Civil aircraft manufacturing industry

Civil aircraft manufacturing sedulousness1. IntroductionCivil aircraft manufacturing patience is one of the largest industries in the world which Boeing and Airbus argon the two large players who dominated the industry. The main former competitors have exited civil aircraft manufacturing market, for instance, Boeing merged with McDonnell Douglas Corp in August 1997 (Boeing, 2010a), and left Airbus and Boeing operating in a near duopoly global market. Boeing now headquartered in Chicago and employs more than 158,000 people in 70 countries with $60.9 billion revenue in 2008 which founded in 1916 (Boeing, 2010b). Airbus, by contrast, created in 1970 with 52,000 employees comes from more than 80 nationalities (Airbus, 2010) and gained 43.3 billion revenues (EADS, 2008). Apparently, it is vital important for new player to survive and prosper by examine the macro and sector environment. This report tries to taste the critical success factors and evaluate whether this is an attractive se ctor to compete in by research secondary information. This report depart begin with evaluate primaeval drivers for change in order to know the external environment issues. Secondly, Porters louver force abridgment and industry life circle will undertake to analysis the structure of this industry. Fin altogethery, the report is going to conclude critical success factors from the findings draw from last two steps. 2. Key Divers for changeMacro-environmental influences sometimes are substantial important for an organisation to survive and prosper. Therefore, there are five external key diver listed below and draw from PESTEL analysis about civil aircraft manufacturing industry. 2.1 turning point Global economic recession had impact on civil aircraft manufacturing in several aspects. On one hand, the direct influence is the two companies received less orders than before. For instance, the number of orders Boeing received decreased significantly in 2009 (142) compared to 2008(662) and 2007 (1,417) (Talton, 2010). On the other hand, the recession had led to downsizing in both Boeing and Airbus. For example, Boeing announced that it would cut 4,500 jobs (Weber, 2009). So the new entrants can gain access to the expertise in this industry easily. It means the new master of those staff will know not unless the market but withal some secret of the two main competitors. 2.2 Fuel price increasedFuel price is also an influence for aircraft manufacturing industry. jibe to The Times (2008), more than $100 billion of aircraft orders have cancelled or postponed resulted from high price of fuel. It indicates that if one company can produce the more environment-friendly aircraft will attract potential buyers who want to take advantage of low fuel salute.2.3 Political influencePolitical influences sometimes are vital important for manufacturing industry. For example, IATA had introduced arc policy options in order to improve fuel efficiency and emissions for protecting environment (IATA, 2010). Otherwise, the companies need to pay huge fund. Therefore, some companies need to redesign the fortune such as engine and exhaust system. Moreover, some governing bodys intervene international trade is another issue can not ignore, namely, recently Boeing suffered threat from Chinese government after United States arms sold to Taiwan (Lubin, 2010). 2.4 Government aidBoth of Boeing and Airbus regularly accuses the other of receiving unfair state aid from their respective(prenominal) governments, namely, the WTO Boeing-Airbus dispute (European Commission, 2007). The reason why is aircraft manufacturing company need significant mounts of money to set up and invest in research and development. For example, Gresing and Johnsson (2007) cited pure development cost of Boeing 787 was $10 billion. 2.5 Technology InnovationAdvanced technologies are one of the key factors for this industry. It helps the company not only keep the differentiation of product but also s ave internal resources. Boeing 787 dreamliner is a living proof to prove this, namely, 50 percent of the primary structure of Boeing 787 is made of composite materials to achieve higher strength-to-weight ratio (Hawk, 2005). In addition, Boeing announced General Electric and Rolls-Royce have developed new engines which will improve the fuel efficiency approximately 20% compared to Boeing 767 (Boeing, 2010c). The new aircraft will attract customers who want to take advantage of lower maintenance cost. 3. The Structure of the civil aircraft manufacturing industry Porters five force analysis and industry life cycle will undertake below in order to evaluate whether civil aircraft manufacturing industry is an attractive sector to compete in.3.1 Porters five forces analysisAppendix 7.1 illustrates the Porters five forces analysis and it will describe below. 3.1.1 Threats of entrants3.1.2 Supplier power3.1.3 Buyer power3.1.4 Threats of substitute3.1.5 Competitive rivalry3.2 Industry life cycleAppendix 7.2 shows the industry life cycle for civil aircraft industry. This report considers the stage of civil aircraft industry life cycle is in the end of shock-out and in the beginning of the maturity because of this industry still maintains some features in shake-out stage and gain new features in the fourth stage.Both shake-out and maturity stage have some similar characteristics, standardised the low and slow growth and high entry barrier. For example, boeing and Airbus suffered from the sharp deceasing number of order at Duhai show in 2009 (EASA, 2009). On the other aspect, Airbus and Boeing received government aid from Europe and United States respectively. It also indicates that it is difficult to survive in this industry without government support. In other words, at least the cost of sceptre resource and competence are quite high.However, the situation of this industry is also fulfilling the some exclusive characteristics of the two stages, namely, in shake-out s tage smaller player in this industry were forced exit or acquired with the Boeing and Airbus resulted in left a near duopoly market for the two giants. Boeing merged McDonnell Douglas Corp is one example (Boeing, 2010a). Meanwhile, the impetuous competition with rivals will happen due to the strong buyer power resulted from more players compete in this industry such as China, Brazil (Goodrich, 2009).4. ReferencesAirbus (2010) Employees from all corners of the world Online Retrieved from http//www.airbus.com/en/corporate/ethics/diversity / Assessed on 23 February, 2010Boeing (2010a) The Boeing Logbook 1997-2001 Online Retrieved from http//www.boeing.com/history/chronology/chron16.html Assessed on 23 February, 2010Boeing (2010b) Boeing in Brief Online Retrieved from http//www.boeing.com/companyoffices/aboutus/brief.html Assessed on 23 February, 2010Boeing (2010c) Boeing 787 Dreamliner pull up stakes Provide New Solutions for Airlines, Passengers Online Retrieved from http//www.boein g.com/commercial/787family/background.html Assessed on 24 February, 2010EADS (2008) Financial Statements 2008 pp.9 Online Retrieved from http//www.reports.eads.com/2008/en/s/downloads/files/financial_statements_eads_ar08.pdf Assessed on 23 February, 2010EASA (2009) European Aviation Safety Agency intelligence information Summary 14/11/2009 20/11/2009 pp.1 Online Retrieved from http//www.ucl.cz/download/pdf/News_Summary_23_11_09.pdf Assessed on 24 February, 2010European Commission (2007) The WTO Boeing-Airbus dispute (updated 15 June 2007) pp.1 Retrieved from http//trade.ec.europa.eu/doclib/docs/2007/june/tradoc_134957.pdf Assessed on 23 February, 2010Goodrich (2009) Goodrich and Chinas XAIC coincide to From Joint Venture Companies Online Retrieved from http//ir.goodrich.com/phoenix.zhtml?c=60759p=irol-newsArticleID=1319837highlight= Assessed on 24 February, 2010Greising, D Johnsson Julie (2007) Behind Boeings 787 delays pp.2 Online Retrieved from http//www.buffalo.edu/news/pdf/D ecember07/ChicagoTribPritchardBoeing.pdf Assessed on 23 February, 2010 Hawk, J (2005) The Boeing 787 Dreamliner More Than an Airplane pp.10-11 Online Retrieved from http//www.aiaa.org/events/aners/Presentations/ANERS-Hawk.pdf Assessed on 24 February, 2010IATA (2010) Emission Policy Options Online Retrieved from http//www.iata.org/whatwedo/environment/emissions_policy.htm Assessed on 23 February, 2010Lubin, G (2010) China Threatens Unprecedented Sanctions Against Boeing After US Arms Sales to Taiwan Online Retrieved from http//www. blood lineinsider.com/china-threatens-unprecedented-sanctions-against-boeing-2010-2 Assessed on 23 February, 2010Talton, J (2010) Boeings drop in orders shows recessions effects still linger Online Retrieved from http//seattletimes.nwsource.com/html/soundeconomywithjontalton/2010729937_boeings_drop_in_orders_shows_r.html Assessed on 23 February, 2010 The Times (2008) Threat to aircraft orders as fuel prices soar Online Retrieved from http//business.timeson line.co.uk/tol/business/industry_sectors/engineering/article4327146.ece Assessed on 23 February, 2010Weber, J (2009) Boeing Will Cut 4,500 Jobs Online Retrieved from http//www.businessweek.com/bwdaily/dnflash/content/jan2009/db2009019_791015.htm Assessed on 23 February, 2010