PROGRAMME TITLE: Top-Up Bachelor (Pre-Elite-Course)

UNIT Number: BBM-02-2014

ASSIGNMENT NAME: Strategic Position and Implementation of

Strategies at Airbus Company.
Student name: Zan Lin Aung
Student ID:
Issue Date: 29.09.2014
Submission Date: 27.10.2014

Zan Lin Aung (BBM) Airbus Company

CONTENTS
1.
COMPANY PROFILE
.. P.3
Companys Vision, Mission and Objectives ..
. P.3 to 4

2.
SITUATIONAL ANALYSIS
. P.4
PESTLE Analysis
..

P.4 to 5

Five Forces Analysis

. P.6
SWOT Analysis
.

P.6 to 7
3.
Strategies Adoption
.. P.8 to 9
Corporate Level, Business Level, Functional Level
. P.8

4.
Implementation of Strategies at Airbus
.. P.9
5.
Conclusion

P.9
6.
References
.P.
10

Pg.2

Airbus Company
Airbus is a leading aircraft manufacturing company whose care
customer focus, commercial know-how, technological leadership
and manufacturing efficiency. Airbus is a division of airbus group
(formerly European Aeronautic Defense and Space Company).
Airbus today consistently captures about half of all commercial
airliners orders. The company also tries to expand its market and
service range by producing military aircraft. Airbus highly successful
product line is A320 family (A318, A319, A320, A321), the wide-body
long-range A330 and the all-new next generation A350XWB family
and the double decker A380 family. These successful aircrafts are
ranging from 107 to 525 seats. (Airbus, 2012)
Airbus has sold over 10,100 aircrafts to more than 430 customers,
operators and has delivered over 6,600 aircraft since it entered first
service in 1974. As an industry leader, Airbus strives to be a truly
eco-efficient enterprise. Airbus is the first aeronautics company in
the world to have earned the ISO 14001(Environmental Certification)
for all production sites and products for the entire life cycle. Airbus
ensures that air transport continues to be an eco-efficient means of
transport, delivering economic value while minimizing its
environmental impact. Airbus is an EADS company headquartered in
Toulouse, France (Airbus, 2012).
Vision
Vision statement is concerned with what the organization aspires to
be (Johnson and Scholes, 2008). Airbus long-term strategic purpose
is Creating the best and safest aircraft for the entire world.
Mission
Mission statement aims to provide employees and stakeholders with
clarity about the overall purpose of the organization (Johnson and
Scholes, 2008). To be the fist aircraft manufacture and supply the
needs of airlines and operators by producing the most modern and
comprehensive aircraft family on the market, complemented by the
highest standard of product support.
Objectives

Pg.3

Objectives are statements of specific outcomes that are to be

achieved (Johnson and Scholes, 2008). These objectives will fulfill
Airbuss mission and try to achieve goals too.
Organization Development
We structure Our operations to ensure that we work as efficiently as
possible, continuously adapting and improving .We favor a matrix
approach that is both transnational and cross-functional supported
by streamlined business processes and local leadership.
Employment
We are socially responsible employer; we strive to assure long-term
employment of our workforce through the anticipation of cyclical
industry changes. In return, employees are expected to set
standards of excellence in their areas of expertise and to support
the companys actions in managing the evolution of its core
business

Health and safety

An integral part of our role as a socially responsible business is our
commitment to provide all who work in or visit our locations with an
environment that is always healthy and safe.
Improvements in quality of products and processes
Our business strategy is try to improve our products and processes
in long-term. In order to attain steady and long-term improvement,
we must work to continuously improve the overall quality of our
design, manufacturing, administrative and support organization.
Technical excellence
In a world of fast-challenging technology, we can only remain
competitive by continuously refining and expanding our technical
capability.
Commitment to integrity
Integrity, in the broadest sense, must pervade our actions in all
relationships, including those with our customers, suppliers and
each other. This is a commitment to uncompromising values and
conduct .It includes compliance with all laws and regulations.
Situational Analysis
PESTLE Analysis
Political

Pg.4

Both Airbus and Boeing enjoy political patronage from the European
Union and the United States government respectively. Airbus was
given a hefty launch aid by the EU when it started and
continuously receives loans, tax breaks and R&D grants from the EU
to boast its activities. Boeing is regularly awarded tax breaks by the
US government too. For example, it recently received a $3.2 tax
relief by the State of Washington (Uwagwuna, 2011).
Both companies have accused each other following these regular
financial aids by arguing that each enjoys unnecessary favoritism
from the two respective governments. They both accuse each other
of engaging in unethical business practices that stifle competition
and they have escalated the issue to the World Trade Organization
for arbitration (Uwagwuna, 2011). It is expected, the companies will
continue receiving these political grants as they have huge
economic influence on the respective economies they operate in.
Economic
Analysts foresee a growth in revenue-per-passenger growth of
between 4.8 and 5.3 percent in 20 years as a result of increase
consumer purchasing power in upcoming economies such as China
and India. Both low-cost such as Ryan air and legacy carriers such
as British Airlines are expected to experienced increase customer
numbers. A total of 16,000 new aircrafts worth about of two trillion
dollars will be required to accommodate this growth according to
analysts. The cargo sector is also expected to grow tremendously
during this period due to increased business activities (Szymanski,
2011). It is expected that Airbus and Boeing will continue to receive
more economic support from their respective governments in order
to flex their activities particularly in risky projects such as the
manufacture of super freighters.
Social
The shrinking of the global economy has made large aerospace
companies to revisit their corporate strategies. Both Airbus and
Boeing have entered into operational partnerships with their
stakeholders (governments, customers, suppliers, employees, and
competitors) in a bid to reduce social costs. Airbus for instance,
encourages innovation that is based on freethinking while Boeing
encourages a global teamwork and collaboration. These are all
attempts to offer low-cost services to a clientele that is more
concerned on the cost of air tickets than the quality of services
offered by airlines. The recent success registered by low-cost
carriers is a testimony to this argument even business class travel
has dwindled in the recent years.
Technological

Pg.5

The influx of the Internet technology has made it easy for

passengers to embrace air transport due to the ease of establishing
cheap deals and booking flights. A large number of households in
Europe and America have access to the Internet from their homes
and can easily make transport arrangements easily.
Technological advancements such as computer aided designing and
automated assembly lines have made aircraft manufacturing more
easy and cheaper. Airbus and Boeing need not cancel orders due to
lack of engineers as they can easily staff their assembly lines
using modern technology such as computer modeling software
(Mayer, 2008).
Jet repulsion technology has led to the manufacture of all-weather
aircrafts that can navigate through bad weather. Modern aircrafts
are bigger and can undertake long-range flights at faster speed
while consuming fuel efficiently. This makes air transport efficient,
cheaper and faster and hence the most preferred form of transport
in the world when travelling overseas.
Five Forces Analysis
Threats of New Entrants
There are huge barriers to entry of new players. This is because of
the huge capital required to make any meaningful investment, say,
in a new design platform.
Competitor Rivalry
Airbus operates in a highly competitive world where large players
such as Boeing and small players such as Euro-copter can easily
takeover its market share especially during a weak dollar like now.
Threats of Substitute Products
Airbus faces low threat of substitute products as clients find it
difficult to replace air transport with other forms of transport
because of its costs, speed and reliability.
Bargaining Power
The company faces a strong buyer bargaining power as the few
buyers can cancels orders and make fresh new orders from Boeing.
This makes Airbus more vulnerable.
SWOT Analysis

Pg.6

Strengths:
Strong leadership philosophy Airbus enjoys a leadership position in
the commercial aircraft manufacturing. This leadership position is
buoyed by the customer-oriented organizational philosophy where
customers opinions are taken into account when developing new or
modifying existing aircraft models. The company thrives in a culture
of innovation and partnership where customers, suppliers,
governments, and employees opinions form a critical in making
critical innovation decisions.
Strong business strategy as a 100 percent EADS subsidiary, Airbus
corporate strategy matters are handled by EADS, a conglomerate
with the largest share of the global aerospace and defence markets.
This allows Airbus to pursue diversification strategy without the fear
of incurring losses or prohibitive capital outlay demands as it is easy
to venture into markets where EADS has dominance.
Strong differentiation capability airbus encourages airlines to
utilise the Hub-and-Spoke- concept a critical solution to the
chronic traffic problem in major hubs and limited taxiing slots in
these hubs. It achieves this by producing super carriers such as the
Jumbo A380 that can stay in the air for longer period of time while
utilising less fuel.

Weakness:
Delays in delivering the Jumbo A380 Airbus started the A380
project many years back but the airline was not able to deliver the
aircraft until 2007 in between, it announced many delays which it
pointed out to the shortage of engineers, switch to automated
production lines, and shortage of production space following the
collapse of acquisition deals. Airlines that suffered the delays
demanded hefty compensations (Gow, 2008).
Lagging behind on mid-size and long-distance aircraft ranges the
over concentration on large- size aircrafts has cost Airbus a
significant market segment for the mid-size and long range
segment. Boeing has market dominance in this segment especially
through its popular Dreeamliner 787. Though the company launched
the A350, it has done very little in cutting Boeing dominance in this
segment.
Opportunities:
Increase demand for air transport and demand for large aircrafts
the growth in air traffic in major hubs has led to industry players
consider utilising large aircrafts that carry many passengers over
long distances as a strategy to reduce congestions. Being the only
aircraft builder making the A380, Airbus stands to gain enormously.

Pg.7

Growth in demand for business aircrafts wealthy businessmen are

lining on aircraft builders order books for business aircrafts that they
can use to criss-cross the globe when undertaking business trips.
Analysts predict a 4.8 and 5.3 in revenue-per-passenger growth in
the next 20 years (Uwagwuna, 2011).
Emergence of new markets in China and India there is growth in
air transport in upcoming markets such as China and India where
consumer income has increased tremendously over the years. Air
transport in these markets is becoming increasingly popular as
characterised by the number of flights handled in major local hubs.
Threats:
Increases in the prices of key raw materials aircraft manufacturers
have lately incurred huge production costs following the scarcity key
raw materials such as titanium and aluminium. Depletion of titanium
and aluminium mines as well as conflict in producing countries has
led to increase their prices in the international market forcing
aircraft builders to look for more expensive and unsustainable
alternatives.
Growth of terrorist activities aircraft manufacturers incurs huge
costs when airlines are forced to cancel orders due to reduced
demand for air transport following terrorism scares such as the
September 11 incident. There have been many cases of flight
cancellation every time an airline reports a potential terrorist act
(Uwagwuna, 2011).

Strategies Adopted by the Company

Corporate Level
Airbus adopts a futuristic and people-oriented corporate strategy.
The company boasts of having solid plans that are laid in good time
to reflect a long-term strategic direction of its key people,
employees, customers, government agencies, and suppliers. It
believes that though future market wars in the aerospace industry
will be decided on cost factor, there is need to deliver comfortable
aircrafts to its customers.
As such, the company gives its key people the opportunity to make
contributions regarding aircraft designs or even organisational
strategy. Ultimately, the company has adopted an
internationalization and globalization stance when addressing all
corporate level issues by taking into consideration, the needs of its
global partners, the ways of lives, and their economic capabilities

Pg.8

(Szymanski, 2011). Consequently, the company has acquired a

competitive advantage over Boeing, as it can now deploy its
culturally diverse workforce into meaningful organisational activities
as well as maximise its core competencies such as manufacturing
super carriers or fly-by-wire aircrafts.
Business Level
Airbus has decentralised business level strategy. It believes in
distributing its production facilities in several countries so as to tap
the unique resources available in these countries. The company has
70 design and assembly facilities distributed in France, Germany,
Spain, UK, and Belgium. In addition, there is an engineering unit in
Moscow, Russia as well as 35 global offices in various countries
including China, India and the US that coordinate supply and
development of critical resources and projects (Airbus, 2012).
This is a core competitive advantage for Airbus especially when
compared to Boeing whose operations have until recently been
limited to the US. As a matter of fact, the company enjoys
economies of scale and hence reduced production costs when it
partners with major markets such as China (Norris & Wagner, 2010).
Moreover, the company is in a position to deploy all its core
resources into productive activities when it separates businesses
and projects.
Functional Level
Airbus functional level strategy is based on the need for the
company to deliver the best aircrafts that utilise modern technology
and that fulfil consumers mobility and security needs in a
responsive and effective manner. The company believes that critical
functional areas such as leadership, management, marketing, and
R&D should be guided by modern innovations where employees and
customers are encouraged to come up with new ways of maximizing
resource utilisation.
The company believes that mobility and security needs are crosscutting in nature and hence require cross-cutting leadership
programme that encourages employees to be creative and dynamic.
Specifically, the company created the Energy 7 programme to
champion for efficiency, quality, customer responsiveness, and
innovation through partnerships. The EADS Global Innovation
Networks, a procurement and supply network has helped the
company to create and disseminate information easily (Szymanski,
2011).
How Airbus Implement the Strategies:

Pg.9

The implementation of strategies is done as per basic management

guidelines such as planning, structuring, production, and supply
chain. The Transformation process, a proprietary programme that
consists of four Is that seeks to encourage integration and
innovation within EADS group through the improvement of the
existing aircraft designs so as to venture into the international
markets and effectively compete against its rivals.
Arguably, Airbus implements strategies by rolling out both
behaviour and skill change among its workforce and suppliers. For
instance, through the use of both the Transformation and Energy 7
Programmes, the company has succeeded in encouraging
innovation, integration, improvement, and internationalisation since
programmes give stakeholders a clear picture of what is supposed
to be done and who is supposed to do it.
Conclusion
Airbus enjoys market dominance in both the commercial and
military aircraft aerospace segments. The company leads in
innovative platforms such as fly-by-wire and super carriers courtesy
of the corporate patronage it enjoys from EADS and the EU.
However, the company experiences constant delays in delivering
aircrafts as was the case of A380 super carriers. There are many
opportunities that Airbus needs to exploit in order to maintain this
market dominance the company can partner with Chinese and
Indian airlines which will most likely order more aircrafts due to the
growing demand on air transport. However, to achieve this, the
company will have to shake-off competition posed by Boeing as well
as upcoming aircraft builders such as Euro-copter. Airbus will also be
required to improve its corporate, business and functional strategies
to make them responsive to the changing mobility and military
needs.

Pg.10

References
Airbus SAS (2012)Corporate social responsibility. [Online]. Available
from: http://www.airbus.com/company/corporate-socialresponsibility/ [accessed Oct 26, 2014].
Johnson,G. and Scholes,K.(2008) Exploring corporate strategy. 8th
ed. England: Pearson Educatoion Ltd.
Gow, D. (14 May, 2008)Airbus customers face further delays for
a380 superjumbo: TheGuardian.
[Online].Availablefrom:http://www.guardian.co.uk/business/2008/ma
y/14/eads.theairlineindustry/ [accessed Oct 26, 2014].
Mayer, S. (2008)Airbus versus boeing-strategic management report.
Germany: Grin Verlag Publishers.
Norris, G. & Wagner, M. (2010)Airbus a380: superjumbo of the 21st
Century. Zenith Press Publishers.
Szymanski, A. (2011)The competitive analysis of the commercial
aircraft industry. Germany: Grin Verlag.
Uwagwuna, C. (2011)How the macroeconomic environment of the
airline industry affects the strategic decision of Airbus vs Boeing.
Germany: Grin Verlag.

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