Change management of the Airbus Company - Term Paper Example

? Change management of the Airbus Company The paper deals with change management of the Airbus Company. Such issues as technological advancement, design development of aircraft products, competitive relations between the rivalries on the international arena are discussed further on. Moreover, challenges after financial crisis in the world and the way the company dealt with them are positioned as illustrative tools of change management of the Company. Differentiation policy of the Company, people-centered approach, a great attention to the customers’ needs and interests of shareholders are the basic principles of the change management policy development. Thesis: Airbus is a perfect example of strategic management involvement in the process of the company’s development and functioning in the modern global world. Strategic concerns are multi-faceted and focused on the customers’ interests, stakeholders’ involvement, aerospace business profitability and advancement in the international arena. Keywords: aerospace industry, strategic management, profitability and advancement. Change management of the Airbus Company Introduction Airbus and Boeing are two world’s largest developers of aircraft potential of the world. Financial crisis has caused a serious impact on Airbus and the company managed to cope with the crisis rather well. Still, it is relevant to save the amount of production and not to suffer great losses. In spite of the fact that in accordance with prognoses production rates of Airbus were unsustainable, Airbus does not lose its positive mood and makes an attempt to satisfy the needs of the customers, to meet the requirements of the suppliers and to take care of the stakeholders’ interests. Further on we will focus our attention on management strategies implemented by the Airbus Company in order to keep up with the rivalries and settle a vacant place in the international arena. General overview of the company’s policy Strategic managers of the company put their efforts together in order the company could reach its heights, profitability and advantageous position in the modern global sector of aerospace industry. Airbus is on the way of searching for a perfect interrelation between inner challenges and external environment challenges. In order to beat the competition, the Airbus Company makes an attempt to advance “modern and cheaper transportation, communication and technological development” (Airbus Official Website). Being one of the largest manufacturers of jetliners and airlifters, Airbus has essentially grown “on the basis of its mission, vision and passion of the employees” (Airbus Official Website) . With regards to the research conducted by McGuire (1997), there are certain key factors, which determine the character of the industry. The following factors may be applicable for the Airbus Company: design, a scale of production, cost reduction strategies, networks, demographics passengers and timing are essential for a potential successful evolution of the country (Airbus Official Website). With respect to Airbus it should be noted that there is a strong development of the Company: “till the end of August, 2009; Airbus has designed 13 models of aircraft and sold 9,340 units with the strong customer base around the world which makes it passenger friendly using high technology” (Airbus Official Website). Data obtained from the annual review (2005-2009) prove the fact that Airbus achieved an enormous success within the last five years in spite of challenges experienced after the world’s financial crisis (from 22,179 million in 2005 to ?27,453 million in 2008) (Airbus Official Website). There is an evident strategic advancement of Airbus in comparison with Boeing. Yearly sales of airbus increased substantially in comparison with Boeing sales for the last five years (McGuire, 1997). The following strategic steps are beneficial for Airbus advancement in the international arena: the introduction of fly-by-wire, cockpit commonality and configuration of the engines for airplanes both for shorter and longer routes (Airbus Official Website). Strategic management was focused on differentiation; such aspects as orders, design, economy, financially and product differentiation were the main concerns for the Airbus company within the last five years. Differentiation strategies are often implemented in the modern globalized context. The main concerns of this policy are focused on reaching success and introducing innovations at different levels (Airbus Official Website). As far as we can see, at the international level the Company managed to develop an appropriate management strategy. Concerning the inner strategic changes of the company it should be noted that a person-centered approach and a special attention to leaders and change managers was paid. Strategic management practical implementation If to correlate Porter’s theory with the strategic changes implemented in the Airbus, it should be noted that generic strategies were chosen by the Company. It means that the Airbus chose the cost leadership strategy, directed on product’s development and allowing the customer to follow the advancement and development. Moreover, the differentiation strategy implies that products and services should be original and products should be bought at a low price. A focused strategy of Airbus can be interpreted as the company’s innovative approach to designs and products development satisfying the price demands of the customers (Airbus Official Website). In accordance with Ferreri (2003): “Airbus has implemented differentiation strategy at its core from time it has been established with the production of first wide bodied twin engine aircraft making it stand apart from its competitors. However, the innovative designs also facilitated cost saving alternatives like fuel saving and maintenance advantage over its rivals” (cited on Airbus Official Website). Customers-oriented products, underlying the importance of people-centered approach, comprise such products as “A-318 in the 100 seat segment, A-340-500-600 for long range segment and then A-380 family in very large segment” (Airbus Official Website). For example, let us focus our attention on the importance of an innovative development of the aircraft A350 XWB. This model gained 478 net orders from 29 customers. The innovative design of the model comprises the newest architecture with “detailed definition freeze review and has single, unified digital mock up” (DMU). Moreover, Airbus pays attention to the military developments. It produces military aircrafts at a lower price (Annual Report, 2008). Consequently, Airbus change management strategy is developed “with respect to Porter’s generic strategies of low cost, differentiation, and focus” (Airbus Official Website). It should be also noted that Airbus deals with the mixed strategy, directed on different products development and comprising different units of production. In accordance with Grand (2005): “Airbus' main goal is to meet the needs of airlines and operators by producing the most modern and comprehensive aircraft family on the market, complemented by the highest standard of product support” (Airbus Official Website). Therefore, Airbus is capable of aircrafts manufacturing, which are unique in design, are developed with respect to modern innovations and technological advancement and refer to the latest needs of the customers. Stakeholders gain benefits from cooperation with the Company, as well as the customers do. Thus, both of the parties are able to monitor and update new developments for the Airbus. “The resources and capabilities have resulted in continuous growth and sustained competitive advantages of Airbus Company” (Airbus Official Website). The following changes were implemented in the management structure of the company. There are three main targets of the Company’s management: suitability, feasibility and acceptability. Firstly, Airbus to its mission and changes implemented are adapted to the organizational changes. Acceptability of the company refers to adaptability to its mission. Moreover, acceptability of the organization stands for a relative risk and appropriate reactions of stakeholders. Therefore, design commonalities were the main concerns of the Airbus Company. In accordance with researches and studies of 90s, strategic management of the Company was described as the one focused on the aggressive implementation of technological advancement. The Airbus chose simple ways of strategic management and offered a full line of products “presenting the most extensive commonality possible in order to make training, operations, and maintenance easier and less expensive for customers” (Airbus Official Website). Consequently, customers’ needs were the main concerns for Airbus. Therefore, organization’s performance increased greatly. We would explain successful performance of the organization with regards to collaborative decision-making, increase of employees’ commitment to the organizational needs. Winthorp underlines that employees’ commitment to the organization leads to the improved performance in organizations. The implementation of advanced technological systems chosen by the team of decision-makers facilitated decision-making processes, advanced customer service, and turned management of the organization into a more efficient and cost-effective. Moreover, openness and creativity of managers and employees of the company created a gateway for innovative organizational teamwork and advanced organizational vision. Therefore, organizational performance turned into a more effective and cost-efficient policy meeting the needs of the customers, employees and stakeholders. The process of change management was enhanced by implementation of direct plans and designs (Airbus Official Website). The following measures were taken at different levels: a collaborative work with clients, organizational professionals’ involvement, evaluation of different levels of collaboration between the clients and organization; creation of different decision-making workshops (Airbus Official Website). Moreover, there is a financial assistance to other organizations unable to fund their developments. As a result, the company protects it from environmental challenges and threats: “The increased fuel prices and travel costs may tamper the low cost product offering by Airbus to its customers and threaten to change its engine design which may consume lesser fuel, which is a consequent threat to the company” (McGuire, 1997). External change management strategy of the company is focused on Asian countries, where urbanization is increasing at a full-speed. In accordance with data Asia is going to become the world traffic leader by 2028 (Winthorp). Airbus is able to produce aircraft with specific design standards at lower thus living the main rivalries behind. Diverse human resource management is also of crucial importance for Airbus. Different employees from various cultural backgrounds are hired by the company. Therefore, a diverse policy is of high importance for the company. Technological advancement of the company is reached by 52,000 employees hired by the company. The revenue of the company reaches ?27453 million (2008) and suppliers (Airbus Official Website). Four main shareholders of Airbus Company express respect to the present strategy. Therefore, the increased sales, the growth in revenue as well as the growth of demand for the nearest future resulted in the product differentiation strategy focused on the successful development of the company (McGuire, 1997). Moreover, successful strategy of the company can be explained by advancement a cooperation of different small firms of the company: “since profits and losses for Airbus are spread proportionately among the members of the consortium, each firm may attempt to increase its own profitability at the expense of its Airbus partners. Thus, while disclosure new efficiencies might be beneficial for holding down the overall costs of producing Airbus aircraft, the disincentives for doing so are significant” (Airbus Official Website). Therefore, the company is focused on environmental challenges and preventive factors of the company’s functioning in the global arena. Conclusion As far as we can see, change management of the Airbus Company is directed on cost reduction, technological advancement, and implementation of the innovative technologies in the design of the aircraft products. Moreover, there is a combined approach of the company: to meet the customers’ needs, to refer to the needs of the shareholders and to defeat the rivals on the international arena. Therefore, case study of change management of the Airbus Company proves the necessity of the aerospace industry functioning in the international arena. An essential advancement and development of the airbus company can be explained by its implementation of technological innovations and compliance with the needs and requirements of the modern customers. In the modern globalized context, aerospace industry is focused on the development and implementation of modern technological innovations, meeting the growing requirements of the customers. Such concerns as reduction of fuel consumption, individual preferences and financial possibilities of the customers are two main points for the developers of the aerospace industry. Works cited 1. McGuire, Steven. (1997). Airbus Industry: Conflict and Cooperation in US-EC Trade Relations. New York: St. Martin's Press. 2. The official website of the Airbus Company. (n.d.) Retrieved November 13, 2011, from: http//:airbus.com 3.Winthorp, A. (n.d.) Organizational Decision Making Is A Strategic Process. 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