Boeing: Analysis of Management, the Boeing-Airbus Competition

Subject: Strategic Management
Pages: 2
Words: 663
Reading time:
3 min
Study level: College

Boeing is one of the most influential organizations in the aircraft industry and has been maintaining a competitive position for a long time. From the perspective of Porter’s five forces, Boeing also has a favorable standing. First, the aircraft industry has high requirements for new entrants, including capital necessity (potentially billions of dollars), the need for product differentiation, and unique scale and experience. Established organizations, such as Boeing and Airbus, have a wider range of products and supply channels, minimizing the threat of new entrants. Consequently, the threat of substitute products is relatively low since the aircraft industry and air cargo are booming, making ship and train cargo less attractive options.

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The bargaining power of buyers and suppliers is medium in the aircraft industry, and Boeing’s competitive position allows it to mitigate most challenges of the two factors. Finally, competitive rivalry is the most notable factor affecting Boeing’s industry decisions. There are very few companies that manufacture high-quality aircraft in the industry, with Airbus being the closest competitor. While the two organizations are dominant, the aircraft industry is also associated with high fixed costs, high exit barriers, and a continual need for product differentiation, making rivalry more intense than expected. Ultimately, according to Porter’s analysis, Boeing has a favorable position in the industry and has few threats to its business performance.

According to the case study, product differentiation is one of the primary concerns for Boeing and Airbus’s competition. From the perspective of the strategy clock, Boeing, subjectively, follows the broad differentiation strategy but also pays attention to niche operations. For instance, Boeing is the leading company in manufacturing air vessels used as passenger, cargo, and military craft. It implies the vast scope of the company and the wide range of products. On the other hand, the case study mentions that the 777X freighter is exceptional for shorter travel times, which is needed to transport perishable cargo, implying the efficiency of Boeing’s vessels for niche operations. Ultimately, Boeing is the aircraft company that uses its leading position in the industry to establish a broad differentiation strategy but also applies premium differentiation for niche areas.

Boeing is in the maturity-decline phase according to the industry life cycle concept. It is complicated to thoroughly analyze the organization’s state due to the severe decline in aviation sales due to COVID-19 and the associated decrease in revenue growth. However, at present, Boeing is slowly restoring its value as well as the whole aircraft industry, implying the maturity phase. Furthermore, as seen from the case study, Boeing and Airbus vessels are still in high demand, and their innovative products will be launched within the next several years.

It is safe to assume that Boeing and Airbus are the two companies that hold leading positions in the industry, negating the establishment of an industry standard and strategic lock-in. The case study shows that many organizations globally choose products from Boeing or Airbus, despite the differentiation methods and diverse approaches. It implies that, despite Boeing’s rich history and leading position for many years, there is currently no industry standard or market dominance.

The first-mover dominance in the aircraft industry could be rightfully attributed to Boeing; however, Boeing and Airbus have been directly competing for over last 20 years without definitive conclusions. At present, both companies continually invent new technologies to differentiate their products. As a result, with no established singular standard in the industry, Boeing’s first-mover dominance is neglected, and both companies could be considered as ‘industry standards.

The self-reinforcing commitment occurs despite the lack of apparent strategic lock-in. One of the reasons is the high requirements for new entrants in the aircraft industry. It implies that the largest companies in the market are established organizations with rich histories. The second reason is the Boeing-Airbus competition, which is sometimes recognized as a duopoly in the industry. While, in theory, this situation differs from a strategic lock-in, self-reinforcing commitment occurs similarly, with most organizations acknowledging the dominance of Boeing and Airbus.

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