Boeing vs. Airbus

In: Business and Management

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INTERIM REPORT ON COMMERCIAL AIRCRAFT MANUFACTURING INDUSTRY
The world aircraft industry can be divided into 2 major segments: 1. Military and space aero-structure 2. Commercial Aircraft 1. Passenger aircraft – a. LCA (Large Civil Aircraft) and b. Small & medium sized aircraft 2. Cargo aircraft COMMERCIAL AIRCRAFT INDUSTRY Commercial aircraft manufacturing industry consists of very few players dominated by two big players namely Boeing and Airbus, yet it is very complex because of a number of suppliers at various levels (Tiers) creating the differences in the supply chain management of different players. The industry has undergone a steady growth and it is set to increase in the coming future due to strong demand forecast especially from emerging economies and huge backlog of orders from the major Airlines. Hence the industry continues to be profitable. But at the same time, being a capital and technology intensive industry, it poses severe challenges in front of potential players.

INDUSTRY ANALYSIS- (PORTER’S FIVE FORCES) Threat of New Entrants-Low There are high entry barriers due to high R&D investment, sophisticated technology and difficulty in financing because of very high capital intensiveness. But positive economic growth and long range forecast in emerging economies are attracting new players to enter despite huge entry barriers. Cost efficient carriers from China and other economies like Mexico and Russia are trying to sabotage the duopoly. Threat of Substitutes-Low to Medium There are not so many direct substitutes and other options like high speed rail are there but very limited in availability and used for rather short distances. For very long distances, air travel is still preferred. Also, uniqueness in design and technology of each aircraft limits the number of substitutes available but with new players coming into the picture, this…...

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