Legal
As mentioned above, companies in this field have a high responsibility concerning the safety of their products. Furthermore, companies often are highly regulated by supranational instituts (NATO, EU) when exporting military products to unstable countries. Therefore, exporting might very often be a risky procedure.
3-Porter’s Diamonds
Porter’s Diamonds is a well-known instrument to analyse the competitiveness of a firm among industrialized nations. As following, we will apply the four basic parts of Porter’s theory and explain the competitiveness of Airbus.
Factor conditions:
Airbus aerospace business requires a strong knowledge-based resources due to high complex products. Due to a modern and distinctive education and university system, Airbus had access to this factor and could push their products forward. Airbus strengthened their transnational cooperations with institutes and companies and could therefore expand their competitiveness. Demanding conditions As said befor, the demanding conditions for Airbus are high. Governments usually want fast jets for their army. Airlines, on the other hand, want aircrafts that consume as little kerosene as possible. In addition, there are many governmental regulations for safety, reliability and exporting military products outside of the NATO. Related & Supporting Industries Airbus could also profit a lot due to related industries. The aerospace industry primarily developed during the second world war. As a result of the constant armament, also during the cold war, europe developed strong competences in this field. Airbus had therefore many supporting industries that helped them to develop high quality products in the field of civil and military aerospace. Firm strategy, structure and rivalry As far as the civil aircraft industry is concerned, Airbus has just one competitor, which is Boing. Therefore, this sector can be considered as a duopoly. However, the competition is nevertheless strong. Usually, an airline orders not a one or two, but a high quantity of aircrafts. Thus, a order from a airline is not only lucrative, but necessary to refinance their high development costs. Besides, Airbus and Boeing bind their customers to their service as they often undertake maintenance and provide spare parts. 4-Porter’s five forces Porter’s five forces is a well-known instrument to analyse the industry a company is participating. Many key factors developed in this subchapter are are a result of the macro-environment. Power of suppliers: As sketched before, this industry manufactures high quality and very complex products. These products require a strong know-how, not only for the aircraft itself but for each component (engine, seats, wheels and so on). Because of the mentioned high regulations regarding safety or pollution, the aircraft companies are forced to work with suppliers to expand their know-how and to improve each of theses components. This ultimately leads to strongly differentiated and important products within the chain value and to very high switching costs for Airbus or Boeing. Therefore, the power of suppliers are very strong in this industry. Power of buyers For this part, one have to strictly divide this industry in military and civil aircrafts. For military jets and aircrafts, the buyers for Airbus products are usually the European Union while the American military would usually buy them from Boeing. This is due to …show more content…
Due to very high fixed costs, high required know-how, elaborated manufacturing chains and a long-term cooperation with governments, new competitors have huge entrance barriers to overwhelm and buyers might have huge switching costs. As far as military products is concerned, a entry of new companies is rather low because of the above explained cooperation with governments. However, a entry threat for the aircraft market might be conceivable, especially if taken account entries from far distant countries like China.
Threat of substitutes
Also the threat for substitutes are low. Firstly, an aircraft can hardly be subsidized by another technology. Radical changes (i.e. electrical aircrafts) in this sector are either very far away or a result of long research & development efforts. For military application, substitutes are usually developed together with the company and the military. However, certain technologies have been subsidized in the past by other companies (i.e. recon drones subsidized recon helicopters). Also space applications are less likely to be subsidized on a great scale. Overall, the threat from this side is low as well.
First strategy concerning the supply chain issues
As mentioned above, companies in this field have a high responsibility concerning the safety of their products. Furthermore, companies often are highly regulated by supranational instituts (NATO, EU) when exporting military products to unstable countries. Therefore, exporting might very often be a risky procedure.
3-Porter’s Diamonds
Porter’s Diamonds is a well-known instrument to analyse the competitiveness of a firm among industrialized nations. As following, we will apply the four basic parts of Porter’s theory and explain the competitiveness of Airbus.
Factor conditions:
Airbus aerospace business requires a strong knowledge-based resources due to high complex products. Due to a modern and distinctive education and university system, Airbus had access to this factor and could push their products forward. Airbus strengthened their transnational cooperations with institutes and companies and could therefore expand their competitiveness. Demanding conditions As said befor, the demanding conditions for Airbus are high. Governments usually want fast jets for their army. Airlines, on the other hand, want aircrafts that consume as little kerosene as possible. In addition, there are many governmental regulations for safety, reliability and exporting military products outside of the NATO. Related & Supporting Industries Airbus could also profit a lot due to related industries. The aerospace industry primarily developed during the second world war. As a result of the constant armament, also during the cold war, europe developed strong competences in this field. Airbus had therefore many supporting industries that helped them to develop high quality products in the field of civil and military aerospace. Firm strategy, structure and rivalry As far as the civil aircraft industry is concerned, Airbus has just one competitor, which is Boing. Therefore, this sector can be considered as a duopoly. However, the competition is nevertheless strong. Usually, an airline orders not a one or two, but a high quantity of aircrafts. Thus, a order from a airline is not only lucrative, but necessary to refinance their high development costs. Besides, Airbus and Boeing bind their customers to their service as they often undertake maintenance and provide spare parts. 4-Porter’s five forces Porter’s five forces is a well-known instrument to analyse the industry a company is participating. Many key factors developed in this subchapter are are a result of the macro-environment. Power of suppliers: As sketched before, this industry manufactures high quality and very complex products. These products require a strong know-how, not only for the aircraft itself but for each component (engine, seats, wheels and so on). Because of the mentioned high regulations regarding safety or pollution, the aircraft companies are forced to work with suppliers to expand their know-how and to improve each of theses components. This ultimately leads to strongly differentiated and important products within the chain value and to very high switching costs for Airbus or Boeing. Therefore, the power of suppliers are very strong in this industry. Power of buyers For this part, one have to strictly divide this industry in military and civil aircrafts. For military jets and aircrafts, the buyers for Airbus products are usually the European Union while the American military would usually buy them from Boeing. This is due to …show more content…
Due to very high fixed costs, high required know-how, elaborated manufacturing chains and a long-term cooperation with governments, new competitors have huge entrance barriers to overwhelm and buyers might have huge switching costs. As far as military products is concerned, a entry of new companies is rather low because of the above explained cooperation with governments. However, a entry threat for the aircraft market might be conceivable, especially if taken account entries from far distant countries like China.
Threat of substitutes
Also the threat for substitutes are low. Firstly, an aircraft can hardly be subsidized by another technology. Radical changes (i.e. electrical aircrafts) in this sector are either very far away or a result of long research & development efforts. For military application, substitutes are usually developed together with the company and the military. However, certain technologies have been subsidized in the past by other companies (i.e. recon drones subsidized recon helicopters). Also space applications are less likely to be subsidized on a great scale. Overall, the threat from this side is low as well.
First strategy concerning the supply chain issues