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The airline industry
Globalization, technological changes, stiff competition, innovation, and changes in customer preferences are instrumental to the current dynamic trends being observed in all industries across the globe. These factors determine the performance of an organization in competitive markets. The airline industry for example confirms how these factors have contributed to its growth. Many recent changes have occurred in this industry.
New technologies, products and services, mergers and new innovations among others are common in the competitive airline industry. Just like in other business industries, companies in the airline industry compete for a larger market share and growth in order to obtain a competitive edge in the industry. In the recent past, the airline industry has been affected by a reduction in demand and the sharp increase of fuel prices. Many corporations are turning to low cost operating and differentiation strategies to gain a competitive edge.
International (Business related) Current Event online
In reference to the 7th October, 2013 BBC news, Airbus, a leader in aircraft manufacturing announced its deal with Japanese airlines. Airbus manufactures A350 planes. This aircraft manufacturing giant won the order for 31 (A350) planes worth approximately $9.5 billion (“BBC Business News” par. 1).
The Japanese company also has a plan of buying an extra 25 (A350) planes from the same company. Airbus made this strategic move in order to lessen the competitive pressure from Boeing, which is its closest competitor in the region (“BBC Business News” par. 3). If the deal is to be confirmed, Boeing will be adversely affected because they have dominated the Japanese aviation industry for many years. Boeing was also hit by technical and safety issues a few months ago (“BBC Business News” par. 2).
Identify Global/Regional Economic Implications, and write Your Judgment: Opportunity or Threat for Region/Corporation? Why?
Airbus and Japan Airlines (JAL) landmark $ 9.5 billion deal has a great effect on the regional economic growth of Japan (“BBC Business News” par. 8). With the two aircraft manufacturing giants operating in the region, it is obvious that the region’s economic growth will improve. This is because more jobs will be created leading to improved living standards. Infrastructure will also be improved and the government of Japan will maximize on its revenue collections. All these factors are instrumental in the economic growth of Japan.
As aforementioned, Boeing will receive a blow from Airbus its competitor because its market share will be reduced after the deal is confirmed. Airbus will increase its market share, sales, profits, and revenue considering that its competitor had previously dominated the aviation market in Japan.
The competition of these two aircraft manufacturing giants has a lot of benefits for the region. It will lead to reduced fare prices, more innovation than before, differentiation, and good customer relations among others. All these confirm that there will be improvements, and hence lead to the region’s economic growth.
Japan Airlines which is the purchaser will also earn extra profits because the (A350) Planes are cost effective. The aircrafts are much more fuel efficient than Boeing manufactured planes. This factor will make it possible for the demand of the planes to increase. Considering that these aircrafts are more fuel efficient than the previous models, Japan Airlines will cut on costs and maximize on profits. It will also be able to reduce the fare prices, and hence attract and retain more customers than before.
The customers will also benefit because their expenses will reduce. Considering that they used to pay more than what they will be charged; they will be able to save some money for other purposes. This will enhance their living standards. All these factors confirm that the move will lead to a growth in the economy of the region.
Works Cited
BBC Business News. Airbus and Japan Airlines agree landmark $9.5bn deal. 7 October 2013. Web.
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