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At the dawn of the twenty-first century, Boeing and Airbus, the leading manufacturers of large aircraft, were locked in a battle for market share that drove down prices for their new planes. At about the same time, the two industry heavyweights began developing new aircraft families to address the future market needs they each projected.

Aircraft take many years to develop, so by the time the new planes made their inaugural flights, significant changes had occurred in the global environment. First, emerging economies in the Asia-Pacific region and elsewhere were growing rapidly, spawning immediate and long-term demand for more aircraft. At the same time, changes to the market for air travel had created opportunities for new products. These opportunities had not gone unnoticed by potential new entrants, which were positioning themselves to compete against the market leaders.

In October 2007, the Airbus superjumbo A380 made its first flight. The A380 carried more passengers than any other plane in history and had been touted as a solution to increased congestion at global mega-hub airports. Four years later the Boeing 787, a smaller long-range aircraft, was launched to service secondary cities in a point-to-point network.

The case provides students with an opportunity to analyze the profit potential of the global aircraft manufacturing industry in 2002 and in 2011. Students can also identify the actions of participants that weakened or intensified the pressure on profits within the industry.

Audio format (.mp3 file) available with purchase of PDF. Contact cases@kellogg.northwestern.edu for access.

This paper aims to address the questions of different outsourcing strategies between Airbus and Boeing and point out the theoretical limits of the resource-based view (RBV) approach that must be broadened with a finance perspective. Owing to the complexity of systems, the aircraft industry is nowadays structured around a well-organised value chain of product development and manufacturing. However, according to the RBV, capabilities attached to some systems and components are strategic resources and must be kept in house to maintain competitive advantage. In commercial aircraft avionics, critical systems such as flight controls fall directly under this rule, due to substantial risks of passenger safety they deal with.

This study is based on two comparative studies concerning the A330/340 and A350 programmes at Airbus and their equivalents at Boeing, the B777 and the B787. The data are both primary (financial and patent data) and secondary (semi-structured interviews and documentation.

The main result highlights the limits of the RBV model to understand why Airbus has chosen to re-internalise the development and production of flight control systems contrary to Boeing. For both, cost reduction is the main objective of outsourcing, but European firms are more careful with critical resources. The financialisation of aircraft manufacturers’ strategies is another explanatory factor relevant to understand why Boeing outsources strategic resources such as flight controls.

The authors demonstrate the potential of multiplication of research methods to address a question. Second, they try to bring together different theories in a preliminary effort, which gives them some promising stuffy perspective for future works.

By addressing both the RBV and the financialisation perspectives, the authors provide an interesting view of the COmplex Products and Systems (CoPS) challenges.

The findings of this research must provide key of interpretation for business managers, which may consider the two faces, knowledge management and financial, to explain corporate performance.

Several originalities are relevant in this work. From a methodological point of view, the authors offer a comparison between the two main players of commercial aircraft manufacturing, an oligopolistic industry. Second, the data they choose to rely on are both qualitative and quantitative to strengthen the results. Third, at a micro level, this study is original in its approach of linking outsourcing to financialisation.

1982 saw the world aircraft market slip even deeper into recession. Only 33 civil wide‐body aircraft were sold during the year, a mere 10% of 1979's total and 21% of 1980's.

Purpose – The purpose of the chapter is to sketch the historical and evolutionary development of the Wichita Aircraft Manufacturing Cluster from inception to present and provide a descriptive narrative of aircraft industry knowledge spillovers currently driving effort to establish a Medical Device Manufacturing Cluster. The chapter illustrates how carbon-fiber composite materials knowledge and technology developed for use in the aviation industry is facilitating the creation and growth of medical device manufacturing.

Methodology/approach – We use an historical case study approach to trace the development of the aircraft cluster in the Wichita, KS metropolitan area. A number of technologies are identified that had initially been adopted by one firm but eventually diffused through other firms in the local cluster and ultimately throughout the industry.

Findings – In addition to providing examples of within industry knowledge spillovers, we provide an example of technology-based knowledge that is diffusing through the aircraft manufacturing industry and is now being used as the basis for establishing an unrelated industry manufacturing cluster. The use of carbon-fiber composites in aircraft manufacturing has diffused from one manufacturer to many in the industry. Subsequently, the knowledge base surrounding carbon-fiber composite materials is being used in a local R&D effort to create a second manufacturing cluster producing medical devices ranging from surgical instruments to joint-replacement implants.

Originality/value of paper – The chapter illustrates a unique example of a manufacturing cluster, intra-industry knowledge spillovers, and inter-industry knowledge spillovers to create a new manufacturing cluster.

Demonstrations undertaken in flight of the Smiths Industries Electronic Flight Instrumentation System (EFIS) at RAE Bedford; at Toulouse for Airbus Industries; and for a variety of authorities and companies in North America; are the first to show an integrated colour CRT system in its natural environment. The EFIS has been installed in the RAE One‐eleven aircraft and comprises 8in. by 8in. display units to ARINC 725 Form Factor D, for primary flight and navigation data. Although there have been only two displays for the demonstrations, there could be six in a typical production aircraft flight deck. The flexibility of installation and the ability to make software changes enables the system to be adapted to meet the needs of an operator, and in addition, different display unit configurations are also being developed.

ON the first day of this international, multimillion pounds, aviation exhibition, there was a very obvious gloom in the air. Words like ‘despite’, ‘but’ and ‘well!’, could be heard echoing around both the many occupied and vacant stands. The recession, of course, has been the main reason for these pessimistic and negative words. Defence cuts, geopolitical uncertainties, cutbacks in other related industries, fewer passengers and increasing competition are not the best ingredients for business success and future growth. However, as the week progressed, the show began to buzz with the increasing number of traders and the unfolding business news. Much of the news consisted of companies merging ideas and efforts in the hope that ‘two minds were better than one’. In fact, on 9th September, it was announced that thirty major European Aeronautical Companies called for a large strategic European effort for research and technology collaboration to ensure the future international competitiveness of the European aeronautical industry.

Industrial policy as practiced by the Japanese is aimed at creating comparative advantage for its industry. This article emphasises Japan's integrated approach to industrial policy. Examples of the application of industrial policy to specific industries are presented. The importance of incorporating the effects of such industrial policies for an analysis of competition in international markets is highlighted. Then, some appropriate strategic countermeasures to such industrial targeting are discussed.

The purpose of this paper is to define reliability requirements to be imposed on electric engines to assure similar or higher value of mean time between failures (MTBF) for mixed piston-electric propulsion configurations when compared to classic and unconventional piston engine configurations.

Reliability estimation was done using mathematical model of safety of light aircraft commercial operations. The model was developed on the basis of Federal Aviation Administration and National Transport Safety Board data. The analysis was conducted for numerous piston and electric configurations. It allowed comparison of selected solutions and definition of relation between electric engine MTBF and MTBF calculated for entire mixed piston-electric propulsion system.

It was found that, from reliability point of view, mixed piston-electric engine propulsion is attractive alternative for classic single- and twin-piston configuration. It would allow to at least doubling of MTBF for propulsion without increase of operational cost.

Rationale behind exploiting electric propulsion in aviation is provided. Relation between electric engine reliability and entire propulsion reliability was identified and defined. Minimum requirements concerning MTBF value for electric engine application in aviation was assessed. Conclusions from this study can be used for definition of requirements for new aircraft and by the regulatory authorities.

Originality consists in use of real accident statistics included in mathematical model of safety for assessment of MTBF for various classic and novel piston and piston-electric engine configurations of light aircraft. Output from the study can be exploited by the industry.

Technology offers great opportunities to firms. Successfully bringing the benefits of technology to market and realizing favourable returns requires a careful balance and management of a host of factors. The critical test of such efforts occur where and when technology “meets the market”, resources and great efforts will yield returns only if one meets the market. Focuses on push versus pull marketing forces and their importance in technology assessment, policy, strategy, and the management of efforts to exploit technology successfully. It defines characteristics of push versus pull forces, addresses the importance of economic, social, political and technical forces, and discusses factors of importance to the marketing analyst and strategist. It provides force assessment guidelines and an evaluation and scoring worksheet to evaluate and summarize factors that will determine the success or failure of a technology based effort. In addition, this assessment scheme is useful in a variety of other situations and environments. Includes examples related to the private and government sectors.