Bombardier Aerospace: The CSeries Dilemma Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Bombardier Aerospace: The Cseries Dilemma

Introduction

Bombardier Aerospace ranked number three in the category of aircraft manufacturers and known to be a leader in local jet aircraft with a seating capacity of 150 passengers. The organization is linked with the development of planes that is regional aircraft and business jets. Other business includes selling spare parts, manufacturing of plane utilized in firefighting, providing training and maintenance. As of now, the company has 337 aircraft that include 138 regional jets and 197 business jets.

Problem statement

By July 19th, 2004, the company has announced its objectives to create a new series of Aircraft named as Cseries. By the end of May 2007, the management of the company was unable to make any decision about the creation of Cseries. The company delayed the actual launch of the project several times that in turn prompt company’s investors to question about the decision-making capabilities of the company. Further, during these three years, the company has published many contradictory statements that have created more doubts and concerns among the stakeholders of the company. Additionally, the management of the company needs to decide whether they should launch Cseries project or not.

Analysis

The company needs to analyze several aspects while studying the industry and external environment of the company. External environment of the company has a huge impact on the overall performance of the company.

Industry Analysis:

Bombardier operates in the transportation and logistics industry, and the industry analysis has been done to analyze the regional aircraft industry of Canada. In order to do that, Porter’s five forces analysis has been done to identify the external environment of the company.

New Entrants:

Threat of new entrants for Bombardier in Canada is found to be moderate as it is difficult for the new entrants to enter in the market because of the existing giants like Chinese and Russian companies. Further, the cost to enter in the market is high along with massive capital investment. According to the data given in the case, the cost related to Cseries was more than $100 million by the end of 2007 along with $2 billion of the overall cost. Further, giants in the industry were enjoying economies of scale and already reached at the lower end of the learning curve.

Supplier Power:

The bargaining power of suppliers is found to be on the lower side because the regulatory bodies have embossed high-quality standards that cannot be overseen by the suppliers. Suppliers do not have the option to make any compromise on the quality of equipments used in the industry. Further, the industry is full of providers who are engaged in supplying 55000 components of the airplane.

Buyer Power:

Bargaining power of customers for Bombardier is found to be low because the buyers don’t have many choices, and thus, they have to limit themselves into few companies. Limited powers to buyers have a positive impact on the companies and have a momentous impact therefore; one has to put more weight for this attribute.

Threat of substitutes:

Threat of substitutes is found to be low because Performances of the other means of transportation are not superior to the airline industry, thus; there is less chance that the customers will switch to another substitute. Further, substitutes that are available are of low quality that would never be a consumer’s priority.

Industry Rivalry:

Competition in the aerospace industry has been intensified with the passage of time. Now, technology advancement and increased number of travelers has increased entity’s interest in the industry. Along with that, there are high barriers to entry because of the four major rivals in the industry that include Boeing, Airbus, Bombardier and Embraer.

In addition to that, the company is encountering with several environmental concerns as well that are affecting the operations of Bombardier. These factors include strict environmental regulations, the credit crunch in the financial market and intense competition.

Alternatives Evaluation

On February 19, 2007, Bombardier announced its decision to expand the CRJ family and offer a new model by 2010. The objective of the CRJ1000 model was to provide greater capacity (86 to 104 seats) and higher levels of comfort to passengers at lower operating costs in comparison to Bombardier’s models and those of competitors in the range of 90-100 seats. The program was launched with 38 conditional orders, including 15 conversions from existing CRJ900 orders.

Some critics argued that the decision was tactical and short-lived because it merely extended an outdated family of products. It did not address Bombardier’s fundamental issue of aging technologies within both the Q-Series and CRJ families. Other analysts suggested that the only way Bombardier could deal with the aging technology would be by developing an entirely new generation of airplanes similar to those envisioned by the Cseries project........................

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In July 2004, Bombardier Aerospace announced its intention to develop a new family called the CSeries aircraft. In May 2007, three years after the initial announcement, the final decision on whether to proceed with the initiative has not yet been resolved. In addition, during this period, the company has released several confusing ads that raised concerns among investors and analysts regarding the long-term sustainability strategy. At the same time, the Brazilian Embraer has invested heavily in research and development (R & D) and took leadership in the regional aircraft Bombardier. Consequently, Bombardier faces a serious dilemma: to run or not to run the project CSeries. Whatever the decision was, he had to have a big impact on the future market positioning of Bombardier. Students may be asked to act as advisors, Pierre Beaudoin, President and Chief Executive Officer (CEO) of Bombardier Aerospace, and recommend whether the company should proceed with the initiative of the CSeries. In particular, students need to do a full analysis of the external environment of the company, the definition of alternatives available to Beaudoin, evaluate these options based on the internal and external environment and recommend a course of action. For Beaudoin, a recommendation is due before the annual shareholders' meeting, scheduled for May 29, 2007. "Hide
by Louis Hebert, Ali Taleb Source: Richard Ivey School of Business Foundation 22 pages. Publication Date: September 19, 2011. Prod. #: W11176-PDF-ENG