Airbus A3XX Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Airbus A3XX Case Study Solution

Porter’s five forces model:

We can evaluate the position of airline industry of US using the porter five forces model. In which we have to evaluate five factors power of customer, power of supplier, threat of new entrants, threat of substitute and competition. All five factors are described below:

Power of customers

Customers are key factor for the success of any business. Company should evaluate their powers before launching any product. So that the success of the product can be determined.

Airbus industry currently has 28% of market share. This makes him the second big partner of the aviation industry. It has the range of aircraft having different seating capacity. These all indicates that the company has great power over the customer. Furthermore the aviation industry currently has only one member who has a very large aircraft so proposal of launching A3XX by Airbus industries will further strength its position over the customer. One another factor which can be used to evaluate the customer power is Switching Cost. Although in aviation industry there is approximately no switching cost in monetary term. But we can say that for aviation it will be in term of physiological and time. Time means time to search a new trustable supplier. (Airbus A380 (Porters Five Forces))

Power of supplier

For any company supplies is crucial to operate effectively. Companies should evaluate supplier’s power before planning to manufacture any product. This will help them to evaluate how much the proposed project will be affected by the supplier.

In the aviation industry supplier affects companies most because their price is based on external factors. The price of fuel is directly relates to the global market of oil. So any fluctuation in oil price will affect supplier’s price too. Further the supplier price is sensitive in relation with labor force and aircraft.

Hence Airbus industries has to rely on supplier which makes the supplier most strong. And any conflict with supplier can cause the failure of A3XX project.

Threat of Substitutes

In the airline industry threat of substitute is low as compare to other industries. Because people preferred a quick and comfortable journey. And plans are at their best to achieve this. Train, busses and other vehicles do not provide quick journey. But here is a concern that along with a fast journey people needs a safe journey as well and train, busses and other vehicles are safer than the plans. Furthermore train and busses provides additional services like WIFI to capture passenger. Therefore airline companies should take care of it.

Airbus is going to launch cargo facility in its new A3XX aircraft. And the cost of A3XX is much higher so it may be possible that the launch may fall due to availability of substitutes at cheap.

Threat of New Entrants

In the airline industry threat of new entrants is much lower. Because to setup the new company one needs a huge amount of capital. Along with this they need expertise to manage and run the business. Furthermore they need a well trained staff so that accident ratio should be reduced. Like the entrance their also stick exit barriers in airline industry. One has to face regulatory and follow regulations if he decided to exit the market. Furthermore at exit one has to bear a huge losses. So we can say that there is low threat of new entrants in US airline industry. (MSG Experts)

Rivalry and competition

Airline industry in the US is too competitive. The market becomes competitive due to the strong regulation applied on it. One has to cater about the safety of the passengers, staff moral and much more to become a leader of market. Furthermore it’s the regulation who decides the market and segment in which a business can operate rather than the business itself. Along with this the main competitor of Airbus Industries, Boeing intends to introduce some new strategies to compete directly with Airbus so that it can maintain its market share. This indicates that the industry of airline is quite competitive.

SWOT Analysis:

Strengths

Airbus industries is an internationally known company. This indicates that it has a brand name which will help in increasing the market share and hence profitability. Along with this in innovating designs and technology company has a good reputation. This gives the company an essence to compete effectively in the global market.

The pilots of the Airbus Industries were trained in the manner that they can fly the similar aircraft. Which give the company an extra benefit to save some expenditure in the foam of training cost. Hence this will increase the profitability and position of Airbus Industries.

Airbus industries has a range of aircraft from low seating capacity to moderate one this indicates that it is a diversified company and hence the overall risk is reduced.

Weaknesses

Despite of the strengths describe above there is a weakness that Airbus Industrie has no product by which it can compete effectively by its main competitor Boeing. Although the company starts to develop the product which can compete with Boeing but the deliveries will be start after some years. This indicates that in short-term company has no plan to compete with Boeing.This may be the main reason behind the second position of Airbus industries in the airline industry.

Airbus industries intends to maintain its position through introducing new products while the customer needs a cheap product. So the company can maintain its position through introducing itself as a low-cost provider. The above point indicates another weakness that the company does not take feedback from its customer and makes future strategy in according with their perception. Instead of this they should take regular feedbacks and incorporate this in their future strategies.

Opportunities

In 1999 support services contributes approximately 60% of total sales. There is also a slightly growth in this market over 20 years projection. Currently Airbus and Boeing both do not operate in this market hence it will be quite beneficial for Airbus to break in this market.

Furthermore research shows that in future there will be high growth rate in Asians markets rather than American’s market. Airbus industries should think about this strategy and should introduced itself in these markets instead of launching new products in existing markets.

Due to low risk as describe in strengths paragraph. Company has an opportunity to attract investors effectively. It also gives company an opportunity to borrow at low interest rate this will help the company in growing fast as compare to equity finance.

Airbus A3XX Harvard Case Solution & Analysis

Airbus industries has a good reputation in technology. And in today’s world technology is the backbone of success. Airbus industries should enhance its technology and should start the sale of aircraft through the internet this will give him opportunity to entre in Asian’s market and hence will improve its profitability and market share....................

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