CASE STUDY Bombardier Aerospace: The CSeries Dilemma
Propaedeutics in Strategy 70-450-12A
FOROUGH ENSANDOUST MARTICULE 11142559
1. Current Performance As of September 30, 2012, the total number of 138 units of CSeries100 and CSeries300 commercial jets are ordered, while it now expects the first delayed delivery before the end of next June, a delay that had been anticipated due to high performance milestones set by company .According to Pierre Beaudoin CEO ,company requires more time to meet certain CSeries program targets but others had been met and the company and its suppliers have "now fully harmonized all commitments to the program's schedule."
2. Current Strategy Since July 2004, Bombardier is working on new family of aircrafts called CSeries, which is capable of carrying between 100 and 135 passengers depending on model. The focused market is airlines that owned old generations of aircraft within the same capacity needed to be replaced. The CSeries family will be specifically optimized to operate on regional routes by meeting the capacity of regional carriers and specifically they are expected to consume less energy than Airbus and Boeing while in terms of operating costs CSeries will operate significantly less expensive than the existing crafts.
Macro Environment Analysis
Political-Legal High financial support of Canada, UK and Quebec Governments: -Governments support may cause legal battles with foreign governments and competitors. If Bombardier’s side loses, it has negative impact on financial situation and on potential customers Government Safety Regulation: -This can leads to higher costs for Bombardier, if Government tightens the rules regarding safety. They might reconsider some designs in higher costs Economic Recession: -It leads to fewer passengers and also financial instability of airlines ,so less request for new aircrafts or Government may reduce the financial supports Currency rates: - The buying power of Bombardier’s client will be related to it Socio-Cultural -CSeries are intended for regional carriers where passenger’s cultures are more towards lower price -Since CSeries will be used in different countries, the language and configuration should be different depending where the buyer is from PIVOT 1: ECONOMY- Recession is the biggest treat to CSeries while stable global financial situation opens opportunities Environment Government Environmental Regulation: -By intensified global warming debates, new generations of airlines are asked to be more energy-efficient and noise pollution reduced. CSeries are energy-efficient and very tight noise reduced.
Technological -Competition is high, so they have to bring new technology in CSeries which is not beatable with serious challengers -The key aspect of Bombardier’s success is high technology and performance .CSeries should be highly modern and competitive to maintain Bombardier’s reputation PIVOT 2: TECHNOLOGY- High reliable innovative technology brings more customers, while lack of confidence in the technological ability of the company makes customers hesitating in investments, on the other hand not very high technology may cause delays in launching or high performance of CSeries
Commercial’s life cycle is normally up to 5-10 years for tier 1 airlines and another 3-7 years for tier 2 airlines. CSeries haven’t been launch yet, so at the begging of their life cycle .If the first generation of CSeries is successful. They should expect to be re-ordered by existing customer every 7-10 years.
Competitive Environment Analysis:
5(+1) FORCES ANALYSIS
Substitutes There are not a lot of substitutes, since each series of aircrafts has its own use, the only treat can be other firms Commercials Government/ Public/ Complementary Government highly supports Bombardier for many strategic reasons such as being symbol of pride, technology contribution to commercial and military industry and a major job creator Buyer Power...
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