Harvard Case - EADS/Airbus: Vision 2020
"EADS/Airbus: Vision 2020" Harvard business case study is written by Rosi Ji, Thorsten Knauer, Momo Schafer, Friedrich Sommer, Jil Wehlmann. It deals with the challenges in the field of General Management. The case study is 19 page(s) long and it was first published on : May 6, 2014
At Fern Fort University, we recommend that EADS/Airbus implement a comprehensive strategic plan that focuses on innovation, globalization, and sustainability. This plan should encompass a digital transformation, organizational restructuring, and talent management strategy to achieve their Vision 2020 goals.
2. Background
The case study focuses on EADS/Airbus in 2007, facing significant challenges in achieving its Vision 2020 goals. These challenges include:
- Internal Conflicts: The merger of Airbus and EADS created a complex organizational structure with conflicting cultures and priorities.
- Market Competition: Boeing's dominance in the large aircraft market posed a significant threat, while emerging competitors from China and Russia were gaining traction.
- Financial Performance: EADS/Airbus faced pressure to improve profitability and efficiency, particularly in its A380 program.
- Sustainability Concerns: Growing public scrutiny of the aviation industry's environmental impact demanded a shift towards more sustainable practices.
The main protagonists in this case are:
- Tom Enders: The CEO of EADS, responsible for driving the Vision 2020 strategy.
- Louis Gallois: The CEO of Airbus, responsible for managing the company's aircraft production and development.
- The EADS/Airbus Board: Responsible for overseeing the company's strategy and performance.
3. Analysis of the Case Study
To analyze the case, we can utilize the following frameworks:
1. SWOT Analysis:
- Strengths: Strong brand reputation, global reach, technological expertise, and a diverse product portfolio.
- Weaknesses: Complex organizational structure, internal conflicts, and a lack of agility in responding to market changes.
- Opportunities: Growing global demand for air travel, emerging markets, and technological advancements in aircraft design and manufacturing.
- Threats: Competition from Boeing and emerging competitors, economic downturns, and environmental regulations.
2. Porter's Five Forces:
- Threat of New Entrants: Moderate, due to high barriers to entry in the aircraft manufacturing industry.
- Bargaining Power of Buyers: High, as airlines have significant leverage in negotiating prices and terms.
- Bargaining Power of Suppliers: Moderate, as EADS/Airbus relies on a limited number of suppliers for critical components.
- Threat of Substitute Products: Low, as air travel remains the dominant mode of long-distance transportation.
- Rivalry Among Existing Competitors: High, with Boeing being a major competitor and emerging players like Comac and Sukhoi posing increasing threats.
3. Balanced Scorecard:
- Financial Perspective: Improve profitability, reduce costs, and increase shareholder value.
- Customer Perspective: Enhance customer satisfaction, build brand loyalty, and expand market share.
- Internal Processes Perspective: Optimize manufacturing processes, improve product quality, and reduce lead times.
- Learning and Growth Perspective: Invest in innovation, develop talent, and foster a culture of continuous improvement.
4. Recommendations
To achieve Vision 2020, EADS/Airbus should implement the following recommendations:
1. Digital Transformation:
- Invest in advanced technologies: Utilize AI and machine learning for predictive maintenance, optimize supply chain management, and enhance customer service.
- Develop digital platforms: Create online platforms for customer engagement, collaboration with suppliers, and data analytics.
- Embrace cloud computing: Migrate data and applications to the cloud for scalability, cost-efficiency, and improved security.
2. Organizational Restructuring:
- Streamline the organizational structure: Simplify reporting lines, reduce bureaucracy, and empower decision-making at lower levels.
- Foster a collaborative culture: Promote communication and knowledge sharing across departments and subsidiaries.
- Encourage innovation: Establish dedicated innovation centers and incentivize employees to develop new products and services.
3. Talent Management:
- Develop a global talent strategy: Focus on attracting, developing, and retaining top talent from diverse backgrounds.
- Invest in employee training and development: Provide opportunities for employees to acquire new skills and knowledge.
- Implement a performance-based compensation system: Reward employees based on their contributions to the company's success.
4. Globalization Strategy:
- Expand into emerging markets: Target high-growth regions like Asia and Africa with tailored products and services.
- Develop strategic partnerships: Collaborate with local companies to enhance market access and leverage their expertise.
- Embrace cross-cultural management: Develop programs to promote understanding and collaboration across different cultures.
5. Sustainability Initiatives:
- Reduce environmental impact: Invest in fuel-efficient aircraft, implement sustainable manufacturing processes, and offset carbon emissions.
- Promote corporate social responsibility: Engage in community outreach programs and support initiatives that promote sustainable development.
- Develop a sustainability roadmap: Set clear targets and timelines for achieving sustainability goals.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: Leveraging EADS/Airbus's existing strengths in technology, manufacturing, and global reach.
- External Customers: Meeting the evolving needs of airlines and passengers, including a focus on sustainability and digital experiences.
- Competitors: Staying ahead of the competition by investing in innovation, expanding into new markets, and improving operational efficiency.
- Attractiveness: Improving profitability, increasing market share, and enhancing shareholder value through a comprehensive strategy.
6. Conclusion
By implementing these recommendations, EADS/Airbus can overcome its challenges and achieve its Vision 2020 goals. This will require a commitment to innovation, globalization, and sustainability, as well as a willingness to embrace digital transformation, organizational change, and talent management.
7. Discussion
Other alternatives include:
- Focusing solely on cost reduction: This approach could lead to short-term gains but could also undermine long-term competitiveness and innovation.
- Merging with a competitor: This could create a larger entity but could also lead to integration challenges and cultural clashes.
The key risks associated with the recommended strategy include:
- Resistance to change: Employees may resist organizational restructuring and digital transformation.
- Technological disruption: Emerging technologies could render current investments obsolete.
- Economic downturns: Global economic instability could impact demand for air travel.
8. Next Steps
To implement the recommendations, EADS/Airbus should take the following steps:
- Develop a detailed strategic plan: Outline specific goals, timelines, and resource allocation for each initiative.
- Communicate the strategy to stakeholders: Ensure transparency and buy-in from employees, customers, and investors.
- Establish a dedicated implementation team: Assign responsibility for overseeing the execution of the strategy.
- Monitor progress and make adjustments as needed: Regularly review performance and adapt the strategy based on changing market conditions.
By taking these steps, EADS/Airbus can position itself for continued success in the global aerospace industry.
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Case Description
EADS N.V. (EADS), Europe's leading aerospace and defence company, is reviewing its strategic positioning. EADS had planned to merge with a British company to form the world's largest aerospace company, but the merger failed mainly due to resistance from government shareholders. As a result, the firm cannot achieve its major strategic goals that were tied to the merger. In the highly competitive aerospace industry and despite also facing production issues and a corruption investigation, the firm's management must revise both its short-term goals and future action plan.
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