Strategic Analysis of Airbus: Business and Strategy Management

Running head: AIRBUS 0
Business Management and Strategy Management

AIRBUS 1
Table of Contents
1. Introduction.........................................................................................................................2
1.1 Target Market...................................................................................................................3
1.2 Industry Analysis.............................................................................................................3
1.3 Current Strategy...............................................................................................................4
2. External Analysis................................................................................................................5
2.1 PESTEL Analysis.............................................................................................................5
2.2 Five Forces Framework....................................................................................................8
Conclusion................................................................................................................................10
References................................................................................................................................11
List of Figures
Figure 1: Airbus Logo................................................................................................................2
Figure 2: Airbus Details.............................................................................................................3
Figure 3: Growth in the number of air travellers.......................................................................4
Figure 4: Comparison between aircraft deliveries of Airbus and Boeing..................................5
Figure 5: Increasing Jet Fuel Price.............................................................................................7

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1. Introduction
Airbus is an aircraft manufacturing corporation which was founded in 1970; it operates
Aerospace and defence industry. The company offers its services worldwide, and its
headquarters is situated in Leiden, Netherlands. The company is formed by a European joint
venture between EADS and BAE system (Airbus, 2018a). This report will develop a strategic
report for Airbus and analyse its target market and the industry in which it operates. Further,
this report will use PESTEL and Porter’s five forces analysis to analyse external factors that
affect the operations of the corporation.
Figure 1: Airbus Logo
(Source: Airbus, 2018a)
The company is the largest aeronautics firm in Europe and a worldwide leader. Airbus
products include commercial, and defence aircraft such as A320, A330, A300, A380 and
others and it has delivered more than 10,926 aircraft globally (Airbus, 2018b) (Figure 2). The
company offers its services in countries across the globe, and its CEO is Tom Enders. It
operates from more than 180 locations and with 12,000 direct suppliers globally (Airbus,
2018b). The corporation has a physical presence, and it is majorly available in four European
Union countries which include France, Germany, the United Kingdom and Spain.

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Figure 2: Airbus Details
(Source: Airbus, 2018b)
1.1 Target Market
The target market of Airbus includes four major market areas which include airline operators
globally and government defence agencies. Major airlines clients of Airbus include
Lufthansa, Northwest Airlines, US Airways, Air China and others. The government agencies
worldwide purchase defence aircraft from Airbus for military and defence purposes (Airbus,
2018c).
1.2 Industry Analysis
Airbus operates in aerospace and defence industry, and it manufactures both low and
premium class aircraft for its customers. The increase in the global defence spending is
beneficial for Airbus since it increases the demand for fighter planes. In 2016, the industry
generated revenue of $709 billion resulted in $69 billion in profits, and it has reported a
growth of 3 percent in revenue (PwC, 2017). The growing number of aircraft deliveries in the
future is a positive sign for Airbus. According to the data of IATA (2017a), the number of air
traveller has increased 7 percent in 2017. The number is expected to nearly double by 2036
(IATA, 2017b) (Figure 3). Boeing is the direct competitor of Airbus, and other competitors
include Embraer, Bombardier and COMAC. In terms of aircraft deliveries, Airbus is ahead of
Boeing.

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Figure 3: Growth in the number of air travellers
(Source: IATA, 2018b)
1.3 Current Strategy
Airbus is a world-leading manufacturer, and it has adopted a value-added strategy to maintain
its competitive advantage in the industry. According to Kiran Rao, Executive Vice President
of Airbus, the company relies on an empowered strategy team which focuses on providing
tailored solutions to customers across the globe (Airbus, 2016a). This strategy is good
because the strategy team focuses on analysing current market trends, evolution,
infrastructure development and microeconomic forecasts before taking business decisions to
ensure that its products are based on customers’ requirements. Airbus is in a strong position
while comparing it with its competitor such as Boeing as its aircraft deliveries are more than
Boeing (Napolitano, 2017) (Figure 4). These factors add value to the company’s products and
make it successful in the aerospace and defence industry.

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Figure 4: Comparison between aircraft deliveries of Airbus and Boeing
(Source: Napolitano, 2017)
2. External Analysis
2.1 PESTEL Analysis
Political Economic Social
 Brexit – It might
affect the business
of Airbus in UK and
EU countries
(Topham, 2018)
 Deregulation of US
Airline – increase in
number of private
airlines in US which
is the biggest market
for Airbus (Omics
Online, 2016)
 Trump’s decision to
increase military
spending - increase
in demand for
military aircraft
(Rotor and Wing,
2018)
 Emmanuel Macron,
President of France,
declared to increase
military spending
 Increase in Jet fuel
prices (IATA, 2017c)
 Growth in economic
performance of airline
industry in 2017 (IATA,
2017d)
 Decrease in profits by
63% due to drop in
foreign exchange rates
(Davies, 2017)
 Air-traffic growth in
emerging markets (The
Nation, 2017)
 Low MRO labour costs
in countries such as
India, China and Asia-
Pacific (Derber, 2017)
 Increase in disposable
income in emerging
markets in next 20 years
(Airbus, 2018e)
 Efficiency in business
cycles (Airbus, 2017a)
 Increase in number
of air travellers
(IATA, 2018b)
 Change in lifestyle
(Kletzel and Terry,
2017)
 Airlines are getting
closer to dynamic
pricing (Silk,
2018)
 Change in
consumer
preference –
increase in air
travel (Davison,
Littleford and
Ryley, 2014)
 Disaster such as
9/11 – increase in
fear of air travel
(Rose et al., 2017)
 Improvement in
social mobility in