Case Study Description of EADS/Airbus: Vision 2020
EADS N.V. (EADS), Europe's leading aerospace and defence company, is reviewing its strategic positioning. EADS had planned to merge with a British company to form the world's largest aerospace company, but the merger failed mainly due to resistance from government shareholders. As a result, the firm cannot achieve its major strategic goals that were tied to the merger. In the highly competitive aerospace industry and despite also facing production issues and a corruption investigation, the firm's management must revise both its short-term goals and future action plan.
Authors :: Rosi Ji, Thorsten Knauer, Momo Schafer, Friedrich Sommer
Swot Analysis of "EADS/Airbus: Vision 2020" written by Rosi Ji, Thorsten Knauer, Momo Schafer, Friedrich Sommer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eads Aerospace facing as an external strategic factors. Some of the topics covered in EADS/Airbus: Vision 2020 case study are - Strategic Management Strategies, Ethics, Financial management, Marketing, Strategy and Finance & Accounting.
Some of the macro environment factors that can be used to understand the EADS/Airbus: Vision 2020 casestudy better are - – there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, increasing energy prices, geopolitical disruptions, technology disruption,
increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of EADS/Airbus: Vision 2020
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in EADS/Airbus: Vision 2020 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eads Aerospace, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eads Aerospace operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of EADS/Airbus: Vision 2020 can be done for the following purposes –
1. Strategic planning using facts provided in EADS/Airbus: Vision 2020 case study
2. Improving business portfolio management of Eads Aerospace
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Eads Aerospace
Strengths EADS/Airbus: Vision 2020 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eads Aerospace in EADS/Airbus: Vision 2020 Harvard Business Review case study are -
Analytics focus
– Eads Aerospace is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Rosi Ji, Thorsten Knauer, Momo Schafer, Friedrich Sommer can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Training and development
– Eads Aerospace has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in EADS/Airbus: Vision 2020 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the EADS/Airbus: Vision 2020 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Eads Aerospace in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Eads Aerospace has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study EADS/Airbus: Vision 2020 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Finance & Accounting industry
– EADS/Airbus: Vision 2020 firm has clearly differentiated products in the market place. This has enabled Eads Aerospace to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Eads Aerospace to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Eads Aerospace is present in almost all the verticals within the industry. This has provided firm in EADS/Airbus: Vision 2020 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Eads Aerospace is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Eads Aerospace is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in EADS/Airbus: Vision 2020 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Eads Aerospace is one of the most innovative firm in sector. Manager in EADS/Airbus: Vision 2020 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Eads Aerospace has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in EADS/Airbus: Vision 2020 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Eads Aerospace in the sector have low bargaining power. EADS/Airbus: Vision 2020 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Eads Aerospace to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Eads Aerospace has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Eads Aerospace has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses EADS/Airbus: Vision 2020 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of EADS/Airbus: Vision 2020 are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study EADS/Airbus: Vision 2020, it seems that the employees of Eads Aerospace don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study EADS/Airbus: Vision 2020 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case EADS/Airbus: Vision 2020 can leverage the sales team experience to cultivate customer relationships as Eads Aerospace is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study EADS/Airbus: Vision 2020, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study EADS/Airbus: Vision 2020, is just above the industry average. Eads Aerospace needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Eads Aerospace has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Eads Aerospace has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Rosi Ji, Thorsten Knauer, Momo Schafer, Friedrich Sommer suggests that, Eads Aerospace is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Eads Aerospace products
– To increase the profitability and margins on the products, Eads Aerospace needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Eads Aerospace supply chain. Even after few cautionary changes mentioned in the HBR case study - EADS/Airbus: Vision 2020, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Eads Aerospace vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Eads Aerospace has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Eads Aerospace even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study EADS/Airbus: Vision 2020, in the dynamic environment Eads Aerospace has struggled to respond to the nimble upstart competition. Eads Aerospace has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities EADS/Airbus: Vision 2020 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study EADS/Airbus: Vision 2020 are -
Creating value in data economy
– The success of analytics program of Eads Aerospace has opened avenues for new revenue streams for the organization in the industry. This can help Eads Aerospace to build a more holistic ecosystem as suggested in the EADS/Airbus: Vision 2020 case study. Eads Aerospace can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Eads Aerospace can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Eads Aerospace is facing challenges because of the dominance of functional experts in the organization. EADS/Airbus: Vision 2020 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Eads Aerospace to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Eads Aerospace to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Eads Aerospace has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study EADS/Airbus: Vision 2020 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Eads Aerospace to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Eads Aerospace can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Developing new processes and practices
– Eads Aerospace can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Eads Aerospace can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Eads Aerospace can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, EADS/Airbus: Vision 2020, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Eads Aerospace can use these opportunities to build new business models that can help the communities that Eads Aerospace operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eads Aerospace in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Eads Aerospace to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Eads Aerospace to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats EADS/Airbus: Vision 2020 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study EADS/Airbus: Vision 2020 are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Eads Aerospace needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Eads Aerospace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Eads Aerospace will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Eads Aerospace with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Eads Aerospace needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Eads Aerospace in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Eads Aerospace can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study EADS/Airbus: Vision 2020 .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study EADS/Airbus: Vision 2020, Eads Aerospace may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Technology acceleration in Forth Industrial Revolution
– Eads Aerospace has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Eads Aerospace needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Eads Aerospace is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Eads Aerospace can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Eads Aerospace needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Eads Aerospace can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Consumer confidence and its impact on Eads Aerospace demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of EADS/Airbus: Vision 2020 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study EADS/Airbus: Vision 2020 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study EADS/Airbus: Vision 2020 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study EADS/Airbus: Vision 2020 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of EADS/Airbus: Vision 2020 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Eads Aerospace needs to make to build a sustainable competitive advantage.