Bombardier: Case Study
The Problem
Bombardier is the global leader in business and regional aircraft manufacturing and in recent years has been improving their performance. Their strategic objective has always been to be global leaders in both their aerospace and transportation divisions. However, there have been frequent leadership changes since the diversification era ended in 1999, and many analysts and investors have been questioning what their long-term strategy in the aerospace industry is, especially since the postponement of the CSeries launch. Their regional jet product line is a concern with the aging technologies of the CRJ and Q-Series models. And the threat of the Chinese, Japanese and Russians entering the market is imminent. It remains clear that Bombardier now faces the challenge of having to carefully assess its strategic direction for the future in order to hold its competitive advantage in regional jet market.
External Analysis
Bombardier is part of the Aerospace and transportation industries, but the focal industry in question is the regional aircraft industry. In order to conduct an external analysis, Porter’s 5 Forces Model will be used.
Threat of New Entrants: is moderate. If the Chinese and Russian projects don’t follow through (since they would be the direct competitors to the CRJ1000 and CSeries), it would be extremely difficult for other competitors to enter the market because the costs associated are relatively high. For example, the initial cost of Bombardier’s CSeries project reached $100 million as of April 2007, and the estimated cost of the entire project is $2 billion (All figures are presented in USD). Also, there are very powerful firms established in the industry and for a new firm to enter they would have to compete with firms already on the lower end of the learning curve (See Exhibit 1).
Bargaining Power of Suppliers: is moderate. There is no threat of suppliers lowering quality because of the high standards set by industry regulators.
Bombardier is the global leader in business and regional aircraft manufacturing and in recent years has been improving their performance. Their strategic objective has always been to be global leaders in both their aerospace and transportation divisions. However, there have been frequent leadership changes since the diversification era ended in 1999, and many analysts and investors have been questioning what their long-term strategy in the aerospace industry is, especially since the postponement of the CSeries launch. Their regional jet product line is a concern with the aging technologies of the CRJ and Q-Series models. And the threat of the Chinese, Japanese and Russians entering the market is imminent. It remains clear that Bombardier now faces the challenge of having to carefully assess its strategic direction for the future in order to hold its competitive advantage in regional jet market.
External Analysis
Bombardier is part of the Aerospace and transportation industries, but the focal industry in question is the regional aircraft industry. In order to conduct an external analysis, Porter’s 5 Forces Model will be used.
Threat of New Entrants: is moderate. If the Chinese and Russian projects don’t follow through (since they would be the direct competitors to the CRJ1000 and CSeries), it would be extremely difficult for other competitors to enter the market because the costs associated are relatively high. For example, the initial cost of Bombardier’s CSeries project reached $100 million as of April 2007, and the estimated cost of the entire project is $2 billion (All figures are presented in USD). Also, there are very powerful firms established in the industry and for a new firm to enter they would have to compete with firms already on the lower end of the learning curve (See Exhibit 1).
Bargaining Power of Suppliers: is moderate. There is no threat of suppliers lowering quality because of the high standards set by industry regulators.
Bibliography: Source: Taleb, A., Hebert, L. (2011). Bombardier Aerospace: The CSeries Dilemma. London Ontario: Ivey Publishing. Exhibit 1 Source: Taleb, A., Hebert, L. (2011). Bombardier Aerospace: The CSeries Dilemma. London Ontario: Ivey Publishing. Exhibit 4