Mgt490 Term Paper Airbus

BUSINESS LEVEL STRATEGY OF “AIRBUS COMPANY”
Business strategy aims to improve a company's or business department's competitive position of

its services or products within the particular industry or market segment it serves. Because
business unit impacts have a double the impact on total firm performance compared to corporate
or industry effects, business strategy is crucial. Business strategy can be aggressive (seeking an
advantage over all rivals) or cooperative (collaborating with one or more businesses to obtain an
edge over rivals).
Michael Porter advocated three "generic" competitive strategies for beating other companies in a
given industry: total cost leadership, differentiation, and focus. These tactics are referred to as
generic because they can be used by any size or style of corporate organization, including not-
for-profit ones:
1. Cost Leadership - refers to a company's or a business unit's capacity to develop,

manufacture, and market a comparable good or service more effectively than its rivals.
This strategy is for business that needs to go after a wider client base by offering the
lowest cost. A misinterpretation about this strategy is that profits are lower. To keep up
higher returns and give the most value, the business should correct internal efficiencies,
2. Differentiation- is known as the capacity of a business to offer the customer distinctive
and greater value. This could relate to things like product quality, unique features, or
post-purchase support.
3. Focus- is a company's capacity to offer distinctive and superior value to a certain
customer group, market sector, or geographic market.
Differentiation Strategy is followed by Airbus
The strategy is for firms that need a wide client base dependent on their uniqueness. Airbus uses
this strategy and creates unique products to win in the market. There are other general tactics that
Airbus uses. The aerospace organizations from the UK, France, Germany, and space sectors
make up the Airbus industries and fight with Boeing in the design and engineering of enormous
airplanes for global markets.
According to (NandaKuman, Ghobadian, and O'Regan, 2010), Airbus has used differentiation
strategy to separate apart from its rivals. Although the innovative designs also made cost-saving
alternatives for the business easier, like fuel savings and conservation advantages over its rivals.
Airbus produced aircraft for the client, including the A-318 for long-distance travel
(Massingham 2004). Making military plane like tankers as part of the company's diversification
plan significantly increased sales revenue. Airbus concentrates its approach on producing items
for the military at a reduced cost while using sophisticated machinery to create distinctive goods
(Massingham 2004).
Selective targeting strategy is used by Airbus as its different aircraft are meant for a different set
of customers. It has positioned itself as an Airline carrier offering a value-based aircraft which
are technologically advanced, aesthetically designed, safe & secure and their related services
By following this differentiation strategy, they can have an advantage of competitive market.
Airbus can compete in the market using a differentiation strategy rather than just reduced prices.
A differentiation strategy has the advantage of enhancing a product's distinctive features. Airbus
business can compile a list of qualities that distinguish its products from those of its rivals. There
are more opportunities for bigger profit margins when products are distinct and elevated in
quality. For instance, Airbus might make more money with fewer sales if their target market is
ready to pay a higher price for premium quality or better value. Moreover, an effective
differentiation approach might provide the impression that the product cannot be replaced by any
other item on the market. Airbus may benefit from the fact that buyers won't want to switch to
another brand even if there are competing items on the market that are comparable to theirs.
Strategic Business Units of Airbus: Commercial aircraft, Defense and space, helicopters
Airbus has commercial aircraft which generate a huge amount of revenue. The Airbus
Military division, which manufactured tanker, transport and mission aircraft, Airbus has other
SBU and that is Airbus Helicopters, the world's largest helicopter supplier. Airbus Helicopters,
formerly known as Euro copter, is a helicopter manufacturing and support company.
Commercial aircraft 77%
Defense and space 15%
Helicopter 8%
Consolidated industry: Consolidated industry means domination by a few large companies.

Airbus is consolidated industry. Airbus is a large company so they have the domination power.
They have the ability to achieve cost leadership.
Competitive Advantage: Airbus brands are well known in the airline industry, they brand
themselves as a company that delivers quality to the customer while staying true to their core
values, such as customer focus, integrity, respect, creativity, reliability, and teamwork.
Airbus is a manufacturing company. So, they have strong supply chine system. Approximately
8,000 direct and 18,000 indirect suppliers from more than 100 countries supply parts,
components, systems and services to Airbus.
Suppliers: The top performers are Airbus Avionics, Diehl Avionik Systeme, AOA-LGG, Vibro-
Meter, Goodrich Fuel and Utility Systems, Technofan, Ultra Electronics, Goodrich Aircraft
Interior Products, Parker and Honeywell Aerospace Electronics Systems.
Main production center: Being a European country, most Airbus' major production centers are
located in countries such as France, Germany, Spain, Italy, and the UK
Customers: AirAsia the largest airline customer for Airbus narrow body aircraft., GE Capital
Aviation Services (GECAS) and International Lease Finance Corporation (ILFC)

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BUSINESS LEVEL STRATEGY OF “AIRBUS COMPANY”

Business strategy aims to improve a company's or business department's competitive position of

1. Cost Leadership - refers to a company's or a business unit's capacity to develop,

Commercial aircraft 77%

Defense and space 15%

Consolidated industry: Consolidated industry means domination by a few large companies.

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