CASE 5-N Iberia Airlines Builds a BATNA MADRID-One day last April, two model air

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CASE 5-N Iberia Airlines Builds a BATNA MADRID-One day last April, two model airplanes landed in the to North America, where air travel is in tatters, and by dominating offices of Iberia Airlines the large Latin American market They weren't toys. The Spanish carrier was shopping for new The Spanish carrier was looking to replace six Boeing 747-200 jetliners, and the models were calling cards from Boeing Co. and jumbo jets more than 20 years old. It wanted as many as 12 new Airbus, the world's only two producers of big commercialf.planes to complete a 10-ycar modernization program for Iberia's It was the first encounter in what would become a months-long lon-haul fleet. Based on list prices, the 12-plane order was valued at more than S2 billion. dogfight between the two aviation titans and Iberia was planning to clean up Iberia's Dupuy, a soft-spoken career finance man, first needed Airbus and Boeing may own the jetliner market, with projected sales of more than SI trillion in the next 20 years, but right now they don't control it. The crisis in the air-travel industry makes the two manufacturers desperate to nail down orders. So they have grown increasingly dependent on airlines, engine suppliers, and aircraft financiers for convoluted deals. to woo Bocing to the table. The U.S. producer had last sold Iberia planes in 1995, and since then, the carrier had bought so many Airbus jets that Boeing considered not even competing. But in late July, Dupuy met Toby Bright, Boeing's top salesman for jets. Over dinner in London, according to both men, Dupuy told Bright that Iberia not just Airbus. Once the underdog, Airbus has closed the gap from just four years ago-when Boeing built 620 planes to Airbus's 294-and he time, "You're running out of ways to show us." Having worked as this year the European plane maker expects to overtake its US. Being's chief salesman in Europe, Airbus's home turf, he had heard rival. For Boeing, Iberia was a chance to stem the tide. For Airbus, similar lines from customers who eventually bought Airbus planes. Iberia was crucial turf to defend The Boeing sales chief was skeptical, and he recalled thinking at So he wondered: "Are we being brought in as a stalking horse?" Iberia and a few other airlines are financially healthy enough Yet replacing Iberia's old 747s with new 777s would be Boeings to be able to order new planes these days, and they are all driving last chance for years to win back Iberia. The argument against Boeing hard bargains. Enrique Dupuy de Lome, Iberia's chief financial of was that an all-Airbus fleet would make Iberia's operations simpler ficer and the man who led its scarch for widebody jets, meant from and cheaper. Still, going all-Airbus might weaken Iberias hand in the start to run a real horse race. "Everything has been structuredfuture deals. Airbus would know that the carrier's cost of switching to to maintain tension up to the last 15 minutes," he said Bocing would require big investments in parts and pilot training. Throughout the competition, the participants at Iberia, Bocing, and Airbus gave The Wall Street Journal detailed briefings on the their latest planes. The four-engine Airbus A340-600 is the longest pitches, meetings, and deliberations. The result is a rarity for the plane ever built. Bocing's 777-300ER is the biggest twin-engine secretive world of aircraft orders: an inside look at an all-out sales derby with globetrotting executives, huge price tags, and tortuous negotiations over everything from seats to maintenance and cabin than the 777. The new Boeing plane is lighter, holds more seats noise levels. The rivals' offers were so close that on the final day and burns less fuel. The Boeing plane, with a catalog price around of haggling, Iberia stood ready with multiple press releases and $215 million, lists for some $25 million more than the A340. extracted last-minute concessions in a phone call between the air line's chair and the winning bidder. In early November, Airbus and Boeing presented initial bids on plane. The new A340 can fly a bit farther and has more lifting power Dupuy, whose conference room is decorated with framed awards for innovative aircraft-financing deals, set his own tough By that point, both suitors felt like they'd been through the wringer. terms on price and performance issues including fuel consump- With 200 airlines and only two plane makers, you'd think we'd get little more respect," said John Leahy, Airbus's top salesman. reliability, and resale value. He wouldn't divulge prices, but people in the aviation market familiar with the deal say he de- Airbus, a division of European Acronautic Defense &Space; anded discounts exceeding 40 percent. Co., reckoned it had a big edge. It had sold Iberia more than 100 planes since 1997. Lcahy thought last summer that he might even Whoever hits its target, wins the order. The race was on. bag the contract with minimal competition. In June he had clinched a separate deal with Iberia for three new Airbus A340 widebodies. perso n January 2002, pitched the Bocing 777 as a "revenue ma- As negotiations began, Dupuy told both companies his rule: Bright, who had been appointed Bocings top airplane sales- But Dupuy made Leahy fight for the order-and so enticed He insisted that his plane could carn Iberia about $8,000 Boeing to compete more aggressively. Then, "just to make things more per flight than the A340-600 because it can hold more seats interesting," Dupuy said, he upped the pressure by going shopping and is cheaper to operate. A burly 50-year-old West Virginian, for secondhand airplanes. These are spilling onto the market at rht joined Boeing out of college as an aerospace designer. He cut-rate prices as the airline industry's problems force carriers to knew the new Airbus would slot easily into Iberia's fleet. But he ground older jets with their higher operating costs. also felt that Dupuy's target price undervalued his plane. Iberia is one of the industry's few highly profitable carriers, thanks to a thorough restructuring before the national carrier was New York City native and the company's highest-ranking Am privatized in early 2001. The world's number 18 in passenger traf- can, he pursues one goal: global domination over Boeing. Last fic, with a fleet of 145 planes, it has benefited by flying few routes year he spent 220 days on sales trips. At Airbus, Leahy also fumed at Iberia's pricing demands. A

Explanation / Answer

In this specific case both of the companies were very competitive in terms of getting the deal done. It was a very big deal as iberia airlines wanted planes from these companies.
As an international marketer companies both of the companies provided their model planes to iberia Airlines. Airbus A340 and Boeing 777 were the aircraft of companies standing out from the crowd in terms of the size and total space being used. Both of the aircrafts were designed to maximize the efficiency as well as productivity of the airline industry.
In this case both of the companies have done explain process of selling and explain the benefits of both of the aircraft to the iberia airlines company. As the deal was huge and overall involve money was also very large, level of concession which was done buy airline was extreme.
Aggressive negotiation techniques used by both of the companies to set the deal with iberia airline. It required several amount of involved strategies regarding the negotiation from the top authorities of iberia airlines. It directly increase the overall level of profits as well as better package management for the airline company during the time of recession for the airline industry. As previously company was using airbus, finalize deal went into favour of Airbus with a better and simple design as well as a promise of maintenance and cost effectiveness for iberia Airlines.
Persuasive marketing techniques used in this deal to make a better outcome of the specific details. Involvement of both of the companies and aggressiveness of the offers directly increased the overall level of competition in the international market.
International negotiation and fluctuation of the prices because of the size of the deal was very important for both of the companies. After this deal, companies increased the level of implementation for the different marketing strategies to word different airline companies. Airbus decreased their prices and shown extreme efforts in getting the deal done by creating better package and by talking different parts suppliers of jet planes to reduce the overall expenses on the plane and to reduce the TV price according to the needs of the iberia airlines.
Their service and already maintained airplanes in airline company was also one of the main reasons for negotiation between Airbus and iberia Airlines. Buy successfully carrying out different strategies regarding the sales and marketing, highly persuasive authorities from Airbus directly increases the chances of getting accepted and finally gets accepted by the iberian airlines to supply the required change in aeroplanes.

Boeing and Airbus are the best manufacturers in their industry. Airline industry is totally dominated by these two companies. Both of the companies have their own Unique Identity as well as strength while going is very famous for creating qualitative and innovative products, airbus is dealing in qualitative as well as wide availability of product arrangers. Where going has availability of different strengths in manufacturing airbus is successfully delivering consistent approach of creating customer friendly as well as comfortable airliners. This type of approach helps a bus and going to maintain their brand identity while both of the companies compete in the global environment. Companies have great customer support and operates globally while dominating the airline industry in a very positive way. This approach has created a Monopoly for both of the companies in the airline segment and only competency regarding availability of the airplanes is dependent on the first differentiation and vision of different products which are dominating the market.

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