In the article which I have chosen, the author discusses one of Latin American’s most successful business stories in the last 20 years. This success comes despite the fact that the company is from an emerging market and developing country. The Brazilian company Embraer may not be known to the general public but it is known to those who make decisions on aircraft purchases including: international airlines, business jet owners, and military contractors. To build the reputation of the company and to become a success, there had to be an adequate knowledge of foreign markets and how to enter them. No aircraft manufacturer has been successful over the long run by staying in a home domestic market. Airline manufacturers such as Tupolev and Ilyushin which have stayed under the Russian government’s arm have suffered from this. As the article states, Embraer has chosen a different path. It was once, like the Russian companies named above, primarily part of its country’s aeronautics branch and, as a result, it has had its advantages including nearly unlimited funds which the company could use in its research and development. They used these funds to “invest in broad-ranging R&D activities” (Promocorp). Despite this help, the company was not able to become successful and as recent as the 1990’s the company was facing financial problems which were threatening to close its doors. Due to the financial pressure that an aircraft manufacturer could put on a government, the Brazilian government had chosen to privatize the company. Although this was probably not done intentionally, this decision proved to be the best thing that could have been done for the then small aircraft manufacturer and in a relatively short space of time, “Embraer’s ... ... middle of paper ... ... / Innovation." Promocorp / Competitiveness / Economic Development / International Trade / Exports Assistance / Innovation. N.p., n.d. Web. 09 Apr. 2014. . Sarathy, Ravi. "High-Technology Exports From Newly Industrialized Countries: The Brazilian Commuter Aircraft Industry." California Management Review 27.2 (1985): 60-84. Business Source Complete. Web. 16 Mar. 2014. United States. United States International Trade Commission. Business Jet Aircraft Industry: Structure and Factors Affecting Competitiveness: Investigation No. 332-526. By Jennifer Carroll. Washington, D.C.: U.S. International Trade Commission, 2012. Print. "World's 3rd Largest Aircraft Maker Upbeat on India." The Economic Times. N.p., n.d. Web. 09 Apr. 2014. .
In the United States, Boeing was the primary civil aviation manufacturer for over half a century. Using manufacturing and defense techniques, it soon became the world’s top producer of commercial aircraft. Of their fleet consisting of fourteen models (five families), their forerunner was the 747-400. When they first produced the 747 in 1965, their decision was criticized and called a gamble. Nonetheless, Boeing announced an initial order of 25 planes which, as a result, caused their stock prices to increase 5.1%. In spite of an initial potential failure, Boeing’s demand for the 747 aircraft continued to stay strong with 47 planes delivered in 1999 and 74 more in their backlog.
On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
The civil aviation industry of world has expanded its wings by letting in private organisations. Privatisation in the domestic and the international circuit can help in foreseeing the future of the aviation industry at a mark up rise, and gaining international recognition. It started eight years back with Open Sky Policy allowing charter flights to operate in domestic market. Today in the year 2000 we saw the code sharing agreement between Air India and Virgin Atlantic Airlines for the DEL- LON sector.
The article by Binyamin Appelbaum and Christopher Payne demonstrates the complexity of one of the world’s biggest supply chains. It was interesting to learn how many different components went into the production of the airplanes. The different geographic locations in which the parts were built was fascinating as well. I had no idea that a manufacturer in Alabama would have parts shipped in from places as far away as Wales and France. The amount of coordination and collaboration needed to maintain efficiency within Airbus must be incredible. Later in the article I learned that the small town of Mobile, Alabama had been trying to develop an airplane factory for more than 30 years. It wasn’t until 2012 that they finally began assembling passenger
This paper analyzes the goals and actions of Boeing by analyzing its critical success factors as well as its strategic roadmap.
With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces.
The aviation industry is very difficult to enter, and the threat of new entrants is low. The first and major threat to entry is the initial capital requirements. The development period is over 5 years, with very large initial investment costs, parts costs, and wages are necessary even before the company earn revenues and sell aircrafts. The economies of scale, when the airline company has a substantial order, there are reduction in cost because of discounts on large orders. The new entrant suffers a significant cost, which is a disadvantage compared to established companies. Another risk for the new entrant, the extra supply of products for the substantial order, will decrease prices. The result, the new entrant will
Diamond Aircraft Industries Inc. is a General Aviation aircraft manufacturer that produces single and twin engine aircraft as well as single engine jet aircraft for the GA community. The following will be an analysis of the market environment for this organization, focusing on the Political, Economic, Social, Technological, and Environmental effects on the company.
Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope...
The airline industry is a costly business to partake in especially due to the cost of fuel and technology needed to operate the airplane. With EasyJet internationalizing into Africa, it had the notion of facing new competitors, however, with the finances (see appendix) it possesses and the famous identity of its brand, made the threat of being a new entry within the Nigerian market low. However, a big threat would be if local Nigerian airlines were to reduce its prices then EasyJet might be at risk because the local airlines have the necessary equipment and knowledge to operate in its region.
To buttress the implication of the model, Porter explained why the airline industry is the least profitable amongst industries owing to the high threat of the competitive forces. The airline industry players compete heavily on price. Most custom...
...o, A. (2008), ‘Boeing , Tata Industries Announce India Joint Venture’, Industry Week. Available at: http://www.industryweek.com/articles/boeing_tata_industries_announce_india_joint_venture_15820.aspx [Accessed 20 March 2011].
Brand equity, in general terms, simply refers to how much a product is worth and how consumers behave and associates themselves with that product (Slotegraaf, Rebecca & Pauwel, 2008; Page 93-306). Consumer attitudes and the value of the product is linked to brand equity as it will determine how big of the market share the brand will occupy and how much the brand will earn in the long run. As the aviation industry is extremely competitive, many airlines have customer loyalty schemes and frequent flyer programmes to maintain or expand their brand equity, making the switching costs substantially high between airlines (Chen & Chang, 2008; Page 40-42). Chen and Chang (2008) also found out that brand equity is also linked to brand preference, purchase intentions and have an influence on consumers when they are thinking about switching brand products. Tigerair Australia’s brand equity was low in the Australian aviation market due to low brand awareness from consumers, the breaches of safety regulations by the Australian Civil Aviation Safety Authority (CASA), and strong competition from competitors like Jetstar.
...leader. Certainly, it has to take into account the implications of completion from both the direct and the indirect competitors. That is why EasyJet centers on the cost management strategy and the differentiation strategy (Hanlon, 2007). Through an analysis of EasyJet Airplane company strategies and performance, it is clear that they are ambitious and strive for the best. They not only survive in an industry that is intensely competitive, as shown through the analysis by Porter's Five Forces, but also succeed in terms of offering their customers the best that they have to offer in terms of value for money. The advantage this airline gains over its oligopolistic competitors stems from flexible ticketing and complete access to all primary routes. However, in keeping airline industry, there is room for improvement and growth as the analysis using Ansoff Matrix reveals.
As Boeing’s CEO, Frank Shrontz promised to increase earnings and return on equity. Boeing had a history of making money when its competitors did not, but Mr. Shrontz wanted higher returns. The airline industry was characterized by large cash outflows for R&D and manufacturing and long payback periods over long life cycles for each new airframe design. Companies had to have deep pockets to keep the operation going while waiting for a return on their investments. If Mr. Shrontz could increase the return on equity for Boeing, it would increase the likelihood of Boeing’s continued success well into the future.