The Rise of Airbus, 19702005Click to edit Master subtitle
style
Submitted By: F10031-F10040
IntroductionDiscusses the various strategies adopted by the 3
CEOs of AIRBUS over the period of 1975-2005q
Factors affecting the Aircraft Industry Strategies of Bernard
Lathiere (1975 1985) Strategies of Jean Pearson (1985 1998)
Strategies of Noel Forgeard (1998 2005) Current Problems which
AIRBUS is facing
q
q
q
q
3/5/12
Commercial Aircraft Industryq
Huge cost of Product Development A lead time of 5-6 years from
launch to first delivery
q
q
Very difficult to breakeven Price reflected high development
costs Engine was most difficult to make and most expensive part of
the Aircraft
q
q
q
Aircraft industry dependent on other industries, Material
Application and electronics etc.
3/5/12 like
Early History of Airbusq
Post-war unable to develop commercially viable airplanes
Financial assistance given by French , British and German
Governments
q
q
Development of A300 With no sales taking place , British govt.
withdrew Consortium was formed in the year 1971
q
q
3/5/12
Click to edit Master subtitle style
Strategies adopted by Airbus CEOs
Bernard Lathiere, 1975-1985q
Technological Leadershipq
Airbuss technological innovations focussed on materials
applications, flight control systems and Aerodynamics
q
Airbus introduced a Computerized system of flight controls
q
Worlds first fly-by-wire commercial Aircraft A380
3/5/12
Bernard Lathiere, 1975-1985q
Families of Planes planes built around basic modelq
Shared maintenance, training and operation procedures, as well
as replacement parts and components , all helped to cut costs
q
Decentralized Production Subcontracting as risk sharing
strategy
q
Centralized Marketingq
Targeted large segments of emerging markets Focused on mature
American market and offered U.S.
3/5/12q
Jean Pierson, 1985-1998Product Developmentq
Airbus embarked on two programs:q
Planned, designed, produced and sold A330/340 family of
planes
q q
Planned the development of A380 program A380 was exceedingly
risky projects
3/5/12
Jean Pierson, 19851998q
Salesq q
Focused on North American market Airbus moved quickly to replace
the Europeans with native Americans
q
Streamline all pricing decisions
3/5/12
Jean Pierson, 19851998q
Subsidiesq q
Airbus Accord 1992 The accord limited all direct subsidies to
33% of developing costs and all indirect subsidies to 4% of total
sales
q
Legitimized Airbuss right to receive subsidies
3/5/12
Noel Forgeard, 1998-2005Restructuringq
Cross Border merger between the partner companies resulted in
the formation of EADS which floated AIC (Airbus Integrated
Company)
q
This had the following advantages
Cost savings Faster decision making Leaner, more flexible
Organization
3/5/12
Diversificationq
Airbus diversified its product line to manufacture military
jetliners.
q
Military sales softened the impact of periodic slumps in
commercial aircraft sales.
q
In 2001, EADS achieved 35% of its sales from defense, space and
aeronautics products.
3/5/12
Globalizationq
Main focus is to reduce production costs and increase aircraft
sales
q
Outsourcing
contracts with major US suppliers,
Japanese suppliers and China
3/5/12
BCG MatrixLOW A320/ A330 A380 / A350
Industr y Growth Rate
Cash Cow
Dogs
Stars 3/5/12 HIGH
??? Relative Market Share LOW
IFE Matrix
3/5/12
Interpretation of IFEq
The total weighted score comes out to be 3.4 This shows that the
companys performance is close to below average as judged by the
matrix
q
q
Hence there is a scope for improvement in the internal factors.
It should work on its weaknesses like competition and technology
3/5/12
EFE Matrix
3/5/12
Interpretation of EFEq
The total weighted score comes out to be 3.65 This shows that
the companys performance is average as judged by the matrix Hence
there is a scope for improvement in the external factor handling
and Airbus should concentrate on the problem areas
q
q
3/5/12
Problems faced by Airbusq
Future prospects of A380 gamble were uncertainq q q
A380s cost shot up by more than $4 bn There were not enough
orders The planes travel range was not up to the mark
q
Severe threat from Boeings 787 Dreamliner A ensuing trade war
with Boeing Inability to finance A350 on its own
q
q
3/5/12
What should Forgeard do?q
Continue
the
cost
cutting
programs
of
his
predecessorsq
Improve the design and speed up the production of A350
q
Expand
the
Defense
products
business
into
Emerging markets and form strategic alliances with companies in
those countriesq
Avoid trade war with Boeing by not getting the aid for A350.
Instead Airbus can raise
government 3/5/12
Thank YOu
3/5/12
