Org Strategy Week 7 Assignment
Jaylin001
AirbusSEEnternalEnvironmentAnalysis.pptxAirbus SE External Environment Analysis
Terrell McGhee
SNHU
Org Strategy in Global Env
2/6/2022
External environment analysis involves an evaluation of the company from broad spectrum will emphasis of competitive strategies. As such this presentation makes an in-depth macro analysis of Airbus SE with intention to identify, the competitors while keeping an eye on the company’s competitive advantage. The presentation will employ various analysis tools such as Porter’s Five Forces model to ascertain and evaluate Airbus SE’s competitiveness in the Aerospace industry.
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Airbus SE Competitors
Boeing
Gulfstream Aerospace
General Dynamics
The competition in the Aerospace industry is more intensified with various giant companies fighting to establish and maintain a footprint in the sector. The companies compete in various facets such market share, product quality, Innovation, number of employees and product portfolio. Boeing company is the major competitor of Airbus with the former taking a lead in the number of ordered planes in 2021. According to data from Ch- Aviation.com in 2021 Boeing received 829 orders against Airbus’s 610. Additionally, most of the commercial aircraft being manufactured by Airbus and Boeing are close competitors for instance, the Airbus A320 and Boeing 737 model, with slightly small differentiation between the two models the competition between the two companies has remained to be neck to neck. On the other hand, Gulfstream Aerospace has been ranked as the company with the best customer services in the Aerospace industry with Airbus coming second in that category (Aldemir, Şengür & Ulukan, 2021).
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Strengths of Airbus SE
Environmental friendly products
Innovation
Global presence with strong market share
High product mix
Airbus has emphasized its efforts in the areas of sustainability and emission reductions, which are the two cornerstones of a long-term aerospace future. The organization brings together renowned aerospace professionals to move the aviation industry toward net-zero emissions. The greener light operations of the company are focused on reducing volatile organic compounds, decarbonization and reducing wastes. Similarly, the company has demonstrated its prowess in the industry through innovation which is characterized by heavy investment in R&D, for instance, in 2020 the company’s investment in R&D was close to 2.86 billion Euros. In order to maintain strong footprint in the industry, Airbus diversified its products portfolio making wide variety of products which ranges from commercial aircraft, space and defense products , low-cost carrier, helicopters among other products. The company has also gained competitive advantage through its global presence and strong market share. The company has strong presence in countries like the UK, Germany and Spain among others (Bhasin, 2019).
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Airbus Core Values
Creativity
Customer focus
Integrity
Teamwork
Airbus SE has embedded strong core values in its operations that has enabled it to gain a competitive edge. More importantly the company’s activities are focused offering exemplary services to its customers. The company has demonstrated high customer-oriented services that are anchored on the timely and quality services. Through creativity the company has built a strong and sustainable solutions. For instance, according to the company’s website by May 2021, the company’s Net Promoter Score was high at 51%. The company is also accredited as on of the most solid and cohesive firm with over 130, 000 employees who work diligently to deliver high end products and services to their clients (Airbus, 2022).
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Porter’s Five Forces Model
Bargaining power of Suppliers (Low)
Bargaining power of buyers (Moderates)
Threat of substitutes ( Moderate)
Threat of new entrants (Low)
Level of competition (Very High)
Airbus relies on a wide and global supply chain to support its growing aircraft product line. This supply chain includes about 7700 suppliers, many of whom are huge corporations with significant financial influence. This gives Airbus strong influence making the bargaining power of suppliers to be low. The demand and influence of customers in the Aerospace industry is diversified due to an array of products provided by the players. The customers often demand aircrafts of high-end technology therefore, they're to Airbus is moderate since the company is required to make products that meets the customers’ specifications. The threats of substitutes are moderate since companies in the Aerospace industry are competing to deliver high quality products that close if not similar, Therefore the customers in the industry can switch to other established firms like Boeing if Airbus does not meet the customer specification. Additionally, due to high cost of investment required to set up a firm in the Aerospace sector the threat of the entrants is very low. This gives more powers to dominate the industry. On the other the level of competition in the Aerospace is so pronounced with giant companies like Boeing and General Dynamics among others spreading their market clout, Airbus has to engage into more research to sustain its share in the market (Pratap, 2017).
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Airbus SE Generic Strategies Based on Porter’s Model
Cost Leadership
Differentiation
Cost Focus
Differentiation focus
The goal of a cost leadership strategy is to achieve a competitive advantage through cutting costs. Airbus' principal generic strategy in numerous consumer sectors is cost leadership. This strategy enables Airbus to increase market share by focusing on the middle class, which accounts for the majority of the vast customer targeted market in most nations. To meet sales targets and deal with competitive pressure from its nearest competitor, Airbus routinely gives discounts and coupons. Airbus uses a differentiation generic approach to position its product offers so that they stand out and are distinct from the competition. The corporation uses distinctiveness as a technique to alleviate the pressure from other brands because it is an established brand with a strong footing. To set the Airbus apart from other companies, it spends a lot of money on marketing, advertising, and celebrity endorsements. Airbus has a focused differentiation strategy in both low-cost and high-value operations. The low-cost focus strategy entails fulfilling the needs of a narrow market group at the cheapest price achievable. In the Capital goods industry, a cost-focused Airbus Group can pursue a price advantage in its chosen segment (Aldemir, Şengür & Ulukan, 2021).
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Strategic Competitive Advantage
Inside out strategy
Maintenance Repair Operation(MRO)
Due to its focus on quality of product, which is decided by its safety record, careful distribution network, and innovative products, Airbus employs an inside-out strategy. Airbus also maintains a global network of Maintenance Repair Operations and has worked with a number of airline companies to manage the operating sites. Airbus' goal of simplifying their supply chain in order to give more value to consumers necessitates a greater understanding of internal ethics. Furthermore, Airbus has one of the largest global MRO networks, which was established in Thailand in collaboration with Thai Airways to handle Southeast Asia's enormous airline industry (Mindtools, 2021).
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Airbus Sustainability Commitments
Ethics and Compliance
Environment
Corporate Leadership
Airbus Foundation
As part of Airbus ethics and compliance commitment the company supports the Internal Forum on Business Ethical Conducts (IFBEC) which sets the yardstick of globally ethical standards. The high ethical framework has enabled Airbus to gain a global reputation and competitive image. In order to support the society, the company-initiated Airbus Foundation which is focused on offering humanitarian services to the society. The Foundation supports emergency and disaster cases as well as inspiring the next generation to embrace the future (Airbus, 2022).
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Airbus SE Areas of opportunities
Increasing the number of passengers.
New engine and Aircraft technology
Sustainable Aviation Fuels
New engine and Aircraft technology. The first flight of an all-electric race plane was completed by an Aerobatics E jet. Airbus, as a founding member of the competition, is contributing significantly to the development of a platform for creating greener and more electric hybrid air vehicles. Sustainable aviation fuels. The management of Airbus believe that sustainable air transport is possible and attainable in the current generation. Thus, they have taken a more forceful stance on environmental conservation and long-term sustainability through the usage of environmental friendly fuel. AIRBUS has introduced Blue 5, a five-point environmental effort that focuses on energy conservation, water conservation, waste reduction, CO2 reduction, and VOC reduction. With the expanding working class in developing countries driving up passenger travel, AIRBUS has a significant opportunity to enter into this market and increase customer base (Airbus, 2022).
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Cont.: Airbus SE Areas of opportunities
Overseas market with growth opportunities.
Business leader in security and science technology
Increasing the number of passengers
Business leader in security and science technology. Airbus has direct exposure to the most advanced technologies and related knowledge available anywhere in the world. Despite the fact that the firm's earnings in the aerospace and security segment dropped in 2020 as a result of the covid-19 outbreak, the corporation still has the potential to contend and become the sector's market leader. Overseas market with growth opportunities. Since the Indian market has a large number of experts, technicians, programmers, Airbus has begun working on a project named "Make in India.“ It is an excellent location for the corporation to extend its operations in emerging markets (Bhasin, 2019).
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Conclusion
In a nutshell, to be prepared for the worst-case situation, Airbus should broaden its markets and strengthen its network security.
Besides, SWOT analysis is a critical strategic management tool that Airbus executives can use to assess the company's current status.
Also, strategic competitive advantage is a crucial instrument that allows an organisation to generate more revenue or higher profits than its competitors.
References
Airbus. (2022). Our Values-These values shape the DNA of our business. [online] Available at: https://www.intelligence-airbusds.com/about-us/our-values/ [Accessed on 1st Feb 2022].
Airbus. (2022). Our commitment to environmental protection. [online] Available at: https://www.airbus.com/en/environment. [Accessed on 1st Feb 2022].
Aldemir, H. Ö, Şengür, F. K., & Ulukan, İ. C. (2021). Exploring Strategic Choices of Airlines: A Study in Turkish Air Transport Industry. Asian Academy of Management Journal, 1-26.
Bhasin, H. (2019). SWOT analysis of Airbus. [online] Available at: https://www.marketing91.com/swot-analysis-of-airbus/ [Accessed on 1st Feb 2022].
Mindtools. (2021). Porter's Generic Strategies. [online] Available at: https://www.mindtools.com/pages/article/newSTR_82.htm [Accessed on 1st Feb 2022].
Pratap, A. (2017). Airbus Porter’s Five Forces Analysis. [online] Available at: https://notesmatic.com/airbus-porters-five-forces-analysis/ [Accessed on 1st Feb 2022].
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