Bombardier Aerospace: The CSeries Dilemma
(10 pages of text)
In July 2004, Bombardier Aerospace announced its intention to develop a new family of aircraft called CSeries. In May 2007, three years after the initial announcement, the final decision on whether to proceed with the initiative was still pending. Moreover, during this period, the company released several confusing announcements that raised concerns among investors and industry analysts regarding the sustainability of the company’s long-term strategy. In the meantime, Brazilian Embraer had invested heavily in research and development and had taken the leadership position in the regional aircraft segment from Bombardier. Consequently, Bombardier was faced with a serious dilemma of whether or not to launch the CSeries project. The decision was expected to have a major impact on the future market positioning of Bombardier.
Students may be asked to act as advisors to Pierre Beaudoin, president and chief executive officer of Bombardier Aerospace, and recommend whether the company should proceed with the CSeries initiative. More specifically, students should do a full analysis of the company’s external environment, identify the alternatives available to Beaudoin, assess these options based on internal and external environments, and recommend a course of action. For Beaudoin, the recommendation was due before the annual meeting of shareholders, scheduled on May 29, 2007.
This case presents students with a situation in which the president of a market leader in the aircraft industry (Bombardier Aerospace) must make a decision that will have a long-term effect on the strategy of the company. The stated challenge is whether the company should proceed with the CSeries initiative. However, attentive students will realize that the actual issue is whether or not the company should venture into a completely new segment of the industry (aircraft of 100-150 seats) and thus confront new competitors, especially Airbus and Boeing. The case may be used to achieve one or several of the following teaching goals:
- Conduct a full analysis of a global industry (aeronautics).
- Understand the importance of strategic alignment.
- Learn about one way of making strategic decisions: identify alternatives, analyze the advantages and disadvantages of each option, and make a recommendation.
- Be sensitive to the strategic implications of some decisions that may seem trivial but can, in fact, shape the overall strategy of an organization and determine its future.
- Appreciate the challenge of developing a complex and expensive product (aircraft) whose development lifecycle is particularly lengthy — at least nine years from the initial idea in 2004 to the estimated launch date in 2013. Also, before the company can engage in the actual development of the product, it must secure “intentional orders” as well as financial partners (e.g. Canadian and British governments) and industrial partners (e.g. AVIC I and Sukhoi).
Given its integrative nature, this case is recommended for use towards the end of a course or as a final exam assignment.
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