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Case
Boeing and Airbus: Competitive Strategy in the Very Large Aircraft Market
Author(s)
Boeing and Airbus are contemplating entry into Very Large Aircraft (VLA) market. Both firms are convinced the market cannot support two players due the extremely high R&D costs and the limited (and highly uncertain) state of demand. The key strategic issue is the uncertainty surrounding Boeing's development cost: To what extent would Boeing's experience with the 747 help it reduce the R&D cost of a new VLA prototype? The main point of the case is that Boeing's strategic moves signal its private information, and that this eliminates any first mover advantage Boeing might have had in this market.
Date Published:
01/01/2006
Discipline:
Economics;Strategy
Key Concepts:
Replacement Effect, Signalling, Winner-take-all Markets, Credible Preemption, Competitive Strategy, Economics
Citations:
Al-Najjar, Nabil, Ichiro Aoyagi, Guy Goldstein, Ted Korupp, Bin Liu, Suchet Singh. Boeing and Airbus: Competitive Strategy in the Very Large Aircraft Market. 5-404-759 (KEL022).