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Porters cost drivers-Value chain activity

Porters cost drivers: Porter identified 10 cost drivers related to value chain activities:

• Economies of scale: NA in this case

• Learning: Going ahead with the new technological innovations keeping in mind its earlier stands at Airbus, learning had an important role to play

• Capacity utilization: Correct6 estimation of the demand of SuperJumbo helped coming at the breakeven with269 crafts.

• Linkages among activities: A good coordination between different departments is the mantra of success at Airbus. Market Research’s correct estimates, Marketing and sales bringing in orders, Good utilization of recourses for production have all added to bottom line success.

• Interrelationships among business units Airbus’s four partners working in perfect coordination

• Degree of vertical integration: Top managements positive outlook of the whole SuperJumbo case and showing a green signal shows a perfect Vertical integration.

• Timing of market entry: Timed right when market needed a large-haul aircraft.

• Firm's policy of cost or differentiation: Differentiation policy for large haul aircrafts being adopted and it was a success.

• Geographic location: All important busy international air routes being tapped

• Institutional factors (regulation, union activity, taxes, etc.): NA

A firm develops a cost advantage by controlling these drivers better than do the competitors.

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