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Airbus

Transcript: -$20 billion in illegal subsidies. -More than 50% of market share. -Barriers to entry are high due to the significant capital requirements to enter. (Massive subsidies from multiple European nations were necessary to start Airbus.) There is little threat felt by these firms to potential new firms. -Other existing firms find it wise to stick to their small scale production and to smaller aircraft -These two dominating firms have been established long enough to find the most efficient method of production and smaller rival firms know better than to aggressively compete. -Products between the two have little differentiation: Airbus produces 14 models (ranging from 150-555 seats) and Boeing produces 16 models ( ranging from 85-605 seats) -Each firm attempts to differentiate from the other by introducing new technologies, mostly to diminish consumers' operating costs. They are the only firms producing the new technology and essentially increasing demand by creating incentive for airlines to update their fleet and save money money in the long run. -Both firms benefit from increasing oil prices as they have the only solution for airlines, new planes. -Airbus has more pricing power than Boeing: -For each comparable model between the two, Airbus charges more. Clearly Airbus believes its product is better than Boeing's, and airline buyers seem to agree because they buy almost equal amounts of each rather than more of the cheaper substitute. -Neither firm chooses to advertise much to the public because they aren't the ones buying the planes airlines are. “Airbus.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Airbus>. “Airbus and Boeing Airplane Price List Comparison.” Table. Bloomberg. N.p., 23 May 2011. Web. 14 Nov. 2013. <http://www.bloomberg.com/news/2011-05-23/airbus-and-boeing-airplane-price-list-comparison-table-.html>. “Boeing.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Boeing>. “Boeing Commercial Airplanes.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Boeing_Commercial_Airplanes>. “Competition between Airbus and Boeing.” Wikipedia. N.p.: n.p., n.d. Wikipedia. Web. 14 Nov. 2013. <http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing>. “Deliveries and Market Share.” Norbert Haupt. N.p., 29 Apr. 2012. Web. 14 Nov. 2013. <http://norberthaupt.com/2012/04/29/boeing-vs-airbus-education-in-the-united-states/>. EADS. N.p., n.d. Web. 14 Nov. 2013. <http://www.eads.com/eads/int/en.html>. “EADS NV (EADSY).” Wikinvest. N.p., n.d. Web. 14 Nov. 2013. <http://www.wikinvest.com/stock/EADS_NV_(EADSY)>. “Global Market Forcast.” Airbus. N.p., n.d. Web. 14 Nov. 2013. <http://www.airbus.com/presscentre/corporate-information/key-documents/?eID=dam_frontend_push&docID=33976>. Competition Within The Oligopoly -Airbus began as a consortium of European aviation firms, Airbus Industrie, formed by a government initiative between France, Germany and the UK, to compete with American companies such as Boeing, McDonnell Douglas, and Lockheed. -Airbus employs around 59,000 people at sixteen sites in four European Union countries. Oligopoly: The Battle For Orders -The firms aim to gain market share over one another through the introduction of new technologies that increase performance in their products (mostly regarding weight reduction and fuel efficiency which both lower the consumers', the airlines', operating costs) Why Do Billions in Illegal Airbus subsidies matter? Boeing has continually protested over European government subsidies to Airbus, while Airbus has argued that Boeing receives illegal subsidies through military and research contracts and tax breaks. On 31 May 2005 the United States filed a case against the European Union for providing allegedly illegal subsidies to Airbus. Twenty-four hours later the European Union filed a complaint against the United States protesting support for Boeing. There were many critics of Airbus over the years. They asserted that Airbus was not a real company, but it was heavily subsidized by a number of governments, including Germany, the U.K. and France. The 747-8. Bass on a 1960's design. A true case of jet lag! Commercial Aircraft -Lockhead and McDonnell Douglas out of business. -Tens of thousands of lost U.S. aerospace jobs. -Other aircraft manufacturers only produce narrow body aircraft (Airbus and Boeing still account for the majority of the that market too) Looking to the Future The military division of Airbus designs, develops and produces a comprehensive range of highly versatile products for military and “civic”/ humanitarian missions. Competition/Controversy It takes an A380 to compete with an A380. Airbus Military Airbus is an aircraft manufacturing subsidiary of EADS, the European Aeronautic Defense and Space Company. -Today, they are two established competitors making up the duopoly of commercial aircraft manufacturing and compete over market

Airbus

Transcript: 2013 Maiden flight of the Airbus A320 POSITIVE IMPACTS Airbus Industrie changes to Airbus SAS OPERATING COUNTRIES 2013 1979 Airlines would lose millions of dollars on planes they will never receive. AIRCRAFT ORDERS 32 1972 Airbus aircraft in service will lose access to expertise knowledge. New Airbus factory is opened Flying can be very dangerous if the plane becomes damaged. 143 358 Airbus The use of Airbus airplanes has helped to boost countries' economy through an increase in tourism and trade. Maiden flight of the Airbus A380 If Airbus were to go out of business: Airbus airlines to change their products to meet the needs of different cultures and airlines. Media Airbus builds products that allow people to travel around the world quickly, efficiently and comfortably. 2000 Comparison: Airbus & Boeing Founded: 18 December 2005 AUD $63.61 billion Airplanes are very loud and this can affect the health of people living near airports or under flight paths. Construction of US assembly line begins 1999 Airbus creates many jobs around the globe. Airbus is part of an aviation industry plan called "Flightpath 2050" which helps to reduce noise, CO2 and NOx emissions. Stress will be put on other companies. 169 908 Airbus has offices and factories located around the globe. Their main factories are located in: France, Germany, Spain and the United Kingdom 1, Rond Point Maurice Bellonte 31707 Blagnac Cedex France 43°37'37.88"N 1°21'15.09"E 2006 First Airbus plane takes its maiden flight Presence in Australia 1 531 Founding of Airbus Military Company SAS BOEING NEGATIVE IMPACTS Maiden flight of the Airbus A330 and A340 EMPLOYEES Airbus A320 is revealed to the press 2003 Maiden flight of Airbus A350 XWB William Merrick Suite 1002, Level 10 Gateway 1 Macquarie Place Sydney NSW 2000 Australia 33°51'47.01"S 151°12'35.87"E 1 619 Engineering centre opens in Russia 1979 Airbus moves headquarters to Toulouse The entertainment systems for passengers can be customised with different language preferences able to be chosen according to the passenger. Languages inside the cabin and cockpit can be changed depending on the origin of the airline. Airbus wing factory opened in Wales 2000 AIRBUS 1970 2011 25 REVENUE (2013) 1987 Planes release many toxic gasses such as CO2 and NOx. CASA joins Airbus consortium Many people would lose their jobs. The galleys can be changed according to the types of meals being served on the flight. 1972 1974 Airbus does not currently operate in LEDC's. They do not own any offices or factories in developing countries. The salary for an Airbus apprentice ranges from about AUD$14 000 to about AUD$20 000. According to workers at Airbus, conditions are great. Workers say that there is a great balance of life and work, flexible working hours and the construction factories are safe and clean to work in. Aviation contributes about 4% of man-made emissions, but the release of emissions is done at a high altitude which could cause a more direct problem. Airbus's presence in Australia is small with one group of offices in Sydney. Airbus products have a large presence in Australia with a total of 122 airbus aircraft owned by the main Australian carriers, QANTAS, Jetstar, Virgin Australia and Tiger Air. All 13 QANTAS Boeing 747's will be replaced by Airbus A380's by 2018. Airbus does not sponsor any programs in Australia at the moment, but it sponsors many initiatives in other parts of the world. In 2009, an Airbus A320 landed in the Hudson River in New York. In 2010, an Airbus A380 suffered engine failure which caused an emergency landing in Singapore. Airbus overtook rival Boeing after record orders and deliveries. Airbus sets wide-body airplane standard in 2014. British Aerospace joins consortium AUD $86.26 billion 1992 Construction starts for Alabama factory

Airbus

Transcript: Agenda 1. Introduction to Airbus 2. Motivations and Means 3. Toulouse as a Cluster 4. Cross-Border Collaboration 5. Joint Ventures 6. Organizational Model 7. Global Responsibilities 8. Transnational? Two conditions: 1. Entities in two or more countries all over the world following a common strategy 2. Linked entities worksharing (spare part centers) Motivations, means and mentalities A320, A330, A380 and A350XWB Saint Mazaire two production sites 2300 employees assembly, equipping, testing (Hydraulic, and metallic sub assemblies) eliminate future competitors greater efficiency local responsiveness take products to emerging markets Goal: Developing sustainable biofuels Benefits: Environmental impacts Economies of scale Global efficiency Global responsiveness Acceleration in availability Toulouse Nantes: production of centre wing box 2000 employees + centralized knowledge in Toulouse - Other knowledge centers (CoE, Joint ventures) From traditional to emerging motivations To what extent has Airbus become a transnational company? Cross-Border collaboration Organizational configuration model Key departments Final assembly line Additional sites (St.Eloi and Blagnac) Flight and ground testing R&D 2 bio. R&D 90% for environment ethical standards EADS Vision 2020 Flight Plan 2050 Airbus Corporate Foundation Global ISO14001 certification Unique nature of aeronautics industry Support of institutions and public goods Airbus stimulated growth Traditional motivations: secure key suppliers seek new markets low cost production advanced technology innovation Emerging motivations: increasing scale economies ballooning R&D investments scanning & learning competitive positioning Transnational organization Constant engagement in society and environment more than just fulfillment of legal standards good citizen BUT no broad change and NGOs still demanding Headquarter Questions? Centralized hub transformation within the last decades MNE traditional as well as emerging motivations to expand successful joint ventures multidimensional capabilities - transnational organization responsive to local needs capturing benefits of global efficiency high focus on CSR Joint ventures + Key assets and resources decentralized but controlled from center: CoEs are decentralized but Toulouse remains controller - independent subsidiaries vs. home country expansions Coordinated federation A320, A330 and A340 Introduction Subsidiary of EADS 1970-2003: European based 2003-2012: fully owned subsidiaries spare parts centers training centers Global network of suppliers Thank you for your attention! Superior ideas learning Improvement of CSR Governmental investment Tianjin Free Trade Zone China Aviation Industry Corporation Takes advantage of all models: Decentralized federation: responsiveness Coordinated federation: learning through cluster formation Centralized hub: efficiency +fully owned subsidiaries abroad + ability to adapt airplane interior to local needs + decentralized resources: Centers of Excellence -Key innovative asset still centralized: Toulouse Airbus' global responsibility Toulouse as a cluster Global efficiency Flexibility Innovation Advantages Conclusion RESPONSIVE MNE Decentralized federation Access to suppliers Proximity Specialization Continuous innovation Access to information and technology Complementarities Access to institutions and public goods Is Airbus a MNE?

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