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Harvard Case - A350 XWB: Airbus' answer to Boeing's Dreamliner

"A350 XWB: Airbus' answer to Boeing's Dreamliner" Harvard business case study is written by Francis Bidault, Buelent Goegduen. It deals with the challenges in the field of General Management. The case study is 22 page(s) long and it was first published on : Dec 15, 2010

This case study solution recommends that Airbus continue its aggressive strategy of innovation, market penetration, and customer focus to solidify its position as a leading player in the wide-body aircraft market. This involves leveraging its A350 XWB's technological advantages, building strong customer relationships, and proactively adapting to evolving industry trends.

2. Background

The case study focuses on Airbus' launch of the A350 XWB, a direct competitor to Boeing's 787 Dreamliner. The A350 XWB was designed to offer airlines a fuel-efficient, technologically advanced, and comfortable wide-body aircraft. The case highlights the intense competition between Airbus and Boeing, the evolving needs of the airline industry, and the strategic challenges of launching a new aircraft model.

The main protagonists are:

  • Airbus: The European aircraft manufacturer, aiming to regain market share and challenge Boeing's dominance.
  • Boeing: The American aircraft manufacturer, holding a strong market position with its 787 Dreamliner.
  • Airlines: The customers of both Airbus and Boeing, seeking fuel-efficient, comfortable, and technologically advanced aircraft to meet their operational and passenger needs.

3. Analysis of the Case Study

This case study can be analyzed using a Porter's Five Forces framework to understand the competitive landscape and SWOT analysis to assess Airbus' internal strengths and weaknesses, and external opportunities and threats.

Porter's Five Forces:

  • Threat of New Entrants: High barriers to entry in the aircraft manufacturing industry due to high capital investment, technological complexity, and regulatory requirements.
  • Bargaining Power of Buyers: Moderate, with airlines having some leverage due to their size and purchasing power, but limited due to the limited number of aircraft manufacturers.
  • Bargaining Power of Suppliers: Moderate, with suppliers holding some leverage due to the specialized nature of components and materials, but limited due to competition among suppliers.
  • Threat of Substitute Products: Low, as there are no direct substitutes for wide-body aircraft.
  • Rivalry Among Existing Competitors: High, with intense competition between Airbus and Boeing, leading to price wars, technological advancements, and marketing campaigns.

SWOT Analysis:

Strengths:

  • Technological Innovation: A350 XWB boasts superior fuel efficiency and advanced technology compared to competitors.
  • Strong Customer Relationships: Airbus has established strong relationships with major airlines, providing them with tailored solutions.
  • Global Presence: Airbus has a global network of production facilities and service centers, ensuring accessibility for customers.

Weaknesses:

  • High Development Costs: Launching a new aircraft model requires significant investment, potentially impacting profitability.
  • Production Delays: Initial production delays can affect customer satisfaction and market share.
  • Limited Market Share: Airbus still lags behind Boeing in terms of market share in the wide-body aircraft segment.

Opportunities:

  • Growing Demand for Wide-Body Aircraft: The global air travel market is expected to grow, increasing demand for wide-body aircraft.
  • Emerging Markets: Developing economies present significant growth opportunities for aircraft manufacturers.
  • Technological Advancements: Continued innovation in areas like fuel efficiency and passenger experience can provide a competitive edge.

Threats:

  • Economic Downturn: Global economic instability can impact airline demand and investment in new aircraft.
  • Competition from Boeing: Boeing's strong market position and ongoing technological advancements pose a significant threat.
  • Regulatory Changes: Changes in environmental regulations or air traffic control policies can impact aircraft design and operations.

4. Recommendations

To solidify its position and capitalize on the opportunities, Airbus should:

  1. Continue Investing in Innovation: Continuously invest in research and development to maintain its technological edge, focusing on fuel efficiency, passenger comfort, and digitalization.
  2. Strengthen Customer Relationships: Build strong partnerships with airlines, offering tailored solutions, and providing excellent after-sales service.
  3. Expand into Emerging Markets: Target high-growth markets like Asia and Africa, leveraging its global network and tailoring products to local needs.
  4. Optimize Production Processes: Streamline production processes to reduce costs, improve efficiency, and ensure timely deliveries.
  5. Enhance Marketing and Branding: Develop a strong brand identity and marketing strategy to effectively communicate the A350 XWB's value proposition to airlines and passengers.
  6. Embrace Digital Transformation: Implement advanced data analytics and AI-powered solutions to optimize operations, enhance customer service, and stay ahead of industry trends.

5. Basis of Recommendations

These recommendations are based on:

  1. Core Competencies and Consistency with Mission: Airbus' core competencies lie in aircraft design, manufacturing, and technology. These recommendations align with its mission to provide innovative and efficient aircraft solutions.
  2. External Customers and Internal Clients: The recommendations focus on meeting airline needs for fuel-efficient, comfortable, and technologically advanced aircraft while ensuring internal efficiency and employee satisfaction.
  3. Competitors: The recommendations aim to differentiate Airbus from Boeing through continuous innovation, customer focus, and strategic market expansion.
  4. Attractiveness: These recommendations are expected to increase market share, improve profitability, and enhance Airbus' long-term sustainability.

6. Conclusion

Airbus' A350 XWB represents a significant step towards regaining market share and challenging Boeing's dominance in the wide-body aircraft segment. By strategically leveraging its technological advantages, building strong customer relationships, and proactively adapting to evolving industry trends, Airbus can solidify its position as a leading player in this competitive market.

7. Discussion

Other alternatives not selected include:

  • Price Reduction: While price reductions could attract airlines, they could also negatively impact profitability.
  • Joint Ventures: While joint ventures could offer access to new markets, they could also lead to conflicts of interest and loss of control.

Key assumptions of these recommendations include:

  • Continued Growth in Air Travel: The recommendations assume continued growth in the global air travel market.
  • Technological Advancements: The recommendations assume continued technological advancements in aircraft design and operations.
  • Stable Economic Environment: The recommendations assume a stable economic environment, allowing airlines to invest in new aircraft.

8. Next Steps

To implement these recommendations, Airbus should:

  • Develop a detailed strategic plan: Outline specific goals, timelines, and resource allocation for each recommendation.
  • Establish a dedicated team: Assemble a cross-functional team to oversee the implementation of the strategic plan.
  • Monitor progress and adjust accordingly: Regularly evaluate the effectiveness of the recommendations and make necessary adjustments based on market conditions and performance metrics.

By taking these steps, Airbus can capitalize on the opportunities presented by the A350 XWB and secure its future as a leading player in the global aircraft industry.

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Case Description

The case describes the strategic moves of Airbus in the twin-aisle-twin segment following Boeing's announcement of the launch of its 787 Dreamliner. Airbus's clients initially reacted negatively to the strategic response by criticizing the design. By the end of 2006, however, there were positive signs that the new design, the A350 XWB, would be able to find its market. The formal industrial launch had not yet been made and the A350 management office had been asked to prepare a series of proposals to the board of EADS regarding the next steps.

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