Airbus vs. Boeing Case

Date:2/22/2021
Airbus Vs. Boeing
1 What are the drivers of value creation and value capture in this industry?
In any given industry, companies have to outline their value creation components, including costs and benefits that will be accrued after producing an absolute good (He et al., 2017). Also, the same companies have to target a higher value of that product once it is out in the market. The same case applies to the airline industries: Airbus and Boeing. The following are some of the drivers of value creation.
* Creation of a supplier network- Manufacturing of any given plane requires many parts, nearly to 4 million domains. All the features need to be supplied regularly to allow continuous production of aircraft. Therefore, airline companies have to establish a good connection of suppliers from all over the globe so that consistency of output and finding the quality raw materials can be achieved. This is vital, especially in the manufacture of passenger planes which are usually in high demand thus require high plane production to meet the increased market needs.
* Presence of supporting organizations, operations, and infrastructure- The aircraft industry is always dependent on the available surrounding factors such as infrastructure, government policies, and general investors. For instance, in Europe, most European governments, such as the British Aerospace, offered small loans to Airbus to meet its production costs. Additionally, the right roads and good sources of energy such as crude oil facilitate planes' production.
* Market requirement- Increased production of planes to the rise of many aircraft manufacturers has led to an increased competition where now the aircraft that meet market requirements get high demands. This calls for more technology advancements, thus the creation of more value.
* Right brand image- The need to maintain the right company image calls for more value creation. Companies such as Airbus and Boeing are the two major companies known for their prowess in the production of passenger planes (Jopp & Spoerer, 2020). To maintain the right name, these companies engage in more value creation, especially when it comes to cheap goods.
* Initial Capital Investment- Aircraft companies require billions of dollars to produce aircraft. Likewise, the capital necessary to start an aircraft company is equally high; thus, once established, the companies need to create more value in their goods to return money used in selecting the company.
For value capturing, these are the several derivers that companies employ.
* Profit- This is the primary driver in any given industry apart from mainly the aircraft companies. The ability to attract more earnings through better marketing strategies such as the deferred-seat strategy used by Airbus where they sell planes as if they have a low number of seats increases the company’s sales thus shows that a company is capturing more value in its products. The value of Return On Assets (ROA), which involves the division of profits by the available assets, can tell a company's position in terms of value capture.
* Customer's payment plans- Purchasing aircraft is always expensive for most organizations which is the same case in their production. For aircraft industries to increase the affordability of planes in the market, they have to provide payment options to help customers buy them. These options can be hire, purchase, or even leasing. These payment options mean that the companies have to capture prices that can allow these payment options, aff...