The boeing case essays

The boeing case essays As we have captured knowledge from reading articles and listening to news, we notice that competing in the aircraft is not an easy job. Companies need millions of dollars to develop a single airplane. This kind of business or manufacturing needs more than 100% accuracy, it concerns the life of millions of people. Building a plane needs an enormous budget; industries need to concentrate on research and development, and to have a high level of dependence on technology. Due to the enormous costs associated with developing a new airliner; a company has to be very fortunate to break even in 10 to 14 years. Usually 5 to 6 years of negative cash flow are associated with the development phase. The estimated costs for the Airbus A380 are between 10 billion to 15 billion. The enormous development costs alone forces the company to capture a significant share of the world demand to break even. Boeing and McDonnell had already got their business established through subsidies therefore in order for Airbus to be successful they had to do the same thing. I believe it was necessary for Airbus to receive subsidies to launch their program, because of the large costs and national interest in the industry. Without subsides, it would have taken Airbus a while to earn enough profit to finance the program themselves and by then, it would have been much harder or even too late to compete. Another reason Airbus needed subsidies were because the commercial aircraft industry requires very large expenses which includes production and labor. Airbus counters that its success was due to a good product and a good strategy, not subsidies; but they only acquired the state of the art technology through government funding. The European government felt the need to invest so much money into Airbus so that they could capture some of the market share that the U.S. companies had already done. Airbus i s a viable competitor not only because of good products and a good stra...