ANALYSING THE MARKET TREND OF BRAZILIAN AIRCRAFT MANUFACTURER: EMBRAER

The new trend of the Embraer, the Brazilian aircraft manufacturer s turnaround and growth were to concentrate on developing regional jets after privatization from the Brazilian government which emphasis was on the country s Military. This was to take advantage of the rapid growing market for the small and mid-sized aircraft which focus was formally to design and manufacture a turboprop biplane to replace its aging fleet. Profit centers were created to focus on specific geographic regions, light aircraft and finally for government sales. Embraer also moved into business jets Embraer started exporting the Bandeirante after the few deliveries to the Brazilian Air Force in 1973. They also ventured into manufacturing agricultural plane for the Brazilian and were able to develop other model for the commercial clients. Embraer lacked business orientation so the new trend was to focus on customer- oriented and market focused to match the market s needs which was not the case when it was a government company which was the reason why the Vector failed because it ignore the customer although the product was of technical superiority and had the some of the best technology of the time. The impact or the danger of forgetting the customer is so huge that it should not be repeated hence His view of hanging the picture of Vector to reminder everybody of that failure. The profit centers that were created were also tasked to sort to improving customer relationship. For example, they had to study the regional jet market carefully to understand the needs and requirement of the airline companies that uses the regional jet. Embraer segmented to identify a niche in the market and they succeeded by concluding that mid sized regional jets were under- served through the survey of 60 airline. This shows that thry have to invested more in research and development (R&D) The latter under the leadership of Botelho presented a strategic turnover plan (strategic plan or business plan) to the board for the first two year which they did not have initially. He was of the view that some measures of cut cost was by reducing the employees and concentrate on improving productivity to regain solvency.

Capital investment Innovation is key to the company success, continuous improving is the company success in regional jets led to developing and adding new model to the ERJ 145 family to take advantage of the expanding market. The new designs and development enabled Embraer to maximized profit, help their customer (airlines) to be cost effective to operate short haul flights since aircraft on those routes often took off with empty seats, cheaper to operate

and maintained and finally to satisfy the end user by making them more comfortable with the configured window and an aisle seats. FOUR LINK ANALYSYS Capital Investment In relations to the four links analysis, Embraer had a government links and network (formal) that help to the company in investment that s why the two Brazil s largest government owned pension funds namely Previ and Sistel are holding 20% shares each of Embraer. Partnership: In addition to the loan by the Brazilian government and monies provided by the two other new owners, Embraer further had to enter into partnership and technical alliance with companies like Parker Hannifin Corporation, Allison Engine Company and Honeywell Space and Aviation Control. These companies collaborated on producing the parts for the plane.

These partnerships led to the realization of this regional jets commercial project which was capital intensive and sourcing of funds was difficult The company also raised funds through the American Depository Receipts (ADRs) listed on New York Stock Exchange

Employees Issues y Embraer management build a relation with the trade union which led to a successfully employee laid-off by the company. Botelho was able to achieved this by being transparent to offer their business plan to the union for deliberation after which they agreed and cooperated. Botelho also agreed to some conditions proposed by the trade union to enable him to carry on his plan. Created a good relationship with the employees of the company. Embraer has a large pool of skilled engineers and technicians because it invested not only in its employees but also students through provision of quality education.

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Supplies and logistic y General Electric Company (GE), C&D Aerospace, Pilkington Aerospace, ENAER and Gamesa which are international companies built subsidiaries and offices in Brazil to achieve production and logistic efficiencies. Embraer formed consortium with Thales, Dassault, EADS and SNECMA to become shareholders of the company.

These partnerships embarked by Embraer, according to Lynch 5th ed.( Pg 103) can be said to have achieved the aim of the four link analysis that :

Embraer had close co- operation with suppliers or delivering more sustainable relationship with those out the organization. Produces lower cost airline through it access to cheap labour, translated into lower manufacturing costs. Achieved a competitive advantage. Increased business opportunities and new markets

INDUSTRY LIFE CYCLE From the analysis of the case the airline industry can be viewed to be in its growth stage (Lynch 5th ed.(pg 87) since a lot of competitors are attracted by its potential and enter the market from a strategic perspective there by increases competition from Russian, the Commonwealth of Independent States, China, and Ukraine. FIVE FORCES ANALYSIS The threat of potential new entrants into the aircraft manufacturing industry is high since the capital requirements is huge that involve investment in technology, plant, skilled employees which is not only difficult to raise but also the risk associated with it Lynch 5th ed. (pg. 101). From the case, most government policies are geared towards supporting its home company thereby creating a monopoly in the aircraft manufacturing industry. It will be difficult for other new entrants either from the same country or outside although Embraer has managed to form joint venture with a Chinese aircraft manufacturer which is an advantage to serve the growing Asian region.

RECOMMENDATIONS Following from the analysis of the case, we wish to recommend that Embraer undertakes it actions: Embraer should consider in future developing large passenger jets, although capital intensive should use it initial strategy of partnerships and alliances to achieve this. Embraer should invest more in research and development (R&D) to help keep track, find new ways of doing things more effectively and efficiently. The underlying factors are knowledge creation, technology development and innovation. The company should still focus on its regional jets, business and microjets and find possible means to re energize its initial product (turboprop biplanes).

The company should continue to promote activities that support both planet (environment) and People (social) and not only concentrate on profit. Through this the company can gain a competitive advantage that is sustainable because people are becoming more conscious of corporate social responsibility which cannot be ignored.