Thursday, November 21, 2019

SWOT Analysis for Possible Ventures. Airbus Joint Venture with Boeing Essay

SWOT Analysis for Possible Ventures. Airbus Joint Venture with Boeing - Essay Example It is evident from the study that in the joint venture, Airbus has strengths that would make it stand out from any possible competition and posed threats. Firstly Airbus has advanced technology in aircraft manufacturing as compared to Boeing, its technologies such as fly-by-wire, joy stick control and laser guided riveter would make Airbus to have a bigger share of the joint venture. Secondly, the manufacturing of Very Large Commercial Transport (VLCT) would take place in Europe where the company has well-established markets. Although the company stands to benefit from the opportunities presented by the joint venture there are some threats that the company needs to consider. Competition with Boeing will make Airbus to cut its prices and this will affect its profit margins. From the venture, the company will be forced to expose its technology and manufacturing techniques to Boeing. In the joint venture, Boeing will have better opportunities than its rival company Airbus will. However, the two companies expect almost similar opportunities. Successful production and marketing of the VLCT will create deals that would increase the company’s capacity to market its other models. Due to the current condition of saturated airports and need for expansion there will be a ready demand for the proposed VLCT. Currently Boeing controls about 60% of the aircraft market and it hope to increase its niche from the venture. The initial cost of producing a VLCT stands at $5-$20 billion, which the company hopes to raise over the next 4-10 years. From the projected demand of 500 units for $150 - $250 million, Airbus expects to create a deal worth 1.25 trillion dollars, which is a remarkable return on investment. Boeing has many strengths that will enable it to benefit from the possible opportunities, unlike it rivals Boeing has a high control over its suppliers with some being sole-suppliers. This makes Boeing to stand out as a well-established aircraft manufacturer. Boeing ha s enjoyed a long-standing agreement in the production of military aircrafts and this has enabled the company to generate a lot of profit. Although Boeing is a strong company, the company has some weakness. Firstly, Boeing may lose its market share if it is unable to produce the VLCT economically. The company has a low production capacity and therefore it may not handle the extended demand adequately. These weaknesses create competition threat that the company faces from its rival company Airbus. Airbus owns or has the rights to most of the critical technologies required in the production of VLCT and therefore Boeing is threatened by possible exploitation. Part 3; Analysis of Airbus Standalone initiative Although the VLCT is a proposed joint venture,

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