Case Study On Strategic Management

1. Who are the main players (name and position)?
The main players are Boeing, Airbus, Bombardier and Embraer. As of 2004, AIRBUS S.A.S. was the world’s largest commercial aircraft maker. Boeing was the world’s second largest manufacturer of large commercial jets, as well as the world’s largest aerospace company focusing on satellites, military aircraft, missile defense, human space flight and launch systems and services. As of the same year, Bombardier was the third largest commercial airplane manufacturer in the world while Embraer was the fourth largest commercial airplane manufacturer. Embraer is the world’s leading regional aircraft manufacturer.
2. What business (es) and industry or industries is the company in?
The company is in the commercial aircraft manufacturing industry, specializing in the narrow-body aircraft product category. It operates in the regional jets and low-cost carriers segments, segments that traditionally composed of aircrafts carrying fewer passengers than major carriers. Embraer also ventured in the manufacture of 70- and 120-seat planes in order to bridge the gap between capacity and demand for this range of planes.
3. What are the issues and problems facing the company? (sort them by importance and urgency)
The main issue facing Embraer is competition, both from Bombardier as well as Boeing and Airbus. The shift in aircraft demand towards smaller and more efficient planes attracted leading aircraft manufacturers such as Boeing and Airbus to enter the regional and low-cost carriers market. Bombardier remains a close rival of Embraer in the regional jets market. Other issues include the 9/11 attacks which saw a dip in aircraft sales as demand for air travel reduced. However, the low-cost carrier segment continued to perform fairly good despite this problem.
4. Why did this problem emerge?
5. Are the apparent problems the real problems or only symptoms of the real problems?
While the entry of these leading aircraft manufacturers into the regional jet market might be a competitive threat, the Embraer has already established itself in this market segment. The real competition lies in its market rival, Bombardier. The launch of Bomabardier’s Cseries would likely present Embraer with a problem in terms of countering competition.
6. What are the characteristics of the environment in which the company operates?
The company operates in a very competitive environment. The airline industry, both aircraft manufacturing and air travel, is very competitive. For example, Embraer’s CEO Mauricio Botelho “ponders on the potential competitive response to his company’s recent attacks on the commercial aircraft market”. In this environment, every player is keen on gaining a significant market share by outdoing the other. Besides competition, the environment is characterized by a high unpredictability of the external operating environment with factors such as fluctuating fuel prices and terrorism creating an uncertain environment.
7. What are the characteristics of the industry that the company is in and how is the industry changing over time?
The company operates in the low-cost carrier and regional jet manufacturing industry segments. Regional jets are considered to have a low-cost structure and improved service levels. They are smaller, have greater range and burn less fuel. The industry is characterized by low capacity planes serving up to almost 200 passengers. The regional jet market is the fastest growing aircraft manufacturing segment and has attracted the entry of leading aircraft manufacturers such as Boeing and Airbus. There is also an emergence of the intermediate-demand market which has seen the introduction of the 70- and 120-seat jet family by Embraer.
8. What are possible solutions to the identified problems?
While there is nothing much that can be done to check the unpredictable external operating environment, much can be done in terms of gaining competitive advantage. Embraer needs to always stay ahead of the competition. For example, the delivery of the Embraer 175 and Embraer 190 means that Embraer has a competitive advantage on the yet to be launched Bombardier’s Cseries. Thus, through planning, organization, leadership and control, the company can be able to foster innovation that will see it stay ahead of the competition. Also, Embraer should contemplate venturing into military aircraft manufacture since the defense industry is highly funded by governments and the company would stand to benefit from this.
9. Are there any possible problems with your suggested recommendations? What contingencies can be accommodated?
The only possible problem regards the entry into military aircraft and systems manufacture. This is an industry that requires massive investment in terms of technology, research and development. Since there is no guaranteed market, the company would be taking a massive gamble in venturing into this industry. A better approach would be to seek partnerships or mergers with already established players in the industry.
9. Model