Business unit strategy: generic strategyTask No1

Presented to Ahmed Shehzad

Presented by Nabeel Ahmed

Mcm 05123045

Bombardier Aerospace

INTRODUCTION

when you think about Bombardier, you think of a company that is the leader in the market in which it operates. Today, the company controls two industry-leading businesses which are Bombardier Aerospace and Bombardier Transportation. They have groundbreaking products that range from commercial aircrafts, business jets, rail transportation equipment, systems and services. Its headquarters are in Montreal, Quebec, Canada. Bombardier and their shares are operated on the Toronto Stock Exchange (BBD) and they are listed on the Dow Jones Sustainability World and North America indexes. Bombardier Inc. set strong priorities for international growth. They are constantly increasing their presence in growing economies and that lets them capture opportunities, generate cost advantages and reinforce their worldwide leadership and competitiveness.

History:In 1942, J.-Armand Bombardier found a company to manufacture tracked vehicles for transportation on snow-covered terrain. The company's name was L'Auto-Neige Bombardier Limitée. •On January 23, 1969, listing of Bombardier stock on the Montreal and Toronto stock exchanges and public offering of two million shares. Shares were now traded on the Toronto stock exchange. •In December 1986, acquisition of Canadair, leading Canadian aircraft manufacturer. •In March 1990, creation of subsidiary Bombardier Real Estate Ltd., responsible for the management of Bombardier's real estate assets. •In March 1992, acquisition made through a new company, de Havilland Inc., whose equity is shared by Bombardier (51%) and the Province of Ontario (49%).

Business unit strategy: generic strategy

Business unit strategy involves a choice between the lowest cost (cost leadership) making the product different from competitor product in some way (differentiation) or specializing on a segment of the market (fous,by addressing that segment by a strategy of cost leadership or differentiation).porter believes that a firm must choose one of these or be stuck-in-the-middle.

The choice of competitive strategyPotter believes there are three generic strategies for competitive advantages.

(a): Cost leadership:

Means being the lowest cost producer in the industry as a whole.

(b): Differentiation:

Is the exploitation of a product or services which the industry as a whole believes to be unique

(c): Focus:

Involves a restriction of activities to only part of the market (a segment)• Providing goods and/or services at lower cost (cost-focus)• Providing a differentiated product or services (differentiation-focus)

Cost leadership

Bombardier aerospace is the cost leadership company He produce low cost, When you think about Bombardier, you think of a company that is the leader in the market in which it operates. Today, the company controls two industry-leading businesses which are Bombardier Aerospace and Bombardier Transportation.

How to achieve overall cost leadership

(a): Economies of scale.

Company has a great set up to meet the production order, Soon after, the company received an even bigger contract requiring the construction and supply of 825 subway wagons for the city of New York, making it the North American leader in the railway industry.

 

(b): Latest technology.

Company use latest technology in manufacturing of aero planes or trains.

DifferentiationThe company has two main products who manufactured.• Bombardier Aerospace• Bombardier Transportation

(a): Improved product:

The companies are not radically different from their competition but are obviously superior in terms of better performance at a competitive price.

 (b): Competitive products:

Bombardier aerospace and bombardier transportation is better than others because they provide good service in low cost.

How to differentiable

Give the product special features:• Every day, millions of people get where they need to go aboard the planes

that we manufacture. Perhaps you do too.Our more than 35,500 employees design, build and service high-performance aircraft. We set the standard of excellence in several markets, including:

• Business aircraft - Learjet, Challenger and Global aircraft families• Commercial aircraft - CRJ Series, Q-Series and Series aircraft families• Amphibious aircraft - Bombardier 415 and Bombardier 415 MP aircraft• Specialized aircraft solutions -Bombardier aircraft modified for special

missions• Aircraft services and training - aircraft parts, maintenance, comprehensive

training, technical support and publications, and online services Bombardier Aerospace is part of Bombardier, a global transportation company

present in more than 60 countries on five continents. Bombardier’s other core business is Bombardier Transportation, the world’s largest train manufacturer.

Focus (or niche) strategy: After acquiring a few companies, Bombardier Aerospace was now faced with the

challenge of how to align the operations of these companies who all had different sets of data, processes and systems. Major areas of concern were process delays, low inventory turn, inconsistent pricing and billing of materials among others. Bombardier introduced the Enterprise Resource Planning (ERP) into its aerospace division with a vision to achieve higher efficiency in manufacturing and also to significantly save cost. To assess the performance of this IT project, Bombardier Aerospace needs to consider the following six variables which are interdependent as far as success or failure is concerned.

• system flexibility, • system variability • ease of learning• Information Quality

Production:Bombardier Aerospace fiscal or calendar year delivery of regional, business and amphibious aircraft:

• Net orders(2006 to 2013)• 363• 698• 367• 311• 201• 249• 481• 388

Drawbacks of a focus strategy

• The firm sacrifices economies of scale which would be gained by serving a wider market.

• Competitor can move to the segment, with increased resources.(e.g. bombardier moved into the uk luxury air bus market, to compete with Boeing air bus)

• The segment’s needs may eventually become less distinct from the main market

Task no2;Strategy clockThe strategy clock develops porter’s theory, analyzing strategies in term of price and perceived value added.

Low Price/Low Value

Bombardier company not fall in this point because he charge low price but provide high quality.

Low Price Bombardier companies charge a low prices with the high volume strategic reasons

for their position, they can sustain this approach and become a powerful force in the market.

Hybrid (moderate price/moderate differentiation) Bombardier CSeries aircraft is positioned as value advantaged in the

commercial airplane manufacturing market space.  Since the CSeries offerings deliver superior value to customers relative to competitors at lower list prices, Bombardier’s go-to-market pricing strategy is consistent with a penetration pricing methodology.  Bombardier’s aggressive entry tactics for the CSeries aircraft offers a credible threat to existing Boeing and Airbus revenue.

Differentiation Bombardier keep their prices low and seek greater market share as compared

Boeing and air bus company. Bombardier make machinery for jets and trains he provide high quality product at low prices.

Product feature Bombardier Transportation is the leading manufacturer of rail technology in the

world. Around 70% of the vehicles used in Swiss public rail transport also come from Bombardier

Marketing, including powerful brand promotion• Bombardier stands for the highest quality in railway technology • Bombardier always offers an exceptional price/performance ratio on its products

and services. • Bombardier guarantees efficient business processes that are certified in accordance

with international standards. • Bombardier offers solutions creating real added value for its customers. • Bombardier is a partner who can be relied upon.

Focused Differentiation Bombardier Company focus on the making cs3000 jet in future and provide high

quality with charge of high price.

Increased Price/Standard Product Bombardier provide high quality product due to increase in price they also improve

the standard quality of product.

High Price/Low Value Bombardier company not use monopoly pricing strategy because there are many

competitor in the market (e.g. boeing,airbus,emarite)

Mid Size Passenger Jets(Bombardier-Aerospace

Bombardier C Series CS100

Price- 62.00 Million USD

Editor Rating - 8.10

Bombardier CS300

Price- 71.00 Million USD

Editor Rating - 8.90

Light Passenger Jets(Bombardier-Aerospace

Bombardier CRJ 200

Price- 21.00 Million USD

Editor Rating - 7.30

Bombardier CRJ 700

Price- 24.39 Million USD

Editor Rating - 8.25

Canadair CRJ Series 705 Jet

Price- 29.00 Million USD

Editor Rating - 7.75

Bombardier CRJ 1000

Price- 46.37 Million USD

Editor Rating - 8.60

Passenger Turbo Props(Bombardier-Aerospace)-

Bombardier Q200

Price- 13.00 Million USD

Editor Rating - 6.80

Bombardier Q300

Price- 17.00 Million USD

Editor Rating - 8.00

Bombardier Q400

Price- 27.00 Million USD

Editor Rating - 8.40

Heavy Business Jets(Bombardier-Aerospace)-

Bombardier Global 5000

Price- 49.00 Million USD

Editor Rating - 8.90

Bombardier Global Express XRS

Price- 51.00 Million USD

Editor Rating - 9.20