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COMM 210

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Management

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Apr 3, 2024

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Bombardier’s Airbus Deal: A strategic Move in Uncertain Times Bombardier, a Canadian multinational aerospace and transportation company, has faced significant challenges in recent years. In 2017, the company struck a strategic move of merging its struggling CSeries program with the European aerospace giant, Airbus, to avoid duties on its CSeries jets. This deal has been seen as a game-changer for bombardier, who had been struggling with the financial viability of the CSeries program and has also been in legal disputes with its rival, Boeing. By partnering with Airbus to form a joint venture, this move could help the company gain an edge in the highly competitive aviation market. This paper will use handy’s sigmoid curve, Mintzberg’s and French & Raven’s theories, and Kaplan and Norton scorecard to analyze the strategic implications of this move from Bombardier. According to Charles handy’s sigmoid curve model, organizations go through a life cycle that can be divided into three stages: growth, maturity, and decline. At the beginning of the growth phase, organizations are innovative and flexible, allowing them to respond to changing market conditions. As they enter the maturity phase, organizations become more bureaucratic and risk-averse, focusing on maintaining their current position rather than innovating. Finally, in the decline phase organizations struggle to adapt to changing market conditions, leading to a decline in performance. Looking at the company Bombardier, their position on the sigmoid curve can be analyzed based on its recent challenges and strategic moves. Bombardier’s struggle with debt and potential delays due to duties imposed for their CSeries program, as “ any duties finally levied against the CSeries (which are now expected to be 300 per cent) will have to be paid on any imported CSeries airplane or part, or it will not be permitted into the country” (Marowits, 2017). This suggests that Bombardier has entered its decline phase, where it is struggling and

having performance issues, focusing on trying to stay afloat rather than succeeding. However, the strategic deal with Airbus implies that bombardier is trying to reverse this trend and move into a new growth phase. As with the imminent transition “bombardier investors warmly received the Airbus partnership, driving up the Montreal-based company’s shares to a nearly three-year high on Tuesday” (Marowits, 2017). Now that Bombardier is in business with Airbus, they have a greater chance to be more innovative and responsive to market conditions, which align with the growth phase of handy’s sigmoid curve. Henry Mintzberg management theory describes ten roles that managers play in organizations. These roles are divided into three categories: interpersonal, informational, and decisional. On the other hand, French & Raven’s theory of power identifies five sources of power that managers can use to influence their employees. In his role as CEO, Bellemare demonstrated all three roles. Firstly, in an interpersonal role, he acted as a figurehead and leader, representing the company, and providing inspiration to employees. As the article notes, Bellemare “told reporters that the company will continue to fight Boeing’s ‘unfair and unjustified’ petition” (Marowits, 2017). Secondly, in an informational role, Bellemare was responsible for gathering and analyzing information to make informed decisions. He and his team used data and market analysis to support the partnership with Airbus, stating that “ the partnership will at least double the value of the CSeries to more than US$4 billion” (Marowits, 2017). Lastly, in a decisional role, Bellemare made strategic decisions to benefit the company. He made the decision to partner with Airbus to avoid paying tariffs on the CSeries aircraft, stating “The assembly in the U.S. can resolve the issue because then it becomes a domestic product and therefore a domestic product would not have the import tariff apply to this” (Marowitz, 2017).

Out of the five sources of power in French & Ravens’ theory, Bellemare demonstrates two of these sources of power: expert and legitimate power. As CEO, Bellemare demonstrates expert power, as he had extensive knowledge of the aviation industry and was able to use this knowledge to make informed decisions for the company; “The Airbus-Bombardier partnership promises to reshape the global aircraft industry by putting pressure on Boeing to compete and calling into question its trade complaint” (Marowitz, 2017). Bellemare shows legitimate power due to his position of authority within the company. He used this power to negotiate the partnership with airbus which “puts it on a strong legal footing to avoid import duties for its CSeries commercial jets while turning the tables on Boeing” (Marowitz, 2017). As the partnership with Airbus continues to develop, it will be interesting to see how Bellemare and Bombardier continue to demonstrate their strategic leadership and power within the aviation industry. The merger between Bombardier and Airbus has created a new entity in the aerospace sector, and as such, it is important to evaluate the company’s performance using the balanced scorecard approach developed by Kaplan and Norton. The balanced score card is a performance indicator that enables companies to track and monitor their progress towards achieving their strategic objective across four categories: financial, customer, internal business process and learning and growth. A key measure from a financial standpoint would be the company’s return on Investment (ROI). It is critical to assess the effectiveness of the firm's investments in terms of producing profits for the company and its stakeholders, as it works to increase its market share. A strong ROI would suggest that the business is making strategic expenditures that are paying off, which would boost investor confidence. The Net Promoter Score (NPS) would be a suitable measure for the customer's perspective. This statistic is frequently used to assess consumer

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happiness and loyalty. On a scale of 0 to 10, it entails asking clients how likely they are to suggest a business's goods or services to others. Clients who receive a score of 9 or 10 are deemed promoters, while those who receive a score of 7 or 8 are passive customers and those who receive a score of 0 to 6 are detractors. An elevated NPS shows that the business is delivering high-quality goods and services that are on par with or exceeding clients' expectations. A good measure for internal business operations would be the organization's manufacturing cycle time. This indicator calculates how long it takes the business to produce and deliver its goods to clients. The organization would be able to respond to changes in market demand more swiftly with a shorter cycle time, which would help to boost customer satisfaction and loyalty. Finally, a crucial indicator for the learning and growth perspective would be the employee satisfaction index (ESI). This indicator assesses the degree of employee involvement and job satisfaction. A high ESI would suggest that the business is offering a welcoming workplace that promotes employee happiness and retention. As a result, the business would be able to recruit and keep top people, which would encourage innovation and boost performance throughout the entire organization. In conclusion, Bombardier's decision to merge its struggling CSeries program with Airbus was a strategic move that could help the company gain a competitive edge in the highly competitive aviation market. The company had been struggling with the financial viability of the CSeries program and legal disputes with its rival, Boeing. Using Handy's sigmoid curve, Mintzberg’s and French & Raven’s theories, and Kaplan and Norton scorecard, this paper analyzed the strategic implications of this move by Bombardier. The paper shows that Bombardier is now in business with Airbus, allowing them to be more innovative and responsive to market conditions, aligning with the growth phase of Handy's sigmoid curve. The CEO,

Bellemare, demonstrated all three roles of Mintzberg's management theory and two sources of power of French & Raven's theory. Furthermore, the Kaplan and Norton scorecard approach showed that the company's ROI and NPS would be crucial measures for evaluating its performance. Overall, this partnership promises to reshape the global aircraft industry, and it will be interesting to see how Bombardier continues to demonstrate its strategic leadership and power within the aviation industry. References: French, J. R. P., & Raven, B. (1959). The bases of social power. In D. Cartwright (Ed.), Studies in Social Power (pp. 150-167). University of Michigan. Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard--measures that drive performance. Harvard Business Review, 70(1), 71-79. Mintzberg, H. (1975). The manager's job: Folklore and fact. Harvard Business Review, 53

Marowits, R. (2017, October 16). Bombardier turns tables on Boeing with Airbus deal it says avoids CSeries duties. The National Post. writer, Q. (2022, November 15). Net promoter score (NPS): The ultimate guide . Qualtrics. Damini. (2022, December 27). Manufacturing cycle time: A complete guide . Deskera Blog. Toucan writer . Employee satisfaction index . Toucan. (n.d.).

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