Airbus and Boeing Porters 5 Forces
The airframe manufacturing industry is a highly competitive environment that has come to be dominated by two firms: Boeing and Airbus. Airbus is a European joint venture between EADS and BAE Systems headquartered in Toulouse, France and originally founded in 1970 (Mayer, 2007). Boeing, on the other hand, is an American firm founded in 1916 in Seattle, Washington, and now headquartered in Chicago, Illinois (Mayer, 2007). As airframe manufacturing firms, Airbus and Boeing hold 86% of the total market share, thus creating a duopoly. Through an analysis of Porter's Five Forces of the two firms, as a duopoly and as individual firms, one can better understand how influential these firms are to each other and to other firms within the industry.
The first of five forces to be analyzed is the threat of new entrants. Within the airframe manufacturing industry, the threat of new entrants is relatively low due to a high barrier of entry and a high barrier to exit (Sinha, Purnendu, Saini, Jain, Raj, n.d., p. 7). These high barriers are applicable both to the Airbus/Boeing duopoly and the airframe manufacturing industry as a whole. Entry into the market, especially to be in direct competition with the duopoly, is complicated as the two firms share 86% of the total airframe manufacturing market (Mayer, 2007). Other major airframe/airplane manufacturers include Bombardier Aerospace, Cessna Aircraft Company, Dassault Falcon, Embraer-Empresa Basileira DR Aeurnautica, Gulfstream Aerospace, Hawker Beechcraft Corp., Piaggio America, Inc., and Pilatus Business Aircraft, Ltd. (Huber, 2009).
The second force analyzed...
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