The paper will outline major flaws in Airbus’s risk management and thereby identify reasons for the production delay of the Airbus 380.
The Airbus A-380 project was launched in 2000 and remains the largest project in the company’s history. The Airplane was designed to carry up to 853 passengers and offer 50 per cent more floor surface than any other passenger aircraft. The total cost of development summed up to € 12 billion and it was planned to deliver the first aircraft to Singapore Airlines in 2005. In reality the first aircraft was delivered in 2007. The 2 years delay of the delivery of the first Airbus 380 eventually added up to an estimated sum of €4.8 billion loss in profit.
The reason for this delay was that the pre-assembled wirings produced in Germany failed to fit into the frame when the plane was to assemble in France. This misfit can be attributed to the fact that the German plant used CATIA 4 (CATIA is a computer-aided design software) which was only able to show the plane as a two dimensional model while France used CATIA 5 which displayed the plane in three dimensions.
Table of Contents
1. Introduction
1.1 Setting the scene
1.2 Hypothesis and Research Questions
1.3 Methodology
1.4 Outline of the Paper
1.5 Airbus the company
2. Analysis
2.1 The A-380 crisis
2.2 Airbus risk landscape
2.2.1 Conclusion risk landscape
2.3 Risk Management at EADS
2.3.1 Conclusion Risk Management Structure
2.4. Culture at Airbus
3. Discussion
3.1 Risks that led to the crisis
3.2 Airbus current risk management (2003-2007)
3.3 What are the flaws (and how could the system be redesigned?)
3.3.1 Why culture matters
3.4 Suggestions for an culture embracing design
3.4.1 Applying SRC to Airbus
4. Conclusion
Research Objectives and Key Topics
This paper aims to investigate the fundamental failures in Airbus’s risk management during the A-380 development project, testing the hypothesis that the project's delays were primarily caused by a misalignment between the company's strategic risk management and its fragmented corporate culture rather than mere technical IT issues.
- Analysis of the Airbus A-380 production delays and associated financial impacts.
- Evaluation of the internal corporate environment and fragmented organizational structure.
- Review of EADS risk management frameworks during the 2003-2007 period.
- The role of corporate culture, internal communication, and knowledge sharing in risk mitigation.
- Proposal of the SRC (Strategic planning, Risk Management, Culture) model for comprehensive risk evaluation.
Excerpt from the Book
2.4. Culture at Airbus
Assessing a company’s organizational culture is a difficult task but it becomes even harder if, like in this academic paper, the researcher has no direct access to the company in addition not the currently culture in place is subject of the study but the culture during the A 380 project. This is why the author is using second sources including case studies and written papers as well as conducted interviews and statements in order to assess the culture in place during the project.
As mentioned above there were employees in the company that were well aware of the possible danger that impended from the incompatible software versions. The lead engineer for the software’s capability, Martin Horwood, even co-authored an article about it. According to a labour-union leader also mid-level managers tried to address the problem but were rejected by the centralized management in Toulouse. The chief of aircraft programs at Airbus even stated that ‘one such miscalculation, or even several, do not amount to a problem’.
While line-managers and engineers are blaming the error on the top management they give the blame back by stating management had tried to change the system but met a wall and that it was due to national pride that the Germans resisted to work with the new software because they felt that a French solution was imposed on them.
These contradictory statements support Business Weeks observation that Airbus remained a ‘surprisingly balkanized’ organisation. The site-managers at the headquarters remained loyal to their site instead of collaborating with the other sites. Which even lead to the conclusion that the German sites keep the old software because it was labour-intensive and preserved jobs.
Summary of Chapters
1. Introduction: Outlines the production delay of the Airbus A-380 and sets the foundation for analyzing risk management failures.
2. Analysis: Examines the A-380 crisis, the risk landscape, EADS's centralized risk management structure, and the impact of the fragmented corporate culture at Airbus.
3. Discussion: Evaluates the specific risks that led to the crisis and proposes the SRC-model as a tool to improve strategic risk management through cultural integration.
4. Conclusion: Summarizes the finding that the A-380 crisis was fundamentally a result of cultural misalignment and insufficient integrative strategic planning.
Keywords
Airbus, A-380, Risk Management, Corporate Culture, EADS, Strategic Planning, Organizational Structure, Software Incompatibility, Crisis Management, Enterprise Risk Management, SRC Model, Internal Controls, Knowledge Sharing, Balkanization, Operational Risk
Frequently Asked Questions
What is the core focus of this research paper?
The paper focuses on identifying the root causes of the production delays for the Airbus A-380, arguing that the crisis was driven by internal organizational and cultural issues rather than just technical software incompatibility.
What are the primary thematic areas addressed?
Key themes include strategic risk management design, the influence of corporate culture on operational effectiveness, the limitations of centralized top-down management, and the necessity of aligning strategy with organizational behavior.
What is the central research hypothesis?
The hypothesis states that Airbus’s failure to deliver the A-380 on time can be directly linked to a misalignment between strategic risk management and the prevailing corporate culture.
What research methodology does the author apply?
The author uses a qualitative case study approach, analyzing secondary sources such as annual reports, newspaper articles, journals, and previous academic studies to evaluate Airbus's internal environment during the 2005-2007 period.
What does the main body of the work cover?
It covers the A-380 crisis, an analysis of EADS's risk management structure, an assessment of Airbus's "balkanized" culture, and a discussion of why current risk systems were insufficient, culminating in a new alignment model.
Which specific keywords define this study?
The study is defined by terms like Strategic Risk Management, Corporate Culture, A-380, EADS, and Organizational Integration.
What is the SRC-model proposed in the study?
The SRC-model (Strategic planning, Risk Management, Culture) is a framework proposed by the author to ensure that organizations identify gaps between these three dimensions to achieve comprehensive risk management.
How did the fragmented culture specifically lead to the A-380 disaster?
The fragmented "balkanized" culture prevented effective communication between sites; because of national pride and site-loyalty, engineers refused to synchronize software tools, and management ignored warnings about this incompatibility.
- Quote paper
- BA Sc. Jens Hermann Paulsen (Author), 2011, Strategic Risk Management - A new Framework based on the Airbus A-380 crisis, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/204406
