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Boeing Co. And Eads Airbus: Oligopolistic Competition And The Effects In The Managerial Decisions

2787 words - 12 pages

Boeing Co. and EADS Airbus: Oligopolistic Competition and the Effects in the Managerial Decisions.

Carlos Fermin Jahn
Pace University
Business 150 – Contemporary Business Practice

Executive Summary……………………………………………………………..............………..3

Introduction………………………………………………………………………..............……...4
Definition of Market Structures……………………………………………….….............…….5
Competition…………………………………………………………….….............……..5
Oligopoly…………………………………………………………………..............……..5
Table 1. Differences between Competition and Oligopoly…………..............…….6
The Global Market Structure for Large Civil Aircraft Manufacturers…….............……..6
Figure 1. Flow of Large ...view middle of the document...

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Executive Summary
In this research is going to be analyzed in-depth comparison the competition between Airbus and Boeing in the following aspects:
• Outsourcing and the rapidly expanding production of both manufacturers.
• Technologic Advances and state-of-the-art innovation in order to attract customers.
• The competition for World Market contracts and shares
• Effects of competition in currency rates.
• Histogram of orders and deliveries by company
• Brief analysis of both Third Quarters Reports for 2011 and shares prices.
• It would be demonstrated how large companies deal with external competition
• How the economic theory of competition influences the managerial decision of a company in regards to its product.
• How companies need to specialize their production in order to decrease competitive barriers in certain markets.
• Relevant connotations will be defined in order to introduce the reader to the framework that will be discussed.

Introduction

During the last month, the New York Times published an article regarding Boeing’s Third Quarter Reports in addition to the announcement of the first deliver of newest aircraft, Boeing 787 Dreamliner in 2013, which may compete with the upcoming Airbus A350. It’s been said by economist that healthy competition encourages efficiency, lower prices, and enhance innovation in such a great way. Indeed, from a macroeconomic perspective, healthy competition has caused commercial firms to develop new products, services and technologies, which gave consumers a greater selection and better products. For example, the two world largest aircraft companies Boeing and Airbus are pursuing to innovate the best aircraft, which fulfill its customer needs at competitive prices in order to increase revenues, thus increase profits. The competition between these two giants started in 1980 with the implementation of technology in their airplanes. Nowadays, Boeing and Airbus compete for shares in the global market for LCA, diminish production expenses, redesigning aircraft in order to fit larger quantities of passengers and so on.

Definition of Market Structures (Economics):
In reference to Economics by McConnel, Brue and Flynn, competition stands for a notion in which a number of firms produce a standardize product (Identical products) in order to compete for a greater share of the market for a given product. Three levels of competition have been classified:
1) Direct Competition: Also called brand competition, where products compete against each other if they perform the same function.
2) Substitute Competition: Where products compete against close substitutes.
3) Budget Competition: Which is based on the different items available for what an individual or organization may buy.
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