1. MNG-6059 Dynamics of Global Strategy
Professor Dr. Yan Cimon
Bombardier
Submitted by:
Arnaud de Santi
Maxence Decoux
Julien Emonides
Rim Afegrouch
Seyed- MortezaLajevardi
Faculté des Sciences de l’Administration
2016/03/07

2. Bombardier
1. Company Presentation
Bombardier is a Canadian multinational company which headquarters is located
in Montreal. The company is specialized in aerospace and transportation industries with
two main business units: Bombardier Transportation and Bombardier Business and
Commercial Aircraft (the organization chart below). The company represent 18.17 billion
dollars revenue (2015) divided equally between its two core businesses. The company is
the world leader in train manufacturing before the French company Alstom. Meanwhile,
in the aerospace sector they are facing the competition of the two mastodons: Airbus and
Boeing. As we will see afterwards aerospace is the achilles heel of Bombardier.
Until 2003 the company owned a recreational company called Bombardier
Recreational Product involved in the development of snowmobile and snowcats. The
company had to implement this reorganisation plan in order overcome the aerospace
business crisis resulted from the September 2001 attack. It was an important decision as
Joseph-Armand Bombardier created the company in 1941 with this business unit. In 2006
they sold their financial services subsidiary. These two disinvestments were made in
order to concentrate their operations and focus to their core businesses: Train and aircraft
building.
“L’évolution de la mobilité est notre promesse de marque. Une promesse faite à
tous”. The motto of Bombardier is to make mobility evolution and improve mobility for
everyone and everywhere. They try to reach this goal with a strong internalization
strategy for both the train and the aircraft sectors. As a matter of fact they employ more
than 76 000 people in 30 different countries. By investing high amount in research and
development they intend to improve their current situation in the global market and
compete with their rivals.

3. 1.1 Aeronautic and Train Business Analysis
1.1.1 Aeronautic Sector
Bombardier enters the aeronautic market in 1986 by acquiring the government-
own company Canada Air after huge financial losses. The company have implemented an
acquiring development strategy since then. Under an internalisation development purpose
they set up a buyout plan of foreign aeronautic companies. In 1989 Bombardier own
Short Brother PLC, a Northern Ireland company, following rapidly by the purchase of the
US company Learjet Corporation.
Today, the aircraft manufacturing sectors represents 49.5% of the global income with
10,4 billions revenues in 2015. Furthermore, the aeronautic field is separated in 2 distinct
business units: Corporate aircraft and Commercial aircraft. The Corporate aircraft
business unit is by far the leading market of the aeronautic sector for Bombardier as it
represents a turnover of 7 billion dollars (2015) when the commercial sector brings back
only 2,3 Billions incomes.
Meanwhile, the aeronautic sector is facing important difficulties for more than
one year. Indeed, Bombardier competes against two colossi in the aeronautic field. Even
if the aeronautic field is now steadily growing especially in Asia, Boeing and Airbus

4. shares barely the whole cake. Indeed Bombardier expected is new aircraft, the Cseries, to
be able to compete against these two giants but it must be noted that contracts do not
flow. The company signs 243 Cseries sales when 300 were expected and they do not sign
any contracts since last march. As an example, the US company United Continental, who
at the beginning was interested in the Bombardier range finally bought the Boeing
aircraft 737 MAX.
1.1.2 Transportation Sector
Bombardier became a train manufacturer with the buyout of Rotax, an Austrian
company. They continued their diversification strategy in 1975 when they acquired the
American Locomotive Company, just after winning a huge contract related to the
Montreal subway in 1974. Through others acquisition plans, Bombardier manage to
impose the company as one of the most important train manufacturer worldwide.
Nowadays, the train construction represents 46,3% of the global revenue of the company
with 8,2 billions income in 2015. The train sector seems to be in better shape than the
aeronautic one as Bombardier counts on an increase in both revenue and margin for this
business unit for the coming years. As a proof, the company has announced the success
of the Italian high-speed train launch in June 2015. Beside they strengthen their position
within the Asian market with three joint ventures with Asian Companies. For example
Bombardier has signed an agreement with the China Railway Corp regarding fifteen
high-speed trains. The total amount of the transaction reaches about 550 million dollars.
1.2 Summary of Bombardier business
1) Forecasts and expectations regarding the Aeronautic sector

5. Bombardier Aeronautic is facing an awkward situation. They are experiencing a
huge decrease in their deliveries when the global market keeps on increasing and the
demand is steadily heighten thanks to both Asian and Emirates countries. Indeed, they
expect a drop of the commands (-25% for 2016) when the global market will increase on
average by 5% each year. For 2016, Airbus and Boeing have already increased their
expectations and they do not anticipate a drop of the demand in the coming years.
Furthermore, when the two competitors increase their production capacities in order to
reach the global demand, Bombardier is setting up a restructuration plan with the support
of the Canadian government and plan a reduction of the workforce by 7 000 people
spread on the next two years. It represents a 10% cut-off on the Bombardier employees.
2) Forecasts and expectations regarding the Train sector
The situation regarding the Transportation sector is in better shape. Indeed, the
global market is also thriven by the need of transportation equipment of the Asian
countries. This situation is even more impacted by the China market. The global market
is expected to increase by 3% each year. As a proof, the recent victory of Bombardier
regarding Asians request for proposal shows the good dynamic of the business unit.
Beside, the group shows good margin regarding the competition: Alstom, for example,
manage to have 5% margin when Bombardier expects 6%.

6. 2. The Aerospace division
Before turning to the operating strategy of the Aerospace division and to the
strengths and weaknesses of that division, it seems important to clearly define the
strategic model of Bombardier.
2.1 Bombardier strategic model
The Bombardier’s strategic model is based on the following three pillars: mobility
solutions, local roots and flawless execution.
The first strategic pillar consists in investing in leading mobility solutions allowing
Bombardier to be at the cutting edge of technology. In creating new ways to move and to
travel, Bombardier aspires to meet clients’ needs and so to become a much bigger player
in the aerospace market and to strengthen its leading position in the rail transportation
market.
The second one is based on the desire to be present all over the world in order to capture
global growth opportunities.
In fact regarding the aerospace market, between 1993 and 2002, 80% of aircraft
deliveries have been made in North America and Europe. Over the next decade, industry
forecasts show sustained growth in business and commercial aircraft markets. High
growth markets are in Asia, Middle East and South America.1
1http://www.bombardier.com/content/dam/Websites/bombardiercom/supporting-
documents/BA/Bombardier-Business-Aircraft-2015-2024-Market-Forecast-en.pdf

7. It is therefore very important for Bombardier to increase its presence in those regions in
terms of sales workforce but also in terms of research and development center in order to
better understand the local demand.
Bombardier’ strategy is so to establish field offices in high grow potential key markets
such as China, India, Brazil or Mexico. The stakes are indeed for Bombardier to benefit
from the strong train demand driven by urban and suburban development worldwide, as
well as ongoing demand for reliable public transportation. For instance, in Sao Paulo
Bombardier's Transportation division is undertaking a huge project to build the world's
largest mass transit monorail to deal with the city's congestion.2
The third, but not the least, strategic pillar is focused on customer satisfaction through
products’ reliability. Faced to the intensive competition, Bombardier wants to be above
and work on every step, from the building part to the after-sales service, in order to
spread an image of excellence and to keep its customers.
3. Operating strategy
As we said in the introduction, we will focus our analysis on the Bombardier’s
aerospace division. It is divided in two parts: the commercial aircraft department and the
business aircraft department. In these two departments, Bombardier applies its three
strategic pillars but in a slightly different way.
2
http://www.vault.com/company-profiles/aerospace-and-defense/bombardier-aerospace-
corporation/company-overview.aspx

8. 3.1 Commercial aircraft department
Bombardier is present in the small and medium commercial aircraft market,
currently offering a range of airplane between 60 to 99 seats.
In line with its strategy to invest in industry leading products, Bombardier has developed
a new aircraft, the CSeries. It is equipped with the latest generation of technology and it
greatly reduced the noise and CO2emission. It has been designed for the 100 to 149-seat
market in order to compete with the Airbus A320 and Boeing 737 and also to offer an
overall portfolio of aircraft to its potential clients. We will see further that this CSeries
program is experiencing many problems.
To be closer to their customers and to their business reality, Bombardier is currently
regionalizing increasingly its commercial aircraft sales team. Moreover in this spirit to
expand its global presence, Bombardier has increased its customer
service capacity in Africa, Asia-Pacific, Middle East and South
America by expanding their regional support offices, parts depots
and third party service agreements. In fact, among its 37,700
employees in this department, only 1% is located in the regions
quoted earlier whereas those are high grow potential key markets. 3
3
http://ir.bombardier.com/modules/misc/documents/05/66/22/56/14/BA-Profile-Strategy-and-Market-FEB-
2014-1.pdf

9. The Bombardier’ strategy in this department is therefore focused on the expansion of
their global presence as is shown with the development of collaborative activities in
China.
3.2 Business aircraft department
Bombardier is well positioned in the business aircraft market with three families
of aircraft (light, medium and large jets), covering the majority of the market. To offer
the broadest business aircraft portfolio as possible and to strengthen their product
leadership in this segment, three aircraft model are currently in development (CL650,
G7000 and G8000). The last two models will give to Bombardier broad market coverage
in the upper end of the business aircraft market, which is currently dominated by the
American manufacturer Gulfstream.
Control of on-time delivery and of the availability of parts all around the world are parts
of the operational strategy of the business aircraft division in order to fulfill the third
strategic pillar of the group. By focusing on their customer satisfaction through fleet
reliability and their capacity to deliver on time, this will improve their image of
excellence and thus their profitability.
To achieve these goals, Bombardier aims to increase its customer service offering.
Maintenance services, parts services, training and support services as 24-hour customer
response centres or customer services engineering, are some services that Bombardier
wants to develop and increase at a worldwide level.

10. Meet their customers’ needs and enhance their competitive positioning in key growing
markets such as Asia and Latin America drive the operating strategy of Bombardier in
this sector. Healthy economic outlook and lower airspace
restriction point to significant growth potential for business
aircraft in these regions. Moreover trade globalization will
continue, particularly with and between emerging markets,
increasing the need for business aircraft. It is therefore very
important to Bombardier to expand their global presence in order
to capitalize on it.
4. Market Tendency
Bombardier is one of the biggest aircraft makers in the world. It works in an
oligopoly, the aerospace industry, and above all on civil aircraft for airlines or business
aircraft.
Even if Bombardier has few competitors, as we see before in the text, it has many
problems and its survival is not guarantee.
As we said before, there are few aircraft makers in the world. In the table below, this is
list with the main manufacturers.
Boeing and Airbus are two leaders of the market. They share both the majority of orders
and deliveries. They do not have another major competitor nowadays but it can change in
the future. Bombardier is the third plane maker in the world after the two big giants. It
has four major competitors: The American Gulfstream; the French Dassault; the Brazilian
Embraer and finally the American Cessna. Bombardier is the leader for business aircraft
and small regional aircraft but it wants to compete with Boeing and Airbus in the medium
capacity aircraft with C-Series.

11. Manufacturers Country Revenue (billion $US)
Boeing USA 81.7
Airbus Europe 66.35
Bombardier Canada 9.4 for plane section
Gulfstream Aerospace USA 6.912 Direct
competitors
for
Bombardier
Dassault Aviation France 4.02
Embraer Brazil 1.64
Cessna USA N/A
This market has good future perspectives; indeed, the air traffic will grow for at least 20
years without interruption.
Above all, airlines will need about 36 000 new aircraft due to the growth of air
transportation. More and more people want to travel and so use plane instead of car or
train. In 2014 the air fleet has 20910 aircraft, this number will be 42 180 in 2033. The
emerging countries in Asia, Middle East and Africa will be the main clients for
manufacturers.
0
500
1000
1500
2000
2500
0
5000
10000
15000
20000
North
America
South
America
Europe Africa Middle
East
CIS Asia
Revenue
airfleet
2014 fleet 2033 fleet revenue (billion $US)

12. World fleet will grow exponentially between 2014 and 2033. In 2033, the main sector for
manufacturers will be the single aisle aircraft with 90 – 230 passengers. It is the best
aircraft for short or medium travel.
Bombardier understands well market tendency because with the development of new C-
series, it wants to compete with airbus and Boeing in the sector of single aisle aircraft.
5. Main assets
 Bombardier is the leader on his main market: business aircraft and regional aircraft.
The competition is harder with regional plane than with business aircraft. For
business plane Bombardier has more than 50% of the market.
 Wide fleet for business aircraft: many different planes from the small one to the big
jet for billionaires. Moreover, the population of multimillionaire will grow over next
decades, for example between 2013 and 2014, there were 219 new billionaires in the
world. So Bombardier is on a market with good future perspective. It will not be a
crisis market.
 Bombardier invented a new plane: the regional jet for less than 100 passengers.
Because it is the inventor, it has a real expertise. Many airlines want to have regional
jet for short travel (1-2 hours) for a good price.
 Bombardier is not in a good period with lots of problem with the development of C-
Series; nonetheless one of its strengths is that it is not dependent of plane market.
7%
70%
12%
9%
2%
Fleet in 2033
Regional aircraft
single aisle (90-230
passengers)
Widebody (200-300
pasengers)
Widebody (300-430
passengers)
Widebody > 400 passengers)

13. Indeed, its revenue comes from plane for 50% and train construction for 50%. So
that, even if its aircraft division has lots of difficulties, its train section goes better.
 It has the support of Québec government and a little from the federal government.
Bombardier is one the pride of Québec. So the government does not want it
disappear. Thus it helps Bombardier during this difficult period.
6. Bombardier’s limits and Weaknesses
About two decades ago, it became public knowledge that the multinational
corporation management process must fit its environment (G, Sumathra, 1993).
Bombardier is a perfect example of an organisation that couldn’t achieve this goal .The C
Series is the main reason to it. The company C Series sales market strategy, cost of
production, financing, product delays are some of main problems that Bombardier
encountered in C Series aircrafts.
6.1 Sales Market Strategy
Figure 4.1
Bombardier initial sales strategy was based on geographically dispersed
customers. The company diversified its global market in an attempt to bust its sales. The
figure 4.1 illustrates this tendency. Unfortunately this strategy was a total failure. “That

14. initial strategy of building a geographically dispersed customer base excluded them going
after a massive customer with a large order that would have given them the credibility
they needed,” 4
.
Since 2008, only two global carriers, Germany’s Deutsche Lufthansa AG and Korean Air
Lines, have ordered for the new jets. Most of the other big global carriers have not be
interested to buy C series aircrafts so far5
. On the other side, Airbus and Boeing 747 sales
team were able to grab Bombardier market by targeting major air lines such as American
airlines, Emirates airlines, Southwest airlines, WestJet airlines, Canada air and etc.6
.
6.2 Product Cost
Figure 4.2
The C Series family needs to be more competitive on price and services. In the last
decade, Airbus and Boeing 747 were able to launch their own re-engine narrow-body
aircraft at a cheaper price. A series of interviews with former Bombardier executive’s
reveals that sometimes Airbus and Boeing were able to sign contracts just hours before
Bombardier signing deadlines. Bombardier upper management refused to sale the C-
series at cheaper price insisting that C Series was worth the premium. This strategy
created a gab of $4 million per plane between the C series and the Airbus and Boeing747
4
Bloomberg, Why Bombardier Is Struggling to Build Bigger Planes, Bloomerb.com (28 February 2016),
http://www.bloomberg.com/news/articles/2016-02-04/why-bombardier-is-struggling-to-build-bigger-
planes; Mcleans ,The story behind the bungled bombardier C-series,,Mcleans.ca,(28 February
2016),http://www.macleans.ca/economy/business/the-story-behind-the-bungled-bombardier-c-series/
5
Ibid.
6
Air France journal, Top Boeing and Airbus Customers, aifrance.com,(28 February
2016),http://www.airfinancejournal.com/Article/3341246/Top-Boeing-and-Airbus-customers.html

15. aircrafts. Figurate 4.2 summarizes this tendency; Airbus A321 and Boeing 737 Max
family grab most of the medium commercial jet market.
6.3 Product delays
Bombardier Inc. suffered major losses du to Product delays for the C-series. The
delivery date of its C Series airliner was pushed several times between 2008 and 2016.
This situation affected the price stock of Bombardier and it fell from 2.5$ to below 1$ in
Toronto Stock Exchange. Shareholders felt that Bombardier wasn’t controlling the
process anymore. Therefore the value of Bombardier stock dropped from $2.2 billion to
$260 million.
As the C Series aircraft, Learjet 85 aircraft was plagued with delays. This situation made
Bombardier quit the project in early 2015 before it became a disaster in last fall. This
failure was pretty costly for Bombardier Shareholders7
.It resulted also in a cut of 1,000
jobs at company facilities in Wichita8
.
7. Conclusion and Recommendations
As it was cited before, the Bombardier’s main problem is in aeronautic sector and
particularly in commercial aircraft division.
Bombardier is new in commercial aircraft market where there are two giants airplane
manufactures; Boeing and Airbus, have almost entire market share. The first step for
Bombardier to compete with 2 strong brands is to build trust and reputation in global
commercial aircraft market. Building strong brand needs medium and long term
investment and plan. In order to build strong brand and reputation, Bombardier needs to
change some of its strategies in production, human resources, marketing and Research
and Development.

16. 7.1 Production Strategy
Bombardier is facing delay in delivery of its C series aircrafts. This delay has bad
effect on its reputation and may push its potential customers towards Boeing and Airbus.
The cost of production needs to be decreased to make the product more competitive in
commercial airplane market. Bombardier needs to change its operational strategy in order
to achieve operational excellence. With operational excellence, Bombardier can deliver
its orders on time and build trust in commercial aircraft market. Increasing speed of
manufacturing aircrafts, maximizing performance, increasing innovation and
collaboration and engaging customers are important criteria to achieve operational
excellence9
.
In order to achieve operational excellence, Bombardier needs to implement Lean Six
Sigma methodology. Lean Six Sigma methodology will help Bombardier to improve
steadily both employee behaviors and productivity and organization processes. In lean
Six Sigma methodology the goals and objectives of operational excellence has to be
clearly determined. Bombardier goals of operational excellence would be the delivery
ofits orders on time and reducing the cost of production10
.
7.2 Human Resources Strategy
Bombardier has to change its strategy in human resources. Less than 1% of
employees are working in emerging economies where the market of airplane is shifting
considerably within next 20 years. Bombardier needs to expand and hire more local
talents from emerging countries. Strong physical presence is important to build strong
9
Why a Black Belt Should only be Worn with a Karategi, ACM Cunsulting Inc.,
http://www.acmconsulting.ca/resources/articles/why-a-black-belt-should-only-be-worn-with-a-karategi/
10
Slide Share,
http://www.slideshare.net/harshupadhyay/operational-excellence-through-lean-six-sigma
Operational Excellence
Increasing speed Maximizing performance Increasing innovation and
collaboration
Engaging customers

17. brand while Boeing and Airbus have already very strong brands in airplane market. As
cited before, Bombardier has lost some of important contracts just hours before signing to
Boeing and Airbus. It shows that the sales team are not enough good to keep the
opportunities in intense competition situations. Bombardier has to work on its human
resources strategy and improve its strategy in attraction and retention of talents.
7.3 Changing Marketing Strategy
Bombardier has focused very much on regional airlines and has neglected big
Airlines. Big airlines do the big purchases in airplane market. By neglecting big airplane
buyers, Bombardier looses the main part of market and thus decreases its revenue
considerably.
Flexibility in contract and pricing are very important in Bombardier marketing strategy to
overcome the current crisis in commercial aircrafts. Bombardier’s pricing strategy should
focus to penetrate to the commercial aircraft market. So its price should be lower than
Boeing and Airbus similar models and contracts should be more flexible. Offering
attractive incentives to buyers would capture buyer’s willingness to purchase
Bombardier’s C series aircrafts rather than Boeing and Airbus aircrafts. If Bombardier
managers insist on high prices, they will lose the opportunities to the strong brands of
Boeing and Airbus. When Bombardier is able to build strong brand in long term; like
Boeing and Airbus, then Bombardier will be able to set higher prices for its commercial
aircrafts.
7.4 Research and Development Strategy
Decentralizing of research and development centers and global spread of research
centers would help Bombardier to understand customer’s needs and help Bombardier to
attract local talents for global class manufacturing of aircrafts. Bombardier global
presence is limited in service locations and sales offices.
As the aircraft market trend shows, 50% of market will be outside of North America and
Europe. It’s important that Bombardier establish semi- autonomous research centers in
Russia, Middle- East, Africa, South Asia, East Asia, South America and Australia.

18. Bombardier will have stronger physical and global
presence and attract talents, who know better the local
needs and standards. The semi- autonomous research
centers will follow the high standards of headquarters
while attracts regional talents and give them enough
freedom for creative ideas for regional needs.