Report on the airline and aircraft and manufacturing industries Essay

Report on the airline and aircraft and manufacturing industries - Essay Example The barriers to entry are high and so very few prospective players are looking forward to enter. The industry is impacted by macro-environmental factors which help to shape demand for its commercial aircrafts. The factors that drive demand in this industry include economic growth as measured by gross domestic product (GDP) and growth in regional and international trade. These factors have historically impacted on growth in regional and international travel. With the abatement of the global recession in most regions, it is expected that the demand for commercial aircrafts will increase resulting in between 26,000 and 31,000 new commercial aircrafts of varying types being demanded. The demand for new aircraft will also be stimulated by the need to replace retiring aircrafts with new and more energy efficient aircrafts that burn less fuel and have more capacity to enable increases in revenue per passenger kilometre (RPK). Boeing and Airbus are the major players in the aircraft manufactu ring industry and both of them have produced market forecast for the 20 year period 2010 to 2029. They both have differences in their estimates of the number of aircrafts that will be required to fill demand for passenger seats during the period. They also have differing expectations on whether the point-to-point or hub and spoke is the best strategy to follow as both seek to ensure that whichever philosophy airlines choose, they are not disadvantaged. A SWOT analysis reveals that the companies have significant strengths and will be able to take hold of the opportunities and minimise weaknesses and threats in both the micro and macro-environments. A TOWS analysis model was used to determine what strengths could be used to take hold of opportunities and minimise threats and weaknesses and turn them into opportunities where possible. Table of Contents 1. Introduction 2. Part A 2.0 Definition of the industry and its structure 2.1 An analysis of the micro-environment 2.1.1 Threat of sub stitute products 2.1.2 Barriers to entry 2.1.3 Power of suppliers 2.1.4 Power of customers/buyers 2.1.5 Competitive rivalry 2.2 An analysis of the macro-environment 2.2.1 Political factors 2.2.2 Economic factors 2.2.3 Social factors 2.2.4 Technological factors 2.2.5 Legal factors 2.2.6 Ecological factors 3 Part B 3.0 Developing a strategy 3.1 Market Forecasts 3.1.1 Boeing’s Market Forecasts 3.1.2 Airbus’s Market Forecasts 3.1.3 Comparison of Forecasts 3.2 Situational Analysis of Boeing and Airbus 3.3 Situational Analysis using the SWOT model 3.3.1 Strengths 3.3.2 Weaknesses 3.3.3 Opportunities 3.3.4 Threats 3.4 Situational Analysis using the TOWS model 4.0 Conclusion 1.0 Introduction This report is divided into two parts. Part 1 identifies and analyses the structure of the commercial aircraft manufacturing industry with emphasis on its two major players Airbus of Europe and Boeing of the United States. It then analyses the competition in the industry and the demand con ditions facing industry players. An analysis of the macro-environment using the PESLE model and highlighting the main factors that will impact the industry has also been presented. Part 2 summarises market forecasts prepared by Airbus and Boeing and highlights the differences. In order to determine the ability of both companies to deal