs of new customers, which can help to differentiate the company from its competitors and increase demand.

Reference List

Bartlett, C. and Beamish, P. (2010) Transnational Management: Text, Cases & Readings in Cross-Border (p. 752). Illinois, McGraw-Hill Education.

Brennan, P.A. and Davidson, M. (2020) Re: What has an Airbus A380 captain got to do with OMFS? Lessons from aviation to improve patient safety. British Journal of Oral and Maxillofacial Surgery, 58(7), p. 869-873. Web.

Davidson, M. and Brennan, P.A. (2019) Leading article: What has an Airbus A380 captain got to do with OMFS? Lessons from aviation to improve patient safety. British Journal of Oral and Maxillofacial Surgery, 57(5), p. 407-411. Web.

Grimme, W., Maertens, S. and Bingemer, S. (2021) The role of very large passenger aircraft in global air transport–a review and outlook to the year 2050. Transportation Research Procedia, 59, p. 76-84. Web.

Thinking globally, Act locally – Globalization & the Global Markets

Boeing , a multinational defense and aerospace corporation in America has numerous business units that offers products and services based on five principle segments namely Boeing Capital corporation (BCC), Global Service and Support (GSS), Network and Space systems (NSS) and Boeing Military Aircraft (BMA) all under its defense space and security.

Its other business segments include Engineering, Operations and Technology that (EO&T) that provides the company with functional and technical capabilities as well as research and development (R&D), information technology, intellectual property management, management of environmental remediation, technology strategy development and test and evaluation (Lewis & Jon 147) . Today, its commercial jetliners include business jets and other families of airplanes such as Boeing 777, 767, 757, 747, 737, and 717 among others.

Source: www.jet-airlinezz.blogspot.com

On the other hand, Airbus Company is an airline giant company made from ingenuity of companies from countries in Europe such as Spain, UK, Germany and France. Globally, it is one of the largest airline industries dealing with business travel and vacation. To effectively meet demands in the market, it updates its planes and creates new ones.

Internationally, it has become a large employer with up to 55,000 employees in Spain, UK and France. It has subsidiaries in Russia, US and Japan. Some of its airbuses include A300, A320 and A380 among others with a capacity of carrying approximately 555-840 people on their two decks.

Source: www.widebobyaircraft.nl

Globally, both Boeing and Airbus exist as largest airline industries. In their bid to target global markets, the airline companies have adopted physical evidence and process strategies that are aimed at improving their Customer Relationship Management (CMR), and as a tool for creating customer loyalty, satisfaction and managing customer relationship.

Both the strategies ensure creation of a fast, effective and efficient way of service provision. In terms of service delivery, the airlines play an important role in determining the quality of service they offer to customers. The commitment of both airlines in giving quality service is part of their new sustainable development strategy. At the check-in of their first class, customers are treated to an experience of concierge-style consoles that are highly advanced.

Additionally, airbus has a first class lounge wing with attractive cafes, exquisite spas and rooms that are peaceful where travelers can read. It is important to note that the brand of this airliner has become popular worldwide as one of high quality, reliability, integrity and safety care and service.

Developing and delivering services that keeps customers attracted and satisfied is the main goal of Airbus and Boeing airlines. This goal aims at keeping the customers loyal, satisfied and attracted and works well in increasing the airlines profitability, market share, customer equity, and revenue.

It is imperative to note that meeting the needs of customers internationally is determined by the ability to know the right market segment to target, at what time and which areas to avoid. Both airlines focus on the customers’ unmet needs, the market gap and their potential offerings (Francis & Alex 645).

For instance, Airbus airlines achieves its superior returns and growth on invested capital by using new offerings to target existing market segments, using existing offerings to target new segments and addressing new offerings and new segments (Raman & Andrew 495). It is important to note that it has made this possible through support from Return Driven Strategy and its tenets.

The strategy to meet the needs of the global market done by Airbus and Boeing companies has been on the basis of organizing its local Genuine Assets to work better than other companies, confronting the changes in the market segments, understanding the size of the market segments and meeting the unmet needs of the customer. To balance its growth with rival airliners, it has improved the functions of its airline facilities such as the check-ins and the boarding gates, the pier and the wing and its business and first class lounges.

Achieving Strategic, Sustainable Competitive Advantage in the Global Marketplace

Taking care of the needs of the tourism industry, marketing industry, and the transport needs of various societies have seen its steady growth in terms of returns. Through its products and services, the airline company has continued to increase its market segments through innovation its offerings through key areas of distribution and sales of its products as well as offering support and quality service.

Changes in marketing and business trends today have put pressure on most firms to increase their competitive advantage by developing and building focus on core competencies.

According to Gorjidooz and Bijan (9), due to intensive competition and increasing uncertainty, both Airbus and Boeing airlines have been able to have a sustainable advantage and make tremendous gains because they have articulate strategic intent, competencies and resources that are non-substitutable and unique (Gorjidooz & Bijan 10).

As such, in order to stem their growth, the airliners have targeted market segments ranging from individual customers to large global corporations. This strategy, based on the foundations of Return driven strategy and other strategy tenets has seen Airbus and Boeing gain a strong branding of their offerings, dominating targeted market segments through superior operations and innovation of offerings.

In order to attain peak production and yet remain competitive and profitable, both airlines have employed innovative capacity, strategic flexibility, organizational learning and effective technology among other core competencies (Francis & Alex 640). Additionally, Airbus and Boeing companies have been able to gain competitive advantage through identifying strategic capabilities that are appropriate, comprehensive planning and proper allocation of their resources.

According to competitive advantage theory, high market price of products should be pegged on high-quality of the products. Being able provide their high quality services at a relatively low cost and still maintain competitive advantage indicates that both companies have been able to restructure their capabilities in such a way that they offer their services at a low cost possible.

Conclusion

To sum up, developing and delivering services that keeps customers attracted and satisfied is the main goal of most airlines. As aforementioned, this goal aims at keeping the customers loyal, satisfied and attracted and works well in increasing the airlines profitability, market share, customer equity and revenue.

Therefore, the concept of customer perceived value and service effectiveness in airlines demands that orientation services be created among airline internal suppliers, creation of service benchmarks and an increase in infrastructure outlay.

Besides, it needs innovative capacity, strategic flexibility, organizational learning and effective technology among other core competencies. Both Airbus and Boeing ability to gain competitive edge is attributed to their functions of intangible organizational learning versus technological tangible competencies.

Works Cited

Francis, John & Alex, Pevzner. “Airbus and Boeing: Strengths and Limitations of Strong States”. Political Science Quarterly 121.4 (2006): 629-651

Gorjidooz, Jayad & Bijan, Vasigh. “Aircraft valuation in dynamic air transport industry”. Journal of Business & Economics Research 8.7 (2010): 1-16.

Lewis, Alfred & Jon, Loebbaka. “Managing future and emergent strategy decay in the commercial aerospace industry”. Business Strategy Series 9.4 (2008): 147

Raman, Hari & Andrew, Barnes. “Finite Element Modeling, Simulation, Tools, and Capabilities at Superform”. Journal of Materials Engineering and Performance 19.4 (2010): 495.

Introduction

This paper is a reflection on a scenario conducted among the three principal project parties including French sales directors and corporate owners, German technical designers, and UAE-based A380 buyers. The paper examines problems faced by the international project and lessons learned from cultural, language, commercial, and other issues.

Cultural Peculiarities

One of the most striking features of the scenario under discussion is a cultural peculiarity. Speaking of culture, every nation tends to implement its ideas and point of view. In this case, Germans could not understand why the French assemblers were unable to use the fifth version of Computer-Aided Design (CAD) (Airbus – A380 2016).

Nevertheless, the use of a particular version was not discussed at the beginning of the project. It should be emphasized that the interoperability was fully ignored. This misunderstanding might cause future delays and increased costs. Lawrence (n.d., p. 6) states that “it is essential to have established a common and integrated toolset and also common methods and processes”. In other words, it is necessary to utilize the same software and tools in designing the international project. However, if such a situation occurred, then a compromise should be achieved by mutual concessions.

Moreover, organizational culture also plays a significant part in the international project. It is important to develop conflict tolerance and risk tolerance so that employees of different groups might communicate effectively. Also, the integration between units matters.

In this scenario, there was no integration as every party wanted to achieve its own goals instead of the paramount project objective (Airbus – A380 2016). The occurred situation illustrates that the parties failed to act in coordination with each other. Consequently, a coordinated manner should be of priority from the very beginning of the international project. Meanwhile, the best scenario might focus on openness and knowledge sharing.

Overcoming Inconsistency

As it was stated before, the use of different software led to technical problems. However, there is another issue faced by the project related to the inconsistency of actions. In particular, French representatives wanted the Germans to take a share of the costs to rectify while the latter did not recognize any role in the delay as the technical drawings were handed over timely. This commercial issue shows that the project lacks concerted decisions. In this connection, it seems appropriate to stop arguing and elaborate on clear priorities based on the key target.

The fact that French sales directors and corporate owners were unwilling to negotiate on money reveals the reluctance to collaborate and listen to others’ ideas. In its turn, it might cause even the deeper frustration of German colleagues. Therefore, there is a need to establish clear objectives through lean thinking. According to Lawrence (n.d., p. 13), “it encourages the project manager or modeller to identify clear project deliverables and work backwards from these by showing the ‘information-pull’ of the network”. It becomes clear from the above observations that all the parties should think in the same direction.

Furthermore, the mentioned issue reflects poor risk analysis as well as a lack of understanding of dependencies (Lawrence n.d.). For example, Germans were sure that quality control was French responsibility. However, quality issues should be controlled at all levels. Language differences might also cause several problems concerning the metric or imperial transformation of data. As a result, the project turned out to be too complex requiring huge customization. To prevent the above situation, it is crucial to choose the same language of operation. For instance, it might be English due to its widespread nature.

UAE-based A380 Buyers’ Support

Considering the scenario, it becomes evident that buyers are quite disappointed and frustrated by the delay. Some of them want immediate compensation while others are ready to refuse from the sales contracts if Airbus is unwilling to rectify. The situation needs to be resolved as soon as possible as the rejection to buy a part of the A380 aircraft would undoubtedly lead to the increased costs and some suspense of the subsequent production. Therefore, there is a need to provide UAE-based buyers with appropriate support and information concerning terms and technical improvements.

Conclusion

All in all, it seems essential to pinpoint that the situation needs an urgent implementation of comprehensive change management. Based on the detailed understanding of tasks, tools, and cultural specifics, the project should be adjusted to the occurred challenges. In its turn, a sophisticated risk analysis would contribute to the prevention of misunderstandings and similar problems in the future. Speaking of stakeholders, it might be a good idea to set up strong buy-in requirements so that they would be more unwilling to leave the project.

In conclusion, it should be emphasized that this scenario reflection revealed several issues faced by Airbus. They comprise such problems as the inconsistency of actions, lack of cultural and intercultural organization, commercial aspects, and others. All of them need to be resolved according to the suggested assumptions. Finally, this role play was of great importance as it demonstrated the possible issues that might occur in the framework of international projects.

References

Airbus – A380 2016.

Lawrence, P n.d., Planning in the Dark: Why Major Engineering Projects Fail to Achieve Key Goals, pp. 1-17.

Executive Summary

Airbus Group is a predecessor of European Aeronautic Defence and Space Company. It was founded on 10 July, 2000. The company operates from France. However, it is incorporated in the Netherlands. The group is headed by Denis Ranque, who is the chairman. The CEO is Dr. Tom Enders. As of 2013, the corporation had revenues of €59.3 billion and a backlog of €634.8 billion. In 2012, its operation income was €2.131, while profits were €1.299. Total assets were €92.102 and total equity €10.434. All the figures are in billions. The number of employees in mid 2013 was 143,358 (Grant 2014). In spite of its success, Airbus Group has faced a number of legal challenges. In this paper, the author analysed some of the legal elements associated with the company.

Introduction

Airbus Group is an aerospace and defence conglomerate based in Europe and with operations in different parts of the world. It is registered in Netherlands, but its headquarters are based in Toulouse, France. The corporation is made up of three divisions. The three are Airbus, Airbus Defence and Space, and Airbus Helicopters (Pederson 2014). It was founded on 10 July, 2000. Originally, it was known as the European Aeronautic Defence and Space Company (EADS). It was formed from a merger between Aerospatiale-Matra, DaimlerChrysler Aerospace AG (DASA), and Construcciones Aeronàuticas SA (CASA). The company’s name was changed to Airbus Group. The change took place on January 2014 (Grant 2014). The new name was acquired from the firm’s subsidiary involved in the construction of commercial airplanes. The subsidiary was a major revenue generator for the firm. The move resulted in a combination of various departments. For example, the departments in charge of the development and marketing of civil and military airliners were merged.

Airbus unit, which is involved in the manufacture of public airplanes, is the leading division in terms of employees and sales (Gil 2007). Its main products include the A320 family and A380 passenger airliners. The Defence and Space departments were formed as a result of the restructuring carried out on Airbus Military, Astrium, and Cassidian. The euro-copter division is the world’s leading manufacturer of helicopter (Hill & Jones 2013). In addition to the three major divisions, the corporation has other important sub-units. They include Airbus Group Inc., Dassault Aviation, and Eurofighter GmbH. Others are MBDA, Airanespace, and DAHER-SOCATA. According to Hill and Jones (2013), Sogerma, Dornier Consulting, and Premium AEROTEC are also part of the group.

In this paper, the author will analyse the legal responsibilities of Airbus Group. To this end, the author will highlight the legal aspects of HS&E, employment, contracts, product, and professional liability. In addition, legal elements in relation to possible case scenarios will be analysed. A comparison between Airbus Group and Boeing will also be made.

Legal Aspects of HS&E

Ensuring the health and safety of employees is Airbus Group’s top responsibility. The company has a policy of psychological risk prevention management. Its key goal is to ensure the workers do not suffer from work related psychosocial injuries. In a joint effort with its stakeholders, the corporation does its level best to ensure quality and adequate resources are set aside for employees’ health maintenance (Szabo 2009).

When it comes to safety, Airbus group does its best to anticipate any potential risks. Thorough analysis is carried out on the products, processes, and facilities to resolve any weaknesses that may compromise safety of both employees and customers. The procedure is conducted from the first phase of manufacturing to the last. Generally, check-ups are audited every month during regular company reviews (Bhatija 2013). In addition, the company brings together talent and technology. The aim is to enhance innovation, integration, and internalisation. As a result, the airline group develops cutting edge technology to help its clients connect and protect lives.

In addition, the company adheres to strict rules concerning environmental protection. Its major focus is on pollution control and prevention. One theme employed is acoustics. It lessens the noise produced by an aircraft during operations (Gil 2007). The other mechanism used is aerodynamics. It helps to reduce the level of fuel consumption. Measures are also put in place to ensure the company’s personnel work in an environment conducive for performance and self-discipline. Workstations that are considered unsafe are modified to ensure safety levels are met (Armanios 2006).

There are various instances where the importance of the health and safety of employees has become evident. A case in point is when the company was fined £200,000 after a worker died. Aerospace Avenue Filton, Bristol, was further ordered to pay £58,891 in costs. The decision was made after it emerged that the company had violated the Health and Safety at Work Act of 1974 (Malaval, Bnaroya & Aflafo 2013).

Employment and Legal Challenges at Airbus Group

Every company has its procedures for recruitment and employment of workers. Airbus Group has employees of more than one hundred nationalities (Hill & Jones 2013). As a result, it benefits a lot from the diversity of personnel. The reason is because it enjoys a blend of ideas, knowledge, and vision. To maintain the cultural diversity, employees are urged to develop individual talents and be proud of their heritage (Armanios 2006). In addition, the company values the high levels of experience and expertise acquired from the global workforce. Currently, the number of female employees is on the rise. They perform a wide range of duties and responsibilities that are similar to those of their male counterparts.

Recent graduates and experienced candidates can look for job opportunities at Airbus Group using various channels. The company’s job market search engine contains all the available vacancies in the three manufacturing divisions (Pederson 2014). More positions outside Europe are found on the International opportunities site. Nations listed on the page are China, India, Saudi Arabia, and the US. There is a segment for featured roles. They are the regularly recruited vacancies, including Engineering, IT, and Business (Newhouse 2007).

Registering in the site allows the air group’s recruitment team to access the profiles of candidates and assess them. Applicants are advised to provide as much information as possible. Notifications on whether or not one has been picked for the applied position are made through the Candidate Cockpit (Szabo 2009). In addition, candidates are required to give information on extra-curriculum activities, knowledge and interest in the field, language, membership to societies, and work experience (Norris & Wagner 2005). Each job opening in the corporation is filled using specific selection criteria for candidates. However, there are basic steps that have to be followed. They include screening, assessment, contract preparation, and on boarding (Grant 2014).

Contracts and Legal Cases

Airbus Group is awarded numerous contracts annually. As a result, the manufacturing teams have to work hard to ensure they deliver the orders. In 2014, the corporation recorded some measure of success in this end. On December, it sold 468 airplanes to clients (Pederson 2014). The products included A320, A330, and A350 crafts. In addition, the Group recorded the best-ever delivery performance. It manufactured 75 jetliners for international clients in December.

At the end of the year, the company had orders for 113 airliners from A319, A320, and A321 current engine versions (CEV). Furthermore, it received 259 orders for the A320 and A321 new engine configurations. Eight were for A330-200, A330-300, and A350s. Eighty orders were for A330neos jetliners (Pederson 2014). The most notable contracts for A330neos were from new clients. They were Air Asia, Avolon, Hawaiian, and Trans Asian airliners. On its part, Airbus new A350 XWB version got a repeat order from Finnair.

The table below highlights the orders received by Airbus in 2013:

Table 1: Airbus Group’s orders for 2013

Product and Professional Liability

Airbus Group stands up for all their behaviour and what they believe to be right. The corporation takes liability for their actions and the quality and safety of their products. The reason is because it values the trust bestowed upon it by its clients, colleagues, and stakeholders. Maintaining professional and product liability allows it to create competitive inventions, solutions, and services (Newhouse 2007). As a result, the group enjoys added value. In addition, it secures a strong future growth, leading to more profits and success. The company operates on a policy emphasising on the importance of what is delivered and how this is done (Norris & Wagner 2005).

Comparison between Airbus Group and Boeing

Airbus and Boeing have been engaged in stiff competition since the 1990s (Armanios 2006). The rivalry has led to a series of mergers in the aerospace manufacturing industry. In terms of orders, within the 2004-2013 period, Airbus received 8933 contracts and delivered 4,824. Boeing received 8428 and delivered 4458 airplanes (Hill & Jones 2013). In 2013, Airbus group recorded more success in contracts and deliveries compared to Boeing.

The chart below illustrates how the two giant firms worked to meet their market needs:

Just like Airbus Group, Boeing has a large taskforce drawn from all over the world (Newhouse 2007). In addition, the corporation adheres to professional and product liability issues. The two are key elements to the success of any company. Generally, variations are experienced in the contracts segment.

Conclusion and Recommendations

Conclusion

Airbus Group has strived to make its mark in the airline industry. In spite of stiff competition from Boeing, the company has enjoyed significant levels of success. For example, it is the manufacturer of the world’s biggest passenger jetliner, the A380. On September 2014, the giant corporation came up with a plan to dissociate itself from Dassault and other sub-divisions. The aim was to help it focus on aerospace. Airbus Group maintains transparent employment and recruitment procedures. It also adheres to the legal aspects of health, safety, and environment.

Recommendations

To sustain its competitive edge in the market, Airbus Group needs to put in place a number of measures. To start with, it is recommended that the company should focus more on its core business of manufacturing crafts. The management should consider outsourcing some of the non-core activities, such as recruitment. Secondly, Airbus Group should continue working hard to improve the welfare of the employees and other stakeholders. Such a move will reduce the risks of legal suits, such as those evidenced in instances where employees incur accidents within the premises.

References

Armanios, D 2006, ‘Parochialism in EU economic policy: case study between the Boeing Company and the Airbus Company’, International Journal of Technology, Policy, and Management, vol. 6 no. 1, pp. 66-85.

Bhatija, N 2013, Aerospace industry, Random Publications, New Delhi.

Gil, J 2007, European aeronautics: the South-western axis, Springer, Berlin.

Grant, T 2014, International directory of company histories, St. James Press, Detroit.

Hill, C & Jones, G 2013, Strategic management: an integrated approach, 10th edn, Cengage Learning, Mason.

Malaval, P, Bnaroya, C & Aflalo, J 2013, Aerospace marketing management: a handbook for the entire value chain, Springer, New York.

Newhouse, J 2007, Boeing versus Airbus: the inside story of the greatest international competition in business, A.A. Knopf, New York.

Norris, G & Wagner, M 2005, Airbus A380: superjumbo of the 21st century, Zenith Press, St. Paul, Minnesota.

Pederson, J 2014, International directory of company histories, St. James Press, Detroit.

Szabo, P 2009, Third report study of the Mulroney Airbus settlement, House of Commons, Ottawa.

Introduction

Mergers refer to business associations that involve two or more companies amalgamating to form a single business entity. Through mergers, companies can achieve greater levels of efficiency through exploitation of benefits that are associated with economies of scale as well as enabling the company to exploit new markets and freeze out competition from other firms in the same industry.

In this case, Airbus, an aircraft manufacturing company based in France and Boeing, a US based aerospace company which is one of the largest in the world are interested in forming a merger.

Through this business association, the two companies would reap benefits associated with economies of scale such as increased overall output and diversified markets which would consequently increasing profitability and investment of the new entity. The new company would also gain from the popularity of the two companies in Europe, America and Asia hence marketing its services will be much easier across the world.

However, careful corporate strategic negotiations are essential for the two companies to reap the benefits associated with company mergers failure to which may result in merger failure causing detrimental effects to the company. Companies should adhere to the general rules when engaging in mergers.

First, both companies should hold open and extensive negotiations to ensure that the entire process promotes the interests and goals that the new entity wants to achieve. Both companies should critically analyze financial prospects and performance that allow them merge without posing the risk of future business failures.

Both aerospace companies perform well financially in the industry and the merger is likely to succeed without risk of bankruptcy. Both companies should uphold trustworthiness to ensure credibility of the process especially through presentation of accurate financial records and other records required to justify the merger.

Evaluating merger prospects

In order to evaluate the effectiveness of the merger, Boeing company board of directors should appoint a special negotiation committee that is charged with the responsibility of evaluating and justifying the merger. The committee should be comprised of experienced and high integrity board members who should negotiate the terms of the merger with the team from Airbus Company.

The committee members and negotiators should ensure that the negotiation process yields the required results through identification and addressing the fundamental goals on the onset of the process in order to highlight the key issues relevant for the successful accomplishment of the merger (Kimathi & Kimathi, 2010).

The committee should seek expert assistance from competent advisors in addressing the key and major issues such as profitability and future projections of Airbus. These experts provide guidelines on complex issues such as financial evaluation, design and implementation of the merger as well as legal and taxation regulations (Kimathi & Kimathi, 2009).

Failure to consult experts on various fields may result to lack of credibility as well as biased and uninformed decision making by the Boeing negotiating committee.

These members should be appointed in such a way that they do not portray any elements of conflict of interest to ensures that the committee decision is based on the corporate merits of the associations and not merely from external influences geared towards personal gain (Kimathi & Kimathi, 2010).

If an individual has potential gains from the business association between Boeing and Airbus, he should not be appointed as a negotiating member since his decision may be biased.

The committee should also assess the suitability of the deal by reviewing financial records of Airbus, management depth and succession, business plans and projections among other important information in order to make the decision as to appropriateness of the merger (Kimathi & Kimathi, 2010).

It should keep proper and accurate records for references during the process and should remain focused to the accomplishment of their task which striking the best financial deal with Airbus.

Once the merger between Airbus and Boeing has been justified, extensive financial analysis of Airbus Company must be conducted. Through this process, problems may be detected that eliminates the company from further consideration of the merger. However, problems that can easily be rectified should not hinder the commencement of the process (Madura, 2006).

Mergers often require a lot of money to finance since they may involve one firm purchasing the existing stock of another (Madura, 2010) hence the Boeing should assess whether it has available resources to finance the merger in order to go ahead with negotiations.

Boeing Company and Air bus merger is justified on the grounds that both companies are in the same industry and dominate in terms of profitability.

Merging the two companies would link the American and the European market as well creating the incentive to exploit the world market at large. It would also lead to increased profitability of the new establishment hence availing resources for investment and innovations in the aerospace industry.

Process of Negotiating a Merger

In order to negotiate effectively, I would ensure I have done adequate research on Airbus Company before hand. Collection and evaluation of information that is important in the negotiation process as well as devising a defensive plan to protect sensitive information that may be required by Airbus Company but the company may not be legally required to submit it (James, 2007).

The company should set realistic expectations from the merger to enable the negotiators insist on the company’s aspirations during negotiations and continually reassess them as new information from Boeing company is obtained through out the negotiating process (James, 2007). The negotiator should take control of the bidding process to ensure that the Boeing Company achieves the best realistic deal.

As the lead negotiator I would ensure sustained credibility throughout the negotiation process (James, 2007). When a negotiator proposes a position he should be objective and should support himself with the appropriate rationales. He should also act within limits of time which have been reasonably set by both companies by avoiding wastage of time from the onset of negotiation process.

The negotiator should also be aggressive and upon determination that the deal is appropriate he should see to it that the merger is signed. He should actively participate in drafting of the contract to ensure that the interests of Boeing that negative issues do not crop up before the deal is concluded (James, 2007).

As a negotiator, I would strongly uphold the values of Boeing Company. However I would also ensure that I am flexible such that I can accommodate values of Airbus Company.

Factors that Hinder Effective Negotiations

However, there are various issues that may render the negotiation process unsuccessful such as unreasonable preconditions whereby if the two CEOs cannot agree on division of power in the integrated business (James, 2007), Strategic leaks may destroys trusts among Boeing and Airbus and delay tactics employed by either of the companies to delay the process for calculated purposes.

In addition, companies may use musical chairs whereby the negotiators are constantly substituted leading to overall derailment of the process (James, 2007)

Conclusion

Merging business is a complex process that requires careful considerations by the companies involved. This is because it involves restructuring of various departments of both companies to fit the strategic plan of the new entity. In the event that Boeing and Air bus companies decide to merge, it is important for the two aerospace companies to follow the necessary procedure to asses the suitability of the merger to ensure its success.

Reference List

James, G. (2007). James Freund, ten rules of mergers and acquisitions bargaining, CBS Interactive. Web.

James, G. (2007). Four common deal killers, CBS interactive. Web.

Kimathi & Kimathi, Corporate attorneys, (2009). Seven top strategies for negotiating a merger and acquisition transaction. Worldwide legal directories. Web.

Madura, J. (2006). Introduction to business, New York: Cengage learning.

Most manufacturing companies that serve customers globally ensure that they have manufacturing plants in various parts of the world. The manufacturing plants in foreign locations improve the efficiency of the company’s services in these locations. Manufacturing companies may use the manufacturing plants in foreign locations to counter competition in these locations (Miltenburg, 2005).

Airbus attempts to use this strategy to conquer the lucrative American civil aviation market. The company intends to set up a manufacturing plant in Alabama. Alabama is the home of Boeing, Airbus’ main rival. The plant in Alabama would help in catering for large orders from American customers.

Alabama is the first US site of Airbus. The company has three plants worldwide. Airbus has two plants in Europe and one plant in Asia. The European plants are in Toulouse, France, and Hamburg, Germany. The Asian plant is in Tianjin, China. The American plant will cost approximately $600 million. Upon completion, the plant would create 1,000 jobs. In addition, the plant will create 3,200 jobs during the construction phase (Kaczmarski, 2012).

Airbus intends to use the Alabama plant to build relationships with American clients. By setting up a plant in Alabama, Airbus will increase competition in the civil aviation industry. Boeing will no longer be the only civil aviation manufacturer that has plants in the US. This would reduce the competitive edge of Boeing in the American market (Petrescu & Petrescu, 2012). Therefore, the Alabama plant is critical to Airbus’ success in the American civil aviation industry.

Airbus’ plant in Alabama will help in consolidating Alabama’s position as the aerospace production hub. The state of Alabama also hosts manufacturing plants of other multinational corporations. Vance is the site of the first Daimler plant outside Germany that manufactures Mercedes-Benz cars. Daimler intends to invest $2 billion in the expansion of the plant in Vance (Kaczmarski, 2012).

The Airbus plant in Mobile and the expansion of the Daimler plant in Vance would help in improving the economy of Alabama. According to the Governor of Alabama, the state strives to move away from low-end manufacturing to the manufacture of airplanes, rockets, and ships. Manufacture of airplanes, rockets, and ships would improve the economy of Alabama significantly (Kaczmarski, 2012).

Alabama has several environmental factors that attract manufacturing plants to the state. The Alabama Industrial Development Training program is one of the factors that attract manufacturing plants to the state. The program helps in providing quality workforce to Alabama’s new and existing industries (Tollefson, Garrett & Ingram, 1999).

Therefore, the abundance of highly trained employees creates a good environment for the success of manufacturing plants. The state of Alabama also has a right-to-work law. This law abolishes union security agreements. The law reduces the power of unions. In some instances, the activities of powerful unions may jeopardize the operations of a company (Holley, Jennings & Wolters, 2011).

In addition, Alabama provides various incentives to attract aerospace companies. The ‘Aviation Amendment’ grants tax exemptions to aerospace companies. Only ten other states provide a similar incentive to aerospace companies. These factors help in improving the business environment of Alabama (Kaczmarski, 2012).

Setting a plant in Alabama would improve the competitiveness of Airbus. The company would use the plant to serve large orders of American customers. The Alabama plant would enable Airbus to benefit from the favorable business environment of the state. The plant is critical in Airbus’ effort to counter the market dominance of Boeing.

References

Holley, W.H., Jennings, K.M. & Wolters, R.S. (2011). The labor relations process. Mason, OH: Cengage Learning.

Kaczmarski, M. (2012). Regions: Americas – US – Airbus rolls into Alabama. Foreign Direct Investment, Aug/Sep, 1-2.

Miltenburg, J. (2005). Manufacturing strategy: How to formulate and implement a winning plan. New York: Productivity Press.

Petrescu, F.I. Petrescu, R.V. (2012). New aircraft ii. Norderstedt: Books on Demand.

Tollefson, Garrett, R.L. & Ingram, W.G. (1999). Fifty state systems of community colleges: Mission governance, funding and accountability. Johnson City, TN: The Overmountain Press.

Production processes

To begin with, both aerospace companies have engaged in production wars by taking the least time possible to manufacture their aircraft. This notion is also aimed at producing as many planes as possible in order to improve sales volume and secure a larger market share.

For example, the Airbus aerospace company presently manufactures the A320 series at a speed of forty-two aircraft per month. On the other hand, the rate at which the A330 series is produced is ten aircraft per month, while three aircraft are manufactured every month for the A380 series. Within the next three years or so, the company is aiming to increase the production of the A380 series to ten per month. In addition, the company is currently pondering over the possibility of starting a new line of products known as the A350 series.

On the other hand, the 737 series from the Boeing Company is currently manufactured at a rate of 42 aircraft per month. 8.3 per month is the rate for the 777, while the 747-8F is manufactured at a speed of 1.75 per month.

As can be seen from the above comparison, Boeing has a higher production rate than Airbus. This partially explains why Boeing remains the largest market shareholder in the aerospace industry. However, the company needs to probably reduce its production and focus more on quality so that the recent spates of mechanical problems reported by various airline companies can be eliminated. Besides, it is pertinent to mention that the production rates for aircraft in both companies have apparently strained the supply chain procedures. Both manufacturers have always geared up for large jetliners without considering the side effects in the supply chain processes.

Outsourcing is yet another production feature of the two airline companies. The past few years have witnessed both companies outsourcing parts and materials before eventually assembling their jets. Supplies management, parts, and design are some of the aspects outsourced by the two manufacturers. While outsourcing has been a popular production practice for Boeing, it has equally led to myriads of production challenges, including long delays and overruns in terms of costs.

As of 2013, Boeing was still struggling to complete a fleet of about forty Dreamliners. Clients are now expected to receive their orders almost three years late. Although outsourcing was meant to lower the cost of production, the unforeseen effects have derailed the production process at Boeing.

The Airbus Company also suffered a similar challenge: delays and unnecessary costs after being disappointed by suppliers. Airbus has opted to collaborate closely with its suppliers in order to facilitate smooth coordination throughout the process of production. Contactors are also assisted by engineers dispatched from the Airbus Company.

Proposed Business Process Management (BPM) for Boeing

Any BPM proposed for the aerospace company Boeing should keenly examine and manage processes that are currently executed at the company. These processes may range from production, storage, marketing, distribution, and sales. Boeing needs a BPM because it is currently facing production (delays) and quality crises.

As it stands now, the company lacks an effective monitoring phase in the BPM of its production. There is a need to track individual processes of production (such as outsourcing, assembling deadlines, dispatch of orders, delivery of supplies, and so on). Statistics on the performance of each process is necessary. The quality challenges noted in the Boeing Jetliners have been occasioned by poor monitoring of processes. A slight omission of a production process leads to poor quality.

Monitoring will also improve the pace of processing orders from customers. At the people phase, the company should appraise the productivity of its employees on a regular basis alongside providing incentives to its labor force as part of the motivation. The people phase, viable tools, and methods should be availed to employees so that they can reduce defect rate and cycle time during production.

The primary target of this case study is to establish the strengths, weaknesses, opportunities and threats (SWOT) that are elaborated in the Airbus.

Strengths. The Airbus has a number of advantages that allow the company to compete with others and maintain market position. Firstly, the biggest strength of the Airbus Company is protecting a superior compelling market share. For example, the company had been maintaining competition with another representative of the industry – Boeing for a position of the dominant aircraft producer on the planet. As a result, the two companies managed to preserve a successful duopoly, in which each organization divides fifty percent of the market share.

Secondly, the Airbus Company has launched a profitable and prosperous jetliner manufacturing line: from the A318, which has one hundred and seven seats in a single line, to the A380, which is known as the biggest business aircraft in the production. Moreover, the Airbus Company suggests a broad selection in conditions of breadth and characteristics.

Other strengths of the Airbus Company consist in extensive funding and can maintain competition on high levels in conditions of novelties and modernization of the product designing, production, business concerns, and environmental friendliness. And the last but not the least strength of the company is the powerful patronage of EADS over Boeing.

Weaknesses. The primary weakness of the Airbus Company is discrete assertions placing blame on the organization for the issue of corruption and extortion of its previous members of authorities. Moreover, the competitor company of Airbus, Boeing, is taking the lead in the market share in North America. This may be due to the fact that NASA and Pentagon are guided by the political intentions while choosing Boeing over the Airbus for concluding the business agreements.

The concluding weakness that the Airbus Company is currently facing is the deferment of the operations. For example, A380 jetliner along with the A400M army transportation plane are way behind its original itinerary, which has led to an inability to fund these models, as there is a lack of millions of dollars in the financial plan for them.

Opportunities. The Airbus Company is constantly open for several opportunities: the forthcoming expansion of the organization, including those in the developing markets; a successful development of Low Cost airlines in Asia; an immense level of reinstatement of its production in maintenance in already established and influental markets; the extension of traffic on the established route network, which allow to increase quantity rather than prevalence. If all the opportunities mentioned above were fulfilled, it would contribute to the increasing the interest towards the Airline Company all over the planet.

Threats. Boeing is a major threat to the development of the Airbus Company, as it often critics its alleged trade infringements and keeps the technological competition with Airbus for several years to date. Moreover, “in 1982 Boeing pleaded guilty to false statements about commissions on the sale of commercial aircraft prior to 1977. Boeing also says that there have been public hearings in the Bahamas over allegations of bribery in the 1990 sale of deHavilland aircraft to Bahamas Air, during Boeing’s ownership of deHavilland” (Schulz 21), thus receiving an advantage in this issue over the Airbus. More threat for the Airbus Company come from such countries as Canada, China, Russia and Brazil, where the single-aisle market had been observed.

Works Cited

Schulz, Peter. Ethics and Airbus. München, Germany: GRIN Publishing, 2008. Print.

Boeing and Airbus are the two world leading companies those competitions in the production processes, distributions, and management are under a thoughtful analysis and evaluation all the time (Newhouse 2007). The comparison of the production processes is a good opportunity to learn better the peculiarities of the companies and analyse how the production is actually organised.

In spite of the existing differences and abilities of the giants, Boeing and Airbus demonstrate rather similar approaches of production. Both of them have a kind of multi-country lineage: its parts come from different parts of the world and are gathered in one place. For a long period of time, Airbus was criticised a lot because of numerous delays and cost overruns based on the necessity to wait aircraft’s wings or engine from another part of the world. However, the chosen idea has been justified because even its main competitor, Boeing, follows the same scheme creating its 787 model.

Another peculiar feature of the Boeing 787 is its material: instead of strong metals like aluminium, the company makes use of different composites to introduce a more fuel-efficient product. Airbus prefers to use the standard materials and use aluminium, titanium, and steel for its aircrafts.

BMP Project for Boeing

The attention to the organisational strategy and certain process architecture phases of the company helps to create a powerful BPM project for Boeing in order to address and improve its quality, cost, and delivery. Ireland, Hoskisson, and Hitt (2008) admit that the main Boeing’s problems are the company’s poorly chosen strategy, weak control, and certain leadership shortcomings.

Title: Boeing Production Process

Industry: Aerospace and defence

Business Priority: high quality, low cost, and in time delivery

Improvements: high quality control, open communication with suppliers, properly organised work of the staff.

Date: during the whole production process

Description: Boeing is a powerful body of the industry that has an impact on its overall development and the development of a particular member of the team. It is necessary to control each step in the production process to make sure that a new strategy of the use of composite materials (Hale n.d.) is not harmful and does not influence the quality.

Steps to be taken:

1. A theoretical analysis of the components used for the Boeing 787;
2. Employees’ education at a high level;
3. The cooperation between the countries that produce different parts of the aircraft;
4. Setting of the delivery deadlines (in case of lateness, the party that causes the delay should provide certain financial support)
5. The delivery deadlines should be different for the supplier and for the final manufacturer so that an additional time is provided.

Issues during the Implement Phase of the BMP Project

Implementing a Boeing BPM project should follow a number of defined principles and rules inherent in any kind of project. The following issues have to be considered by the Boeing Company in case the offered BPM project is approved:

1. Understanding of what should be achieved at the end of the BPM;
2. Identification of the project’s main goals, timescales, and the essence;
3. Evaluation of the technical aspects;
4. Analysis of the implementation, identification of its weak and strong aspects;
5. Introduction of the alternatives that can be applied on the same conditions but with a new perspective.

All these steps will help to create a successful and effective project for the Boeing 787 production.

References

Hale, J n.d., Boeing 787 from the ground up, A Quarterly Publication Boeing.com. Web.

Ireland, RD, Hoskisson, R, & Hitt, M 2008, Understanding business strategy: Concepts and cases, Cengage Learning, Mason, OH. Web.

Newhouse, J 2007, Boeing versus airbus, Knopf Doubleday Publishing Group, New York. Web.