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Boing Vs Airbus Duopoly
The document discusses the duopoly between Boeing and Airbus in the commercial aircraft manufacturing industry. It begins by defining a duopoly as a market controlled by two companies. It then provides characteristics of a duopoly such as two firms controlling the majority of market share and price competition depending on quantity supplied by each firm. The document analyzes the commercial aircraft industry specifically, noting how mergers have consolidated it into just Boeing and Airbus. It discusses aspects of their competition like diversified product portfolios, regulations around safety, and how prices and strategies are determined. Finally, it reinforces that a duopoly has two producers dominating one market, which is the current situation between Boeing and Airbus.
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Boing Vs Airbus Duopoly
- 1. BOING Vs AIRBUSDUOPOLY
- 2. What is Duopoly ? Whatdoes it means Characteristics Advantages and Disadvantages Conclusion
- 3. MEANING A situation inwhich two companies control all or nearly all of the market for a given product or service. A Duopoly is the most basic form of oligopoly, which is a market dominated by a small number of companies. A Duopoly can have the same impact on the market as a Monopoly if the two players collude on prices or output. Collusion results in consumers paying higher prices than they would in a truly competitive market and is illegal under U.S. antitrust law.
- 4. FEATURES Two firms rulethe majority of the market share Competition depends on quantity of product supplied Business decision depends on consideration of rivals product line. Strong price competition – customer looks for product which is cheaper in price. Barriers to entry – small players may not be able to sustain or even reach stage of competition.
- 5. Advantages & Disadvantages Cutthroat competition, customer gets price benefit Interaction Price competition is governed by reaction to other competition. Simplicity Near Perfect Competition. Establishment of New firms is difficult due to Duopolies. Lack of new products which leads to Stale in the market. Price monopolization & quality compromises Limited customer Options Producers have an upper hand Chances of cartelization are high
- 6. REAL WORLD EXAMPLESOF DUOPOLY:
- 7. • AIRBUS VERUSBOEING • Aircraft industry is heavily capital intensive industry with hugh investment in research, development, manufacturing, and marketing technology.
- 8. • Competitive Environment •Dominant and ever growing market • Hugh market demand • Capital intensive • Cut throat competition • Regulated and governed by various agencies.
- 9. Result of Mergers/Integration- Aviation market was not Duopolistic • 1960, there were only 12 commercial aircraft manufacturers By 1980, only 3 left: Boeing, Lockheed Martin, and McDonnell Douglas Lockheed Martin forced out of market because of the dismal failure of L-1011 Tristar • By 1996, Boeing and McDonnell Douglas merged together Airbus beginning as a European consortium while the American Boeing absorbed its former arch-rival, McDonnell Douglas in a 1997 • Presently only 2 manufacturers of large commercial aircraft (100 seats and above): Boeing and Airbus
- 10. Portfolio Diversified– Catersto all sectors and Needs !!! Net Orders by both Boeing and Airbus since 1991 till present :
- 11. Aviation is awell Regulated Market to safeguard consumer safety !!! • Both manufacturers operate in non- capitalist economies. • High capital cost & Labor intensive • Hugh market demand. Multiple stakeholders. • Lack of players due to high capability prowess required. • Security of PAX is subprime. No compromise is tolerable on same. Norms are established. • Global exposure. • Based from different Geographies, governed by local regulation and laws
- 12. Prices, strategies, Innovationand Competition is managed by Producers Modes of competition and Customer Choices • Decisions to outsources across globe for components manufacturing and Supplies • • Technology used – range, materials, weight, automation, etc. • Provisions of Engine Choice – from various makes and models, Green Initiatives, reduce carbon footprint • Currency and Exchange rates – flexibity to bill in multiple currencies, insurance against fluctuations. Etc. • Safety Records – majorly governed by regulations and guidelines. • Pricing competition on discounts. No Ceiling by Government or regulatory bodies.
- 13. A Duopoly isa business term to describe an industry which has just two producers in one market. It is a similar concept to a monopoly, except a monopoly has only one producer for its one market. Because of its simplicity, the duopoly model is the most studied model of oligopoly. It should be noted that there can be more than two producers in a duopoly, but the main two will need to have dominant market share.
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- 15. Two Words Duo---Two Polies---Sellers Market with TWO sellers Just below Monopoly Simplest Form of Oligopoly Have Power to control Market Super Normal Profits Two Classifications: One in which there is coordination b/w duopolists. One in which there is no coordination. MEANING(CONTI NUED)
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