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Running Head: BOMBARDIER INC. STRATEGY ANALYSIS
04-75-100 – Introduction To Business – Section 30
Bombardier Inc.
Strategy...
BOMBARDIER INC.STRATEGY ANALYSIS
EXECUTIVE SUMMARY
Bombardier Inc. is the world’s largest passenger train maker and the th...
BOMBARDIER INC.STRATEGY ANALYSIS
TABLE OF CONTENTS
1. INTRODUCTION 1
2. COMPANY HISTORY AND DESCRIPTION 1
3. CURRENT COMPE...
BOMBARDIER INC.STRATEGY ANALYSIS
9.3 Appendix C – Tables & Figures 27
10. REFERENCE LIST 28
BOMBARDIER INC. STRATEGY ANALYSIS
1
1. INTRODUCTION
The purpose of this report is to critically analyze the strategy of a ...
BOMBARDIER INC. STRATEGY ANALYSIS
2
authorized service facilities, and distribution centers as well as a range of aircraft...
BOMBARDIER INC. STRATEGY ANALYSIS
3
3. CURRENT COMPETITIVE SITUATION ANALYSIS
3.1 INDUSTRY ANALYSIS
Over the past few year...
BOMBARDIER INC. STRATEGY ANALYSIS
4
economic uncertainty remains a threat, Bombardier’s focused strategy has enabled it to...
BOMBARDIER INC. STRATEGY ANALYSIS
5
Boeing, another major competitor of Bombardier, is the largest aerospace company in th...
BOMBARDIER INC. STRATEGY ANALYSIS
6
population growth in mature and emerging urban markets through its product and service...
BOMBARDIER INC. STRATEGY ANALYSIS
7
assesses all new programs and its Product Development Cycle – which involves thoroughl...
BOMBARDIER INC. STRATEGY ANALYSIS
8
Further, BT also introduced an initiative on quality in 2011, with two core elements. ...
BOMBARDIER INC. STRATEGY ANALYSIS
9
responsibility) in order to deliver on its promise, sustain a competitive advantage, d...
BOMBARDIER INC. STRATEGY ANALYSIS
10
3.5 COMPETITIVE POSITION
“Positioning is the image or perception that customers have ...
BOMBARDIER INC. STRATEGY ANALYSIS
11
companies in Canada do not believe that the Canadian government provides sufficient f...
BOMBARDIER INC. STRATEGY ANALYSIS
12
period, the Bombardier business aircraft market forecast predicts that business jet
m...
BOMBARDIER INC. STRATEGY ANALYSIS
13
increase amongst major manufacturers with these key trends in mind. According to Bomb...
BOMBARDIER INC. STRATEGY ANALYSIS
14
challenges face the traditional players due to stiff local-content rules in emerging ...
BOMBARDIER INC. STRATEGY ANALYSIS
15
Rail passenger transit is on the rise in emerging markets as well as in developed cou...
BOMBARDIER INC. STRATEGY ANALYSIS
16
In particular, BA should increase production of its individual and corporate business...
BOMBARDIER INC. STRATEGY ANALYSIS
17
and rail transportation industries, and achieve its mission of being “the world's lea...
BOMBARDIER INC. STRATEGY ANALYSIS
18
6. STRATEGIC MODELS
6.1 SWOT ANALYSIS
STRENGTHS WEAKNESSES
 “World’s No.1 passenger ...
BOMBARDIER INC. STRATEGY ANALYSIS
19
7. STRATEGIC DISCUSSION
Bombardier Inc. has come a long way since its establishment i...
BOMBARDIER INC. STRATEGY ANALYSIS
20
Additionally, Bombardier must constantly invest in research and development to mainta...
BOMBARDIER INC. STRATEGY ANALYSIS
21
9. APPENDICES
9.1 APPENDIX A – GROUP CONTRACT
04-75-100 – Introduction to Business – ...
BOMBARDIER INC. STRATEGY ANALYSIS
22
e) Strategic models: Xingyue Chen & Farkhundah Ahmadzai
Discussion and Conclusions: F...
BOMBARDIER INC. STRATEGY ANALYSIS
23
9.2 APPENDIX B – REFLEXIVE ASSESSMENT OF TEAM PROCESSES
Upon review with group member...
BOMBARDIER INC. STRATEGY ANALYSIS
24
This initial act began to secure our trust in one another that our relationships coul...
BOMBARDIER INC. STRATEGY ANALYSIS
25
Challenges did arise in the form of timelines and scheduling conflicts. Procrastinati...
BOMBARDIER INC. STRATEGY ANALYSIS
26
on added assignments (checking Turnitin results, etc.). Also, another major lesson th...
BOMBARDIER INC. STRATEGY ANALYSIS
27
9.3 APPENDIX C – TABLES & FIGURES
Figure 1 - Global Competitiveness in the Rail and T...
BOMBARDIER INC. STRATEGY ANALYSIS
28
10. REFERENCE LIST
1. ALSTOM (2012). About Us. Retrieved from http://www.alstom.com/a...
BOMBARDIER INC. STRATEGY ANALYSIS
29
16. Nickels, W. G., McHugh, J. M., McHugh, S. M., Cossa, R., & Sproule, B. (2010)
Und...
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Bombardier Inc. Strategy Analysis - Group 6

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Bombardier Inc. Strategy Analysis - Group 6

  1. 1. Running Head: BOMBARDIER INC. STRATEGY ANALYSIS 04-75-100 – Introduction To Business – Section 30 Bombardier Inc. Strategy Analysis Presented On: 22 March 2012 PresentedTo:KentWalker PresentedBy:Group6 Farkhundah Ahmadzai - 103743110 Brian Chauvin - 930072550 JingZhou - 103703778 Xingyue Chen - 103703846 Mona Dave – 103773067 Universityof Windsor
  2. 2. BOMBARDIER INC.STRATEGY ANALYSIS EXECUTIVE SUMMARY Bombardier Inc. is the world’s largest passenger train maker and the third largest civil aircraft manufacturer (Bombardier Inc., 2012). The company is headquartered in Quebec, Canada, and employs approximately 62,900 people in operations in more than 60 countries around the world (Datamonitor, 2010, p.96). Over the years, Bombardier has built a reputation for being an industry leader, innovator and trend setter. Increased global competition coupled with economic uncertainty and changing consumer needs, is forcing Bombardier to rethink its strategies, in order to be able to effectively compete in the competitive global market. The aim of this report is to provide Bombardier Inc. with the guidance and direction it needs to achieve its mission of being “the world's leading manufacturer of planes and trains” (Bombardier Inc., 2012). This report will outline business and corporate level strategies for Bombardier to adopt in order to deliver on its promise of evolution of mobility, sustain a competitive advantage, differentiate itself from its competitors, and drive future growth. This report includes detailed information on Bombardier’s history, its current competitive situation analysis and business environment projection in order to provide the company with a thorough understanding of its current position and to aid in achieving its goals and mission.
  3. 3. BOMBARDIER INC.STRATEGY ANALYSIS TABLE OF CONTENTS 1. INTRODUCTION 1 2. COMPANY HISTORY AND DESCRIPTION 1 3. CURRENT COMPETITIVE SITUATION ANALYSIS 3 3.1 Industry Analysis 3 3.2 Competitor Analysis 4 3.3 Business Level Strategy 6 3.4 Corporate Level Strategy 8 3.5 Competitive Position 10 4. FORWARD 5 YEAR BUSINESS ENVIRONMENT PROJECTION 10 4.1 Legal and Regulatory Factors 10 4.2 Economic Factors 11 4.3 Technological Factors 12 4.4 Competitive Factors 13 4.5 Social Factors 14 4.6 Global Factors 14 5. PROPOSED STRATEGIC ADAPTATIONS 15 5.1 Business Level Strategies 15 5.2 Corporate Level Strategies 16 6. STRATEGIC MODELS 18 6.1 SWOT Analysis 18 7. STRATEGIC DISCUSSION 19 8. CONCLUSION 20 9. APPENDICES 21 9.1 Appendix A – Group Contract 21 9.2 Appendix B – Reflexive Assessment of Group Processes 23
  4. 4. BOMBARDIER INC.STRATEGY ANALYSIS 9.3 Appendix C – Tables & Figures 27 10. REFERENCE LIST 28
  5. 5. BOMBARDIER INC. STRATEGY ANALYSIS 1 1. INTRODUCTION The purpose of this report is to critically analyze the strategy of a publicly listed Canadian Corporation. Bombardier Inc. will be evaluated and its strategies analyzed. The aim will then be to recommend business and corporate level strategy changes for Bombardier Inc. to adopt in order to maintain its industry-leading positions now as well as in the future. 2. COMPANY HISTORY AND DESCRIPTION Bombardier Inc. began as a family business, established in 1942 by Joseph-Armand Bombardier, an inventor who built and sold the first snowmobiles. In 1959 the company produced the first Ski-Doos, and by 1974 it was producing underground rail cars for Montreal. The company then entered the aerospace industry through its purchase of Canadair in 1986, shortly followed by its purchase of Lear Jet and Ireland’s Short Brothers, and its acquisition of de Havilland. By 1988 Bombardier began producing Sea-Doos and bought out water-engine manufacturers Johnson and Evinrude (Canadian Broadcasting Corporation [CBC], 2003, p.48). Bombardier now competes in the aerospace and rail transportation industries, manufacturing business and commercial aircraft transportation equipment, rail transportation equipment and systems, and related services through its two subsidiaries Bombardier Aerospace (BA) and Bombardier Transportation (BT). The company is headquartered in Quebec, Canada, and has operations in more than 60 countries in five continents, employing approximately 62,900 people (Datamonitor, 2010, p.96). Its first subsidiary Bombardier Aerospace is involved in designing and manufacturing aviation products, including business jets, commercial jets and amphibious aircrafts for companies, high net worth individuals, airlines and leasing companies. It has 10 manufacturing and engineering sites and is present in 22 countries across the world. BA also offers maintenance service centers,
  6. 6. BOMBARDIER INC. STRATEGY ANALYSIS 2 authorized service facilities, and distribution centers as well as a range of aircraft services such as parts logistics, aircraft maintenance, and training solutions to name a few (Datamonitor, 2010, p.96). Its second subsidiary Bombardier Transportation is involved in the manufacturing of rail equipment and systems, such as passenger railcars, locomotives, light rail vehicles, automated people movers, bogies, electric propulsion, control equipment and maintenance services (Railtex, 2009). BT operates through 58 production and engineering sites and 40 service centers in 23 countries around the world (Datamonitor, 2010, p.97). Bombardier like many other large multinational firms did fall prey to the recent downturn in the world economy. As a result of the decline in demand for new aircraft Bombardier was faced with declining sales and rising debt. This put Bombardier in a tough position and even forced the company to lay off 3000 employees (CBC, 2003, p.51). Fortunately, Bombardier was able to bounce back from the negative effects of the recession, due to the increased demand for business travel and for business aircraft from globalization (Bombardier, Inc., 2011, p.26). Through its 4 “core values of: integrity, commitment to excellence, customer orientation and shareholder focus” (Bombardier Inc., 2012), Bombardier aims to fulfill its mission “to be the world's leading manufacturer of planes and trains” (Bombardier Inc., 2012). Currently, “Bombardier is the world’s No.1 passenger train maker and No.3 civil aircraft manufacturer” (Nickels, J. McHugh, S. McHugh, Cossa, Sproule, 2010, p.292). It recorded revenues of $19,366 million for the financial year ended January 2010 (Datamonitor, 2010, p.96).
  7. 7. BOMBARDIER INC. STRATEGY ANALYSIS 3 3. CURRENT COMPETITIVE SITUATION ANALYSIS 3.1 INDUSTRY ANALYSIS Over the past few years, the Aerospace Industry has dealt with significant challenges as a result of the recession and high oil prices, leading to a reduction in the demand and confidence of customers to renew and expand their fleets. Although economic uncertainty around the world reduced the demand for business aircraft, globalization is increasing the demand for business aircraft and travel that will enable individuals and corporations to reach more destinations efficiently. The global aerospace industry has thus been growing steadily since 2006, due to increasing demand from emerging countries and is expected to do so in the future (Bombardier, Inc., 2011, p.26). A (2010) Datamonitor report found the following: Total revenues for the global aerospace market in 2009 were $743.9 billion, with a compound annual growth rate of 4.9% for the 2005-2009 period. The civilian aerospace market generated revenues of $210.8 billion in 2009, equating to 28.3% of the market’s aggregate revenues. (p. 7) In contrast to the aerospace industry, the rail industry has remained resilient even in uncertain economic times. Over the past five years, the rail industry has continued to grow as a result of increased government investment in anticipation of longer term increases in rail demand (Bombardier, Inc., 2011, p.106). “The worldwide rail market continued to have high levels of activity, reaching $96.9 billion on average over the years 2009 to 2011, higher than the previous average of $94.6 billion for years 2008 to 2010” (Bombardier, Inc., 2011, p.106). This shows that rail industry is less subject to short-term instability than other industries, and even though
  8. 8. BOMBARDIER INC. STRATEGY ANALYSIS 4 economic uncertainty remains a threat, Bombardier’s focused strategy has enabled it to continue winning orders (Bombardier, Inc., 2011, p.106). 3.2 COMPETITOR ANALYSIS Bombardier operates as a leader in the global rail and aerospace industries, and according to Hoover’s Company Records (2012) its main competitors are ALSTOM, Boeing, and Siemens AG. Other competitors include Airbus and Embraer. Many of Bombardier’s competitors are partially owned by the government and/or receive subsidies. Bombardier also receives subsidies and financial aid from the Canadian government, however, not to the extent of some of its competitors. This distorts the market and can make it harder for Bombardier to compete. ALSTOM is one of Bombardier’s major competitors and also a world-leader when it comes to the manufacturing of commuter trains, locomotives, signaling equipment and rail infrastructure, high-speed trains and provision of complete turnkey railroad setup (Hoover’s, 2012). It has built up a strong brand name in the rail transportation industry from its ability to manufacture very high speed trains, and its “technological advances allowed the company to achieve the world rail speed record at a speed of 574.8 km/h on 3 April 2007” (ALSTOM, 2012). ALSTOM operates in 100 countries around the world, but is increasing its focus from the developed world to emerging economies. Customers in emerging countries accounted for a 25% increase in orders, which brought the global total from 35% in 2010 to 60% in 2011. Orders from customers in Brazil, Russia, India, and China increased from 10% of the global total in 2010 to 25% in 2011. ALSTOM also experienced a 6% increase in sales in 2011, after 2 years of decline in revenue in 2009 and 2010. Moreover, orders increased by 28% in 2011, whilst net income, on the other hand, was down 62% in 2011 compared to 2010 (Hoover’s, 2012).
  9. 9. BOMBARDIER INC. STRATEGY ANALYSIS 5 Boeing, another major competitor of Bombardier, is the largest aerospace company in the world (Boeing, 2012). It is the second largest maker of large commercial jets after Airbus and the second largest defense contractor following Lockheed Martin. Boeing’s businesses include Commercial Airplanes, Boeing Defense, Space & Security and Boeing Capital Corporation. Its Defense, Space and Security business consists of global services & support network, military aircraft, and space systems. Its capital business provides financing and leasing services to both military/aerospace and commercial customers. A large portion (60%) of Boeing’s sales are generated in the Americas, with the US Department of Defense generating about 80% of the revenues for its Defense, Space & Security unit. Other major customers of Boeing include NASA, international defense agencies, and satellite markets (Hoover’s, 2012). Siemens AG is also a major competitor of Bombardier. It is one of the largest electronics and industrial engineering companies in the world, and runs 750 subsidiaries and associated companies in over 1,600 locations around the world. The company manufactures diagnostic and imaging systems for clinics and hospitals; automation equipment and building technologies for manufacturers and construction companies, and also produces power generation and distribution equipment for the oil and gas and renewable energy sectors. Its largest subsidiaries are Siemens Energy, Siemens Healthcare, and Siemens Industry. The company develops new technology at more than 175 research and development facilities around the world, and has corporate technology departments in Germany, the US, China, and India. While Siemens’ operations are diverse, its long-term strategy focuses on developing and producing products that are in global demand. That is, addressing climate, environmental, and energy concerns, and facilitating
  10. 10. BOMBARDIER INC. STRATEGY ANALYSIS 6 population growth in mature and emerging urban markets through its product and service offerings (Hoover’s, 2012). 3.3 BUSINESS LEVEL STRATEGY Bombardier Aerospace designs, manufactures and supports innovative aviation products for the commercial, business, amphibious and specialized aircraft markets. BA has the most comprehensive aircraft portfolio and holds a first place ranking in business and regional aircraft. Its high-performance aircraft and services set the standard of excellence in global markets (Bombardier, Inc., 2011, p.23). As industry forecasts have predicted sustained growth in the business and commercial aircraft markets, BA employs a differentiation strategy to sustain its competitive advantage over its competitors. BA has a reputation for being an innovator, trend setter and for setting industry benchmarks, as it is continuously improving and evolving its products. Its strategy focuses on developing industry-leading products, achieving flawless execution, and expanding its international presence in order to meet its customers’ needs and further strengthen its leadership position (Bombardier, Inc., 2011, p.3). To elaborate, Bombardier has developed industry leading products such as the innovative C- Series single-aisle commercial aircraft which offers superior field performance, best-in-class operating economics, and is environmentally friendly. Also, Bombardier’s Learjet 85 business jet can fly faster and farther than any Learjet aircraft ever built, whilst Bombardier’s Global 8000 business jet can fly farther than any other business jet (Bombardier, Inc., 2011, p.26). Further, BA’s dedication to achieve flawless execution is achieved through various programs and controls. These include Bombardier’s Aircraft Portfolio Strategy Board – which thoroughly
  11. 11. BOMBARDIER INC. STRATEGY ANALYSIS 7 assesses all new programs and its Product Development Cycle – which involves thoroughly inspecting the product development process, enabling BA to identify and reduce potential risks quickly and efficiently. (Bombardier, Inc., 2011, p.27). Also, BA has expanded its presence globally to further its production footprint and improve supply chain efficiency, by building a manufacturing site in Mexico that produces lower cost and high-quality components. The company also plans to grow further by building a manufacturing facility in Morocco (Bombardier, Inc., 2011, p.28). By leveraging its extensive portfolio and continuously improving its products and operations, Bombardier Aerospace continues to remain profitable through these tough economic times (Bombardier, Inc., 2011, p.26). Bombardier Transportation employs both a low cost and differentiation strategy to sustain a competitive advantage over its competitors. Its strategy focuses on developing innovative and cost-optimized products and solutions, enabling development of more integrated transportation networks, building local capabilities and long-term partnerships, and delivering flawlessly on its promises. BT is able to differentiate itself from competitors by making trains that are more efficient, faster, quieter and more comfortable (Bombardier, Inc., 2011, p.44). Moreover, BT is expanding its presence and building long-term partnerships in emerging markets by localizing production, establishing operations and maintenance presence and investing in public & private partnerships. For example, for Metro de São Paulo in Brazil, BT used its local presence to restore a fleet of metro vehicles, extending the vehicle life by 20 years and reducing maintenance costs, improving reliability and availability for passengers (Bombardier, Inc., 2011, p.45).
  12. 12. BOMBARDIER INC. STRATEGY ANALYSIS 8 Further, BT also introduced an initiative on quality in 2011, with two core elements. The first element involves advanced quality planning throughout all phases of project management. The second element is an effective process of problem identification, problem solving and prevention and process improvement. This initiative allows BT to successfully differentiate itself by producing world-class goods and delivering flawlessly on its promises (Bombardier, Inc., 2011, p.45). In addition, Bombardier Transport’s low cost strategy involves developing low cost products to meet the needs of its customers. In particular, the company has developed the Régio2N regional train to allow customers with budget constraints to upgrade their infrastructure at a lower cost (Bombardier, Inc., 2011, p.44). 3.4 CORPORATE LEVEL STRATEGY Bombardier is a global transportation company with 76 production and engineering sites and a vast network of service centres in 25 countries around the world. It operates two industry-leading businesses through Bombardier Aerospace and Bombardier Transportation. Bombardier’s 70,000 employees design, manufacture, sell and support a wide array of world-class products in these two sectors, including commercial and business jets, and rail transportation equipment, systems and services (Bombardier Inc., 2012). Bombardier is committed to its promise of “the Evolution of Mobility” (Bombardier, Inc., 2011, p.10). Bombardier is utilizing three interrelated horizontal growth strategies (Invest in leading mobility solutions, grow local roots in emerging markets, and achieve flawless execution at every stage) supported by four competitive capabilities (great talent, financial discipline, active risk management, commitment to corporate social
  13. 13. BOMBARDIER INC. STRATEGY ANALYSIS 9 responsibility) in order to deliver on its promise, sustain a competitive advantage, differentiate itself from its competitors, and drive future growth (Bombardier, Inc., 2011, p.3) First, Bombardier is investing in mobility solutions (such as the very high speed ZEFIRO train, and the CSeries commercial aircraft) that are trend setting, technologically innovative and will broaden its geographic reach to ensure the company’s long-term success (Bombardier, Inc., 2011, p.1). Second, Bombardier is aiming to build local capabilities and sound partnerships in emerging economies, in order to sustain growth. That is, Bombardier aims to expand internationally given the recent growth in emerging markets. For Bombardier to capture opportunities, generate cost advantages and strengthen its global leadership and competitiveness, building a strong local presence in the world’s rising economies is crucial. International expansion will allow Bombardier to increase its scale, expertise, technologies and products to meet the substantial transportation needs of billions of people in emerging markets (Bombardier, Inc., 2011, p.6). And finally, to build value and grow even further, Bombardier is aiming to achieve flawless execution in its new product programs and delivery of its substantial backlog. The company pursues customer-focused excellence and applies lean manufacturing principles throughout a product’s entire lifecycle. This enables flawless delivery of products and services, drives Bombardier’s leadership and paves the way to growth (Bombardier, Inc., 2011, p.8). Thus, Bombardier’s corporate level strategies are embedded in its competitive foundation of great talent globally, active risk management, committed corporate social responsibility, and strong financial discipline (Bombardier, Inc., 2011, p.3).
  14. 14. BOMBARDIER INC. STRATEGY ANALYSIS 10 3.5 COMPETITIVE POSITION “Positioning is the image or perception that customers have of a particular brand or company, relative to their perceptions of others in the same category” (Rohanek, 2006). Bombardier competes in the global market as a leader in both the aerospace and rail transportation industries. It utilizes a variety of positioning strategies in order to sustain its leadership position in the market. By positioning in relation to its competition, Bombardier aims to continuously innovate its products to beat the offerings of its competitors. By positioning in relation to its customers, Bombardier is able to meet the changing transportation needs of its customers before any other competitor by engineering innovative and sustainable solutions to today’s mobility challenges. It is Bombardier’s leadership position and perception of innovativeness that led to the company generating revenues of $18.3 billion US in the fiscal year ended December 31, 2011 (Bombardier Inc., 2012). 4. FORWARD 5 YEAR BUSINESS ENVIRONMENT PROJECTION 4.1 LEGAL AND REGULATORY FACTORS Within the aerospace industry, the role of government is becoming increasingly important. A 2009 study by aerospace consultant, AeroStrategy LLC (titled ‘The Strategic and Economic Impact of the Canadian Aerospace Industry’), suggests that a developing trend globally is the growing cooperation between aerospace companies and foreign governments to create high value aerospace clusters within their respective countries i.e. the Mexican government’s investment in a National Public Aero Trade School. For the Canadian aerospace industry, this means that global competition will continue to increase. When compared to other countries, many aerospace
  15. 15. BOMBARDIER INC. STRATEGY ANALYSIS 11 companies in Canada do not believe that the Canadian government provides sufficient funding to the sector. These companies believed that with increased government funding, we would see creation of a greater number of jobs within the industry. Within the rail transit industry, many European and Asian countries have embraced effective policies and invested heavily in their rail and transit sectors (Refer to Figure 1 in Appendix C). Similar to the aerospace industry, in North America there is also belief that more federal funding is required from government to provide maintenance to bring existing systems up to date as well as to expand systems to keep up with increasing passengers. Environmental regulations and related issues to fight climate change are also heavily impacting both the aerospace and rail transit industries. Many companies are being pressured to become more environmentally responsible in the future. Many companies believe this increased pressure will lead to rising operational costs in the future. 4.2 ECONOMIC FACTORS The success of the Canadian aerospace industry is directly related to that of the airline industry. “The International Air Transportation Association (IATA) reports that international air passenger and cargo traffic is now approaching pre-recession levels, and that 2010 will be a year of positive growth for the air traffic during the recovery.” (Deloitte & Touche LLP and affiliated entities, 2010). According to an article by Marketwire (2009): The worldwide business jet fleet included approximately 13600 aircraft at the end of 2008. It is expected to grow by a compound annual growth rate of approximately 5.8% over the forecast period to some 23,800 units after aircraft retirements. In the same
  16. 16. BOMBARDIER INC. STRATEGY ANALYSIS 12 period, the Bombardier business aircraft market forecast predicts that business jet manufactures will deliver a total of 11500 aircraft with revenues of $256 billion US for the industry. The Canadian aerospace industry has a large impact on the Canadian economy. The study by Aerospace LLC (2009) also found the following: In general, for each additional C$ 100 Million of output generated by the Canadian aerospace industry, the output in the rest of the Canadian economy (indirect impact) would be expected to increase by approximately C$45.6 million. Employment would be expected to increase by some 355 direct jobs in Canada and indirectly employment would increase by 675 jobs across the country. “Global demand for passenger and freight rail equipment, infrastructure, and related services in 2007 was $169 billion and projected to grow to $214 billion by 2016” (Renner, M., & Gardner, G., 2010). The market is dominated by Western Europe, followed by Asia and the Pacific. Globally, subways and light rail systems are expanding and investment is being made in intercity high speed rail lines (HSR). In the long term, air and rail transportation profitability will be driven by growth in emerging markets. 4.3 TECHNOLOGICAL FACTORS Global aircraft is aging and manufacturing for the aerospace industry will move towards replacing old fleet particularly in America and Europe. Technological trends indicate that next generation aircraft will be built with fuel efficiency in mind as well as technologies that produce fewer emissions and operate more quietly. Research and development investment is expected to
  17. 17. BOMBARDIER INC. STRATEGY ANALYSIS 13 increase amongst major manufacturers with these key trends in mind. According to Bombardier, by 2020 noise levels and aircraft nitrous oxide emissions will be reduced by 50% and 80% respectively. Further predictions by third parties confirm that there is a long term trend in aircraft design towards a greener and more environmentally friendly aircraft (Deloitte & Touche LLP and affiliated entities, 2010). In the rail industry, technology is centered around the movement towards the expansion of high speed intercity rail lines (HSR). Renner & Gardner (2010) state: In 2009 HSR lines totaling some 6650 miles were operational including close to 1490 miles in Japan. In China alone, an extensive HSR system is under construction whose total length will be 15000 miles long. In 2009, the number of HSR trainsets in operation worldwide consisted of 2200. By 2015, it is estimated that the number of trainsets in operation worldwide is expected to rise by 70 percent, up to 3725. 4.4 COMPETITIVE FACTORS Established aerospace markets will continue to develop their aerospace industries through greater research and development but will face strong competition from emerging markets such as China which are aggressively developing their industries. China specifically has created a competitive domestic aircraft manufacturer (government owned) Commercial Aircraft Corporation of China Ltd. (COMAC) to reduce the country’s dependency on Boeing and Airbus. In the rail industry, Bombardier, ALSTROM, and Siemens have been the leading international manufacturers of rail and transit vehicles but similar to the aerospace industry, they are facing competition from China and emerging markets that are developing a domestic industry. Further
  18. 18. BOMBARDIER INC. STRATEGY ANALYSIS 14 challenges face the traditional players due to stiff local-content rules in emerging countries (China) which stipulate that 70-90 per cent of rail equipment must be manufactured domestically (Renner, M., & Gardner, G., 2010). 4.5 SOCIAL FACTORS A major focus with many aerospace and rail transit equipment companies today is building toward environmentally sustainable or greener technologies to address the growing issue of climate change. There is also a shift towards alternative forms of travel mainly due to high gasoline prices, traffic congestion, and greenhouse gas emissions. Public transportation including urban rail and high speed rail offer a range of benefits over private automobile travel. There is increasing interest in North America to further develop these forms of public transportation (Renner, M., & Gardner, G., 2010). 4.6 GLOBAL FACTORS For the aerospace industry, the fastest emerging markets are forecasted to be China, India, and the Middle East. This can be explained by the large expansion of business activities in these emerging markets combined with strong economic growth as well as a rise in disposable income that will increase domestic and international air travel (Deloitte & Touche LLP and affiliated entities, 2010). These emerging markets mark an opportunity for the Canadian Aerospace industry. Although there are efforts to build these industries domestically in areas such as China, domestic demand in the short term may use up all domestic supply leaving a net opportunity for Canadian companies to prosper in these markets (Deloitte & Touche LLP and affiliated entities, 2010).
  19. 19. BOMBARDIER INC. STRATEGY ANALYSIS 15 Rail passenger transit is on the rise in emerging markets as well as in developed countries seeking alternatives to primary automobile transport. With many new systems under construction or in the planning stages, orders for rail vehicles and equipment are projected to show strong growth in the near future – and these orders will translate into employment growth. The regions with the fastest growth are Asia and the Pacific (Renner, M., & Gardner, G., 2010). 5. PROPOSED STRATEGIC ADAPTATIONS 5.1 BUSINESS LEVEL STRATEGIES Based on the current competitive situation analysis, future business environment projection and SWOT Analysis conducted, Bombardier Aerospace and Bombardier Transportation must adopt the following business level strategies in order to successfully compete in the future and maintain its competitive advantage over its competitors. Both Bombardier Aerospace and Bombardier Transportation must utilize a differentiation strategy in order to continue being one of the leading aircraft and rail transportation manufacturers in the world, and to be able to compete with the low cost offerings of Chinese transportation manufacturers and other competitors like Embraer who receive government subsidies. In addition, BA and BT must focus on continuously providing their customers with high quality, innovative, and technologically advanced products and services, as well as a high level of customer service. BA and BT should also promote their unique selling point of being the only manufacturer of planes and trains in the world.
  20. 20. BOMBARDIER INC. STRATEGY ANALYSIS 16 In particular, BA should increase production of its individual and corporate business jets as globalization and increased trade amongst nations is expanding the need for individuals and corporations to move from one location to another quickly and safely. In particular Bombardier should focus on expanding into emerging markets (Brazil, Russia, India and China), who signify great growth opportunities and have substantial transportation needs to be met. Moreover, China, India and Latin America’s need for rail transportation and infrastructure represents a great opportunity for BT to take advantage of. In particular, China is looking to connect its many large cities and BT can do this by providing the country with its leading regional trains (Bombardier, Inc., 2011, p.17). BT can also use a low cost strategy to target customers in Europe who have aging fleets, but lack the financial strength to update their entire fleet. BT should target its Régio2N regional trains to the European market which are more affordable than other BT trains, but will still give European customers the benefits of upgrading such as the latest technology and a more energy efficient fleet. If Bombardier Aerospace and Bombardier Transportation are able to successfully differentiate themselves, then this could lead to increased customer loyalty as customers may become strongly attached to their unique features. 5.2 CORPORATE LEVEL STRATEGIES Based on the current competitive situation analysis, future business environment projection and SWOT Analysis conducted, Bombardier Inc. must adopt the following corporate level strategies in order to grow the company further whilst maintaining its leading positions in the aerospace
  21. 21. BOMBARDIER INC. STRATEGY ANALYSIS 17 and rail transportation industries, and achieve its mission of being “the world's leading manufacturer of planes and trains” (Bombardier Inc., 2012). Firstly, Bombardier must employ a diversification strategy, that is promote its new products in new markets as well as market development strategies such as promoting current products in new markets. As a result of globalization, people are increasingly requiring transportation that enables them to move from one location to another quickly and efficiently. In particular, emerging markets such as Brazil, Russia, India and China are experiencing rapid growths in their economies as well as in their populations. These countries have growing transportation needs that presents as an opportunity for Bombardier. These strategies will enable Bombardier to capture global growth opportunities and market share by expanding its global reach and satisfying the existing demand for efficient transportation in emerging markets. Moreover, to maintain its reputation for being an innovate company, Bombardier must constantly invest in research and development. That is, Bombardier must continually evolve its products to ensure that its products are up to date with the latest technology, efficiency and safety standards. This will enable Bombardier to maintain its reputation and stay ahead of the competition. To elaborate further, Bombardier must ensure that it products and services meet the needs of its customers. For this to happen, Bombardier must continually monitor the business environment and ask for feedback from its customers in order to be able to satisfy their needs. For instance, high fuel prices and increasing concern over global warming is leading to customers requiring fuel efficient and environmentally friendly products. Thus, Bombardier must be prepared to deliver fuel efficient and environmentally friendly products that are suitable to its customers needs otherwise risk losing its customers to its competitors.
  22. 22. BOMBARDIER INC. STRATEGY ANALYSIS 18 6. STRATEGIC MODELS 6.1 SWOT ANALYSIS STRENGTHS WEAKNESSES  “World’s No.1 passenger train maker” (Reuters, 2008)  World’s No.3 civil aircraft manufacturer  Serves customers in over 100 countries  Positive brand image  Innovative, safe, and reliable products  Diverse business and geographic segments  Diverse aircraft and rail transportation portfolio can be hard to manage  Slow to expand and take advantage of emerging markets OPPORTUNITIES THREATS  Increased demand for business aircraft as a result of globalization  Increased demand from emerging countries  Continually evolving aircraft technology  Cater to environmentalists by producing environmentally friendly products  Aging rail transportation fleet in Europe  Economic crisis can decrease demand for new aircraft and rail transportation  High gasoline prices  Fierce global competition, in particular from emerging markets, such as China  Social and environmental responsibility
  23. 23. BOMBARDIER INC. STRATEGY ANALYSIS 19 7. STRATEGIC DISCUSSION Bombardier Inc. has come a long way since its establishment in 1942 as a snowmobile manufacturer. The company is now the “world’s No.1 passenger train maker and No.3 civil aircraft manufacturer” (Nickels, et al., 2010, p.292) with operations in over 60 countries throughout the world. Even though Bombardier is a global leader in the aerospace and rail transportation industries, it is still faced with many challenges. That is, issues such as the September 11 terrorist attacks, the recent recession, globalization and increased global competition have had a tremendous impact on the demand for new aircraft and rail transportation. However, Bombardier has overcome these challenges by investing in leading mobility solutions, growing local roots in emerging countries, and aiming to achieve flawless execution at every stage of the product life cycle (Bombardier, Inc., 2011, p.3). Moreover, to deliver on its promise of evolution of mobility, sustain a competitive advantage, differentiate itself from its competitors, and drive future growth Bombardier must continually evolve and adapt its products and services to meet the ever-changing needs of its customers all over the world. To elaborate, Bombardier must also continuously monitor the business environment to be able to take advantage of opportunities, such as growing demand in emerging countries. Thus, it is suggested that Bombardier employ a diversification strategy, to promote its new products in new markets as well as a market development strategy to promote current products in new markets such as China and India.
  24. 24. BOMBARDIER INC. STRATEGY ANALYSIS 20 Additionally, Bombardier must constantly invest in research and development to maintain its reputation for being an innovate company and be the first to develop products with the highest level safety and efficiency standards, whilst utilizing cutting edge technology. To elaborate further, Bombardier must ensure that it products and services are attuned to the needs of today’s customers. That is, Bombardier must be able to meet its customers concerns over fuel prices and global warming and emissions by providing fuel efficient and environmentally friendly products. If Bombardier is able to do this then it can capture another segment of the market, i.e. environmentalists. In regards to its subsidiaries Bombardier Aerospace and Bombardier Transportation, it is suggested that BA take advantage of the growing demand for business aircraft in emerging markets, whilst BT take advantage of the growing rail transportation needs in China and India, and the growing need for European countries to renew their rail infrastructure. Therefore, if Bombardier continually evolves its product and services and adopts the suggested strategy changes then it should continue to see increases in revenue and profitability well into the future. 8. CONCLUSION In conclusion, after careful evaluation of Bombardier’s current situation and strategies, various recommendations to the business level and corporate level strategies were made. Thus, Bombardier must adopt the above suggested business and corporate level strategies in order to remain profitable and maintain its leadership position in both the aerospace and rail transportation industries.
  25. 25. BOMBARDIER INC. STRATEGY ANALYSIS 21 9. APPENDICES 9.1 APPENDIX A – GROUP CONTRACT 04-75-100 – Introduction to Business – Group Contract for Team Project - Bombardier Inc. Strategy Analysis Group #6 Members 1. Brian Chauvin bgchauvin@uniongas.com (519) 560-7027 2. Jing Zhou zhou11q@uwindsor.ca (519) 991-3027 3. Xingyue Chen chen113l@uwindsor.ca (519) 991-8532 4. Mona Dave dave111@uwindsor.ca (226) 975-2183 5. Farkhundah Ahmadzai ahmadzaf@uwindsor.ca (519) 991-4253 Meeting Times and Location The group will meet on a weekly basis before class on Thursdays (whenever there is a class) at 5:30pm-6:45pm or as further deemed necessary by the group. Locations The group will meet at the Leddy Library. Missed Meeting If a member of the group cannot make a meeting, the group member will contact all group members to inform of absence at least 24 hours prior to the meeting. Schedule of work and responsibilities Executive summary: Farkhundah Ahmadzai Introduction: Farkhundah Ahmadzai Content & Analysis: a) Company history and description: Xingyue Chen b) Current competitive situation analysis: Farkhundah Ahmadzai c) Forward 5-year business environment projection: Brian Chauvin d) Proposed strategic adaptations: Mona Dave & Jing Zhou
  26. 26. BOMBARDIER INC. STRATEGY ANALYSIS 22 e) Strategic models: Xingyue Chen & Farkhundah Ahmadzai Discussion and Conclusions: Farkhundah Ahmadzai & Jing Zhou References: Farkhundah Ahmadzai & Brian Chauvin Appendices: Brian Chauvin Formatting/Editing: Farkhundah Ahmadzai Deadlines Deadlines as established in weekly meetings for progress must be kept. All progress assignments shall be forwarded to each group member for comment. Final product will be ready for submission by March 21, 2012. Behavioural Expectations 1. Every team member needs to be at every meeting. Be punctual. 2. Establish and follow meeting etiquette. 3. Actively participate. Share opinions, listen to others and have an open minded attitude. 4. Assume positive intent. Constructive criticism only. Compromise where appropriate. 5. Stay focused. Be prepared for your assignment and keep your commitments. 6. Help your other group members if they are struggling with something. 7. Have fun! We the members of Group #6 do solemnly agree to the above conditions Signatures 1. __________________________________________ Date: __________________ 2. __________________________________________ Date: __________________ 3. __________________________________________ Date: __________________ 4. __________________________________________ Date: __________________ 5. __________________________________________ Date: __________________
  27. 27. BOMBARDIER INC. STRATEGY ANALYSIS 23 9.2 APPENDIX B – REFLEXIVE ASSESSMENT OF TEAM PROCESSES Upon review with group members, it was agreed that on a whole the project was a very good experience. Each member was left with not only an increased knowledge about the history, challenges, and opportunities of Bombardier Inc., but also an insight on how to strategically analyze a corporation. Furthermore and generally viewed as most important, this project was an opportunity for members to be part of a team working towards a common objective and experience processes that can lead to high-performance or possible failure of the endeavour. It is essential to develop teamwork skills as “it is estimated that between 70 and 82 percent of U.S. companies use the team concept, making teamwork skills one of the most commonly required skills in a work environment.” (Introduction to Business 75-100 Custom Publication for University of Windsor, p. 11). In week 3 of the course, the teams were formed under selection criteria that ensured that teams were diverse in gender, culture, and educational discipline. This diverse nature of the group was regarded by the team as being very important as the world landscape has changed. Today’s global economy has products and services being brought to all corners of the earth, especially in emerging markets in less developed countries. “Global companies must recognize differing attitudes and competencies in the team’s cultural mix” (Nickels, et al., 2010, p. 345). When the team was initially formed, the members did not know each other, other than simply fulfilling the diversity scope of the project. An early success was found at easing the feelings of uncertainty when we formally introduced ourselves and mutually decided on which company we would choose to analyze. Each member was allowed input and encouraged to provide their opinions.
  28. 28. BOMBARDIER INC. STRATEGY ANALYSIS 24 This initial act began to secure our trust in one another that our relationships could be open, a characteristic of a high-performing team. Continuing in our forming stage, at our first meeting, structure was given to how we would attack the project. Meeting times and clear communication processes (email, text) were established. Emphasis very early on was given to the common purpose of the team and it was understood by all that we would all be dedicated to ensure the project was completed effectively. Although each member was given input on how to begin the project, roles were starting to become apparent. Some team members were more focused on completing individual assignments while others were looking at the bigger picture. Leadership naturally began to emerge in the form of a project manager role to ensure that our accountabilities were clear and expectations were stated. In retrospect, to fully appreciate this concept, the team could have formally designated roles and responsibilities (i.e. project manager, communications liaison, etc.) to ensure that we were aware of how our work affects other members. Nevertheless, this did not seem to adversely affect the team, it was almost a quiet understanding. Over the course of the weeks, work was performed individually and as agreed upon, the finished pieces would be provided well in advance to all other members for critique and approval. Following the group contract, positive intent was always assumed and only constructive criticism was provided to each member. Group members did provide feedback, and only when consensus was achieved, was the work submitted as part of the final project. There was no conflict encountered at this stage be it a product of our group exhibiting the aforementioned high- performing characteristic, or perhaps an unwillingness to provide harsher criticism in order to preserve the good harmony in the group.
  29. 29. BOMBARDIER INC. STRATEGY ANALYSIS 25 Challenges did arise in the form of timelines and scheduling conflicts. Procrastination was inevitably an issue with one member in particular. It can be attributed to the lack of understanding of the scope of the assignment on the individual’s part, not for lack of the team communicating. The team however did do a good job at realizing these potential issues when we first met. Efforts were made to begin the project as soon as possible and ensure that a time “buffer” was provided to account for both procrastination as well as conflicting priorities within the group in which we could not meet. Proper communication was key in minimizing these issues. Team members were made aware of any timelines that could not be met as initially agreed upon, however members were held accountable to provide active updates on contingency progress. Team conflict was only encountered toward the end of the project when completed work was being presented and ready for merging into the final product. It was here that team members began to question their individual contributions. Note that team members did not question the contribution of others, but in fact of whether their own contributions were enough. These were surprising comments as one would tend to believe we would encounter social loafers, “what typically happens when the team member’s work ethics may differ and one or more team members step up to the plate and take on added responsibility to ensure the work gets done” (Introduction to Business 75-100 Custom Publication for University of Windsor, p. 11). It is believed that team members were proud to be part of this team, felt valued and did not want to let the rest of the team down. Nevertheless, the solution to either of these issues was the same. The responsibilities may have required to be divided more clearly in our forming stage. To right the ship, a review took place to ensure we could have members looking to contribute further to take
  30. 30. BOMBARDIER INC. STRATEGY ANALYSIS 26 on added assignments (checking Turnitin results, etc.). Also, another major lesson the entire group learnt was to start future projects earlier, in order to have sufficient time to complete the project.
  31. 31. BOMBARDIER INC. STRATEGY ANALYSIS 27 9.3 APPENDIX C – TABLES & FIGURES Figure 1 - Global Competitiveness in the Rail and Transit Industry (Renner, M., & Gardner, G., September 2010) Table 1 – The Strategic and Economic Impact of the Canadian Aerospace Industry (Deloitte & Touche LLP and affiliated entities, October, 2010).
  32. 32. BOMBARDIER INC. STRATEGY ANALYSIS 28 10. REFERENCE LIST 1. ALSTOM (2012). About Us. Retrieved from http://www.alstom.com/about-us/ 2. Boeing (2012). About Us. Retrieved from http://www.boeing.com/companyoffices/aboutus/ 3. Bombardier, Inc. (2012). About Us. Retrieved from http://www.bombardier.com/en/corporate/about-us 4. Bombardier, Inc. (2011). Annual Report. Retrieved from http://ir.bombardier.com/modules/misc/documents/03/62/76/32/13/BombardierAnnualReport_D ec2011_2nd-Web-post_en.pdf 5. Bombardier, Inc. (2012). Mission Statement. Retrieved from http://www.bombardier.com/en/corporate/about-us/mission---values/mission- statement?docID=0901260d8000c494 6. Bombardier, Inc. (2012). Profile. Retrieved from http://ir.bombardier.com/en/profile 7. Canadian Broadcasting Corporation [CBC]. (2003). Turbulence: Air Canada & Bombardier. Retrieved from http://newsinreview.cbclearning.ca/wpcontent/archives/may03/PDFs/turbulence.pdf 8. Custom Publication for University of Windsor. (2011). Introduction to Business 75-100. Canada: McGraw Hill Custom Publishing. 9. Datamonitor. (2010). Global Top 10 Aerospace and Defense Companies Report: Industry, Financial and SWOT Analysis. Retrieved from http://www.datamonitor.com/ 10. Deloitte & Touche LLP and affiliated entities. (October, 2010). The Strategic and Economic Impact of the Canadian Aerospace Industry. Retrieved from http://www.aiac.ca/uploadedFiles/AIAC_ExecSummary%20-%20Final%20_2_.pdf 11. Hoovers, Inc. (2012). ALSTOM overview. Retrieved March 1, 2012, from Hoover’s Company Records database: http://search.proquest.com/docview/230549273?accountid=14789 12. Hoovers, Inc. (2012). Bombardier, Inc. top competitors. Retrieved March 1, 2012, from Hoover’s Company Records database: http://search.proquest.com/docview/230549273?accountid=14789 13. Hoovers, Inc. (2012). Siemens Aktiengesellschaft. Retrieved March 1, 2012, from Hoover’s Company Records database: http://search.proquest.com/docview/230549273?accountid=14789 14. Hoovers, Inc. (2012). The Boeing Company. Retrieved March 1, 2012, from Hoover’s Company Records database: http://search.proquest.com/docview/230549273?accountid=14789 15. Marketwire. (June 15, 2009). Bombardier Aerospace Releases Annual Market Forecasts. Retrieved from http://www.wingsmagazine.com/content/view/2990/132/
  33. 33. BOMBARDIER INC. STRATEGY ANALYSIS 29 16. Nickels, W. G., McHugh, J. M., McHugh, S. M., Cossa, R., & Sproule, B. (2010) Understanding Canadian Business. Canada: McGraw-Hill Ryerson 17. Railtex (2009). Retrieved from www.railtex.co.uk 18. Renner, M., & Gardner, G. (September 2010). Global Competitiveness in the Rail and Transit Industry. Retrieved from http://www.worldwatch.org/system/files/GlobalCompetitiveness-Rail.pdf 19. Reuters (2008). Retrieved from http://www.reuters.com/article/2008/06/04/bombardier- idUSN0433637820080604?&lang=en_us&output=json 20. Rohanek, L. (2006). Strategic Marketing Workbook. Sydney: Granville College of TAFE Australia.

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