Introduction To Aircraft Manufacturing Industry Marketing Essay

Introduction To aeratecraft Manufacturing Industry Marketing EssayThe Aircraft Industry is a duopoly industry comprising of Airbus (EU) and Boeing (US). If there be to be slanged from political consensus they be two- spark offy political system. Anthony Downs proposed a determinate model in the political science that suits the situation in the perfect way. His proposal reversed the worldly-minded connection between party ideologies and elections. He said that instead of parties achieving victory in the elections on the arse of the appropriateness of their agenda, his findings give elections pre-eminence, with insinuation that all actions taken by the party ar aimed at tap votes. According to Downes, both parties impart try to resemble each other as much as possible. Both parties will keep their policies modestly distinct from each other. Also majority of voters only want to see minor alterations in g everyplacenment cogitationing(a)ity. The Market of large and mid siz e aircrafts works on the same ideology. There is an immense consensus among grocery store players to what an attractive product comp progresss, that is, an economically efficient and safe aircraft. exactly there ar as well as some interest factions that pass wagered in product design, just as there argon much potential groups within a democratic system(Ibsen n.d.).The Government of the United States and its federal official Aviation Administration (FAA) be considered to be influential as they look upon the largest air transport market in the world. Regulations laid by the European and United states government will prove to be a major driving force for orders of unseasoned aircraft in the coming familys. In the similar way, the deregulation of European airlines, which begun in 1990s, promises to expand the markets for belittleder regional jets(Ibsen n.d.). Trade of large technical jetliners has been tariff free chthonic the agreement of General Agreement on Tariffs and T rade (GATT).The high degree of political intervention has rig on the purchase of aircraft. The finish of buyers to buy which aircraft depends on the political reasons because the die hard and interference from the government could upshot the future of buyers. For Example, presently Boeings biggest market is China and is estimated to be for contiguous 20 divisions. As a terminus Chinas purchase of boeing aircrafts has led to cumulation of political work by in the United States(Ibsen n.d.).ECONOMIC FACTORSAir avocation in US and UK is likely to outgrowth as they have just recovered from the recession. The moneymaking(prenominal) aircraft is estimated to rise worth US$ 2 trillion in the coming twenty years, which will precede into invite of 16,600 young aircrafts (estimated). The largest lease is expected to father from airlines from China, US and India. Huge amount of crop is expected from the shopping centre East countries. It is expected that China alone will ne ed 2,200 freshly aircrafts to meet its travel needfully. Also, foreign freight sector is estimated to grow by 253% in the future(a) twenty years (Irwin Pavcnik n.d.).China cosmos the biggest emerging market and considering its population size, the growth in air riders is likely to shoot up which would result in change magnitude crave for new aircrafts (The Economist n.d.).High Oil prices towering fossil oil prices have elevated the operating cost of airlines. In the year 2007, the cosmopolitan airline industry had to pay 136 meg US dollars for fuels, its a 300% increase compared to what they had to pay in 2003. Even in 2008, when crude oil prices fell dramatically, it still accounted for 32% of the operating expenses.Global GDP- the primary factors in determining the demand of aircraft and growth in the industry is the GDP, which is expected to grow by 3.2% by 2030The worldwide recession The recession which cause a theatrical drop in load factors in the middle of 2008. In response, airlines have been move aircrafts out of service and rethinking plans to order replacement for the existing aircrafts. In the third quarter of 2008 24 airlines went bankrupt. The loses during this end were estimated round 4-8 trillion US dollars.The character reference crunch The credit crunch in combination with the higher up mentioned factors, has made it hard to purchase new aircrafts, airlines are finding difficulties to finance new aircrafts. Despite of the credit crunch, orders for business and commercial jets have seen increase at the beginning of 2008, simply the credit crises has resulted in delays and deferrals and harm to take deliin truth of many aircrafts(Captain n.d.).SOCIAL FACTORSRecent changes in society have led to increase in air travel.Also changes in life style of people and the viewpoint of air jaunt being a feasible option.Demand of air travel is driven by gimmick. However, the trend is ever-changing as the consumers travel decisions is p rimarily based on price. advance cost and rival produced by cheap carriers is involveing majority of Airlines. Business travels, once a stable of income, now is a conduct by corporate travel guidelines. As a consequence, airlines are combining their networks to utilize economies of scale, minimize environmental opposition and offer smaller markets with new and improved services.The incumbrance generated and CO2 emission near the airport is overly a thing of higher concern as people living near the airport are pressurizing authorities to change their operating style(Ferreri n.d.).TECHNOLOGICAL FACTORSIn the commercial aviation industry, there are massive amount of costs connected with Research and suppuration for the development of a new aircraft. European married couple governments sustain European technology R D sector, just as the united states government does, though FAA, NASA, Department of Defence (DOD) and programs that reliefs export tax (Colantonio n.d.). Though U nited states has three epochs much support than the European union.The Aircraft industry is very demanding with very high quantity of time and money dedicated to innovations and RD. at present a days carbon fiber is used for the expression of an Aircraft body. (example A350 XWB with 50% carbon fiber body) dousing on development on making more fuel efficient engines for longer ranges (Szodruch et al. n.d.).Use of alternative sources of fuel to counteract raising oil pricesThe development of supersonic aircraft is withal a chance because it will lead to creation of in all new market member. Commercial carriers will buy these aircrafts to meet customers demand of reaching the destination quickly and on time.The largest and cost efficient advancement for commercial aircraft industry is the straightaway designing of planes. The augmented manufacturing time will save aircrafts manufacturers time on labor and help them to best utilize resources. For Example Boeing 777 used compute r to design a prototype, this saved them the cost of building a real prototype(Szodruch et al. n.d.).In todays hawkish world, robots are as well as considered an effective tool for the manufacturing of aircraft.LEGAL FACTORSThere are many restrictions when it comes to entering the market but due(p) to globalisation circumstances have changed and also due to US up to(p) skies agreement. Open skies agreement has led to smooth flow of national and international flights in and out of US, promoting tours and business activities, improving productivity and creation of job opportunities and economic growth (BBC n.d.).United states open skies policy has been proved very effective in airline globalization. It enabled the airline carriers limitless admittance in the partners market and right to go to all middle and beyond points. This agreement has offered the closely operational flexibleness for airline coalitions. This agreement has been achieverful in achieving over hundred partners from each part of the world and every level of economic growth (BBC n.d.).Also there is IATA (International Air Transport Association). Its aim is to provide assist to airlines to decrease complexity of their process and increase passenger convenience, decreasing costs and develop efficiency. The pioneering simplifying the business end is vital in this area. Moreover, IATAs primary priority is galosh and its aims to continuously improve safety standards via IATAs Operational safety audit (IOSA)(Rothman Rothwell n.d.).The Boeing company and government have long complained that Airbus has ignored the 1992 bilateral agreement, which is one of the key agreement, which says that piece aid will be available to Airbus till its in the level of its competitor Boeing, but that is no longer the case with Airbus having 52% of the market luck. The US government says that the aid given to Airbus is illegal below the WTO agreement and had also asked for litigation. The case is solved and US won the battle and Airbus was penalised and WTO promised to restore fair flock in the industry (EU Business n.d.).Major regulatory bodies such as EPA, FAA have a major furbish up on the industry as they decide on the laws and regulations that various suppliers, manufacturers and operators have to deal with. The impact is substantial as they are capable of creating major obstacles in the final approval of aircrafts (Barriage n.d.)(Clarke n.d.).ENVIRONMENTAL FACTORS environs factors generally include ecological aspect of climate and weather change, which in turn asshole influence industries such as insurance, tourism and farming. Today, there is an awareness of climate change in the minds of people, which is becoming a deciding factor on how companies function and what are their offerings, because it finish lead to formation of a new market or destruction of the present market.ACARE is an European group of airports, eurocontrol, airlines, manufacturers, universities and member s of EU and EU commission. Its primary challenges are safety, reasonable, select, environment and security. Some of their objectives are to reduce air accidents to 80%, 15 minute less abide time on airports for little distance destinations and 50% less time needed to market. One of most popular intention of ACARE was to reduce specific CO2 discharge by 50%, the discharge of dark by 80%, and to decrease the exterior fray of fixed wing aircraft by 10 db per operation. For example- Boeing is a major element of the commercial aviation industry. It is executing some new plans to improve its aircrafts environmental performance. Compared to present It also claims that it will reduce its honey oilhouse gas emissions by 25% by 2020(Szodruch et al. n.d.).The inclination of ACARE clearly reflects the demand of society, especially in the area of security and stability of environment. Also, their purpose reflect the requirements of aircraft operators, which are major driver for innovation in technology.The ACARE objectives reflect requirements which are demanded by society, particularly in the areas of environmental compatibility and security. On the other stack, the ACARE objectives also reflect the needs of aircraft operators, which are an important driver for technological improvement. On the other hand, the mounting pressure from society regarding emissions, noise around airports is affecting airline operations(Szodruch et al. n.d.).In addition, with increasing pressure from society as a whole, as well as from local communities around airports, noise and local emissions have an impact on airline operations(Clarke n.d.).CONCLUSIONCommercial Aviation Industry is optimistically connected to the world economy. As a result, with the continuous growth of world economy, this industry is also presenting signs of prompt growth. Airbus and Boeing forecasted immense growth in the future and adjusting their strategies accordingly. Boeing and Airbus create a duopoly in the market. However they still font competition from small companies located in Russia. Also China is entering the market with its first domicil made commercial jetliner COMAC C919 coming in 2012. This sector is heavily dependent on outsourcing and external factors. Their operations are carried out around the world so multiple trade policies of different countries affect their strategies. Rising oil prices is a serious problem for the industry airlines are forced to shut down their hoar planes because of increased fuel consumption. After the PESTEL analysis, it gage clearly be concluded that the biggest challenges are expected to come from economic, legal and environmental factors in the near future.PART BAIRBUS FUTURE bodeAccording to Airbus a la mode(p) Worldwide market forecast, there will be a actors line of 25,000 new freighter and passenger aircrafts between 2009 to 2028, which are expected to be worth US$ 3.1 Trillion.Rising economies, developing airline networks, flank of low cost airlines and increasing number of big cities as well as growth in traffic and also the also the orders to replace new aircrafts with the new ones which are more efficient are creating more demand for the aircrafts.In 2009, there was a down give in Revenue Passenger Kilometres (RPKs) by 2%, it is expected to rise to 4.6% in 2010.The forecast also estimates that in close twenty years, passenger traffic RPKs will show resiliency to the repeated effects of the sector and raise itself by 4.7% per year or double in the coming fifteen years. This will only happen if demand rises to 24,100 new aircrafts of value US$2.9 trillion. When the old 10,000 aircrafts will be replaced with the new ones, the global aircraft fleet of hundred sit or more will twofold from some 14,000 today.According to the forecast, airfreight tonne kilometres (FTKs) are expected to increase annually by 5.2%. Pooled with fleet renewal, this will lead to requirement of 3,440 new freighters. More than 850 of these are new, which are expected to valued more than 210 one million million dollar, with the remainder converted from passenger aircraft.Economics of Oxford predicts that in the next twenty years, this industry will directly employ 8.5 million people and will add US$ 1 trillion to the world GDP. Other indirect utility and tourism are even bigger.The biggest demand will come from the Asia pacific and the emerging economies. They are China and India (31%), followed by Europe (23%). Also in terms of domestic market China (10%) and India (7.9%) will be the fastest growing in the next twenty years. But the US will retain its title of being the biggest domestic network.Not very surprising, Airbus also predicts requirements for Very Large Aircraft (VLA) which can accommodate more than 400 passengers like the A380, at preceding(prenominal) 1,700. About 19 percentage by value of passenger and freight deliveries, or seven percent aircraft units are valued at over US $570 billion. Out o f these, 1,318 will be used to link the mega cities of the world, which are continuously increasing in numbers. This implies greater increase in air traffic. Also more than half of the VLA will be operational in Asia-pacific.In the segment of twin aisle aircraft which can accommodate 250 to 400 passengers, forecast states that there will be a need of 6,250 new aircrafts in the next twenty years, expected to be valued at US$ 1,300 billion, or 25% by units, 42% by value. Out of these 6,250, 4,240 will be small twin aisle (250-300 sitting capacity) and about 2,010 will be twin aisles (350-400). Such sections include members of A330/A340 family. It is also expected that from 2013, A350 XWB will replace the whole twin aisle market requirements.According to the forecast, in the single aisle section, aircrafts worth US$ 1,200 billion or 68% by units, 39% by value will be distributed in the next twenty years. There is comparatively an increase in forecast compared to previous ones due to a rrival of affordable transporters and liberalization in route and increasing requirement of single aisle aircraft in Asia pacific(Leahy)(Airbus n.d.).BOEING FUTURE FORECASTGlobal economic activity revealed that gross domestic product (GDP), is the most powerful driver of development in commercial aircraft and airlines industry and also affects demands of aircraft. The worldwide GDP is anticipated to rise at an add up of 3.2% on a yearly tail for the next twenty years. Revealing on the economic growth, global traveler traffic will rise average 5.3% and freightage traffic to 5.9% over the forecasted period. The traveller and cargo traffic growth rates are comparatively higher than prior years due to fall in air traffic. After calculating the twenty year growth rate on the basis of lower base year results into a higher growth rate. If the low starting point is neglected, it is estimated that traveller traffic will increase to a rate of 4.9 percent and the cargo traffic will also in crease to 5.4 percent each year. To meet the current demand of business-related aviation services, the number of aircrafts needed worldwide will increase at an annual rate of 3.2%, doubling-up from 19,000 aircrafts present today to a total of 36,000 aircrafts in 2029. Also airplane deliveries for the purpose of substituting old planes and growth of fleet will total 30,900 over the next twenty years of value US$ 3.6 trillion.Diverse demand for air services Air travel around the world continues to change in response to challenges and opportunities. New airline Business models and wide awake growth of air travel in the emerging countries are expanding the demand of airplanes. Despite the downfall in travel in 2009, there were still several business models and markets that experienced growth. In the next twenty years, seventy seven percent of the demand of new aircrafts will arise from outside of north America, with 34% going to Asian region. According to the Boeing forecast the bigges t demand form market value point of view will come from United States, followed by china. Amazingly, the United Arab Emirates, with less than five million population, is home to legion(predicate) highly competitive airlines, is expected to be the third biggest market by value (Boeing n.d.).AIRBUS COMPANY indite AND STRATEGIES IMPLEMENTEDAirbus is an aircraft manufacturing company based on France, Toulouse, is presently the worlds largest commercial aircraft manufacturer with 52% of the market share in the European market, and has been involved in an intense competition with Boeing since 1970. Airbus is a supplementary of European aeronautical defence and space space company (EADS). In 2001, Airbus officially became a solo company, BAE and EADS relocated their assets to impertinently formed company and became stakeholders of 20% and 80% respectively. A shareholder committee that contains seven members and work as an administrative council, 5 members from EADS and 2 members from B AE administer airbus, they approve the investment and make up three year investment plan.In the May month of 1974, Airbus successfully made its first delivery, it was an A300B2, to an air operator in FranceAirbus has been restructured into centres of excellence and each centre is managing its own policy of buy and make accordingly, making decision to farm out trying to find out whether they can lower cost, which is the only way to continue profitability.Airbus has also altered differentiation strategy for its core activities since it rolled out its first wide bodied twin aircraft which differentiates it from its competitors (UscubaComission n.d.).Airbus follows an blowup strategy by proving itself expert in the industry and put it in use in the soldiery program A400M program. Airbus has started research on the new engine option (NEO) that could result into reductions of operating costs. Boeing plans to offer a new aircraft in 2020 followed by 737NG in 2011.The company make use of only prime and decent tested technology to chose its suppliers to assure quality. The company used synergies between its aircrafts, which leads to shorter training time between engineers and pilots, guide to savings in maintenance processes and reduction in chuck up the sponge parts inventory. This leads to monetary pees and competitive advantage for them(Goold n.d.).Airbus functions on the thinking of foreseeing and listening properly to their customers and employees in building more fuel efficient, less strident and homy aircrafts. Airbus operates on the principles of thinking ahead and listening to their customers, passengers, and employees in building constantly more comfortable and efficient aircrafts. Also Airbus corporate culture and diversity is competitive advantage for the company (Composed n.d.).The increment in oil prices and journey cost whitethorn interfere in the low cost offerings by Airbus, which may put pressure on the firm to switch to more fuel efficient e ngines(Chapman n.d.).BOEING COMPANY visibility AND STRATEGIES IMPLEMENTEDTill now, Boeing has been conventional leader in the global aviation industry, with Airbus lying behind. Nevertheless, in the make it few years Airbus has been ahead Boeing repeatedly because of the large number of orders its been receiving and surpassing its deliveries in 2003.Boeing is the key producer of commercial airplanes and the foremost aerospace firm and offer connected support services. Boeing is currently the worlds biggest producer of large commercial aircrafts (LCAs)(Composed n.d.).Boeing has been keeping up with its objective of giving its customer eco friendly products. Boeing has been aggressive in taking over, expanding and displace into practice new technological solutions for reducing aircraft noise, and also maintaining operational effectiveness and customer satisfaction of its products in parallel.The Boeing capital corporation also invests in commercial apparatus and private airplanes.Th e Boeing is also involved in design, growth, sale, production as well support of industrial jetliners, rocket defence, satellites, space flight of human and institute services and systems.Boeing is one out of the two main producers of 100 plus seat aircrafts for the global commercial airline industry and the second biggest defence constrictor in the United States.Boeings major operations are carried out in the United States of America. They depend heavily on their chain of suppliers, subcontractors and partners which are situated around the globe(Arkell n.d.).Boeing has injected great amount of capital in the construction of new facilities, equipments to carry out their tests, and to extemporise on their noise control and aero-acoustics research. There are also several research project that focus on applying the new technology and implementing it to the production. Most of the important research projects are employed to deal with cost, maintenance, production and cross functional design and problems coming in the adaptation of new technology.NASA Boeing is also a NASA contractor who has worked vigorously in the operations conducted by it and so that it can attract access into new technologies in the field of aerospace. Boeing also has its full database linked with the NASA. Boeing has been involved with NASA for quite a long time regarding noise problem in commercial planes. This also enables the firm to have a very strong RD department.Boeing has made a decision to market in a different way by turning their focus on small and mid-size aircrafts to increase flexibility between airline operations and to cover longer distances. They focus not on increased capacity but to cover longer distances, this differentiates them. This will enable airlines to provide much convenience to travellers, at much less operational costs, leading to combination of lower rates for travellers and profit for airlines.Their potential success which they foresee is based on three of strategies of running core business values in a healthy way, using strength into new products and opening up new limits (Horton McKay n.d.).Their potential success which they foresee is based on three of strategies of running core business values in a healthy way, using strength into new products and opening up new limits.SWOT analytic thinking OF BOEINGThis segment analysis the strengths if Boeing, they will use the strength to meet the upcoming future demand to gain competitive edge.StrengthCustomer Satisfaction The project named My Boeing fleet has implemented web service and XML technology to improvise operations, reduce general work errors and decrease costs.Enhanced Customer Satisfaction Boeing uses the latest IT technology to behave tasks from their work locations. They improve their time spent in meeting to learn new things every time they undergo training. These action lead to rise in productivity.High performing employees Boeing endeavours to be improve quality continu ously and with the help of its workforce benefit programme and maintaining balance between work/life culture. Also, Boeing also recognizes that its competence lies with its employees.Well Developed Organization Boeing has several dedicated project teams and subsidiaries to give a hand in improving overall companys performance. For example, Aero-info is a subsidiary of Boeing focused on providing aircraft maintenance solutions.New instalment Supply With the numerous increments in commercial communication satellites, Boeing has decided to build a new construction factory in Alabama and Decatur for the production of newest generation of missiles used to push the satellites into space.WeaknessRecent break of serve of Boeing from the troops contracts and re-assignation of those contracts to Lockheed martin, this occurred to ethical lapses.Columbia Shuttle Tragedy The name of Boeing suffers drawback every time the tragedy is re-called because Boeing is a very special part of United Spa ce in alliance.Ongoing controversy linking ex-CFO and ex-CEO This happened due to hiring of a military regulator trance negotiating an important contract.Change of Aircraft corroborateing Boeing has decided to fold up the production of Boeing 757, while Boeing 717 and 767 are on lifeline. This could have a bad effect on consumers confidence and interests.OpportunitiesGovernment Support Boeing is the biggest exporter and second biggest weapons manufacturer in the US and primary contractor in many the countries missile programs, it can gain government support anytime they want.Expected deal from Boeing 7E7 contracts The program has already started and it has also received orders from All Nippon Airways and also from airlines from New Zealand and Australia. They expect sales of around 500 at the end of the year.ThreatsAggressive competition Boeing is in the middle of a fierce competition, especially from the field of LCAs. It was once leader in LCA but now its on a very close compet ition with Airbus, which is the leader in producing commercial aircrafts. unknown Barriers The growing concern for Boeing is the foreign government involvement in the production of LCA. A term conform to to this situation is called Regulatory Nationalism. This can result into refusal of US made aircrafts in some countries(Campbell et al. n.d.).SWOT ANALYSIS OF AIRBUSStrengthDiversity in employees Airbus has been very conscious about its employees, it believes in keeping diversity in their employees.Ingenuity The ingenuity of Airbus company has enabled it to survive for the last three decades. Since its commencement in the 1970, the has risen to be the leader surpassing its main competitor Boeing in 2005.Freezing of Spare parts Airbus freezes the price of its spare parts for three years. For example, the prices of spare parts in 2009 were same as in 2006. This practice has gained them lot of customer support.WeaknessThe A380 The Airbus company invested almost everything in the A380. Even after that it faced delays in the delivery of A380. This lead to a lot of stir with its parent company EADS, so much that its management was changed in 2006. Airbus also made huge amount of cuts by reducing its suppliers from 3000 to 500, resulting into saving of US$ 2 billion and cut administrative costs by US$ 446 million. These steps were taken to accommodate growing needs with the launch of A350. When A380 production was delayed for two years, the parent company EADS reportedly lost US$ 6 billion dollars. After shocks came when FedEx world largest express transportation company, cancelled its ten orders for the double decker and ordered 15 Boeing 777 in place of that.Also one of the major weakness of Airbus is that it has low RD investment compared to its competitor Boeing which can prove harmful in a long run.OpportunitiesAirbus is continuously going on a green path. This is a very auspicious position for any company who intends to be in forefront of greening technology. Development of new aircrafts that significantly lower the carbon footprint on the environment is an opportunity no company would pass. Today, people are concerned about the environment and this act by airbus will gain a lot of public support. Airbus plans on being the industry pioneers when it comes to keep the environment clean. All of its manufacturing sites are kept within the environment standard, all ISO14001 certified.ThreatsLegal actions are inherited in this industry and no one is immune from it. For example, Air France sued the company for the crash occurred in 1992 near Strasbourg.A major finance risk is also there when there are exchange rate clashes. A major part of the revenues of EADS are generated in US dollars and most of its cost incurred are in euro, this can seriously affect profits (Weidner et al. n.d.).ConclusionAirbus strategies are to the point, provide every variety of product available to meet the different requirements of the customers with the latest techn ology, also maintaining low cost of operations and maintenance expenditure. Airbus implements mixed type of strategies on different types of its products, it follows differentiation strategy on commercial airplane segments for different needs of customers and invent units to operate at lower costs.Boeing has a very strong Research and Development network, the company uses its innovative technology to gain competitive advantage. They know that they are lagging behind airbus but they put high amount of work to improvise the quality of their products. They are going in a different direction by ply to different set of customers. Both Airbus and Boeing cater to different kind of customers. Airbus makes bigger jets and Boeing makes smaller jets. Boeing needs to surpass the situation and regain their position in the market.