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The Airbus (1) Airbus external opportunities are as follows: 1) The continuous economic growth of such countries as China, Malaysia, Korea, Russia and Thailand will increase the demand for the new types of passenger planes and it will also increase market diversification, which can benefit Airbus enormously, as Company that is known for its willingness to invest into development of new technologies. 2) It becomes increasingly profitable for the air carriers to place orders on planes that incorporate large carrying capacity and low fuel consumption, as an integral part of their design. Airbus appears to be fully committed to building such planes. It is estimated that the newest A 380 will be using 30 % less fuel than Boeing 747, while its carrying capacity is going to be increased by 35 %, comparing to 747. This alone provides Airbus with great competitive edge. 3) The realities of current geopolitical situation in the world cause many air carriers to choose in favor of placing orders on Airbus planes, because Boeing's financial standing is expected to be undermined by stagnant tendencies in American economy.
The value of American dollar continues to decline, which causes some air carriers to switch to Euro, when it comes to making financial transactions. This automatically increases the commercial appeal of Airbus planes, because Airbus functioning, as commercial enterprise, is linked to the currency that posses objective and not merely declarative value. 4) The biggest airports in the world now apply new rules and regulations, which would force air carriers to reduce the noise factor, associated with their planes, during landings and take offs. Airbus planes are generally quieter than the planes of its main rival, which is going to serve as another motivation for airline companies to choose in favor of Airbus, when it comes to placing orders. 5) Airbus is also going to benefit on the fact that prices for oil in the world continue to raise, because its planes are considered as more friendly, within the context of fuel consumption. If current trends on the market of oil continue to gain momentum, buying Boeing planes will simply cease to be feasible. (2) The range of Airbus internal opportunities is just as wide: 1) Airbus is heavily subsidized company, which means that it is not just as prone to actual competition, as Boeing, for example. European governments will never allow Airbus to file for bankruptcy, even if it was justified by commercial considerations. 2) Airbus production facilities are not concentrated in one place, which makes Company less vulnerable to acts of terrorism. It also guaranties operational flexibility and allows Airbus officials to avoid standardization of manufacturing procedures, which is associated with additional costs. 3) Airbus top officials are fully committed to wining competition with Boeing, which is why they often resort to bribing, as the ultimate mean of resolving competitive disputes.
This practice might not be moral, but it is highly effective. It indicates that making commercial profit for Airbus owners represents the foremost priority, which always should be the case, when it comes to insuring survival on highly competitive market. 4) Airbus incorporates fly-by wire technology in the line of all of its planes. In its turn, it reduces the chances of making a mistake, during the flight, on the part of pilots. It also means that pilots that fly Airbus planes need to undergo less training, before they are being issued a pilots license, which is considered by air carriers as something that increases their operational efficiency, because less training means fewer costs.
As result, airline companies are going to think of acquiring Airbus planes as the mean of increasing their operational competitiveness. This will guarantee sales, on the part of Airbus. 5) It generally takes less time for the delivery of Airbus planes, comparing to its main rivals. This is because, up until now, Company was able to avoid manufacturing congestion by not accepting production orders, if it could not guarantee on-time delivery. This is another reason why more and more air carriers consider buying Airbus planes. (3) Airbus is associated with following external threats: 1) Boeing is currently the largest producer of commercial aircrafts in the world and as such, it represents the biggest threat to the very existence of Airbus. So far, Airbus was able to stake its share of the market, which continues to expand, however, there is no guarantee that this is going to be the case in the future. 2) American government is very likely to introduce economic sanctions against Airbus, because, according to government officials, the fact that Airbus is being subsidized by EU deprives the competition between Airbus and Boeing of its fairness. If this happens, Airbus will sustain a heavy financial blow, as result, which might cause the Company to reconsider its current operational strategy.
The usual cost of organizational restructuring is temporary loss of competitiveness. 3) Airbus is also affected by the threat of new entrants. Such countries as Russia and China are not even trying to conceal their intentions to become major players on the market of commercial aircrafts in the future. This will automatically undermine Airbus commercial effectiveness; because Company would have to invest increasingly larger amounts of money into making the line of its products more appealing to the potential buyers. This will lessen Airbus profits. 4) While being able to subsidize Airbus financially, the governments of European countries are simply not in position to apply a political pressure, to insure Companys sales, the way American government does, in order to help Boeing. 5) Airbus is dependent on the great number of American manufacturers that supply Company with necessary components for building planes. If they decide to cancel their contracts with Airbus, it will mean that Airbus would not be able to deliver its aircrafts to the buyers on time, which will have an immediate negative effect on Company. (4) In regards to Airbus, we can say that Company is also subjected to the variety of internal threats, such as: 1) Complicated scheme of Airbus ownership.
Airbus is not a unified commercial entity, as Boeing. It is owned by 45 different companies from 18 European countries, even though the shares of Germany, France and England, in Companys stock, are the most substantial. This results in the fact that Airbus top officials rarely have the same vision of how Company should operate. The delayed introduction of A 380 comes as its direct consequence. 2) Airbus constantly has trouble, while trying to resolve labor disputes. According to the restructuring planes, adopted in 2007, Airbus will have 10, 000 jobs cut over four years; 4, 300 in France, 3, 700 in Germany, 1, 600 in the UK.
The Airbus labor unions have already announced that their members will resist any attempts to eliminate jobs, on the part of Companys officials. 3) Airbus does not have a comprehensive development strategy. It designs planes that would fill gaps in Boeing's share of the market; however, it does not posses a vision of what commercial aviation will develop into in the future. As result, it is highly unlikely that Airbus might become associated with revolutionary breakthroughs, in the field of aircraft manufacturing. 4) It is also likely that Airbus will continue to shuffle its manufacturing facilities throughout the Europe, as result of various disputes, related to the issue of ownership. This, of course, cannot be considered as something that benefits Companys competitive standing. 5) Finally, Airbus functioning is being continuously affected by the political disputes, within EU. The European Unions bureaucracy strives to deprive Airbus of its purely commercial status and to turn in into the tool of EUs geopolitical influence. This is the reason why Airbus is always at the center of politico-economic tensions between EU and U.
S. This causes Airbus officials to deal with the issues that do not belong to the field of their competence, while leaving them with less time to actually execute their primary duties, which have to do with improving Companys commercial competitiveness and increasing the corporate loyalty of Airbus employees. Bibliography: Airbus. 2007. Wikipedia.
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