Driving Trend and Forces
Driving trend and forces
In the aircraft industry, there are 5 key driving forces which determine the future trends in this industry. The first one is government spending. If one company can sign contracts with its government to guarantee the sales every year, it can grow faster and stronger.The second is war changing. If the relationship get worse between several countries even war breakout, the sales of aircraft will increase to meet the need of war. The third one is political constrain. This is very important. If aircraft is allowed to sell to any country without barriers, the sales will be huge. The fourth one is technology changing. Fox example unman aircraft replace the normal fighter in the battle, which means the companies which have the most advanced technology can survive in this industry. The last one is cost of per unit. Nowadays the price of F22 and F35 become more and more expensive, so the gross margin will increase too.
Government spending
These 6 main players all rely on the government strongly. They all sign contracts with their governments to guarantee the sales. For example, every year USA government spends billions of dollars to purchase aircrafts from LM and Boeing. USA Government military budget even occupy the 90% sales of LM and Boeing. The Rafale air fighters produced by Dassault are all purchased by France government. Government spending is really a key factor in this industry. If some of them lose government contracts, it will be difficult for those to survive. Nowadays, the military budget of every country increases year by year which is a big opportunity for These 6 companies to grow fast. They should improve the performance of their aircrafts to attract the contracts of government.
War changing
This factor has obvious impact on some companies, especially LM and Boeing. When the war breaks out between