Embraer: Case Study.
1) The new launching of new jets by Embraer constitutes a big threat to the existence of Bombardier, because both companies compete in the same market segment of narrow body jets, they both belong to the same strategic group, therefore, it is so crucial for Bombardier to act to the recent changes in its strategic group as quickly as possible, it needs to put all its resources and capabilities into launching its C series jets.
Bombardier’s launch of C series would be the biggest threat to Embraer’s recent ERJ family of jets.
Bombardier has designed its C series jets specifically for 110 – 135 seats, they were not upward stretch versions of other small jets like Embraer’s 190 jet, or downsized version of larger narrow body jets like Airbus 318 and Boeing 717.
The C series are expected to outperform all competitors with respect to weight, size, or range; Bombardier expected the C series to achieve unmatched operating efficiency, by reducing costs to 15% to 20% below the cost of operating competing planes.
This innovation may give Bombardier a competitive advantage and a tremendous supplier power since it will be the only company producing cost effective jets.
The C series breakthrough technology may be classified as a discontinuous change, because it will drastically alter how jets are manufactured.
As for Airbus and Boeing, both companies are focusing on wide body jets; Airbus smallest plane is 318 which is a 107-132 seat short haul jet launched to compete with Boeing’s 717; which was discontinued by Boeing, because the market for it was too small for Boeing to continue serving. As for Airbus’s 318 jet, it is considered to be larger and heavier than is desirable for jets in the 100 seat market.
Embraer should monitor closely its Macroenvironment, and should perform an analysis of its competitors by mapping its competitors, analyzing the value curve and predicting its competitors’behaviors.