The Boeing Aircraft Company has dominated the commercial aircraft market for dec

Question

The Boeing Aircraft Company has dominated the commercial aircraft market for decades, but its position of influence has lessened in recent years. Its chief competitor, Airbus, has made significant market gains, and may be posed to become the number one producer of commercial aircraft in the near future.

Use the material in Chapters 1-5 to analyze how Boeing and Airbus approach the aircraft marketplace, how they are alike and different (particularly their production processes), where the rivalry is likely to head, and the most probable outcome of their ongoing competition.

Remember to document your sources, to be specific, and to tie your ideas back to Managerial Economics. Information should be 1-3 pages long with APA style citations.

Explanation / Answer

Boeing and Airbus approach to the aircraft marketplace

The Airbus A380 super-jumbo is a plane for the annals of aviation history. When it goes into service later this year, it will be the biggest, baddest airliner around, capable of ferrying from 550 to 800 passengers (depending on configuration). With its two full-length decks and the promise of amenities such as sleeper cabins, cocktail lounges and a gym, it is sure to capture the public's imagination. But for all its promise of innovation, the A380 represents a bet-the-house wager on one of the most disliked same-old models of air travel: the hub-and-spoke. The A380 is built around the assumption that airlines will continue to fly smaller planes on shorter routes (spokes) into a few large hubs, then onward to the next hub on giant airplanes. It also presumes that passengers will want to put up with the hassles of changing planes in exchange for the privilege of traveling in a jet-powered cruise liner. Whether the A380 will live up to the hype remains very much to be seen. Passengers may become disenchanted with the plane if it turns out to be a freighter rather than a luxury liner. When airlines can choose between more seats and a gym, out goes the gym. Sound cynical? Not to those of us who fondly remember the upstairs first-class lounge in the early 747s. Second, and even more importantly, Boeing's (nyse: BA - news - people ) 787 represents an appealing alternative. It's based on a fundamentally different vision, and it is radically different by design

Similarities and differences

Airbus vs. Boeing: factors influencing price and product development Boeing is the largest global aircraft manufacturer by revenue, orders and deliveries, and the third largest contractor in the world based on defense-related revenue. Boeing is the largest exporter by value in the United States. William E. Boeing founded it in 1914 in Seattle Washington. Boeing has expanded over the years, merging with McDonnell Douglas in 1997.

Airbus is another major aircraft manufacturing company, which is a subsidiary of the EADS, a European aerospace company. It is based in blagnac, France and with being very active in Europe; it produces about half of the world's jet airliners. It employs around 57,000 people at sixteen sites in four European Union countries: Germany, France, the United Kingdom, and Spain. Airbus has subsidiaries in the United States, Japan, China and India. One of the frequent trade arguments between the United States and Europe concerns the competition between the Airbus and Boeing in the market for wide-body aircraft. Airbus first began manufacture of aircraft in the early 1970s with considerable financial assistance from the European governments. As Airbus prospered in making in roads into many of Boeing's marketplaces, Boeing alleged that Airbus profited from unfair subsidies and has pressured US trade authorities to counteract Europe's fiscal support. As a result, the United States and European Community signed an agreement on trade in civil aircraft in 1992 that limited government subsides for aircraft production. This agreement, however, has come under new strain as Airbus introduces the A-380 super-jumbo aircraft designed to compete directly against the Boeing 747.

Until 2001, Airbus was a marketing confederation established under French law as a

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