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airbus and boeing case study answers

Category: Business Paper Type: Homework Reference: APA Words: 1500

According to the analysis of the case, when we look towards the policies behind the issuing of soft loans and the affects of the establishment of Airbus on the European Economy through democratic socialism, from European countries for the establishment of Airbus, we find that the European government has successfully justified the financial aid to Airbus. Following this, the matter of the fairness of the loans and subsidies for the airbus can also be justified as it has mentioned in the case that the “Airbus qualified as subsidies under the World Trade Organization’s Agreement on Subsidies and Countervailing Measures and the subsidies were actionable.

Moreover, with the establishment of the Airbus, not merely the Airbus received the advantage of the European aid to become one of the leading airlines in the world but it has also left great impact on the overall economy of the region. Government financial support helped the airbus to launched A380, A350 and many other innovative airplanes that helped the company to capture the globalized market of airplane. In the response of the government support, Airbus received rapid grow and become one of the leading airlines in the world and in 1992 it captured about one third of the global commercial aircraft market.

Case Study Of Government Intervention at Airbus and Boeing Submitted By Dated: Question # 1: According to the analysis of the case, when we look towards the policies behind the issuing of soft loans and the affects of the establishment of Airbus on the European Economy through democratic socialism, from European countries for the establishment of Airbus, we find that the European government has successfully justified the financial aid to Airbus. Following this, the matter of the fairness of the loans and subsidies for the airbus can also be justified as it has mentioned in the case that the “Airbus qualified as subsidies under the World Trade Organization’s Agreement on Subsidies and Countervailing Measures and the subsidies were actionable. Moreover, with the establishment of the Airbus, not merely the Airbus received the advantage of the European aid to become one of the leading airlines in the world but it has also left great impact on the overall economy of the region. Government financial support helped the airbus to launched A380, A350 and many other innovative airplanes that helped the company to capture the globalized market of airplane. In the response of the government support, Airbus received rapid grow and become one of the leading airlines in the world and in 1992 it captured about one third of the global commercial aircraft market. According to the Democratic Socialism of the European countries, the countries of the region will collectively play their role for the political and economic development of the region. In this way when we look towards the case of European countries financial support for the establishment of a new airline Airbus, we can realize that the step taken by the countries boosted the economy of the region. In the retort of the European countries alliance for the airline brought jobs for around 53,000 people, it introduced new valuable technology and most importantly, it attracted a huge amount foreign capital to the Europe that played considerable role in economy. Question # 2 In the response of the rapid progress of the Airbus, Boeing had to face great loss in the market and its business considerably reduced at great extent. When Boeing became helpless to tackle Airbus and felt the danger severely, it went to the court against the European aid for the establishment and for the support of Airbus. Controversially, the case described that the aid of the European countries for Airbus was actionable but the Boeing received indirect subsidize through massive defense contract via tax dollar. On the other hand, in the name of Research and Development US government granted around $23 billion in indirect government subsidies. According to the case, in the light of the World Trade Organization’s Agreement on Subsidies and Countervailing Measures the subsidies to specific industries from government or other public bodies are prohibited. Boeing received huge subsidized from US government and Japanese companies that to build the 787 Dreamliner in an approach to compete Airbus in the race of Airline Industry. Secondly, Boeing received indirect support from the NASA and Pentagon the Space Agencies of America and the Airline was free to use the knowledge acquired from these projects for the production of Civilian Aircrafts. This activity of the Boeing Seems unfair as it received subsidies and loans for other purpose but he used the collected money in the manufacturing of civilian aircrafts. Therefore, Boeing unethically used the provide payment and received unfair advantages from it. Question # 3 Airbus has become an important driving factor in the European economy and it has played important role in the past economy therefore, the company has great importance in the economy fair of the region. In the present condition, the European economy greatly connected with the Airbus performance. Thus, in case if the airline will not be able to compete without loans and subsidies, thus it seems hard for the Europe to discontinue its financial support for the Airbus airline business. In case, if Europe will not support Airbus to compete then the company would probably collapsed because of the financial crises and the collapse of Airbus will not remains with the company but it will create great challenges for the European nations. It is because a large number of Employees are working with the Airbus, if the company will collapse then thousands of people will lose their jobs and become burden on the country and the economy will receive adverse affects. In this concern, by considering the importance of Airbus and by focusing on the after affects of the collapse of the airline, the European countries have great interest to continue supporting the Airbus. Moreover, the European countries realize the potential of the Airbus as they have received massive economy growth through the businesses of Airbus; therefore, they will not let the chance to go empty and will do their best for the support of Airbus. Considering, the importance of the Airbus for the European nations, it can be reasonably stated that the European country will continue their support for the Airbus. Question # 4 Considering the WTO rules against Airbus regarding the acceptance of subsidies and soft loans, the management of Airbus needed to convince WTO through conceptual and reasonable facts that justify the importance of the Airbus for the European nations. The management of the Airbus should go on with a fact that Airbus has become a part of European economy and not merely millions of travelers are attached with it but it has a large line of employee and they are huge in numbers. Similarly, other stakeholders receive direct impact of the progress of Airbus. Therefore, if the European national will stop subsidies and soft loans for Airbus, then in the response of Global Financial Crises, the company will probably be collapsed and will left adverse effect. The massive foreign capital will be flooded away from the European economy, the large number of Employee will lose their jobs as well and the overall economy will have to face serious economical crises. To maintain the Airbus leading position in the Global Commercial aircraft industry, the management of the company need to go through progressive approaches and strategic management in which they have to focus on various factors. At the very first stage, the management should avoid over manufacturing. There is great need to understand the market trend and instead of focusing on the race in Commercial aircraft industry, there is need to focus on maintain the performance. The Airbus should reorganize its global operations and manufacturing should be outsourced to cut-off the manufacturing cost at great extent. Moreover, the company should sell its factories.

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