Global Business Management: Strategies for Airbus to Expand in the Chinese Business Jet Market

Running head: GLOBAL BUSINESS MANAGEMENT
Global Business Management
Name of the Student
Name of the University
Author’s note

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1. EXECUTIVE SUMMARY
The purpose of the assignment is to analyze the global business opportunities of a company. The
case study that has been provided revolves around the opportunities in the business jet market of
China. This report focuses on the identification and evaluation of strategies adopted by Airbus to
pursue expansion in the Chinese market in the business jet categories. The Chinese market is a
lucrative opportunity for the business jet market as there are the country hosts second largest
numbers of billionaires who are the target market of the business jet services. It has been
analysed that an alliance with the Hunan Airlines is the best strategy of entering the Chinese
market. The companies can base the alliance on equities and joint venture method will be used.

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Table of Contents
2. INTRODUCTION.......................................................................................................................4
3. PROBLEM IDENTIFICATION.................................................................................................5
4. PROBLEM ANALYSIS AND JUSTIFICATION......................................................................7
4.1 EQUITY BASED ALLIANCE.................................................................................................8
4.2 JOINT VENTURE.....................................................................................................................9
4.3 VERTICAL COOPERATION..................................................................................................9
4.4 COMPETING WITH CHINA COMPANY RATHER THAN COLLUSION.......................10
4.5 MOTIVES BEHIND MERGERS AND ACQUISITIONS.....................................................12
4.6 ALLIANCE FORMATION.....................................................................................................13
4.7 PERFORMANCE OF STRATEGIC ALLIANCE..................................................................13
4.8 ATTACK STRATEGIES........................................................................................................14
4.10 COMBINING PRODUCT AND GEOGRAPHIC DIVERSIFICATIONS..........................15
4.11 STRATEGIC CHOICES.......................................................................................................16
4.12 ORGANIZATIONAL STRUCTURE...................................................................................17
4.13 TRIPOD OF CORPORATE GOVERNANCE.....................................................................18
5. ALTERNATIVE SOLUTION...................................................................................................18
6. RECOMENDATION................................................................................................................19
7. CONCLUSION..........................................................................................................................19
8. REFERENCES..........................................................................................................................21

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2. INTRODUCTION
Airbus is a leading organisation in the aviation and aerospace industry. The company has
over the years served as European Aeronautic Defense and Space Company (EADS). Over
the years of operation the company has established as a major company in the market and has
also gathered reputation among the stakeholders. Airbus is registered in Netherlands and is
categorized as Societas Europaea with the European Union (Airbus.com 2018). As per the
official website of the company, the number of aircrafts delivered by the end of 2017 is 10926
(Airbus.com 2018). Innovation has been one of the greatest strategies of the company to gain an
edge over the other competitors in the market. The company encourages innovation and has also
incurred a number of advanced technology form its predecessor companies. The company is a
consumer oriented business that is focused on the needs and requirements of the customers while
developing strategies. In order to meet the requirement of the customers the company encourages
the experts to broaden their horizon and develop technologies and scientific procedures to assist
the business as well. The aim of the organisation is to establish and help in building a world that
is better connected, safe and prosperous (Airbus.com 2018). There are three categories of the
company in terms of operation commercial aircraft manufacturer, space and defense and
helicopters (Airbus.com 2018). In Europe the company is the largest in the industry and is also
among the world leaders (Airbus.com 2018). The company has its existence in over 180
locations and 12000 direct suppliers. In 2016 the company has been investing a significant
amount in research and development being one of the significant global innovators (Airbus.com
2018).

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3. PROBLEM IDENTIFICATION
The business jet is the category of commercial aircrafts which transports a small group of
people and has a focused target market. The services that are provided in these aircrafts are
premium and exclusive. Most of the airline companies have a segment of business jet, the ticket
price of these airlines are also higher in comparison to other aircrafts in the same route. Airbus
has a list of ACJ (Airbus Corporate Jets) which has around 10 models in the list (Airbus.com
2018). Depending on the model of the craft the interior varies and are developed to make
maximum utilisation of the space (Cavusgil et al. 2014). The idea of the company is to provide
the customers with comfort and luxury. There are also opportunities for the customers to
customise their space and comfort accordingly in some of the models. Airbus associates with a
number of acclaimed designers to plan and strategies the interiors of the aircrafts providing a
class-apart approach to the customers. On the other hand, the experts of the company have
incorporated some of the innovative technologies in these jets as well.
In order for a company to expand the market there are a number of challenges and
barriers that the company has to face in terms of the external environment that impacts the
business as well as the resource and capabilities of the company. Chinese market though being a
lucrative market has a significant number of barriers as well. The airspace in china is controlled
by their military forces and hence in order to get permission companies have to undergo a
number of legal procedures and regulations. Also the flight plans have to be submitted prior in
order to get clearance and acceptance. Beijing is one of the most important airports in China and
has just two hours in a day allocated to business jets. On the other hand, there are also a number

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of tax, export and import duties etc levied upon the customers which is a major hindrance for the
services of Airbus or any other company that is trying to establish business in the market.
Another barrier of expansion in the industry is the anti-corruption strive that has launched by
President Xi Jinping, this has led to a number of organisation to stand down and give up on their
assets. This has also led to a reduction in the market opportunity as well. Another challenge in
the market according to Jason Liao, chairman and CEO of China Business Aviation Group is that
the buyers in the country are becoming more and more consumer centric and thus are also
becoming picky regarding their choice of aircraft.
In order for Airbus to establish the business jet market in China the company will require
a strategic management plan regarding the alliance and other decisions that will be required in
order to align with the industry as well as the capabilities of company.