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New Strategic Plan for Bombardier Inc.
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Executive Summary
Bombardier is a Canadian-based multinational aerospace and transportation company. This
study provides a comprehensive evaluation of the firm and the challenges it faces for its future.
Competitive pressures, brand positioning, innovation, legal constraints, and supply chain
vulnerabilities were all included in the analysis. Bombardier has shifted its strategy in response
to intense rivalry, aging aircraft models, poor performance, and the possibility of expansion
into the defense industry. The VRIO research showed that the company had a solid brand
position, which helped it stand out in a crowded industry. Bombardier's business-level strategy
seeks to leverage its innovative capabilities by enhancing product features, investing in
advanced technology, and empowering sales teams to engage in differentiated selling.
The proposed corporate strategy of horizontal integration would expand Bombardier's product
line, thereby reducing the company's exposure to supply chain risks. These plans, however,
must be carried out ethically, with governance measures taken into account to guarantee
openness and justice in all activities. Moreover, Bombardier possesses several key strengths
that position it favorably to overcome its challenges. These strengths include its strong brand
reputation, substantial financial resources, and significant innovative potential. Accordingly,
Bombardier anticipates overcoming challenges, improving strengths, and maintaining its status
as an industry leader by taking a comprehensive approach.
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Table of Contents
Executive Summary ................................................................................................................... 2
Organization’s Overview ........................................................................................................... 4
External Analysis ....................................................................................................................... 5
PESTEL Analysis ................................................................................................................... 5
Political Factor ................................................................................................................... 5
Economic Factor................................................................................................................. 5
Social Factor ....................................................................................................................... 6
Technological Factor .......................................................................................................... 6
Legal Factor ........................................................................................................................ 6
Environmental Factor ......................................................................................................... 7
Porter’s Five Forces ................................................................................................................ 7
Barriers to Entry ................................................................................................................. 7
Suppliers’ Bargaining Power.............................................................................................. 8
Buyers’ Bargaining Power ................................................................................................. 8
Threat of Substitutes ........................................................................................................... 8
Competitive Rivalry ........................................................................................................... 8
Internal Analysis ........................................................................................................................ 9
VRIO Analysis ........................................................................................................................ 9
Expansion Effectiveness................................................................................................... 10
Access to Capital .............................................................................................................. 10
Brand Extensions .............................................................................................................. 10
Financial Resources .......................................................................................................... 10
Product Portfolio Synergy ................................................................................................ 11
Leadership ........................................................................................................................ 11
IT and Digital Sources ...................................................................................................... 11
Strategy Statement and Reflection ........................................................................................... 11
Strategy Proposal ..................................................................................................................... 12
Business Level Strategy ........................................................................................................ 12
Corporate level Strategy ....................................................................................................... 13
Horizontal Integration ...................................................................................................... 13
Related Diversification ..................................................................................................... 13
Strategy Implementation .......................................................................................................... 14
Business Strategy Implementation ........................................................................................ 14
Corporate Strategy Implementation ...................................................................................... 16
Conclusion ............................................................................................................................... 17
References ................................................................................................................................ 17
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Organization’s Overview
Bombardier Inc. is a global aviation industry leader focused on designing,
manufacturing, distributing, and servicing the world's most exceptional business jets. Its
mission statement is to be the world's leading manufacturer of planes and trains. The
company was founded by Joseph-Armand Bombardier in 1942 in Quebec, Canada to market
snowmobiles, eventually becoming a giant producer of aircraft and trains. There is a
worldwide fleet of approximately 5,000 aircraft in service with a variety of multinational
corporations, charter and fractional ownership providers, governments, and private
individuals. Bombardier has more than 70 production and engineering sites in more than 25
countries and is listed on the Toronto Stock Exchange (TSX) with stock symbol BBD. The
business is skilled at providing all-inclusive support solutions, including maintenance
services, aftermarket services, and specialized training programs. Headquartered in Montreal,
Quebec the company has a vast portfolio that includes business and commercial aircraft,
however its current CEO Éric Martel was the driving force behind Bombardier's successful
repositioning as a company purely focused on business aviation in 2020. Bombardier
functions through its wholly owned service centers, a network of authorized service centers,
maintenance facilities, and entirely owned line maintenance stations to ensure unmatched
customer service (Bombardier, 2023). According to Reynolds (2023), Bombardier has had to
deal with the aviation industry's supply chain disruptions as of late, which have hampered
their productivity and have increased costs. Additionally, there have been difficulties in brand
perception and resource allocation due to entering novel markets, such as military defense,
while competing with established competitors like Boeing (Dion, 2023). The company's
strategic decision to broaden its product line and compete in high-stakes markets calls for
vigilant stakeholder expectation management - whether they be customers, employees,
suppliers, investors - and a nuanced approach to juggling its existing business with its new
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endeavours. Pierre Beaudoin (Bombardier, 2023), the Chairman of the Board is confident that
"Bombardier has the talent and determination to tackle challenges old and new with the
innovation and ingenuity that have been moving people for generations."
External Analysis
Focusing on enhancing the value for business with improved competency, analyzing
the external environment based on the macro factors and competitive intensity is significant,
as discussed below.
PESTEL Analysis
The macro-environmental factors affecting Bombardier Inc.'s external environment
are thoroughly outlined in the PESTEL analysis. As per Hill and Schilling (2019), PESTEL
analysis offers insight into the possibilities and risks facing the business in the Canadian
aerospace industry by assessing the following factors.
Political Factor
Governmental decisions, both supportive and restrictive, have impacted Bombardier's
strategic choices within the aerospace sector. Reynolds (2023) illustrated that the business is
in a position where its independence could be risky because it depends heavily on
governmental financial assistance. Canada and the United Kingdom are both significant
contributors to the projects' funding, which raises the risk that political whims will cause
funding inconsistencies. Nevertheless, adopting a "made in Canada by Canadians" approach
presents a potential advantage in utilizing nationalism to secure a larger share of the domestic
defense market.
Economic Factor
Financial statements reveal concerns about revenue compared to investment,
highlighting the severity of Bombardier's economic difficulties. Overhead expenses higher
than income highlight financial vulnerability and pose a risk to the company's long-term
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viability. Business jets are in high demand but limited supply (Reynolds, 2023). Thus, it
creates a market opportunity, as does the expected expansion of the global business jet
industry. Areas of concern are volatile fuel prices, risk of foreign currency fluctuations, and
growth in non-traditional markets.
Social Factor
A social barrier to Bombardier's entry into the defense market is the company's
reputation as a luxury goods maker for wealthy consumers rather than weapons. Ineffective
management of this social image could pose a risk (Chan & Tai, 2022). Nevertheless, the
growing fascination with private jets and the increasing demand for travel has the potential to
offer a favorable social prospect if effectively utilized.
Technological Factor
Bombardier currently seems to be combining both internal innovations and the hiring
of external experts. Relying on outside specialists for urgent technological needs can be
expensive and may not provide long-term benefits. Sarsfield (2019) magnified that adopting
more autonomous models by competitors such as Embraer could pose a threat. The challenge
is further compounded by the fact that the proposed alternative to Boeing's offering is
currently only a conceptual idea without any physical manifestation. Areas worthy of
exploration are improved efficiency through better technology and recoverable materials to
increase recycling.
Legal Factor
The large-scale involvement of the government through lending and subsidies has
political and legal ramifications. Dependence on outside funding by the company can result
in convoluted legal frameworks and agreements that could impede decision-making or
change strategies, posing a threat (Dion, 2023). In addition, competing with established
industry leaders such as Boeing could potentially result in patent infringement or other legal
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conflicts in the future, as was the case of Boeing's filing a petition in 2017 charging
Bombardier with dumping for selling CSeries aircraft to Delta Air Lines for far less than their
production cost.
Environmental Factor
The environmental standards of the aerospace industry, including Bombardier, are
under increasing scrutiny as the world works to increase the use of renewable electricity and
reduce waste and carbon emissions. The data provided did not specifically address
environmental issues for Bombardier, but the entire aviation sector is pressured to adopt
environmentally friendly practices and technologies complying with CO2 emission
regulations (Chan & Tai, 2022). It presents both a challenge in compliance and potential
reorganization and an opportunity for Bombardier to pioneer environmentally friendly
technologies ahead of its rivals.
Porter’s Five Forces
Porter’s Five Forces model offers an all-inclusive framework for comprehending the
competitive environment for Bombardier Inc. within the aerospace industry (Hill & Schilling,
2019). This study examines Bombardier’s strategic positioning in the market and the factors
that affect its intensity of competition and potential for profit.
Barriers to Entry
Given the complex barriers to entry in the aerospace industry, Bombardier’s position
as an established player is to its advantage. Significant capital expenditures, technological
know-how, adherence to strict regulations, and a robust supply chain are all necessary for this
industry (Chan & Tai, 2022). While Bombardier has established a strong position, the
emergence of companies from rapidly industrializing nations may present a potential
challenge in the future.
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Suppliers’ Bargaining Power
Due to the complex nature of aircraft manufacturing, Bombardier relies on a wellestablished network of suppliers to provide the necessary parts and systems. The availability
of specialized parts is constrained, in contrast to the widespread availability of standard
components (Hakim, 2023). When there are disruptions in the supply chain, as has been
observed, this concentration can give suppliers some bargaining power.
Buyers’ Bargaining Power
Airlines and governments are just two of the industry’s few significant clients. These
buyers can bargain for better pricing or terms when they place large orders. Nevertheless,
Bombardier’s ability to provide high-quality products, adhere to safety standards, and
incorporate technological advancements can potentially mitigate the influence of this
bargaining power.
Threat of Substitutes
There are no direct substitutes for aircraft in the aerospace industry. However, highspeed trains and other alternative modes of transportation can be seen as competitors in some
areas (Sarsfield, 2019). Additionally, new aircraft leasing models could be Bombardier’s
business jet division.
Competitive Rivalry
Boeing, Airbus, and Embraer hold the lion’s share of the aerospace market. Each has
a distinct market, with some overlapping categories for Bombardier (Sarsfield, 2019). There
is intense competition, and businesses always develop new ideas to provide better efficiency,
technology, and pricing.
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Internal Analysis
After demonstrating the external threats and opportunities, determining the internal
strengths and weaknesses are imperative to attain strategic competency within the business.
Therefore, the VRIO framework is analyzed.
VRIO Analysis
Bombardier, a prominent multinational corporation in the transportation industry,
consistently explores opportunities to optimize its resources to maintain and enhance its
competitive advantage (Bombardier, 2023). By employing the VRIO framework, the brand
can assess the vital resources and examine its ability to offer the business a long-lasting edge
within the ever-changing aerospace and transportation sector.
Table 1: VRIO Analysis for Bombardier
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Considering the VRIO table, Bombardier's strategic positioning within the
transportation industry has consistently relied on its careful allocation of resources and
capabilities. Further exploration of the VRIO framework:
Expansion Effectiveness
The business's potential for growth, particularly its forays into rail transportation and
business jets, demonstrates its capacity to capitalize on adjacent industries, developing new
revenue streams. Tao (2023) highlighted that Bombardier strategically chose to sell its rail
operations to Alstom to concentrate more on the expanding business jet market.
Access to Capital
Due to its established reputation and long history of industry leadership, Bombardier
can secure low-cost financing (Reynolds, 2023). Although many of Bombardier's rivals have
similar access, they have an edge due to their established relationships with financial
institutions and government subsidies, especially from the Canadian government.
Brand Extensions
Due to the brand's widespread popularity, Bombardier can investigate potential new
uses for the name. As per Vasigh and Azadian (2022), the development of the CSeries
airplane, later purchased by Airbus and renamed the A220, demonstrated their capacity to
enter markets dominated by industry giants like Boeing and Airbus.
Financial Resources
Bombardier's massive financial resources have been its bulwark against difficulties.
As per Dion (2023), These resources allowed them to make significant R&D investments,
which led to the development of ground-breaking products like the Global 7500, which
revolutionized the business jet market.
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Product Portfolio Synergy
Bombardier's extensive range of products, encompassing regional jets and luxury
business aircraft, enables the company to serve a vast clientele effectively. The fact that they
could launch planes like the CRJ series, aimed at regional markets, and planes like the Global
series, aimed at luxury markets, exemplified their versatility.
Leadership
The leaders at Bombardier have been instrumental in the company's success thanks to
their forward-thinking vision and focus on innovation and the satisfaction of customers. Their
innovative mindset is at the forefront of their decision to shift focus to high-end business jets.
IT and Digital Sources
IT and e-commerce capabilities have been improved by Bombardier in the age of
digital transformation. Although specific e-commerce initiatives for aircraft sales are still in
their infancy, their shift to digital is demonstrated by the broader push toward digital options
in procurement, client service, and online education.
Strategy Statement and Reflection
The VRIO analysis highlights that Bombardier has established a notable reputation in
the business aviation sector, and the strategy statement emphasizes the company's intent to
further cement its dominant position in this market. Adopting innovation, which has
consistently been a fundamental principle for Bombardier, is paramount. According to
Porter's Five Forces analysis, the aerospace industry faces intense competition from solid
companies like Boeing and Embraer (Dion, 2023). Bombardier's clear advantage is its
product line, which is based on various market segmentations and consumer preferences.
Bombardier's decision to explore emerging digital solutions reflects its ability to identify
opportunities in the e-commerce sector, highlighting the company's adaptability. Therefore,
Bombardier’s strategy represents a forward-thinking approach based on its core competencies
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that address current challenges while placing the company in a position for growth in the
future. According to Rukstad and Collis (2008), the strategy statement based on the analysis
is “Bombardier anticipates maintaining its position as the market leader in business aviation
by leveraging its strong brand recognition, developing new product lines, and utilizing
cutting-edge digital solutions.”
Strategy Proposal
Considering the challenges and resources available for business, Bombardier’s
management needs to focus on the following strategic initiatives to strengthen the business's
competitive edge.
Business Level Strategy
The business-level strategy sets how a business positions itself to acquire a
competitive advantage in the marketplace. It establishes standards for operational procedures,
customer interactions, and value propositions (Hill & Schilling, 2019). Considering two
business-level strategies, differentiation and cost leadership, Bombardier's most suitable
business-level strategy would be "differentiation." Bombardier has built its reputation in the
aerospace industry for innovation on cutting-edge designs, unmatched craftsmanship, and
distinctive value propositions. The identified challenges highlight the importance of standing
out in the market, especially amid intense rivalry from giants like Boeing and Embraer.
Bombardier's brand positioning is primarily based on its unique brand image and the
significant recognition of its CSeries aircraft among key players in the industry. It is
recommended that the company prioritize the development of technologically advanced
aircraft that meet current market demands and align with emerging market needs, including
environmental considerations.
Moreover, Bombardier's potential foray into related industries and e-commerce
prospects indicates a distinct inclination towards inventive solutions that extend beyond the
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conventional realm of aircraft production. Bombardier can distinguish itself by providing
distinct customer experiences, supplementary digital services, and onboard technological
enhancements in an industry characterized by frequently similar technical specifications.
Accordingly, implementing a differentiation strategy will enable Bombardier to establish a
higher pricing level. Given the company's financial and supply chain difficulties, this could
provide the necessary revenue boost and margins to reinvest in R&D and innovation
(Reynolds, 2023). Thus, differentiation is the key that opens the way to sustainable growth
for Bombardier in the face of intensifying competition.
Corporate level Strategy
A company's corporate strategy determines its operational footprint and how it
engages with different markets and sectors (Hill & Schilling, 2019). It contributes to enabling
the best use of resources, leveraging value, and managing risks while ensuring ongoing
competitiveness and sustainability.
Horizontal Integration
Horizontal integration seems appropriate for Bombardier, given the strategy
statement's emphasis on diversification and leveraging core competencies. Bombardier
specializes in the provision of aerospace and transportation solutions. Horizontal integration
refers to a company's strategic approach to acquiring or merging with other companies
operating in the same industry. It allows the company to expand its market share and
diversify its product offerings (Hill & Schilling, 2019). This strategic decision can
potentially leverage the brand's existing high level of awareness and established position
within the market.
Related Diversification
Bombardier could benefit from a Related Diversification strategy because of its
difficulties in areas like fierce competition, legal restraints, supply chain issues, and the
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expansion into new markets like defense. This strategy uses Bombardier's current skills and
knowledge to enter or grow in sectors closely related to its core business (Da Motta Veiga &
Rios, 2019). Bombardier can use its strong brand recognition, current R&D capabilities
towards greener aircrafts, product sustainability throughout the whole life cycle, sustainable
materials, sustainable aviation fluel, and high efficiency and in-depth knowledge of the
aerospace and transportation ecosystems by expanding into closely related industries. Thus,
related diversification includes expanding into defense or specialized aviation services,
maintenance, and aftermarket solutions.
Implementing diversification strategies will enable them to generate multiple sources
of revenue while maintaining the integrity of their brand (Boschma, 2021). Besides, it will
enable them to leverage current connections with suppliers and customers, reducing the risks
connected with brand-new endeavours. Correspondingly, Bombardier can use this strategy to
lessen threats from rivals in its primary industry, and it also provides ways to deal with
potential legal issues and supply chain disruptions. Thus, Bombardier can increase its market
dominance by conducting business in related industries and more effectively handling
external pressures.
Strategy Implementation
Strategic implementation is pivotal for business, considering the following tactics are
important for implementing both strategies for Bombardier.
Business Strategy Implementation
The aerospace industry is highly competitive globally, making product differentiation
especially important for companies like Bombardier. Bombardier can differentiate its
products from the competition by investing in research and development to improve aircraft
features. As a result, the R&D team must continuously innovate while upholding safety,
environmental, and ethical standards. Investing in cutting-edge technology does not just
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entail introducing the newest gadgets on board to improve the passenger experience. It
implies that the tech and development teams must uphold the highest cybersecurity standards,
respect the privacy of passenger data, and maintain transparency in tech implementations.
Differentiated selling training should involve more than just teaching staff how to talk about
features. Ethically, sales pitches need to be transparent, forthright, and non-misleading (Hill
& Schilling, 2019). The role of governance in this context involves overseeing these
processes to ensure that the brand's differentiation is authentic and ethically communicated.
The table below indicates the implementation actions with the metrics to evaluate the
outcomes.
Strategic Actions
Enhance aircraft
Responsible
Mode of
Metrics to Assess
Possible
Individuals
Communication
Performance
Outcomes
R&D Team
Monthly meetings,
Customer
Higher market
email updates
feedback, market
share,
share growth
improved
features to
differentiate from
brand
competitors
reputation
Investment in
Tech &
Quarterly tech
Tech
Enhanced user
advanced tech for
Development
briefings,
implementation
experience,
a better passenger
Teams
workshops
success rate,
increased
customer reviews
loyalty
experience
Training for sales
Sales and
Sales workshops,
Sales numbers,
Increased sales,
teams on
Marketing
webinars
customer inquiries
improved
differentiated
Teams
customer
relations
selling points
Table 2: Business Strategy Implementation
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Corporate Strategy Implementation
Strategic moves toward market dominance often involve horizontal integration
through mergers and acquisitions. When identifying potential acquisitions, transparency,
avoidance of conflicts of interest, and fair valuations are crucial considerations for the
Strategy and M&A teams (Alkaraan, 2022). Ethical considerations encompass the obligation
to treat all stakeholders of the acquired company respectfully and fairly. The process of
integrating operations after an acquisition presents unique challenges. The successful
integration of employees from the acquired company necessitates the careful consideration of
their rights, the assurance of job security, and the transparent communication of any
forthcoming alterations. Besides, upholding an ethical position when integrating corporate
cultures is paramount. In post-acquisition marketing alignment, governance plays a crucial
role in ensuring the integrity of marketing claims and maintaining a consistent brand image
that does not mislead stakeholders (Hill & Schilling, 2019). Considering the implementation,
the focus table demonstrated the channels and performance metrics to add value with
strategic actions significantly.
Strategic
Responsible
Mode of
Metrics to Assess
Possible
Actions
Individuals
Communication
Performance
Outcomes
Identify
Strategy and
Bi-weekly M&A
Number of viable
Market
potential M&A
M&A teams
meetings, dedicated
targets identified,
consolidation,
targets in
communication
successful
increased
aerospace.
channels
negotiations
operational
efficiency
Integrate the
Operations
Regular integration
Speed and
Smooth transition,
acquired
and
check-ins, email
efficiency of
retention of talent,
updates
integration,
company's
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operations
Integration
employee
improved
seamlessly,
Teams
feedback
processes
Align
Marketing
Monthly marketing
Brand cohesion
Unified brand
marketing
Team
strategy meetings
post-acquisition,
image, increased
efforts post-
customer
customer trust
acquisition
feedback
Table 3: Corporate Strategy Implementation
Conclusion
Several key insights emerge from the in-depth analysis conducted for Bombardier,
pointing to potential growth and strategic positioning avenues. Bombardier operates in the
aerospace industry, which is fraught with difficulties, from fierce internal competition to
major external factors like political and economic uncertainty. Bombardier has many
advantages, including the potential to expand its brand, strong financial backing, and strong
brand recognition, but it is not immune to the impending threats noted by PESTEL and
Porter's analysis. Bombardier's future success is contingent on fully utilizing its distinctive
strengths. The VRIO study highlights the significance of Bombardier's brand positioning,
particularly the sustainable competitive advantage resulting from brand recognition.
Differentiation could boost Bombardier's position in a competitive market by making its
products stand out. On the corporate front, the horizontal integration route offers interesting
opportunities. Bombardier can reduce its risk exposure, strengthen its position in the market,
and explore new opportunities by expanding laterally. If Bombardier approaches this
integration with appropriate ethical considerations and governance mechanisms, it
can advance the company significantly. Besides, ethical business practices and strong
governance should serve as the foundation for this journey, guaranteeing profitability and
maintaining the company's image and integrity among stakeholders.
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