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 1-6 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.


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 1-6 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.


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 1-6 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.


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 1-6 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.

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 1-6 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.

Explanation / Answer

The Boeing Aircraft Company has dominated the commercial aircraft market for decades, considering the highly competitive U.S aerospace industry. “U.S. firms manufacture a wide range of products for civil and defense purposes and, in 2010, the value of aerospace industry shipments was estimated at $171 billion, of which civil aircraft and aircraft parts accounted for over half of all U.S. aerospace shipments. In 2010, the U.S. aerospace industry exported nearly $78 billion in products, of which $67 billion (or 86% of total exports) were civil aircraft, engines, equipment, and parts”(Harrison, 2011). However, its position of influence has lessened in recent years. This is due to its main competitor, Airbus, who in in recent years has made significant market gains, and may be posed to become the number one producer of commercial aircraft in the near future.   Thus, for this short research, I plan to discuss how both of the companies 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. Finally, I will mention the future competitive environment in the global jetliner industry

Approach of the Marketplace

Boeing enjoyed a monopoly for almost 40 years with its 747however, this changed 10 years ago when Airbus its larger and more efficient plane. These two companies operate in very completely environment and the strategies of each one strongly impact the business of the other. Both companies have fundamentally different products, based on completely opposite visions of the future. Below are some the products that each company produces.

Airbus

Although, the vision of each company is heading in difference directions, one thing is certain, that each one wants to take over the market. “Boeing and Airbus are the sole rivals across all segments of large commercial aircraft manufacturing…and both have achieve their goal of building innovative, efficient aircraft that establish excellent safety and service records”(Harrison, 2011)

Probable Outcome of their Ongoing Competition

Due the process involved in manufacturing airplanes, it is a must for both companies to largely invest their capital which, cause high sunk costs.The complexity of producing thee highly advanced airplane required hug search and development (R&D) spending.Both Boeing and Air-bus have built long supply chains in which they share many suppliers abroad and within the U.S. Airbus uses the process called “systems interactions” mode of production. “In this mode, risk and costs are spread over a network of domestic and foreign partners. Thus, while the final pro-duct is assembled inside the US (or EU), major parts of their airframes are subcontracted out to foreign suppliers”(Caliskan, 2010).

However, their approach to manufacturing is different. Boeing utilizes the concept of economies of scope and scale. This approach “…exist when the total of producing two products is les than the of cost of producing it separately”(Baye, Piece, p.195, 2014).Boeing produces military and commercial aircraft, which sell on completely different markets. Airbus, however, seeks to minimize costs by producing variable levels of output, optimizing the selection of fixed and variable levels of production by having facilities in four different locations. More specially, the process is known as long-run average cost curves. In the long rung “… the firm can adjust the fixed factors …and by adjusting it in a way that optimizes the scale operation, the firm economized in production and produce unit of outputs at lower average cost”(p. 192).

Competitive Environment

The diversity that Boeing employs has nonetheless allowed it to become the largest aviation company in the world since it can lower its costs by sharing technology, employees and research between its businesses.

“Although the Boeing/Airbus duopoly in small commercial jets is clearly under challenge, it is not obvious that the civil aircraft market is large enough to sustain as many as five additional competitors. Nevertheless, all of the challengers to the Boeing/Airbus duopoly believe that their ability to compete in the narrow-body segment will be critical to the creation of successful domestic aerospace industries. It is clear that the United States, the European Union, Russia, China, Japan, Brazil, and Canada all consider the aerospace to be commercially and militarily strategic”(Harrison, 2011).

Airbus. (2014, January 1). Airbus. Global Website -. Retrieved June 16, 2014, from http://www.airbus-group.com/airbusgroup/int/en/our-company/What-we-do/airbus.html

Baye, M. R., & Prince, J. T. (2014). Fundamentals of Managerial Economics. Managerial Economics and             Business Strategy (). New York: McGraw-Hill/Irwin.

Boeing. (2013, January 1). About Us. Boeing:. Retrieved June 16, 2014,

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