Airbus and Its International Business - Term Paper Example

Airbus and Its International Business of Affiliation: Airbus and Its International Business With advanced technological developments, doing business has spread across regions, into areas with diverse cultures, political, economic, and social aspects. Through globalization, businesses have been able to expand substantively, capturing new markets and therefore, enhancing their stability and profitability. Airbus as an international organization, has been able to explore many different countries from where it has been able establish ground and influence its profitability. Despite the various differences from various perspectives, the company has remained a force to reckon with in terms of international business. Introduction Airbus is a company in the aerospace industry, dealing with the manufacture of aircraft in the division of Airbus Group. Headquartered in Blagnac France, Airbus has established its manufacturing and production facilities in many other countries around the globe, with the most identifiable including German, Spain, and the United Kingdom (Norris and Wagner, 1999). According to the latest statistics, the company was able to produce 626 airlines in 2013. Three individuals namely; Bernard Lathière, Roger Béteille, and Henri Ziegler founded the company in 1970. Over the years, the company’s success has been realized mainly due to the contributions of two key individuals; Fabrice Bregier, the chief executive officer and Gunter Butscheck, the chief operating officer. As at 2008, the company’s revenue was at Euros 33.10 billion. Despite diversifying their operations into many different countries, Airbus deals solely in the manufacture of commercial airlines as its only product. As at the moment, the company has 63,000 employees in its sixteen different working sites in the different countries in which the company had built its production and manufacture facilities. Currently, Airbus is considered as the world’s manufacture of the largest passenger airliner the A380 (Norris and Wagner, 1999). It is the desire of many businesses to expand to different regions that show potential success opportunities. In such a perspective, Airbus has been able to establish expansive opportunities in many different countries in the world. One of the countries is China. China is currently one of the developed countries in the world, and therefore, experiencing significant changes in terms of the business ventures (Som, 2009). The substantive rise economically by China has mainly been attributed to changes the country has made in its political and economic systems. With the current manner in which China develops economically and socially, it is substantive that there would be critical effects when the globe finally adjusts to the presence of China’s economy and political development. It is a critical aspect that the involvement of China in international business has to have an effect on both the policies and the political systems. Based on such a perspective, it is possible that different large countries would therefore, participate in the active participation in the management of both its political and economic interests depending on the effects the two aspects would have towards China’s development (Newhouse, 2007). The economic transition that China as experienced over the past decade, to the position of the world’s second largest single trade in the world economy. This has had a significant impact on China’s political system and the manner in which the political system operates. The fruits of the continued economic growth contribute to further changes in the political systems, considering that the two work in unison towards the facilitation of proper governance and transparency necessary towards the achievement of high levels of prosperity. Based on the progress that China’s economic systems have had over the past years and the impact the same has had in changing the economic the political system towards influencing trade (Newhouse, 2007), doing business especially with international companies has indeed achieved great success. With the stable economic and political systems, China has indeed become one of the world’s markets for the aviation industry, contributing up to 20 of the current Airbus’ global production . As at 2013, the company from its Chinese production unit has been able to deliver up to a thousand aircrafts to China air (Newhouse, 2007). Considering the economic progress that China has realized over the past decades, with stabilized political institutions, Airbus has been able to expand its fleet of airlines by up to 50 times more in less than just two decades (Hill, 2009). Every country provides different business environments for both the local and the international businesses. Considering the globalization perspective in global business, China has indeed become an appealing market for many organizations and investors. In developing appropriate globalization strategies, one of the greatest concerns for many businesses in the international platform is the cultural diversities as each country has a difference cultural influence (Newhouse, 2007). Chinese society is one that is influenced much by different traditional values. These indeed play a substantive role in the promotion of strict systems of norms and propriety (Som, 2009). China bases its business prospects onto five main cultural aspects. These include distance, individualism, masculinity, uncertainty avoidance, and long-term orientation. Distance is Chinese cultural aspect determining the extent to which the less powerful individuals in China expect and accept that there is power is distributed unequally. According to Chinese cultural settings, it is accepted that certain inequality exists within the society. Individuals in the lower hierarchal level in the society are never to challenge those of the higher ranks (Som, 2009). The aspect of individualism in the Chinese culture is based on the image the society shows to the external societies. This is whether individuals are identified as individuals or as corporates. China in these aspects exists as a collective society in which the interests of others concern individuals. On the masculinity/femininity dimension, China is developed as a masculine society in which people are driven by values of competition, achievement, and success. On the cultural aspect of cultural aspect of uncertainty avoidance, China ideally a low scores for the culture in that Chinese are always confortable with ambiguity and any occurrence. Things are done on risks and therefore, facilitating relationships takes precedence with law taking second position (Newhouse, 2007). Additionally, China has a long-term orientation where the future rewards individuals based on their perseverance and persistence. On a critical analysis of the of the cultural aspects of the Chinese society, it is substantively clear that such an environment is directed towards providing businesses with the opportunity of achieving success and Airbus has indeed captured the opportunity and is realizing great success. China has been able to realize great success from Foreign Direct Investment policies it has developed. With vast investment opportunities and continuously growing domestic market, China has indeed become a great attraction for foreign investors. The foreign direct investment policies that China has developed have contributed towards economic development in the nation in addition to the strengthening of institutional capacities it has achieved in the previous years (Rugman, 2006). This has mainly been because of the liberalization aspect with the different market opportunities put in their right places. With the decentralization of FDI approval and policy implementation, China has been able to create opportunities for healthy competition for both the local businesses as well as those of international affiliations (Newhouse, 2007). It is due to this aspect that Airbus has made strides into its full establishment and success in the Chinese markets. This has contributed towards Airbus’ realization of the 20% production capacity in the Chinese facility. Regional Economic Integration plays critical role in determining the economic success of countries within a particular region, with the main being the rapid economic development. With the increase in economic ties between China and France, significant success has been realized by Airbus. Proper regional economic integration involves the aspect of a region providing the appropriate environment for doing business for the benefits of all the nations involved (Rugman, 2006). China leads its region in the elaboration of regional trade policies, considering that it has grown as the regional’s powerhouse (Hill, 2009). By this China has become the greatest proponent of bilateral trade liberalization, thereby stabilizing both the nation’s economic and political stability. By this Airbus has been able to expand its market for the airlines produced by the Chinese production facility. For any country to establish stability and achieve success in business prospects, the government must be in full support and provide the appropriate environment for which business can flourish. Governments usually develop different strategies and policies that regulate and control business operations. Any restrictions developed by governments in the control of businesses are mainly due to three factors. These are politics, economy, and culture (Som, 2009). The Chinese government has developed various strategies for influencing and intervening in trade prospects in the country, contributing towards a steady growth of the economy. The government offers low interest loans to various businesses to as a facilitation of improving their fast growth and stability in realization of profits with ease. Additionally, the government has been able to develop strict security measures within the country, which provides an environment appropriate for both the local and the international investors. The Chinese government has also made strides in offering protection to the different industries existing within the nation’s boundaries by the institution of reasonable sized quotas and tariffs that ideally play a role in protecting many industries from improper competition and other poor business oriented practices and customs (Rugman, 2006). Cultural diversities have also contributed towards government regulating on trade of certain goods. This usually goods that are considered to be culturally offensive, and hence are rejected. For Airbus, the government regulations and policies have been an added advantage considering that its product, the airlines, is a universal product and therefore, enjoys all the measures that the Chinese government has developed in promotion of various industries. In the current age of globalization, international markets have become the greatest attraction for a majority of organizations and companies. Airbus is not left out in such an aspect through the development of appropriate international expansion strategy. The most successful international expansion strategy that has enabled the company penetrate into different markets is the production of cost-effective airlines (Hill, 2009). By producing cheaper and quality airlines, Airbus has made entry into a number of countries. Additionally, Airbus is currently the world’s largest producer of the largest airlines and therefore, gives it an additional advantage over the other airline producers globally. Airbus has indeed made great strides in addressing international challenges to enable them achieve their goals and targets. It has developed numerous prospects in the international markets with the benefit of globalization that is currently benefited the company by integrating various cultural diversities around the globe. Cultures are the greatest obstacles to international businesses and by Airbus’ international market philosophy of integrating cultures towards the improvement of its production facilities in different countries (Hill, 2009). Based on the above aspects, it is conclusive to state that Airbus has been able to achieve great success, as its performance in the international markets has been profound. References Hill, C. W. (2009). International business: competing in the global marketplace (7th ed.). Boston: McGraw-Hill/Irwin. Newhouse, J. (2007). Boeing versus Airbus: the inside story of the greatest international competition in business. New York: A.A. Knopf. Norris, G., & Wagner, M. (1999). Airbus. Osceola, WI, USA: MBI Pub. Co.. Rugman, A. M. (2006). International business (4th ed.). Harlow: Financial Times Prentice Hall. Som, A. (2009). International management managing the global corporation. New York: McGraw-Hill Higher Education. Read More