Airbus Essay

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Executive Summary: The competitive landscape for manufacturing commercial aircraft in 1991 consists of three major players: Boeing, Airbus, and McDonnell Douglas. From the beginning, the history of the industry has been closely tied to government contracts for developing technology for national defense, aerospace, and other projects. Over time, this dynamic of heavy government involvement in the profitability and sustainability of each of the companies has created an environment where the fairness of international trade has been called into question. Facing new restrictions on government assistance moving forward, we seek to help you, Airbus, combat this issue and others and remain competitive in the manufacturing of commercial aircraft. Industry Overview: Boeing and McDonnell Douglas have each profited heavily from US military contracts since World War II that have indirectly benefited their respective commercial segments in terms of reduced research and development costs (Yoffie 2). Your company, Airbus, on the other hand, owes its entire existence to public funding from several European countries beginning in the late 1960’s and continuing to the present (Yoffie 2). In an attempt to balance the playing field for commercial aircraft manufacturers, key government officials from the US, Europe, and elsewhere created the 1979 GATT Agreement on Trade in Civil Aircraft. This plan attempted to end duties and technical barriers for civil aircraft, promote fair pricing, and ban governments from interfering with sales and purchases of aircraft. The Large Aircraft Sector Understanding was added in 1985 to eliminate governmental financial assistance when selling the products (Yoffie 10). These agreements have not settled the situation, however. Parties from each side of the argument have put forth claims alleging that the other side has not followed

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