Boeing/Airbus Case AnalysisCompetition in the Commercial Aircraft IndustryWith only a few large companies worldwide (Boeing, MD and Airbus), the commercial aircraft industry essentially shows the qualities of an oligopoly competition with intense rivalry. Here is an analysis of competition in the commercial airline industry using Porter's five forces. Figure 1: Porter's five forces applied to the aviation industry Barrier to entry: - High barriers to entry, to some extent help in understanding the risks involved in operating in the aviation industry .1. Initial Capital Requirements: - A long initial development period and very high investment, equipment and WIP costs are required even before the company starts producing and selling aircraft. It takes more than 5 years of development and manufacturing costs before the company starts earning revenue. Purchase commitment and investment from launch customers are crucial.2. Economies of scale: - The company had to have a significant quantity of orders to achieve economies of scale. Otherwise the production cost would normally be higher than the selling price of the aircraft.3. Role of Government: - Government is an important stakeholder for the aviation sector. Subsidies and government protection play a huge role in the aviation industry. (Discussed later in the article)4. Learning Curve: - The learning curve is very steep. Companies learn from developing year after year and internalizing lessons learned. Boeing was founded in 1916 and Airbus in 1970. Both of these companies have progressed step by step learning from every product and technology they built and also from their failures. Buyers: - It is essential that aircraft manufacturers have a global..... .middle of paper......be more expensive than profitable.3. Alliance with Airbus: - May never be possible given their history. It is certainly not good for the air travel industry.4. Technological Innovation: - Boeing should carefully analyze the market to evaluate trends in the airline industry and aggressively invest in a new product line (top dog strategy) that could counter Airbus' A380.5. Government Support: - Boeing may seek government intervention to prevent Airbus from selling to American airlines, thereby reducing market availability for Airbus. But this could prove counterproductive for Boeing as EC governments could react similarly. Of the four strategies mentioned, I think the most viable one would be the price leadership or technological innovation strategy. Perhaps Boeing could engage in both of these strategies at the same time