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The Bombardier Aerospace Analysis Essay

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Updated: Jun 18th, 2020

Introduction

The aerospace industry is among the most complex businesses to undertake as the business involves several commercial challenges that are often difficult to comprehend. This commercial investment normally faces a series of challenges ranging from financial deficiencies, political interferences, social problems, technological complications, to legal dilemmas. Although most of the companies strive to excel in the highly challenging environment through revising and reforming their operational strategies, their chances of business survival are often miniature.

Bombardier Aerospace is among the globally renowned dealers and manufacturers of private jets with long-term survival record of several decades since its inception (Bombardier 18). Despite its massive performance over the years, the company has been facing a number of irresistible challenges regardless of its strategic management plans (Bombardier 18). Central to such problems, this essay focuses on providing a comprehensive critical analysis of the Bombardier Aerospace, while focusing on its several external and internal factors.

SWOT and PESTEL in the Case of Bombardier

SWOT is a business analysis model that stands for the Strengths, Weaknesses, Opportunities, and Threats that determine the survival of a business in a certain commercial space (Valentin 94). The SWOT business analysis tool is a strategic assessment instrument that helps analysts and managers to identify the lapses in the current operations of a company and provide possible solutions to fix the identified problems (Valentin 94). The case of the Bombardier Company contains identifiable strengths, weakness, opportunities, and threats. PESTEL (Political, Economic, Social, Technological, Environmental and Legal components will also make up the analysis.

Threats to the Company

Legal dilemmas

A significant threat to the strategy of the Bombardier Company in the unveiling of the C-series airplane model is the legal dilemma that the company is facing. Neighboring countries are using the World Trade Organization (WHO) regulations to create legal controversies that seem to be veracious to the existence of the C-series scheme (Bombardier 25). WHO controls the international trade and it is a powerful institution that presides over the business agreements between the transnational firms. A significant threat to the launch of the C-series model is the previous trade litigations between Canada and Brazil that concerned trade fairness.

Technology and modern innovation

In PESTEL, technology is a crucial facet in determining the successful development of a desired business or project (Mahara 366). The Bombardier Company has failed to remain resilient or adaptive to the modern technologies that spur innovation and growth in the aerospace company. Its chief competitor has consistently evolved together with the remarkable transformations experienced in the aerospace industry. Such a levelheaded strategic progress makes Embraer viable to future evolutions. Even as the company seeks to introduce the C-series into the commercial aerospace business, it requires adaptive techniques towards innovation that would make C-series to survive.

Regional Market Dominance

The PESTLE model considers the social component of a business as a determining factor in the success of a business in a competitive market (Mahara 366). The company still enjoys extensive regional market dominance across most of the European nations where the aerospace business is still lucrative and in constant demand. As the entire center of attention on the present development and market dominance remains focused on the development of the new C-series airplane model, what threatens the company is the sudden shift in service provision techniques.

Customer market demands

The Canadian aerospace industry experiences problems with customer preferences as witnessed in the case of the C-series project. The company is still reliant on the regional jet market to unveil its mega C-series scheme, which is dependent on the consumers, who are very selective about the structural design of the planes (Bombardier 21). In the commercial aerospace industry, market entry is a crucial issue because it defines the future of the survival of a company. Commercialization of the C-series may face threats from the customer insights and choosy behaviors that are likely to hamper its market entry.

Weaknesses of the Company

Technological lapses

Bombardier Company has been using conventional technologies to commence its innovation and in the case where an urgent technological need has arisen, the company has relied on the hired experts to assist in the innovation. Hiring external technological experts to launch an emergent innovation has been costly for the company even as the innovations fail to last for long before they crumple (Bombardier 17). Although the C-series may emerge triumphant in the regional market, its reliance on the hired technologies may remain short-lived. Its competitor, the Embraer, has proved strategic, in dealing with innovations, and often releases new models only when the market allows.

Internal business decision demands

The Company has weaknesses in its internal decision making processes and such complications make the future of the C-series a complex engagement to consider. The prevailing complexities in making the investment decisions between the company and the investors are a problem for the future of the C-series model (Bombardier 65). Portraying a weakness as whether to continue with conducting researches about the viability of the innovation or venture into the C-series model is a significant internal weakness in decision-making. The external pressure that affects the decision on the investment deal is putting the company at a risk of external manipulation.

Economic challenges

Through a financial statement analysis, the comprehensive government financial support offered by the Bombardier Company is ruining its financial stability. The prevailing extensive government lending, subsidies and leasing strategies are making the company contingent and it is losing its sovereignty in making independent investment decisions (Bombardier 33). The financial statement of the company reveals its financial weaknesses in the sense that its total annual revenue seems remarkably low compared to the annual amount invested (Bombardier 30). The income tax imposed on its present operations exceeds the operating income and the net income by far, and this makes the innovation susceptible to the financial crisis.

The undeterred political interests

Bombardier Company is at present unable to deter the political interests aimed towards the innovation on the C-series airplane model. The company lacks an effective autonomy to override its financiers in the project because the government seems to control most of its present operations and market interests (Bombardier 89). The joint efforts of the UK and Canada to empower the company financially in the targeted project may be unsuccessful because of the political demands that Canada has vested in its aerospace innovations (Bombardier 89). Financing the project may result in controversial issues between the two aspiring investors.

Alternatives to the Dilemma

Reducing external borrowing

All the dilemmas facing the Bombardier Company are resulting from external government influence and inabilities to make informed decisions on product renovation (Bombardier 76). The company is lagging behind technologically because the external financiers are only providing monetary support, but are failing to consider the market demands and trends that are placing the company at a decision quandary (Bombardier 83). The company should opt to renovate its present business portfolio to match the standards of the aerospace industry. Bombardier Company can consider reducing external borrowing to have independent autonomy over its investment decisions over the pending C-series scheme (Bombardier 93).

Enhancing aerospace technology

The Bombardier Company is using conventional technologies that are not only retrogressive to the business, but also dangerous to the progress of its mega aerospace innovations (Bombardier 89). Optionally, instead of risking the company in investing in a controversial investment, the Bombardier Company should opt to renovate its present innovation through investing in the medium size jets (Bombardier 90). Since the initial strategy is to broaden the regional market through improving the aerospace technology in the European market, the medium size airplanes will accommodate the regional demand and provide the desired comfort.

Recommendation

Currently, the company seems to run into debts, while its investment returns are still miniature. The margin between the investment ratios marked by the total operating expenditure and the overall size of revenue and the gross profit combined, are very miniature for the economic survival of the company. The C-series project requires an external investment support to maintain its initiation and survival. The experience of the company in manufacturing business jets is still immature and risking the large sums of finances into a new business project of that nature would deem ineffectual for the company. Hence, abandoning the idea is ideal.

Conclusion

More frequently, businesses plunge because they venture in trial projects without a strategic plan. Even with a strategic plan, a company remains unsafe in a trial investment when its financial base is weak and when it is relying on external financiers to support the trial project. As a strategic alternative, Bombardier Company should reevaluate its partnership with the external investors to ensure an effective approach to the aerospace market. The company should adopt medium size jets that may require a little money compared to the business jets.

Works Cited

Bombardier, 2011, Leading: Brighter Skies Ahead; new tech Rides the Rails. Web.

Mahara, Tripti. “PEST- Benefit/Threat Analysis for selection of ERP in Cloud for SMEs.” Asian Journal of Management Research 3.2 (2013): 365-373. Print.

Valentin, Erhard. “Away With SWOT Analysis: Use Defensive/Offensive Evaluation Instead.” The Journal of Applied Business Research 21.2 (2005): 91-105. Print.

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