Boeing And McDonnell Douglas Response To Competition From Airbus Industries

Essay by PaperNerd ContributorUniversity, Master's October 2001

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Subject: Boeing and McDonnell Douglas response to Competition from Airbus Industries My analysis of the case of Boeing, McDonnell Douglas, an Airbus Industries revealed and ever more difficult trade environment resulting from unfair government support from the European conglomerate, thereby giving Airbus an unfair competitive edge from a pricing standpoint. The only reasonable way to fight off Airbus would be a merger of McDonnell Douglas with Boeing allowing both companies to merge their sector strengths in the commercial aircraft and defense contracting industries.

Summary of Proposed Actions Boeing Corporation is the market leader in long-range commercial aircraft and McDonnell Douglas is the largest defense contractor in the United States. Since the case states that innovation and technological advances are spawned from the defense industries and are a legal way for commercial aircraft companies to get government funding for their development projects, a merger of the two companies would be an immensely complimentary marriage of two companies with unique core competencies.

The new company should also continue to aggressively compete in the commercial aircraft industry by continuing the policy of taking its competitor's planes in trade and reselling them. This would force Airbus to continue to support the maintenance of those aging aircraft, thereby diluting their resources by to managing that effort.

A McDonnell-Boeing merger would allow the company to reduce its costs by eliminating redundant functions and they would also increase their competitiveness and responsiveness by taking advantage of existing outsourcing contracts from their respective companies. A merger would also increase their commercial customer base for each respective company thereby opening up opportunities for additional sales.

Justification and Implementation of the Proposed Actions Boeing has developed a reputation for providing rapid worldwide service and parts replacement for its customers, something that McDonnell Douglas could certainly take advantage of in...



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