>> Case Study
Over the past two decades, the People's Republic of China has invested billions of RMB in domestic and international air travel capability. Today, almost every major city in China has a new airport. The average aircraft age in the (largely state-owned) air carrier fleets is one of the lowest in the world. Currently, there are an estimated 1,400 commercial planes in China, of them approximately 800 Boeing, 470 Airbus, and 130 other (Embraer, Bombardier, CRJ, etc.). At China's current economic growth rate, land area and population size, most experts agree that China will spend another £200 billion to buy an additional 3,700 commercial aircraft in the next two decades.
Although China's COMAC currently builds a small commercial plane, the CRJ-21, it is not certified outside of China and has limited market. China is also developing a large aircraft, the COMAC 919, with an eye towards certification for international sales, competing with Boeing and Airbus. The competition for China's aircraft needs is fierce.
Boeing and Airbus not only lead the field in numbers, but they are also the key inventers and developers of business strategy and trade models for aircraft in China. Most of the others follow the leaders with a ‘me too' strategy. In their home markets, Boeing and Airbus already have divergent product and capitalization strategies. It would be difficult to imagine two more different competitors.
For this project, you are going to analyze the international trade strategies of these two companies as they compete for new aircraft business in China. You will have to pay some attention to the two different product and capitalization strategies, but they are incidental. The international trading strategies are the focus for your project.
This week, you will begin by developing a brief synopsis outlining the business and capitalization strategies of Boeing and Airbus. In addition, you will compare and contrast the product strategies of these companies and appraise how well their strategies might fit the Chinese socio-economic system.
In Week 6, you will compare and contrast the specific components of the strategies that Boeing and Airbus have employed as they compete for new aircraft business in China.
In Week 8, you will submit your Final Project paper. In addition to honing and revising the previously submitted portions of the project, you will synthesise how the strategies used by Boeing and Airbus appear to be changing over time, and you will predict how these organisations might approach trade with China in 2 years. In addition, you will evaluate the effectiveness of the trading strategies employed and suggest plausible cause and effect assumptions about how these strategies might have evolved. You will conclude your project by recommending possible ways that either or both companies could have improved the competitive capability of their international Chinese trading plans.
For this week, you are responsible for developing and submitting the following:
A brief synopsis describing the business and capitalisation of the two companies, Boeing and Airbus.
A brief analysis contrasting the two different product strategies of the two companies and an appraisal of how well each might fit the Chinese socio-economic system.