Analysis of the Boeing/Airbus caseCompetition in the commercial aircraft sectorWith only a few large companies around the world (Boeing, MD and Airbus), the commercial aircraft industry essentially has the qualities of an oligopoly. competition with intense rivalry. Here is a competitive analysis of the commercial aircraft industry using Porter's Five Forces. Figure 1: Porter's five forces applied to the aeronautical industry. Barrier to Entry:- High entry barriers, to some extent help in understanding the risks of operating in the aviation industry. .1. Initial capital requirements: - A huge initial development period and very high investment, tooling and work-in-progress costs are required before the company even starts producing and selling aircraft. It takes over 5 years of development and production costs before the company starts generating revenue. Buying commitment and investments from launch customers are crucial.2. Economies of scale: - The company had to have a large number of orders in order to achieve economies of scale. Otherwise, the cost of production would generally be higher than the selling price of the aircraft.3. Role of government: - The government is an important player in the aviation sector. Government subsidies and protection play an important role in the aviation sector. (Discussed later in the write-up)4. Learning curve: - The learning curve is very steep. Businesses learn from year to year and by internalizing lessons learned. Boeing was established in 1916 and Airbus in 1970. Both of these companies progressed step by step by learning from every product and technology they built as well as their failures. Buyers: - It is essential for aircraft manufacturers to have a..... . middle of paper......to be more expensive than profitable.3. Alliance with Airbus: - Perhaps never possible given their history. This is definitely not good for the airline industry.4. Technological Innovation: - Boeing should carefully analyze the market to assess 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 could seek government intervention to prevent Airbus from selling its products to US airlines, thereby reducing Airbus' availability in the market. But this could prove counterproductive for Boeing, as EC governments could retaliate in the same way. Of the four strategies mentioned, I think the most feasible one would be either the price leadership strategy or the technology innovation strategy. Perhaps Boeing could engage in both strategies simultaneously