BOING Vs AIRBUS DUOPOLY

What is Duopoly ?

What does it means

CharacteristicsAdvantages

and Disadvantage

sConclusion

MEANING

A situation in which two companies control all or nearly all of the market for a given product or service. A Duopoly is the most basic form of oligopoly, which is a market dominated by a small number of companies. A Duopoly can have the same impact on the market as a Monopoly if the two players collude on prices or output. Collusion results in consumers paying higher prices than they would in a truly competitive market and is illegal under U.S. antitrust law.

FEATURES

Two firms rule the majority of the market share

Competition depends on quantity of product supplied

Business decision depends on consideration of rivals product line.

Strong price competition – customer looks for product which is cheaper in price.

Barriers to entry – small players may not be able to sustain or even reach stage of competition.

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Cut throat competition, customer gets price benefit

Interaction

Price competition is governed by reaction to other competition.

Simplicity

Near Perfect Competition.

Establishment of New firms is difficult due to Duopolies.

Lack of new products which leads to Stale in the market.

Price monopolization & quality compromises

Limited customer Options

Producers have an upper hand

Chances of cartelization are high

REAL WORLD EXAMPLES OF DUOPOLY:

• AIRBUS VERUS BOEING

• Aircraft industry is heavily capital intensive industry with hugh investment in research, development, manufacturing, and marketing technology.

• Competitive Environment• Dominant and ever growing

market• Hugh market demand• Capital intensive • Cut throat competition• Regulated and governed by

various agencies.

Result of Mergers/Integration - Aviation market was not Duopolistic

• 1960, there were only 12 commercial aircraft manufacturersBy 1980, only 3 left: Boeing, Lockheed Martin, and McDonnell DouglasLockheed Martin forced out of market because of the dismal failure of L-1011 Tristar

• By 1996, Boeing and McDonnell Douglas merged togetherAirbus beginning as a European consortium while the American Boeing absorbed its former arch-rival, McDonnell Douglas in a 1997

• Presently only 2 manufacturers of large commercial aircraft (100 seats and above): Boeing and Airbus

Portfolio Diversified– Caters to all sectors and Needs !!!

Net Orders by both Boeing and Airbus since 1991 till present :

Aviation is a well Regulated Market to safeguard consumer safety !!!• Both manufacturers operate in non-

capitalist economies.• High capital cost & Labor intensive• Hugh market demand. Multiple

stakeholders.• Lack of players due to high capability

prowess required.• Security of PAX is subprime. No

compromise is tolerable on same. Norms are established.

• Global exposure.• Based from different Geographies,

governed by local regulation and laws

FAA – FEDERAL AVIATION ADMINISTRATION

DGCA – DIRECTORATE GENERAL OF CIVIL AVIATIONBCAS – BUREAU OF CIVIL AVIATION SECURITY

US ANTI TRUST LAW

Prices, strategies, Innovation and Competition is managed by Producers

Modes of competition and Customer Choices

• Decisions to outsources across globe for components manufacturing and Supplies• • Technology used – range, materials, weight, automation, etc.

• Provisions of Engine Choice – from various makes and models, Green Initiatives, reduce carbon footprint

• Currency and Exchange rates – flexibity to bill in multiple currencies, insurance against fluctuations. Etc.

• Safety Records – majorly governed by regulations and guidelines.

• Pricing competition on discounts. No Ceiling by Government or regulatory bodies.

CONCLUSION

A Duopoly is a business term to describe an industry which has just two producers in one market. It is a similar concept to a monopoly, except a monopoly has only one producer for its one market. Because of its simplicity, the duopoly model is the most studied model of oligopoly. It should be noted that there can be more than two producers in a duopoly, but the main two will need to have dominant market share.

THANK YOU!!!!

Two Words Duo---Two Polies---Sellers Market with TWO sellers Just below Monopoly Simplest Form of Oligopoly Have Power to control Market Super Normal Profits Two Classifications: One in which there is coordination b/w duopolists. One in which there is no coordination.

MEANING(CONTINUED)

REFERENCES

http://www.usdoj.gov/atr/cases/f1900/1973.htm

http://mit.edu/thistle/www/v12/2/credit.html

http://wikipedia.org

http://slideshare.net.